SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-6152
THE BANK OF NEW YORK COMPANY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-2614959
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
One Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
(212) 495-1784
(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the issuer's Common Stock, $7.50 par value, was 740,443,568 shares as of October 31, 2000
THE BANK OF NEW YORK COMPANY, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 2000 and December 31, 1999 3
Consolidated Statements of Income
For the Three Months and Nine Months
Ended September 30, 2000 and 1999 4
Consolidated Statement of Changes In
Shareholders' Equity For the Nine
Months Ended September 30, 2000 5
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
2000 and 1999 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market
Risk. (See "Trading Activities") 13
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings 23
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
SIGNATURE 26
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PART I. FINANCIAL INFORMATION
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Balance Sheets
(Dollars in millions, except per share amounts)
(Unaudited)
September 30, December 31,
2000 1999
---- ----
Assets
------
Cash and Due from Banks $ 4,222 $ 3,276
Interest-Bearing Deposits in Banks 5,047 6,850
Securities
Held-to-Maturity (fair value of $833 in 2000
and $839 in 1999) 849 871
Available-for-Sale 5,926 6,028
------- -------
Total Securities 6,775 6,899
Trading Assets at Fair Value 10,157 8,715
Federal Funds Sold and Securities Purchased Under Resale
Agreements 3,184 5,383
Loans (less allowance for credit losses of $617 in 2000
and $595 in 1999) 36,781 36,952
Premises and Equipment 901 893
Due from Customers on Acceptances 914 739
Accrued Interest Receivable 374 319
Other Assets 7,054 4,730
------- -------
Total Assets $75,409 $74,756
======= =======
Liabilities and Shareholders' Equity
------------------------------------
Deposits
Noninterest-Bearing (principally domestic offices) $11,886 $12,162
Interest-Bearing
Domestic Offices 15,688 16,319
Foreign Offices 25,725 27,270
------- -------
Total Deposits 53,299 55,751
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 1,478 1,318
Other Borrowed Funds 4,199 3,825
Acceptances Outstanding 917 740
Accrued Taxes and Other Expenses 3,135 2,644
Accrued Interest Payable 148 131
Other Liabilities 1,857 893
Long-Term Debt 2,957 2,811
------- -------
Total Liabilities 67,990 68,113
------- -------
Company-Obligated Mandatory Redeemable Preferred
Trust Securities of Subsidiary Trust Holding Solely
Junior Subordinated Debentures 1,500 1,500
------- -------
Shareholders' Equity
Class A Preferred Stock - par value $2.00 per share,
authorized 5,000,000 shares, outstanding 16,320 shares
in 2000 and 16,787 shares in 1999 1 1
Common Stock-par value $7.50 per share,
authorized 1,600,000,000 shares, issued
983,594,524 shares in 2000 and
977,961,165 shares in 1999 7,377 7,335
Additional Capital 454 315
Retained Earnings 3,326 2,620
Accumulated Other Comprehensive Income 189 30
------- -------
11,347 10,301
Less: Treasury Stock (242,944,902 shares in 2000
and 237,747,242 shares in 1999), at cost 5,418 5,148
Loan to ESOP (1,444,005 shares in 2000
and 1999), at cost 10 10
------- -------
Total Shareholders' Equity 5,919 5,143
------- -------
Total Liabilities and Shareholders' Equity $75,409 $74,756
======= =======
----------------------------------------------------------------------------------------
Note: The balance sheet at December 31, 1999 has been derived from the audited financial
statements at that date.
See accompanying Notes to Consolidated Financial Statements.
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THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
For the three For the nine
months ended months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Interest Income
---------------
Loans $ 732 $ 643 $2,183 $1,962
Securities
Taxable 79 63 236 190
Exempt from Federal Income Taxes 16 13 47 36
------ ----- ----- -----
95 76 283 226
Deposits in Banks 67 62 203 180
Federal Funds Sold and Securities Purchased
Under Resale Agreements 80 49 198 147
Trading Assets 133 4 380 15
------ ----- ----- -----
Total Interest Income 1,107 834 3,247 2,530
------ ----- ----- -----
Interest Expense
----------------
Deposits 501 320 1,494 961
Federal Funds Purchased and Securities Sold
Under Repurchase Agreements 38 32 107 99
Other Borrowed Funds 37 27 108 102
Long-Term Debt 52 38 149 108
------ ----- ----- -----
Total Interest Expense 628 417 1,858 1,270
------ ----- ----- -----
Net Interest Income 479 417 1,389 1,260
-------------------
Provision for Credit Losses 25 90 70 120
------ ----- ----- -----
Net Interest Income After Provision for
Credit Losses 454 327 1,319 1,140
------ ----- ----- -----
Noninterest Income
------------------
Servicing Fees
Securities 427 311 1,202 904
Cash 65 69 196 208
------ ----- ----- -----
492 380 1,398 1,112
Private Client Services and
Asset Management Fees 77 61 219 179
Service Charges and Fees 84 77 278 252
Securities Gains 20 50 105 149
Other 112 963 302 1,115
------ ----- ----- -----
Total Noninterest Income 785 1,531 2,302 2,807
------ ----- ----- -----
Noninterest Expense
-------------------
Salaries and Employee Benefits 371 300 1,097 922
Net Occupancy 47 41 137 122
Furniture and Equipment 27 25 80 69
Other 190 149 551 424
------ ----- ----- -----
Total Noninterest Expense 635 515 1,865 1,537
------ ----- ----- -----
Income Before Income Taxes 604 1,343 1,756 2,410
Income Taxes 213 542 614 915
Distribution on Preferred Trust Securities 28 28 85 84
------ ----- ------ ------
Net Income $ 363 $ 773 $1,057 $1,411
---------- ====== ===== ====== ======
Net Income Available to Common Shareholders $ 363 $ 773 $1,057 $1,411
------------------------------------------- ====== ===== ====== =====
Per Common Share
----------------
Basic Earnings $ 0.50 $1.04 $1.44 $1.87
Diluted Earnings 0.49 1.02 1.42 1.84
Cash Dividends Paid 0.16 0.14 0.48 0.42
Diluted Shares Outstanding 747 754 744 769
------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
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THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statement of Changes in Shareholders' Equity
For the nine months ended September 30, 2000
(In millions)
(Unaudited)
Preferred Stock
Balance, January 1 $ 1
-------
Balance, September 30 1
-------
Common Stock
Balance, January 1 7,335
Issuances in Connection with Employee Benefit Plans 42
-------
Balance, September 30 7,377
-------
Additional Capital
Balance, January 1 315
Common Stock Issued in Connection with Employee Benefit Plans 139
-------
Balance, September 30 454
-------
Retained Earnings
Balance, January 1 2,620
Net Income 1,057
Cash Dividends on Common Stock (351)
-------
Balance, September 30 3,326
-------
Accumulated Other Comprehensive Income
Securities Valuation Allowance
Balance, January 1 58
Change in Fair Value of Securities Available-for-Sale,
Net of $106 in Taxes 186
Reclassification Adjustment, Net of $(13) in Taxes (26)
-------
Balance, September 30 218
-------
Foreign Currency Items
Balance, January 1 (28)
Foreign Currency Translation Adjustment (1)
-------
Balance, September 30 (29)
-------
Less Treasury Stock
Balance, January 1 5,148
Issued (67)
Acquired 337
-------
Balance, September 30 5,418
-------
Less Loan to ESOP
Balance, January 1 10
-------
Balance, September 30 10
-------
Total Shareholders' Equity, September 30 $ 5,919
=======
------------------------------------------------------------------------------------
Comprehensive Income for the three months ended September 30, 2000 and 1999 was $495
million and $618 million.
Comprehensive income for the nine months ended September 30, 2000 and 1999 was
$1,216 million and $1,162 million.
See accompanying Notes to Consolidated Financial Statements.
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THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
For the nine months
Ended September 30,
2000 1999
---- ----
Operating Activities
Net Income $1,057 $1,411
Adjustments to Determine Net Cash Attributable to
Operating Activities
Provision for Losses on Loans and Other Real Estate 73 120
Liquidity Charge on loans Available-for-Sale - 124
Gains on the Sale of BNYFC - (1,020)
Depreciation and Amortization 184 156
Deferred Income Taxes 382 305
Securities Gains (105) (149)
Change in Trading Activities (2,475) (817)
Change in Accruals and Other, Net (1,124) (469)
------ ------
Net Cash Used by Operating Activities (2,008) (339)
------ ------
Investing Activities
Change in Interest-Bearing Deposits in Banks 1,639 (104)
Purchases of Securities Held-to-Maturity (264) (303)
Maturities of Securities Held-to-Maturity 222 369
Purchases of Securities Available-for-Sale (2,312) (1,875)
Sales of Securities Available-for-Sale 1,340 476
Maturities of Securities Available-for-Sale 1,355 837
Net Principal Disbursed on Loans to Customers (407) (2,808)
Sales of Loans and Other Real Estate 263 230
Change in Federal Funds Sold and Securities
Purchased Under Resale Agreements 2,460 1,666
Purchases of Premises and Equipment (64) (58)
Acquisitions, Net of Cash Acquired (158) (71)
Disposition, Net of Cash Included 46 4,867
Proceeds from the Sale of Premises and Equipment 2 10
Other, Net (169) 138
------ ------
Net Cash Provided by Investing Activities 3,953 3,374
------ ------
Financing Activities
Change in Deposits (1,176) 291
Change in Federal Funds Purchased and Securities
Sold Under Repurchase Agreements (71) 484
Change in Other Borrowed Funds 533 (145)
Proceeds from the Issuance of Preferred Trust Securities - 200
Proceeds from the Issuance of Long-Term Debt 190 343
Repayments of Long-Term Debt (53) (21)
Issuance of Common Stock 248 219
Treasury Stock Acquired (337) (1,615)
Cash Dividends Paid (351) (318)
------ ------
Net Cash Used by Financing Activities (1,017) (562)
------ ------
Effect of Exchange Rate Changes on Cash 18 (42)
------ ------
Change in Cash and Due From Banks 946 2,431
Cash and Due from Banks at Beginning of Period 3,276 3,999
------ ------
Cash and Due from Banks at End of Period $4,222 $6,430
====== ======
----------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for:
Interest $1,840 $1,342
Income Taxes 200 169
Noncash Investing Activity
(Primarily Foreclosure of Real Estate) 2 4
----------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
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THE BANK OF NEW YORK COMPANY, INC.
Notes to Consolidated Financial Statements
The accounting and reporting policies of The Bank of New York Company, Inc. (the Company), a financial holding company, and its subsidiaries conform with generally accepted accounting principles and general practice within the banking industry. Such policies are consistent with those applied in the preparation of the Company's annual financial statements.
The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods have been made. Such adjustments are of a normal recurring nature.
In March 2000, the Company completed the acquisition of the correspondent clearing business of SG Cowen Securities Corporation ("SG Cowen"). This transaction supports the Company's ongoing strategy of growth in the correspondent clearing business. In July 2000, the Company completed the acquisition of BHF Securities Corporation ("BHF"), a leading provider of domestic and international correspondent clearing services. In November 2000, the Company announced its agreement to acquire the correspondent clearing business of Schroder & Co. Inc, from Salomon Smith Barney Inc. This transaction provides the Company with the opportunity to establish new client relationships and add valuable product capabilities to its securities servicing businesses.
In March 2000, the Company acquired the corporate trust business of Harris Trust and Savings Bank located in Chicago, Illinois. The transaction involves the transfer of approximately 1,700 trustee and agency appointments for corporate and municipal issues of debt securities. In May 2000, the Company completed its purchase of the issuer, agency and depository services business of Barclays Bank PLC. This transaction involves the transfer of several hundred fiscal, principal paying agent and sub-agent appointments as well as depository holdings on behalf of Euroclear and Clearstream Banking SA. In July 2000, the Company acquired the corporate trust business of Sakura Trust Company. In September 2000, the Company acquired the corporate trust business of Dai-Ichi Kangyo Bank of California, a wholly-owned subsidiary of the Dai-Ichi Kangyo Bank Ltd., headquartered in Tokyo, Japan. In September 2000, the Company signed a definitive agreement to acquire the corporate trust business of The Trust Company of Bank of Montreal located in Toronto, Canada. The Trust Company's corporate trust business comprises approximately 300 bond trustee and agency appointments for Canadian and U.S. companies, which issue debt securities into the Canadian market.
In October 2000, the Company acquired Ivy Asset Management Corp., a privately-held asset management firm, based in Garden City, New York. Ivy offers clients hedge fund products and advisory services utilizing multiple managers engaged in niche styles and sophisticated strategies not typically available to the investing public. Also, in October 2000, the Company completed the acquisition of approximately $9 billion in custodial accounts administered by the Bank of America Private Bank in Los Angeles. The acquisition of this book of business expands the Advisory Custody services for investment advisors and their high net worth clients. This is an integral part of the Private Client Services business which currently administers $33 billion in custody assets for private clients, consultants, investment advisors, and family offices.
In January 2000, the Company completed the acquisition of certain assets of Institutional Securities Trading LLC ("IST"). IST is a commission recapture and third-party services firm primarily serving Taft-Hartley organizations and other plan sponsors. In May 2000, the Company completed the acquisition of certain assets of Global Execution Network Associates, Inc. ("GENA"). GENA is a U.S. based broker-dealer, specializing in quantitative and program equity trading in 52 markets globally. GENA's clients are both U.S. and U.K. institutional investors. The acquisition will enhance the Company's non-dollar trading capabilities for the Company's institutional clients worldwide and furthers the Company's strategy to be a recognized leader in global institutional agency brokerage.
In April 2000, the Company completed the sale of its interest in Banco Credibanco S.A. to Unibanco-Uniao de Bancos Brasileiros S.A.
Transactions in the allowance for credit losses are summarized as
follows:
Nine months ended
September 30,
(In millions) 2000 1999
---- ----
Balance, Beginning of Period $ 595 $ 636
Charge-Offs (62) (133)
Recoveries 14 10
----- -----
Net Charge-Offs (48) (123)
Acquisition/(Disposition) - (39)
Provision 70 120
----- -----
Balance, End of Period $ 617 $ 594
===== =====
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As of October 31, 2000, the Company has approximately 6 million common shares remaining to repurchase under its share buyback programs.
Effective January 1, 2001, a new accounting standard will require the Company to record all derivatives on the balance sheet at fair value and apply new accounting practices for hedging activities. The Financial Accounting Standards Board ("FASB") continues to issue interpretative guidance related to this standard. Based upon current interpretations of the standard and market conditions as of September 30, 2000, the adoption of the standard is not expected to have a material effect on the Company's financial position or results of operations.
The following table illustrates the computations of basic and diluted earnings per share for the three and nine months ended September 30, 2000 and 1999:
Three Months Ended Nine Months Ended
September 30, September 30,
(In millions, except per share amounts)
2000 1999 2000 1999
---- ---- ---- ----
Net Income (1) $363 $773 $1,057 $1,411
==== ==== ====== ======
Basic Weighted Average
Shares Outstanding 734 741 733 756
Shares Issuable on Exercise of
Employee Stock Options 13 13 11 13
---- ---- ---- ----
Diluted Weighted Average Shares Outstanding 747 754 744 769
==== ==== ==== ======
Basic Earnings Per Share: $ 0.50 $ 1.04 $ 1.44 $ 1.87
Diluted Earnings Per Share: 0.49 1.02 1.42 1.84
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(1) For purpose of calculating earnings per share, diluted net income and net income available to common shareholders equal net income for all periods presented.
In the ordinary course of business, there are various claims pending against the Company and its subsidiaries. In the opinion of management, liabilities arising from such claims, if any, would not have a material effect upon the Company's consolidated financial statements.
The Company's actual results of future operations may differ from those set forth in certain forward-looking statements contained herein. Refer to further discussion under the heading "Forward Looking Statements".
The Company reported third quarter diluted earnings per share of 49 cents, up 17% from the 42 cents earned on a normalized basis in the third quarter of 1999. Net income for the third quarter was $363 million, up 16% from the $313 million earned on a normalized basis in the same period last year. Reported diluted earnings per share were $1.02 in the third quarter of 1999 while reported net income was $773 million. Diluted earnings per share were $1.42 for the first nine months of 2000, up 16% from the $1.22 earned on a normalized basis last year. Net income for the first nine months was $1,057 million, an increase of 15% over last year's $916 million earned on a normalized basis. Reported diluted earnings per share were $1.84 for the first nine months of 1999 while reported net income was $1,411 million. (See "Normalized Net Income" heading)
The Company's continuing emphasis on offering diversified services to virtually all segments of the global securities markets resulted in superior growth in both revenue and profitability. This quarter's performance continues to reflect the fundamental strength of the Company's long-term strategy. In securities servicing, fee revenues increased to a record $427 million, up 37% for the quarter. Foreign exchange and other trading revenue increased to $59 million or 31% over last year, benefiting from the continued increase in global trading volumes. Private client services and asset management fees grew 26% in the quarter, led by strong performance in all product areas. The Company's continued focus on fee-based businesses resulted in noninterest income growing to 62% of total revenue in the third quarter, up from 60% last year.
Return on average common equity for the third quarter of 2000 was 25.75% compared with 25.33% on a normalized basis in the third quarter of 1999. Return on average assets for the third quarter of 2000 was 1.89% compared with 1.96% on a normalized basis in the third quarter of 1999. Reported return on average common equity was 61.23% in the third quarter of 1999 while reported return on average assets was 4.78%. For the first nine months of 2000, return on average common equity totaled 26.55% compared with 25.34% on a normalized basis in 1999. Return on average assets was 1.83% for the first nine months of 2000 compared with 1.95% on a normalized basis in 1999. Reported return on average common equity was 36.63% for the first nine months of 1999 while reported return on average assets was 2.88%.
Fees from the Company's securities servicing businesses reached a record $427 million for the third quarter compared with $311 million last year. For the first nine months of 2000, fees from the Company's securities servicing businesses totaled a record $1,202 million, growing 33% compared with $904 million in 1999. Fee revenue was strong across all product lines with particular strength in global custody, depositary receipts ("DRs"), unit investment trust, and mutual funds as well as global execution and clearing services. Fee revenue also benefited from the acquisition of the Royal Bank of Scotland Trust Bank ("RBSTB") in the fourth quarter of 1999. The Company continues to be the world's leading custodian with assets of $6.9 trillion including $2 trillion of cross-border custody assets. DR trading activity reached $1 trillion for the first time during the first nine months of 2000. Cross-border mergers and acquisitions as well as U.S. investor interest in global telecommunication, media, and technology industries continued to be the major drivers of trading volume.
Private client services and asset management fees were $77 million for the quarter, up 26% over last year, led by continued superior investment performance by BNY Asset Management resulting in further new business, as well as by the acquisition of Estabrook Capital Management, Inc.
Total revenues from global payment services, excluding trade finance, were up 10% in the first nine months of 2000. This growth was primarily due to strong increases in funds transfer with domestic financial service companies as well as increased cash management revenue associated with broad market acceptance of CA$H-Register PlusSM, the Company's new internet delivery system for cash management services. Trade finance revenues were down from a year ago primarily due to the sale of BNY Financial Corporation ("BNYFC") and reduced pricing, driven by the improved risk profiles of select Asian and Latin American markets.
Foreign exchange and other trading revenues for the quarter increased 31% over the third quarter of last year to $59 million. In the first nine months of 2000, foreign exchange and other trading revenues were $206 million compared with $133 million last year. Despite seasonal fluctuations, foreign exchange revenues remained strong, driven by continued increased transaction flows from the Company's global securities servicing customer base.
Net interest income on a taxable equivalent basis for the third quarter increased to $492 million from $477 million in the second quarter of 2000. For the first nine months of 2000, net interest income on a taxable equivalent basis was $1,429 million, compared with $1,292 million in the first nine months of 1999, benefiting from the acquisition of RBSTB, which brought approximately $10 billion in highly liquid, short-term assets and liabilities.
Tangible diluted earnings per share (earnings before the amortization of goodwill and intangibles) were 52 cents per share in the third quarter of 2000, compared with 44 cents per share on a normalized basis in the third quarter of 1999. On the same basis, tangible return on average common equity was 38.89% in the third quarter of 2000 compared with 36.52% in 1999; and tangible return on average assets was 2.05% in the third quarter of 2000 compared with 2.11% in 1999. Tangible diluted earnings per share were $1.50 per share for the first nine months of 2000, compared with $1.34 per share on a normalized basis in 1999. On the same basis, tangible return on average common equity was 41.11% in the first nine months of 2000 compared with 37.72% on a normalized basis in 1999; and tangible return on average assets was 1.98% in the first nine months of 2000 compared with 2.19% last year. Amortization of intangibles for the third quarter and the first nine months of 2000 was $29 million and $85 million compared with $23 million and $76 million last year.
CAPITAL
The Company's estimated Tier 1 capital and Total capital ratios were 8.29% and 12.67% at September 30, 2000, compared with 8.03% and 12.24% at June 30, 2000, and 8.38% and 12.52% at September 30, 1999. The leverage ratio was 7.42% at September 30, 2000, compared with 6.80% at June 30, 2000, and 8.10% one year ago. Tangible common equity as a percent of total assets was 5.75% at September 30, 2000, compared with 5.11% at June 30, 2000, and 5.93% one year ago. The decline in the leverage and tangible common equity ratios from 1999 primarily reflects the acquisition of RBSTB. In the third quarter of 2000, the Company repurchased approximately one million shares under its common stock repurchase programs.
LIQUIDITY
The Company maintains its liquidity through the management of its assets and liabilities, utilizing worldwide financial markets. The diversification of liabilities reflects the flexibility of the Company's funding sources under changing market conditions. Stable core deposits, including demand, retail time, and trust deposits from processing businesses, are generated through the Company's diversified business operations and managed with the use of trend studies and deposit pricing. The use of derivative products such as interest rate swaps and financial futures is designed to enhance liquidity through the issue of long-term liabilities with limited exposure to interest rate risk. Liquidity also results from the maintenance of a portfolio of assets, which
can be easily reduced, and the monitoring of unfunded loan commitments, thereby reducing unanticipated funding requirements.
NONINTEREST INCOME
3rd 2nd 3rd
Quarter Quarter Quarter Year-to-Date
------- ------- ------- ------------
(In millions) 2000 2000 1999 2000 1999
---- ---- ---- ---- ----
Servicing Fees
Securities $427 $403 $311 $1,202 $ 904
Cash 65 65 69 196 208
---- ---- ---- ------ ------
492 468 380 1,398 1,112
Private Client Services and
Asset Management fees 77 72 61 219 179
Service Charges and Fees 84 104 77 278 252
Foreign Exchange and
Other Trading Activities 59 71 45 206 133
Securities Gains 20 45 50 105 149
Other 53 20 918 96 982
---- ---- ---- ------ ------
Total Noninterest Income $785 $780 $1,531 $2,302 $2,807
==== ==== ====== ====== ======
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Total noninterest income reached $785 million, up 24% from $635 million in last year's third quarter, excluding the sale of BNYFC and the liquidity charge. The decline in cash servicing fees reflects both lower trade finance fees as well as lower cash management and funds transfer fees due to a rising rate environment positively impacting the value of customers' compensating balances. Service charges and fees declined from the second quarter reflecting a reduction of capital markets activity. Securities gains were $20 million compared with $45 million in the second quarter of 2000 and $50 million one year ago. Other income in the third quarter of 2000 includes a $26 million payment associated with the termination of a securities clearing contract entered into in conjunction with the acquisition of Everen Clearing Corporation. In 1999, other income in the third quarter included a $1,020 million gain on the sale of BNYFC and a $124 million liquidity charge on loans available for sale.
NET INTEREST INCOME
3rd 2nd 3rd
Quarter Quarter Quarter Year to Date
(Dollars in millions on a ------- ------- ------- --------------
tax equivalent basis) 2000 2000 1999 2000 1999
---- ---- ---- ---- ----
Net Interest Income $492 $477 $429 $1,429 $1,292
Net Interest Rate
Spread 1.93% 1.93% 2.21% 1.94% 2.23%
Net Yield on Interest-
Earning Assets 3.05 2.91 3.16 2.95 3.14
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Net interest income on a taxable equivalent basis was $492 million in the third quarter of 2000 compared with $477 million in the second quarter of 2000 and $429 million in the third quarter of 1999. The net interest rate spread was 1.93% in the third quarter of 2000, compared with 1.93% in the second quarter of 2000 and 2.21% one year ago. The net yield on interest-earning assets was 3.05% compared with 2.91% in the second quarter of 2000 and 3.16% in last year's third quarter.
For the first nine months of 2000, net interest income on a taxable equivalent basis, amounted to $1,429 million compared with $1,292 million in 1999. The year-to-date net interest rate spread was 1.94% in 2000 compared
with 2.23% in 1999, while the net yield on interest-earning assets was 2.95% in 2000 and 3.14% in 1999.
The expansion of the Company's securities servicing, global payment services, and asset management businesses continues to generate increased levels of deposits. These additional deposits are being invested in high- quality liquid assets which increase net interest income, although lowering the net interest-rate spread. The improvement in the yield from the second quarter of 2000 reflects the Company's increased capital base combined with the growing level and value of interest-free deposits generated by the Company's securities and fiduciary businesses.
Interest income would have been increased by $1 million and $2 million for the third quarters of 2000 and 1999 and $5 million and $8 million for the first nine months of 2000 and 1999 if loans on nonaccrual status at September 30, 2000 and 1999 had been performing for the entire period.
TRADING ACTIVITIES
The fair value and notional amounts of the Company's financial instruments held for trading purposes at September 30, 2000 are as follows:
3rd Quarter 2000
September 30, 2000 Average
---------------------------- -------------------
(In millions) Fair Value Fair Value
------------------ -------------------
Notional
Trading Account Amount Assets Liabilities Assets Liabilities
--------------- -------- ------ ----------- ------ -----------
Interest Rate Contracts:
Futures and Forward
Contracts $ 23,909 $ 4 $ - $ 2 $ -
Swaps 111,779 1,063 912 1,056 928
Written Options 84,259 - 616 - 617
Purchased Options 45,506 52 - 55 -
Foreign Exchange Contracts:
Swaps 338 - - - -
Written Options 19,254 - 50 - 105
Purchased Options 22,300 125 - 175 -
Commitments to Purchase
and Sell Foreign Exchange 51,673 854 744 845 705
Securities 8,059 141 8,790 151
------- ------ ------- ------
Total Trading Account $10,157 $2,463 $10,923 $2,506
======= ====== ======= ======
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The Company manages trading risk through a system of position limits, a value at risk (VAR) methodology, based on a Monte Carlo simulation, stop loss advisory triggers, and other market sensitivity measures. Risk is monitored and reported to senior management by an independent unit on a daily basis. The VAR methodology captures, based on certain assumptions, the potential overnight pre-tax dollar loss from adverse changes in fair values of all trading positions. The calculation assumes a one day holding period for most instruments, utilizes a 99% confidence level, and incorporates the non-linear characteristics of options. As the VAR methodology does not evaluate risk attributable to extraordinary financial, economic or other occurrences, the risk assessment process includes a number of stress scenarios based upon the risk factors in the portfolio and management's assessment of market conditions. Additional stress scenarios based upon historic market events are also tested.
The following table indicates the calculated VAR amounts for the trading portfolio for the periods indicated. During these periods, the daily trading loss did not exceed the calculated VAR amounts on any given day.
(In millions) 3rd Quarter 2000 Year-to-date 2000
------------------------- -----------------------------------
Market Risk Average Minimum Maximum Average Minimum Maximum 09/30/00
----------- ------- ------- ------- ------- ------- ------- --------
Interest Rate $ 4.1 $ 2.9 $ 5.6 $ 4.5 $ 2.7 $ 6.6 $ 3.7
Foreign Exchange 1.5 0.9 2.7 1.7 0.9 3.8 1.5
Overall Portfolio 5.6 4.3 7.1 6.2 4.3 8.8 5.2
|
(In millions) 3rd Quarter 1999 Year-to-date 1999
------------------------- -----------------------------------
Market Risk Average Minimum Maximum Average Minimum Maximum 09/30/99
----------- ------- ------- ------- ------- ------- ------- --------
Interest Rate $ 3.9 $ 2.3 $ 6.2 $ 4.5 $ 2.1 $10.9 $ 4.7
Foreign Exchange 1.5 0.8 3.0 1.5 0.7 4.0 1.2
Overall Portfolio 5.4 3.6 8.7 6.0 3.6 12.1 5.9
|
NONINTEREST EXPENSE AND INCOME TAXES
Noninterest expense for the third quarter of 2000 was $635 million, compared with $515 million in 1999. The increase was principally due to acquisitions, technology investment, and new business wins.
The efficiency ratio for the third quarter of 2000 improved to 50.4% compared with 51.9% in the second quarter of 2000, partially reflecting the increase in other income. For the first nine months of 2000, the efficiency ratio was 51.4% compared with 50.3% last year. The increase is primarily attributable to the acquisition of RBSTB in the fourth quarter of 1999. The computation of the efficiency ratio in 1999 excludes the gain on the sale of BNYFC and the liquidity charge.
The effective tax rates for the third quarter and the first nine months of 2000 were 35.1% and 35.0% compared with 40.4% and 37.9% last year. The 1999 rates reflect the sale of BNYFC.
NONPERFORMING ASSETS
Change
9/30/00 vs.
(Dollars in millions) 9/30/00 6/30/00 6/30/00
-------- -------- --------
Loans:
Other Commercial $ 69 $ 45 $ 24
Foreign 49 54 (5)
Regional Commercial 28 33 (5)
Available for Sale 17 23 (6)
----- ----- -----
Total Loans 163 155 8
Other Real Estate 5 7 (2)
----- ----- -----
Total $ 168 $ 162 $ 6
===== ===== =====
Nonperforming Assets Ratio 0.4% 0.4%
Allowance/Nonperforming Loans 379.6 393.4
Allowance/Nonperforming Assets 367.5 376.4
|
Nonperforming assets totaled $168 million at September 30, 2000, compared with $162 million at June 30, 2000. The increase in nonperforming other commercial loans partially reflects a loan to an insurance company. At September 30, 2000, remaining credit exposures of loans available for sale totaled $152 million with outstandings of $81 million compared with $246 million and $144 million, respectively at June 30, 2000.
In October 2000, a customer of the Company sought protection from asbestos claims through a bankruptcy filing. The Company has a $59 million credit exposure to this customer. Accordingly, the Company expects nonperforming loans to rise in the fourth quarter of 2000 compared with the third quarter of 2000.
At September 30, 2000, impaired loans (nonaccrual loans over $1 million) aggregated $122 million, of which $98 million exceeded their fair value by $36 million. Impaired loans at September 30, 1999, totaled $83 million, of which $57 million exceeded their fair value by $16 million. For the third quarters of 2000 and 1999, the average amounts of impaired loans were $116 million and $128 million. Interest income (cash received) of $1 million was received on the impaired loans in the third quarter of 2000, while $62 thousand was received during the third quarter of 1999.
CREDIT LOSS PROVISION AND NET CHARGE-OFFS
3rd 2nd 3rd
Quarter Quarter Quarter Year-to-date
------- ------- ------- -------------
(In millions) 2000 2000 1999 2000 1999
---- ---- ---- ---- ----
Provision $ 25 $ 25 $ 90 $ 70 $120
==== ==== ==== ==== ====
Net(Charge-offs)Recoveries:
Commercial Real Estate - - (1) - (2)
Other Commercial (14) (12) (61) (39) (82)
Consumer (1) (1) (1) (3) (3)
Foreign (3) - (23) (3) (34)
Other - (2) (3) (3) (2)
----- ----- ----- ----- ------
Total $(18) $(15) $(89) $(48) $(123)
===== ===== ===== ===== ======
Other Real Estate Expenses $ 1 $ 1 $ - $ 3 $ 1
|
The allowance for credit losses increased to $617 million, or 1.65% of loans at September 30, 2000, compared with $610 million, or 1.60% of loans at June 30, 2000, and $594 million, or 1.57% of loans at September 30, 1999. The ratio of the allowance to nonperforming assets was 367.5% at September 30, 2000, compared with 376.4% at June 30, 2000, and 384.2% at September 30, 1999.
Based on an evaluation of individual credits, historical credit losses, and global economic factors, the Company has allocated its allowance for credit losses as follows:
9/30/00 6/30/00 12/31/99
------- -------- --------
Real Estate 3% 3% 4%
Domestic 82 77 78
Foreign 12 11 12
Unallocated 3 9 6
--- --- ---
100% 100% 100%
|
Such an allocation is inherently judgmental, and the entire allowance for credit losses is available to absorb credit losses regardless of the nature of the loss.
SEGMENT PROFITABILITY
Segment Data
The Company has an internal information system that produces performance data for its four business segments along product and service lines.
The Servicing and Fiduciary businesses segment provides a broad array of fee based services. This segment includes the Company's securities servicing, global payment services, and private client services and asset management businesses. Securities servicing includes global custody, securities clearance, mutual funds, unit investment trust, securities lending, American Depositary Receipts, corporate trust, stock transfer and execution services. Global payment services products primarily relate to funds transfer, cash management and trade finance. Private client services and asset management provide traditional banking and trust services to affluent clients and asset management to institutional and private clients.
The Corporate Banking segment focuses on providing lending services, such as term loans, lines of credit, asset based financings, and commercial mortgages, to large public and private corporations nationwide, as well as public and private mid-size businesses in the New York metropolitan area. Special industry groups focus on financial institutions, securities, insurance, media and telecommunications, energy, real estate, retailing, automotive, and government banking institutions. Through BNY Capital Markets, the Company provides syndicated loans, bond underwriting, private placements of corporate debt and equity securities, and merger, acquisition, and advisory services.
The Retail Banking segment includes consumer lending, residential mortgage lending, and retail deposit services. The Company operates 351 branches in 22 counties in three states.
The Financial Markets segment includes trading of foreign exchange and interest rate products, investing and leasing activities, and treasury services to other segments. This segment offers a comprehensive array of multi-currency hedging and yield enhancement strategies. Offices in New York, London, Brussels, Tokyo, Frankfurt, Hong Kong, Seoul and Taipei provide clients a 24-hour trading capability.
The segments contributed to the Company's profitability as follows:
In Millions Servicing
and
For the Quarter Ended Fiduciary Corporate Retail Financial Reconciling Consolidated
September 30, 2000 Businesses Banking Banking Markets Items Total
--------------------- ---------- --------- ------- --------- ----------- ------------
Net Interest Income $ 177 $ 137 $ 128 $ 31 $ 6 $ 479
Provision for
Credit Losses - 30 2 (1) (6) 25
Noninterest Income 621 66 26 52 20 785
Noninterest Expense 414 54 79 16 72 635
----- ----- ----- ---- ----- -----
Income Before Taxes $ 384 $ 119 $ 73 $ 68 $ (40) $ 604
===== ===== ===== ==== ===== =====
Average Assets $17,749 $28,687 $4,529 $23,868 $1,682 $76,515
======= ======= ====== ======= ====== =======
|
In Millions Servicing
and
For the Quarter Ended Fiduciary Corporate Retail Financial Reconciling Consolidated
September 30, 1999 Businesses Banking Banking Markets Items Total
--------------------- ---------- --------- ------- --------- ----------- ------------
Net Interest Income $ 115 $ 140 $ 127 $ 33 $ 2 $ 417
Provision for
Credit Losses - 22 1 - 67 90
Noninterest Income 474 70 23 56 908 1,531
Noninterest Expense 294 57 78 23 63 515
----- ----- ----- ---- ------ -------
Income Before Taxes $ 295 $ 131 $ 71 $ 66 $ 780 $ 1,343
===== ===== ===== ==== ====== =======
Average Assets $6,141 $29,215 $4,617 $22,862 $1,228 $64,063
====== ======= ====== ======= ====== =======
|
In Millions Servicing
For the Nine and
Months Ended Fiduciary Corporate Retail Financial Reconciling Consolidated
September 30, 2000 Businesses Banking Banking Markets Items Total
--------------------- ---------- --------- ------- --------- ----------- ------------
Net Interest Income $ 493 $ 428 $ 381 $ 85 $ 2 $1,389
Provision for
Credit Losses - 96 4 (1) (29) 70
Noninterest Income 1,804 228 74 174 22 2,302
Noninterest Expense 1,199 159 231 50 226 1,865
------ ----- ----- ----- ----- ------
Income Before Taxes $1,098 $ 401 $ 220 $ 210 $(173) $1,756
====== ===== ===== ===== ===== ======
Average Assets $17,306 $30,473 $4,422 $23,455 $1,674 $77,330
======= ======= ====== ======= ====== =======
|
In Millions Servicing
For the Nine and
Months Ended Fiduciary Corporate Retail Financial Reconciling Consolidated
September 30, 1999 Businesses Banking Banking Markets Items Total
--------------------- ---------- --------- ------- --------- ----------- ------------
Net Interest Income $ 313 $ 474 $ 359 $ 109 $ 5 $ 1,260
Provision for
Credit Losses - 83 3 (2) 36 120
Noninterest Income 1,386 248 67 165 941 2,807
Noninterest Expense 860 201 225 58 193 1,537
----- ----- ----- ----- ----- -------
Income Before Taxes $ 839 $ 438 $ 198 $ 218 $ 717 $ 2,410
===== ===== ===== ===== ===== =======
Average Assets $6,283 $31,784 $4,371 $21,630 $1,462 $65,530
====== ======= ====== ======= ====== =======
|
Segment Highlights
In the third quarter of 2000, noninterest income was $621 million compared with $474 million in 1999.
Fees from the Company's securities servicing businesses reached a record $427 million for the third quarter compared with $311 million last year. For the first nine months of 2000, fees from the Company's securities servicing businesses totaled a record $1,202 million, growing 33% compared with $904 million in 1999. Fee revenue was strong across all product lines with particular strength in global custody, depositary receipts, unit investment trust, and mutual funds as well as global execution and clearing services. Fee revenue also benefited from the acquisition of the RBSTB in the fourth quarter of 1999. The Company continues to be the world's leading custodian with assets of $6.9 trillion including $2 trillion of cross-border custody assets. DR trading activity reached $1 trillion for the first time during the first nine months of 2000. Cross-border mergers and acquisitions as well as U.S. investor interest in global telecommunication, media, and technology industries continued to be the major drivers of trading volume. Execution and clearing services continue to benefit from increased activity and a steady flow of new business. In addition, the acquisition of GENA, BHF, and SG Cowen have contributed to the success of these businesses.
Private client services and asset management fees were $77 million for the quarter, up 26% over last year, led by continued superior investment performance by BNY Asset Management resulting in further new business, as well as by the acquisition of Estabrook Capital Management, Inc. Assets under management were $64 billion while assets under administration were $33 billion at September 30, 2000.
Total revenues from global payment services, excluding trade finance, were up 10% in the first nine months of 2000. This growth was primarily due to strong increases in funds transfer with domestic financial service companies as well as increased cash management revenue associated with broad market acceptance of CA$H-Register PlusSM, the Company's new internet delivery system
for cash management services. Trade finance revenues were down from a year ago primarily due to the sale of BNYFC and reduced pricing, driven by the improved risk profiles of select Asian and Latin American markets.
Net interest income in the Servicing and Fiduciary businesses segment was $177 million for the third quarter of 2000 compared with $115 million in 1999. The increase in net interest income is partially attributable to the acquisition of RBSTB.
Net charge-offs in the Servicing and Fiduciary Businesses segment were zero in the third quarters of 2000 and 1999. Noninterest expense for the third quarter of 2000 was $414 million compared with $294 million in 1999. The increase was principally due to acquisitions and technology investment.
The Corporate Banking segment's net interest income was $137 million in the third quarter of 2000, down from last year's $140 million. The decline is partially attributable to the sale of BNYFC.
The third quarter of 2000 provision for credit losses was $30 million compared with $22 million last year. Net charge-offs in the Corporate Banking segment were $17 million and $88 million in the third quarters of 2000 and 1999. Noninterest income was $66 million in the current year compared with $70 million last year. The decline is attributable to the sale of BNYFC. Noninterest expense declined to $54 million from $57 million reflecting the sale of BNYFC.
In the Retail Banking segment, net interest income in the third quarter of 2000 was $128 million compared with $127 million in 1999. Noninterest income increased in this same period to $26 million from $23 million. Noninterest expense in the third quarter of 2000 was $79 million compared with $78 million in the previous year's period. Net charge-offs were $2 million in the third quarter of 2000 and $1 million in the third quarter of 1999.
In the Financial Markets segment, net interest income for the quarter was $31 million compared with 1999's $33 million. Noninterest income was $52 million in the third quarter of 2000 compared with $56 million in the third quarter of 1999. There was a recovery of $1 million in the third quarter of 2000 and net charge-offs were zero in the third quarter of 1999.
The Company's segment data has been determined on an internal management basis of accounting, which is different from the generally accepted accounting principles used for consolidated financial reporting. These measurement principles ensure that reported results of the segments track their economic performance. Segment results are subject to restatement whenever improvements are made in the measurement principles or organizational changes are made. In the third quarter of 2000, the Company changed certain assumptions related to the duration of sector assets and liabilities and the related interest rates. As a result, sector results for 1999 have been restated.
The measure of revenues and profit or loss by operating segment has been adjusted to present segment data on a taxable equivalent basis. The provision for credit losses allocated to each reportable segment is based on management's judgment as to average credit losses that will be incurred in the operations of the segment over a credit cycle of a period of years. Management's judgment includes the following factors among others: historical charge-off experience and the volume, composition and growth of the loan portfolio. This method is different from that required under generally
accepted accounting principles as it anticipates future losses which are not yet probable and therefore not recognizable under generally accepted accounting principles. Assets and liabilities are match funded. Support and other indirect expenses are allocated to segments based on general guidelines.
Reconciling items for net interest income primarily relate to the recording of interest income on a taxable equivalent basis, reallocation of capital and the funding of goodwill. Reconciling items for noninterest expense include $29 million and $23 million of amortization of intangibles in the third quarters of 2000 and 1999 and $85 million and $76 million of amortization of intangibles for the nine months ended September 30, 2000 and 1999, Year 2000 expenses, and corporate overhead. The year-to date and third quarter of 1999 reconciling items for noninterest income include the gain on the sale of BNYFC and the liquidity charge on loans available for sale. The adjustment to the provision for credit losses reflects the difference between the aggregate of the credit provision over a credit cycle for the reportable segments and the Company's recorded provision. The reconciling items for average assets consist of goodwill and other intangible assets.
Normalized Net Income
1999 normalized earnings reflect net income adjusted for the results of BNYFC, the $1,020 million gain on the sale of BNYFC, the related investment of proceeds, and repurchase of 25 million shares of Company common stock on a pro forma basis as of December 31, 1998; the $124 million liquidity charge related to the sale of loans; a provision adjustment of $75 million; and related tax effects. These adjustments are shown in the table below:
Third Quarter Year-to-date
(In millions, except per share amounts) 1999 September 30, 1999
------------- ------------------
Net Income $ 773 $1,411
Adjustments:
Pre-tax Gain on Sale of BNYFC (1,020) (1,020)
BNYFC Income Before Tax (10) (100)
Liquidity Charge - Loans Available
For Sale 124 124
Provision Normalization 75 75
Interest on Proceeds 2 33
Tax Effects 369 393
------ ------
Normalized Net Income $ 313 $ 916
====== ======
Fully Diluted Shares 754 769
Share Adjustment (6) (18)
---- ----
Adjusted Shares 748 751
==== ====
Normalized Diluted Earnings Per Share $ 0.42 $ 1.22
|
FORWARD LOOKING STATEMENTS
The information presented with respect to, among other things, revenue and earnings growth, legal proceedings, the Company's plans and objectives regarding fee based business, nonperforming loans, and future loan losses, is forward looking information. Forward looking statements are the Company's current estimates or expectations of future events or future results. As such, forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projected results discussed in this Report. These include lower than expected performance or higher than expected costs in connection with acquisitions and integration of acquired businesses, variations in management projections or market forecasts and the actions that management could take in response to these changes, and other factors described in the following paragraph.
The Company or its executive officers and directors on behalf of the Company, may from time to time make forward looking statements. When used in this report, any press release or oral statements, the words "estimate", "project", "anticipate", "expect", "intend", "believe", "plan", "goal", and words of like import are intended to identify forward looking statements in addition to statements specifically identified as forward looking statements. These statements, projections or future plans, could be affected by a number of domestic and international factors that the Company is necessarily unable to predict with accuracy, including future changes in interest rates, general credit quality, the level of capital market activity, economic activity, consumer behavior, government monetary policy, legislation, legal proceeding and regulation, competition, credit, market and operating risk, and loan demand. In addition, the Company's future results of operations, discussions of future plans and other forward looking statements contained in Management's Discussion and Analysis and elsewhere in this Form 10-Q involve a number of risks and uncertainties. As a result of variations in such factors, actual results may differ materially from any forward looking statements.
Forward looking statements speak only as of the date they are made. The Company will not update forward looking statements to reflect factual assumptions, circumstances or events which have changed after a forward looking statement was made.
Government Monetary Policies
The Federal Reserve Board has the primary responsibility for monetary policy; accordingly, its actions have an important influence on the demand for credit and investments and the level of interest rates, as well as market conditions, and thus on the earnings of the Company.
Competition
The businesses in which the Company operates are very competitive. Competition is provided by both unregulated and regulated financial services organizations, whose products and services span the local, national, and global markets in which the Company conducts operations.
A wide variety of domestic and foreign companies (both banks and non- banks) compete for processing services. Commercial banks, savings banks, savings and loan associations, and credit unions actively compete for deposits, and money market funds and brokerage houses offer deposit-like services. These institutions, as well as consumer and commercial finance companies, factors, insurance companies and pension trusts, are important competitors for various types of loans. Issuers of commercial paper compete actively for funds and reduce demand for bank loans. For personal and corporate trust services and investment counseling services, insurance companies, investment counseling firms, and other business firms and individuals offer active competition.
THE BANK OF NEW YORK COMPANY, INC.
Average Balances and Rates on a Taxable Equivalent Basis
(Dollars in millions)
For the three months For the three months
ended September 30, 2000 ended September 30, 1999
------------------------------ ------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
ASSETS
------
Interest-Bearing
Deposits in Banks
(primarily foreign) $ 4,941 $ 67 5.36% $ 5,641 $ 62 4.35%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 4,863 80 6.55 4,051 49 4.76
Loans
Domestic Offices 18,862 355 7.49 19,224 349 7.20
Foreign Offices 19,676 377 7.62 18,522 294 6.30
------- ----- ------- -----
Total Loans 38,538 732 7.56 37,746 643 6.76
------- ----- ------- -----
Securities
U.S. Government Obligations 1,604 24 5.90 2,452 36 5.85
U.S. Government Agency Obligations 1,614 28 6.92 840 14 6.56
Obligations of States and
Political Subdivisions 629 13 8.12 570 11 7.87
Other Securities, including
Trading Securities 11,779 176 5.99 2,537 31 4.93
------- ----- ------- -----
Total Securities 15,626 241 6.16 6,399 92 5.76
------- ----- ------- -----
Total Interest-Earning Assets 63,968 1,120 6.97% 53,837 846 6.24%
----- -----
Allowance for Credit Losses (609) (593)
Cash and Due from Banks 3,003 3,240
Other Assets 10,153 7,579
------- -------
TOTAL ASSETS $76,515 $64,063
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
Money Market Rate Accounts $ 5,879 73 4.96% $ 4,891 54 4.37%
Savings 7,566 52 2.73 7,763 45 2.32
Certificates of Deposit
$100,000 & Over 442 7 6.01 430 5 5.03
Other Time Deposits 1,877 25 5.23 2,208 24 4.27
Foreign Offices 26,411 344 5.20 18,664 192 4.07
------- ----- ------- -----
Total Interest-Bearing Deposits 42,175 501 4.73 33,956 320 3.74
Federal Funds Purchased and
Securities Sold Under Repurchase
Agreements 2,517 38 6.06 2,827 32 4.50
Other Borrowed Funds 2,154 37 6.91 2,012 27 5.34
Long-Term Debt 2,872 52 7.13 2,313 38 6.59
------- ----- ------- -----
Total Interest-Bearing Liabilities $49,718 628 5.04% 41,108 417 4.03%
----- -----
Noninterest-Bearing Deposits 11,232 10,580
Other Liabilities 8,448 5,870
Minority Interest-Preferred Securities 1,500 1,500
Preferred Stock 1 1
Common Shareholders' Equity 5,616 5,004
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $76,515 $64,063
======= =======
Net Interest Earnings
and Interest Rate Spread $ 492 1.93% $ 429 2.21%
===== ==== ===== ====
Net Yield on Interest-Earning Assets 3.05% 3.16%
==== ====
|
THE BANK OF NEW YORK COMPANY, INC.
Average Balances and Rates on a Taxable Equivalent Basis
(Dollars in millions)
For the nine months For the nine months
ended September 30, 2000 ended September 30, 1999
------------------------------ ------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
ASSETS
------
Interest-Bearing
Deposits in Banks
(primarily foreign) $ 5,499 $ 203 4.94% $ 5,321 $ 180 4.52%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 4,310 198 6.15 4,169 147 4.73
Loans
Domestic Offices 19,477 1,075 7.37 19,913 1,073 7.21
Foreign Offices 20,039 1,109 7.39 19,109 890 6.23
------- ----- ------- -----
Total Loans 39,516 2,184 7.38 39,022 1,963 6.73
------- ----- ------- -----
Securities
U.S. Government Obligations 2,165 97 6.01 2,518 109 5.79
U.S. Government Agency Obligations 1,192 61 6.82 857 41 6.43
Obligations of States and
Political Subdivisions 612 37 8.04 592 35 7.82
Other Securities, including
Trading Securities 11,382 507 5.94 2,538 87 4.56
------- ----- ------- -----
Total Securities 15,351 702 6.11 6,505 272 5.59
------- ----- ------- -----
Total Interest-Earning Assets 64,676 3,287 6.79% 55,017 2,562 6.23%
----- -----
Allowance for Credit Losses (606) (619)
Cash and Due from Banks 3,239 3,130
Other Assets 10,021 8,002
------- -------
TOTAL ASSETS $77,330 $65,530
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
Money Market Rate Accounts $ 5,733 210 4.89% $ 5,086 160 4.20%
Savings 7,630 146 2.56 7,793 131 2.24
Certificates of Deposit
$100,000 & Over 443 19 5.59 559 20 4.89
Other Time Deposits 2,023 76 5.00 2,195 71 4.31
Foreign Offices 27,755 1,043 5.02 18,971 579 4.08
------- ----- ------- -----
Total Interest-Bearing Deposits 43,584 1,494 4.58 34,604 961 3.71
Federal Funds Purchased and
Securities Sold Under Repurchase
Agreements 2,569 107 5.57 3,061 99 4.32
Other Borrowed Funds 2,197 108 6.54 2,591 102 5.31
Long-Term Debt 2,839 149 6.97 2,225 108 6.45
------- ----- ------- -----
Total Interest-Bearing Liabilities $51,189 1,858 4.85% 42,481 1,270 4.00%
----- -----
Noninterest-Bearing Deposits 11,249 10,548
Other Liabilities 8,073 5,866
Minority Interest-Preferred Securities 1,500 1,482
Preferred Stock 1 1
Common Shareholders' Equity 5,318 5,152
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $77,330 $65,530
======= =======
Net Interest Earnings
and Interest Rate Spread $1,429 1.94% $1,292 2.23%
====== ==== ====== ====
Net Yield on Interest-Earning Assets 2.95% 3.14%
==== ====
|
PART II. OTHER INFORMATION
The Company continues to cooperate with investigations, which have been ongoing for almost two years, by federal and state law enforcement and bank regulatory authorities. The investigations focus on funds transfer activities in certain accounts at The Bank of New York ("BNY"), principally involving wire transfers from Russian and other sources in Eastern Europe, as well as certain other matters involving BNY and its affiliates. The funds transfer investigations center around accounts controlled by Peter Berlin, his wife, Lucy Edwards (until discharged in September 1999, an officer of BNY), and companies and persons associated with them. Berlin and Edwards plead guilty to various federal criminal charges. The Company cannot predict when or on what basis the investigations will conclude or their effect, if any, on the Company.
On February 8, 2000, BNY entered into a written agreement with both the Federal Reserve Bank of New York and the New York State Banking Department, which imposed a number of reporting requirements and controls. Substantially all of these reporting requirements and controls are now in place.
Four purported shareholder derivative actions have been filed in connection with these Russian related matters - - two in the United States District Court for the Southern District of New York and two in the New York Supreme Court, New York County - - against certain directors and officers of the Company and BNY alleging that the defendants have breached their fiduciary duties of due care and loyalty by aggressively pursuing business with Russian banks and entities without implementing sufficient safeguards and failing to supervise properly those responsible for that business. The actions seek, on behalf of the Company and BNY, monetary damages from the defendants, corrective action and attorneys' fees. On September 1, 2000, plaintiffs in the two federal actions filed an amended, consolidated complaint that names all of the directors and certain officers of BNY and the Company as defendants, repeats the allegations of the original complaints and adds allegations that certain officers of BNY and the Company participated in a scheme to transfer cash improperly from Russia to various off-shore accounts and to avoid Russian customs, currency and tax laws. The Company and BNY believe that the allegations of both the original and the amended complaint are without merit. Defendants have moved to dismiss both actions in New York Supreme Court and the consolidated action in federal court on the ground that plaintiff failed to make a proper demand on the boards of directors. These motions are pending. On September 12, 2000, the boards of directors of BNY and the Company authorized a Special Litigation Committee to consider the response of BNY and the Company to the state and federal court shareholder derivative actions.
Additionally, on October 7, 1999, six alleged depositors of Joint Stock Bank Inkombank ("Inkombank"), a Russian bank, filed a purported class action in the United States District Court for the Southern District of New York on behalf of all depositors of Inkombank who lost their deposits when that bank collapsed in 1998. The complaint, as subsequently amended twice, alleges that the Company and BNY and their senior officers knew about, and aided and abetted the looting of Inkombank by its principals and participated in a scheme to transfer cash improperly from Russia to various off-shore accounts and to avoid Russian customs, currency and tax laws. The amended complaint asserts causes of action for conversion and aiding and abetting conversion under New York law. In addition, the amended complaint states a claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). It seeks an unspecified amount of damages believed to exceed $500 million, along with punitive damages of $500 million, interest, costs, attorneys' fees, expert fees, and other expenses. The amended complaint seeks a trebling of any RICO damages. The Company and BNY moved to dismiss the amended complaint. The Company and BNY believe that the allegations of the amended complaint are without merit and intend to defend the actions vigorously.
On October 24, 2000, three alleged shareholders of Inkombank filed an action in the Supreme Court, New York County against the Company, BNY and Inkombank. The complaint alleges that the defendants fraudulently induced the plaintiffs to refrain from redeeming their alleged $40 million investment in Inkombank. The complaint asserts a single case of action for fraud, seeking $40 million plus 12% interest from January 1994, punitive damages, costs, interest and attorney fees. The Company and BNY believe that the allegations of the complaint are without merit and intend to defend the action vigorously.
The Company does not expect that any of the foregoing civil actions will have a material impact on the Company's consolidated financial statements.
In the ordinary course of business, there are various legal claims pending against the Company and its subsidiaries. In the opinion of management, liabilities arising from such claims, if any, would not have a material effect on the Company's consolidated financial statements.
In March 2000, the Federal Reserve Board published for public comment a proposal to amend its regulatory capital guidelines to increase the amount of consolidated regulatory capital required to be held by bank holding companies with respect to certain equity and debt investments made by bank holding companies, or their subsidiaries, in nonfinancial companies. The financial impact of the proposal upon the Company cannot be determined until a final rule is published. However, based upon the Company's estimate of the impact of applying the proposed rule to the Company's current investments covered by the proposed rule, management anticipates that the Company's regulatory capital ratios will remain in excess of the ratios required in order to be considered "well capitalized".
(a) The exhibits filed as part of this report are as follows:
Exhibit 10(a) - Amendment to The Bank of New York Company, Inc. 1993 Long-Term Incentive Plan
Exhibit 10(b) - Amendment to The Bank of New York Company, Inc. 1999 Long-Term Incentive Plan
Exhibit 10(c) - Amendment to The Bank of New York Company, Inc. Retirement Plan for Non-Employee Directors
Exhibit 10(d) - Amendment to Deferred Compensation Plan for Non-Employee Directors Of The Bank of New York Company, Inc.
Exhibit 10(e) - Amendment to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan
Exhibit 10(f) - Amendment Number Twelve To Grantor Trust Agreement
Exhibit 10(g) - Tier I Employee Severance Agreement dated July 11,2000
Exhibit 10(h) - Tier I Employee Severance Agreement dated July 11, 2000
Exhibit 10(i) - Tier I Employee Severance Agreement dated July 11, 2000
Exhibit 10(j) - Tier I Employee Severance Agreement dated July 11, 2000
Exhibit 10(k) - Tier I Employee Severance Agreement dated July 11, 2000
Exhibit 12 - Statement Re: Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Distributions on Preferred Trust Securities for the Three Months and Nine Months Ended September 30, 2000 and 1999.
Exhibit 27 - Statement Re: Financial Data Schedule containing selected financial data at September 30, 2000.
(b) The Company filed the following reports on Form 8-K since June 30, 2000:
On July 17, 2000, the Company filed a Form 8-K Current Report (Items 5 and 7), which report included unaudited interim financial information and accompanying discussion for the second quarter of 2000 contained in the Company's press release dated July 17, 2000.
On October 16, 2000, the Company filed a Form 8-K Current Report (Items 5 and 7), which report included unaudited interim financial information and accompanying discussion for the third quarter of 2000 contained in the Company's press release dated October 16, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 14, 2000 By: \s\ Thomas J. Mastro
---------------------------------
Name: Thomas J. Mastro
Title: Comptroller
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Exhibit Description
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10(a) Amendment to The Bank of New York Company, Inc.
1993 Long-Term Incentive Plan
10(b) Amendment to The Bank of New York Company, Inc.
1999 Long-Term Incentive Plan
10(c) Amendment to The Bank of New York Company, Inc.
Retirement Plan for Non-Employee Directors
10(d) Amendment to Deferred Compensation Plan for Non-Employee
Directors Of The Bank of New York Company, Inc.
10(e) Amendment to The Bank of New York Company, Inc.
Supplemental Executive Retirement Plan
10(f) Amendment Number Twelve To Grantor Trust Agreement
10(g) Tier I Employee Severance Agreement dated July 11, 2000
10(h) Tier I Employee Severance Agreement dated July 11, 2000
10(i) Tier I Employee Severance Agreement dated July 11, 2000
10(j) Tier I Employee Severance Agreement dated July 11, 2000
10(k) Tier I Employee Severance Agreement dated July 11, 2000
12 Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Combined Fixed Charges and Distributions on Preferred
Trust Securities for the Three and Nine Months Ended
September 30, 2000 and 1999.
27 Financial Data Schedule containing selected financial
data at September 30, 2000 and for the Nine Months Ended
September 30, 2000
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EXHIBIT 10(a)
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
1993 LONG-TERM INCENTIVE PLAN
WHEREAS, the 1993 Long-Term Incentive Plan of The Bank of New York Company, Inc.(the "Plan") was adopted by the Board of Directors of The Bank of New York Company, Inc., effective as of January 1, 1993; and
WHEREAS, Section 18 of the Plan provides that the Board of Directors may amend the Plan at any time, except in certain respects not material hereto; and
WHEREAS, the Board of Directors desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of July 11, 2000, by amending Section 13 thereof in its entirety to read as follows:
13. CHANGE IN CONTROL. In the event of a Change in Control, as hereinafter defined, (i) the restrictions applicable to all shares of restricted stock and restricted share units shall lapse and such shares and share units shall be deemed fully vested, (ii) all restricted stock granted in the form of share units shall be paid in cash, (iii) 200% of all performance shares granted in the form of shares of Stock or share units shall be deemed to be earned in full and fully vested, (iv) 200% of all performance shares granted in the form of share units shall be paid in cash, and (v) each Participant who holds a stock option that is not exercisable in full shall be entitled to receive a cash payment as provided below with respect to the portion of the stock option which is not then exercisable. The amount of any cash payment in respect of a restricted share unit or performance share unit shall be equal to: (A) in the event the Change in Control is the result of a tender offer or exchange offer for Common Stock, the higher of the final offer price per share paid for the Common Stock or the highest Fair Market Value of the Common Stock during the 90-day period ending on the date of the Change in Control or (B) in the event the Change in Control is the result of any other occurrence, the highest Fair Market Value of the Common Stock during the 90- day period ending on the date of the Change in Control. The amount to be paid in respect of the portion of any stock option which is not exercisable shall be equal to the result of multiplying the number of shares of Common Stock covered by such portion of the stock option by the difference between (x) the per share value of Common Stock determined pursuant to the preceding sentence, or such lower price as the Committee may determine with respect to any incentive stock option to preserve its incentive stock option status, and (y)
the per share exercise price of such stock option. Notwithstanding the
foregoing, if a Change in Control occurs under clause (C) of the definition
thereof, the transaction described in clause (C) is conditioned on qualifying
for "pooling of interests" accounting treatment or similar accounting
treatment and the arrangements described in clause (iii) or (iv) would prevent
such qualification under applicable accounting standards, then (a) all
performance shares granted in the form of shares of stock or share units shall
be converted to restricted stock of the Surviving Corporation or, if
applicable, the Parent Corporation and shall be deemed fully vested at the end
of the applicable performance period; and (b) all outstanding restricted stock
and stock options shall be converted to restricted stock or stock options, as
applicable, of the Surviving Corporation or the Parent Corporation with the
vesting provisions of the original awards thereof, provided that, (x) if the
Participant has entered into a change in control severance agreement with the
Company (a "CIC Severance Agreement") and within 24 months after the Change in
Control the employment of such Participant is terminated by the Company or a
subsidiary without "Cause" (as defined in the CIC Severance Agreement) or by
the Participant for "Good Reason" (as defined in the CIC Severance Agreement),
all restricted shares and stock options shall be deemed fully vested on the
date of the Participant's termination of employment and (y) if the Participant
has not entered into a CIC Severance Agreement, all restricted shares and
stock options shall be deemed fully vested if within 24 months after the
Change in Control the Participant's employment is terminated without "cause"
or for "good reason," as such terms are defined in the applicable Award
Agreement or, if not defined therein, as defined below, and (ii) if a Change
in Control occurs under clause (D) of the definition thereof, 100% of all
performance shares granted in the form of shares of Stock or share units shall
be deemed to be earned in full and 100% of all performance shares granted in
the form of share units shall be paid in cash. The Committee may, in its
discretion, include such further provisions and limitations in any agreement
documenting such Awards as it may deem equitable and in the best interests of
the Company. If such terms are not otherwise defined in a Participant's Award
Agreement, "cause" shall mean the Participant's having (a) breached any
fiduciary duties to the Company or any of its subsidiaries, (b) failed in a
willful and continued manner to substantially perform his or her duties and
responsibilities after a demand for substantial performance is delivered to
the Participant by a direct supervisor or any more senior executive, which
specifically identifies the manner in which the direct supervisor or executive
believes that the Participant has not substantially performed his duties, (c)
been convicted of, or have entered a plea of guilty or nolo contendere to, a
felony or a lesser crime or offense (other than a minor traffic offense), or
(d) violated the Company's Code of Conduct (or successor rules governing the
conduct of the Company's employees) making the Participant subject to
dismissal pursuant to the standards set forth therein and "good reason" shall
mean a reduction of the Participant's base salary, the imposition of a
requirement that the Participant's business be conducted from a location
greater than 35 miles away from the location in which the Participant's
business was conducted immediately prior to the Change in Control, or if the
Company's Chief Executive Officer immediately prior to such Change in Control is not then serving as Chief Executive Officer of the Surviving Corporation and the Parent Corporation (if applicable), a reduction in the sum of the Participant's base annual salary and discretionary bonus compensation for any fiscal year of the Company from the amount thereof for the Company's prior fiscal year.
A "Change in Control" shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a Change in Control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a Change in Control under this Section 11 and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B) during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence)whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the
issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
Notwithstanding anything contained herein to the contrary, if a Change in Control occurs under clause (C) of the definition thereof, no amendment to the provisions of this Section which is adopted in connection with or as a consequence of the Change in Control shall be effective if it adversely affects a Participant unless the Company's Chief Executive Officer immediately prior to such Change in Control serves as Chief Executive Officer for 2 years thereafter of the Surviving Corporation and, if applicable, of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation.
IN WITNESS WHEREOF, The Bank of New York Company, Inc. has caused this Amendment to be executed by its duly authorized officers this 11th day of July, 2000.
ATTEST: \s\ Gerald L. Hassell
-----------------------
\s\ Patricia A. Bicket
-----------------------
Assistant Secretary
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EXHIBIT 10(b)
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
1999 LONG-TERM INCENTIVE PLAN
WHEREAS, the 1999 Long-Term Incentive Plan of The Bank of New York Company, Inc.(the "Plan") was adopted by the Board of Directors of The Bank of New York Company, Inc., effective as of January 1, 1999; and
WHEREAS, Section 16 of the Plan provides that the Board of Directors may amend the Plan at any time, except in certain respects not material hereto; and
WHEREAS, the Board of Directors desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective as of July 11, 2000, by amending Section 11 thereof in its entirety to read as follows:
11. CHANGE IN CONTROL. In the event of a Change in Control, as hereinafter defined, (i) the restrictions applicable to all shares of restricted stock and restricted share units shall lapse and such shares and share units shall be deemed fully vested, (ii) all restricted stock granted in the form of share units shall be paid in cash, (iii) 200% of all performance shares granted in the form of shares of Stock or share units shall be deemed to be earned in full and fully vested, (iv) 200% of all performance shares granted in the form of share units shall be paid in cash, and (v) each Participant who holds a stock option that is not exercisable in full shall be entitled to receive a cash payment as provided below with respect to the portion of the stock option which is not then exercisable. The amount of any cash payment in respect of a restricted share unit or performance share unit shall be equal to: (A) in the event the Change in Control is the result of a tender offer or exchange offer for Common Stock, the higher of the final offer price per share paid for the Common Stock or the highest Fair Market Value of the Common Stock during the 90-day period ending on the date of the Change in Control or (B) in the event the Change in Control is the result of any other occurrence, the highest Fair Market Value of the Common Stock during the 90- day period ending on the date of the Change in Control. The amount to be paid in respect of the portion of any stock option which is not exercisable shall be equal to the result of multiplying the number of shares of Common Stock covered by such portion of the stock option by the difference between (x) the per share value of Common Stock determined pursuant to the preceding sentence, or such lower price as the Committee may determine with respect to any incentive stock option to preserve its incentive stock option status, and (y) the per share exercise price of such stock option. Notwithstanding the
foregoing, if a Change in Control occurs under clause (C) of the definition
thereof, the transaction described in clause (C) is conditioned on qualifying
for "pooling of interests" accounting treatment or similar accounting
treatment and the arrangements described in clause (iii) or (iv) would prevent
such qualification under applicable accounting standards, then (a) all
performance shares granted in the form of shares of stock or share units shall
be converted to restricted stock of the Surviving Corporation or, if
applicable, the Parent Corporation and shall be deemed fully vested at the end
of the applicable performance period; and (b) all outstanding restricted stock
and stock options shall be converted to restricted stock or stock options, as
applicable, of the Surviving Corporation or the Parent Corporation with the
vesting provisions of the original awards thereof, provided that, (x) if the
Participant has entered into a change in control severance agreement with the
Company (a "CIC Severance Agreement") and within 24 months after the Change in
Control the employment of such Participant is terminated by the Company or a
subsidiary without "Cause" (as defined in the CIC Severance Agreement) or by
the Participant for "Good Reason" (as defined in the CIC Severance Agreement),
all restricted shares and stock options shall be deemed fully vested on the
date of the Participant's termination of employment and (y) if the Participant
has not entered into a CIC Severance Agreement, all restricted shares and
stock options shall be deemed fully vested if within 24 months after the
Change in Control the Participant's employment is terminated without "cause"
or for "good reason," as such terms are defined in the applicable Award
Agreement or, if not defined therein, as defined below, and (ii) if a Change
in Control occurs under clause (D) of the definition thereof, 100% of all
performance shares granted in the form of shares of Stock or share units shall
be deemed to be earned in full and 100% of all performance shares granted in
the form of share units shall be paid in cash. The Committee may, in its
discretion, include such further provisions and limitations in any agreement
documenting such Awards as it may deem equitable and in the best interests of
the Company. If such terms are not otherwise defined in a Participant's Award
Agreement, "cause" shall mean the Participant's having (a) breached any
fiduciary duties to the Company or any of its subsidiaries, (b) failed in a
willful and continued manner to substantially perform his or her duties and
responsibilities after a demand for substantial performance is delivered to
the Participant by a direct supervisor or any more senior executive, which
specifically identifies the manner in which the direct supervisor or executive
believes that the Participant has not substantially performed his duties, (c)
been convicted of, or have entered a plea of guilty or nolo contendere to, a
felony or a lesser crime or offense (other than a minor traffic offense), or
(d) violated the Company's Code of Conduct (or successor rules governing the
conduct of the Company's employees) making the Participant subject to
dismissal pursuant to the standards set forth therein and "good reason" shall
mean a reduction of the Participant's base salary, the imposition of a
requirement that the Participant's business be conducted from a location
greater than 35 miles away from the location in which the Participant's
business was conducted immediately prior to the Change in Control, or if the
Company's Chief Executive Officer immediately prior to such Change in Control is not then serving as Chief Executive Officer of the Surviving Corporation and the Parent Corporation (if applicable), a reduction in the sum of the Participant's base annual salary and discretionary bonus compensation for any fiscal year of the Company from the amount thereof for the Company's prior fiscal year.
A "Change in Control" shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a Change in Control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a Change in Control under this Section 11 and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B) during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence)whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the
issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
Notwithstanding anything contained herein to the contrary, if a Change in Control occurs under clause (C) of the definition thereof, no amendment to the provisions of this Section which is adopted in connection with or as a consequence of the Change in Control shall be effective if it adversely affects a Participant unless the Company's Chief Executive Officer immediately prior to such Change in Control serves as Chief Executive Officer for 2 years thereafter of the Surviving Corporation and, if applicable, of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation.
IN WITNESS WHEREOF, The Bank of New York Company, Inc. has caused this Amendment to be executed by its duly authorized officers this 11th day of July, 2000.
ATTEST: \s\ Gerald L. Hassell
----------------------
\s\ Patricia A. Bicket
-----------------------
Assistant Secretary
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EXHIBIT 10(c)
AMENDMENT
TO
THE BANK OF NEW YORK COMPANY, INC.
RETIREMENT PLAN FOR
NON-EMPLOYEE DIRECTORS
WHEREAS, The Bank of New York Company, Inc. Retirement Plan for Non- Employee Directors (the "Directors' Retirement Plan") was adopted by the Board of Directors of The Bank of New York Company, Inc. (the "Company"), effective as of May 11, 1993; and
WHEREAS, Section 6 of the Directors' Retirement Plan provides that the Board of Directors of the Company may amend the Plan at any time, except in certain respects not material hereto; and
WHEREAS, the Board of Directors of the Company desires to adopt an amendment to the Directors' Retirement Plan;
NOW, THEREFORE, the Directors' Retirement Plan is hereby amended, effective as of July 11, 2000, by amending the second paragraph of Section 2(e) to read as follows:
A "Change of Control" shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a Change of Control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a Change of Control under this Section 2(e) and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B)during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities
shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
IN WITNESS WHEREOF, The Bank of New York Company, Inc. has caused this Amendment to be executed by its duly authorized officers this 11th day of July, 2000.
\s\ Gerald L. Hassell
----------------------
ATTEST:
\s\ Patricia A. Bicket
-----------------------
Assistant Secretary
|
EXHIBIT 10(d)
AMENDMENT
TO
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
OF THE BANK OF NEW YORK COMPANY, INC.
WHEREAS, the Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. (the "Directors' Deferred Compensation Plan") was adopted by the Board of Directors of The Bank of New York Company, Inc. (the "Company"), effective as of December 1, 1993; and
WHEREAS, Section 7(a) of the Directors' Deferred Compensation Plan provides that the Board of Directors of the Company may amend the Plan at any time; and
WHEREAS, the Board of Directors of the Company desires to adopt an amendment to the Directors' Deferred Compensation Plan;
NOW, THEREFORE, the Directors' Deferred Compensation Plan is hereby amended effective as of July 11, 2000, by amending Section 5(g) in its entirety to read as follows:
(g) A "Change of Control" shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the
same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a Change of Control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a Change of Control under this Section 5(g) and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B) during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business
Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
IN WITNESS WHEREOF, The Bank of New York Company, Inc. has caused this Amendment to be executed by its duly authorized officers this 11th day of July, 2000.
\s\ Gerald L. Hassell
----------------------
ATTEST:
\s\ Patricia A. Bicket
-----------------------
Assistant Secretary
|
EXHIBIT 10(e)
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, The Bank of New York Company, Inc. Supplemental Executive Retirement Plan (the "Plan") was adopted by the Board of Directors of The Bank of New York Company, Inc., effective as of June 9, 1992; and
WHEREAS, Section 9 of the Plan provides that the Compensation Committee of the Board of Directors may amend the Plan at any time, except in certain respects not material hereto; and
WHEREAS, the Compensation Committee desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended in the following respects, effective as of July 11, 2000:
1. Section 3 of the Plan is amended by amending the first sentence thereof to read as follows:
The Committee shall determine in its sole discretion which employees of the Company who are members of the Retirement Plan shall be Participants in the Plan as listed on Exhibit A.
2. Sections 4 and 5 of the Plan are amended by deleting the words "Exhibit A" wherever they appear and substituting therefor the words "Exhibit B".
3. Section 5(c) of the Plan is amended by deleting the last paragraph thereof and substituting therefor the following:
Notwithstanding anything contained herein to the contrary, in the event of a Change in Control (as defined below) (i) the Benefit to a Participant listed on Exhibit B and any remaining installments to a Participant or a Participant's spouse shall be paid in a lump sum and the Committee may not direct that payment be made at a different time and (ii) the Committee may not direct payment of a Benefit to a Participant's spouse in a different form or at a different time.
For purposes of this Section, a "Change in Control" shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding The Bank of New York Company, Inc. ("BNYCO") or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of BNYCO in substantially the same proportion as their ownership of BNYCO, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of BNYCO representing 25% or more of the combined voting power of BNYCO's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a Change in Control if (x) it involves the acquisition of BNYCO's Voting Securities from BNYCO in connection with the acquisition by BNYCO of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a Change in Control under this Section 5(c) and (z) such person does not become the beneficial owner of 35% or more of BNYCO's Voting Securities; or (B)during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with BNYCO to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the shareholders of BNYCO was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of BNYCO in which such person is named as a nominee for director, without written objection to such
nomination (each such new director shall also be deemed to be an Incumbent
Director) cease for any reason to constitute a majority of the Board;
provided, however, that no individual initially elected or nominated as a
director of BNYCO as a result of an actual or threatened election contest with
respect to directors, as a result of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other than
the Board or as a result of an actual or threatened acquisition of 25% or more
of BNYCO's Voting Securities shall be deemed to be an Incumbent Director; or
(C) there occurs the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving BNYCO or any of
its subsidiaries that requires the approval of the shareholders of BNYCO,
whether for such transaction or the issuance of securities in the transaction
(a "Business Combination"), unless immediately following such Business
Combination: (i) at least 60% of the total voting power of (x) the
corporation resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 95% or more of the voting
securities eligible to elect directors of the Surviving Corporation (the
"Parent Corporation"), is represented by BNYCO's Voting Securities that were
outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which such Voting Securities were converted
pursuant to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the voting power of
BNYCO's Voting Securities among the holders thereof immediately prior to the
Business Combination and (ii) after giving effect to the Business Combination,
at least (I) a majority of the members of the board of directors of the
Surviving Corporation and of any corporation that owns 25% or more but less
than 50% of the Voting Securities of the Surviving Corporation or (II) a
majority of the members of the board of directors of any corporation that owns
at least 50% of the Voting Securities of the Surviving Corporation, were
Incumbent Directors at the time of the Board's approval of the execution of
the initial agreement providing for such Business Combination; or (D) the
shareholders of BNYCO approve a plan of complete liquidation of BNYCO; or (E)
the consummation of the sale or disposition by BNYCO of all or substantially
all of the assets of BNYCO.
4. Exhibit A is amended in its entirety to read as follows:
Thomas P. Gibbons
Leslie V. Godridge
Alan R. Griffith
Gerald L. Hassell
Newton P. S. Merrill
Donald R. Monks
Robert J. Mueller
Richard A. Pace
Thomas J. Perna
Charles E. Rappold II
Thomas A. Renyi
Brian G. Rogan
Bruce Van Saun
Joseph M. Velli
5. A new Exhibit B is added to the Plan to read as follows:
The following Participants shall be entitled to a Benefit under the Plan in the event of their termination of employment prior to attaining age 60, other than by reason of death:
Alan R. Griffith
Gerald L. Hassell
Newton P. S. Merrill
Robert J. Mueller
Richard A. Pace
Thomas A. Renyi
Bruce Van Saun
IN WITNESS WHEREOF, The Bank of New York Company, Inc. has caused this Amendment to be executed by its duly authorized officers this 11th day of July, 2000.
\s\ Gerald L. Hassell
----------------------
ATTEST:
\s\ Patricia A. Bicket
-----------------------
Assistant Secretary
|
EXHIBIT 10(f)
AMENDMENT NUMBER TWELVE
TO
GRANTOR TRUST AGREEMENT
THIS AGREEMENT made as of the 11th day of July, 2000 by and between THE BANK OF NEW YORK COMPANY, INC., a corporation organized and existing under the laws of the State of New York (hereinafter referred to as the "Company"), and THE CHASE MANHATTAN BANK, a corporation organized and existing under the laws of the State of New York (hereinafter referred to as the "Trustee").
WITNESSETH:
WHEREAS, the Company and the Trustee entered in a Grantor Trust Agreement dated as of November 15, 1993 (as amended from time to time, the "Agreement");
WHEREAS, Article TWELFTH of the Agreement provides that the Company may amend the Agreement; and
WHEREAS, the Company desires to amend the Agreement;
NOW, THEREFORE, the Company and the Trustee agree that the agreement is amended, effective as of July 11, 2000, as follows:
1. Article FIRST is amended in its entirety to read as follows:
FIRST: Definition of Change in Control. For purposes of this Agreement, a "Change in Control" shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a Change in Control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a Change in Control under this Article and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B) during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
Notwithstanding the foregoing, for purposes of this Agreement, the Trustee shall not be deemed to have knowledge that a Change in Control has occurred until it has received written notice thereof from the Company or a Covered Participant.
2. Article TWELFTH is amended by amending the first sentence of paragraph (b) thereof to read as follows:
Notwithstanding any other provision of this Agreement, no amendment to the provisions of this Agreement and the trust created thereby shall be effective (i) if it is adopted in connection with or as a consequence of the Change in Control and it adversely affects the Covered Participants, unless the Company's Chief Executive Officer immediately prior to such Change in Control serves as Chief Executive Officer for two years thereafter of the Surviving Corporation and, if applicable, of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation or (ii) it is
adopted after the date a Change in Control occurs without the written consent of two-thirds in number of the Covered Participants.
3. Exhibit I to the Agreement is amended by deleting Exhibit I in its entirety and substituting therefor Exhibit I in the form attached hereto.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed in their respective names by their duly authorized officers under their corporate seals as of the day and year first above written.
ATTEST: THE BANK OF NEW YORK COMPANY, INC.
\s\ Russell P. Wellinger By: \s\ Gerald L. Hassell
------------------------- ---------------------------
Name:
Title:
ATTEST: THE CHASE MANHATTAN BANK
\s\ William J. Leahy By: \s\ Gerard Stafford-Smith
--------------------- ------------------------------
Name:
Title:
|
EXHIBIT I
1.The Bank of New York Company, Inc. Excess Benefit Plan
2. The Bank of New York Company, Inc. Supplemental Executive Retirement Plan
3. Agreements between The Bank of New York Company, Inc. and the following persons:
Individual Date of Agreement ---------- ----------------- Thomas P. Gibbons July 11, 2000 Leslie V. Godridge July 11, 2000 Alan R. Griffith July 11, 2000 Gerald L. Hassell July 11, 2000 Newton P.S. Merrill July 11, 2000 Donald R. Monks July 11, 2000 Robert J. Mueller July 11, 2000 Richard Pace July 11, 2000 Thomas J. Perna July 11, 2000 Thomas A. Renyi July 11, 2000 Brian G. Rogan July 11, 2000 Bruce W. Van Saun July 11, 2000 Joseph M. Velli July 11, 2000 |
EXHIBIT 10(g)
July 11, 2000
Mr. Thomas A. Renyi
The Bank of New York
One Wall Street
New York, New York 10286
Dear Mr. Renyi:
The Bank of New York Company, Inc., a New York corporation (the "Company"), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility, and the uncertainty and questions which it may raise among management of the Company and its principal subsidiary, The Bank of New York (the "Bank"), may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of management of the Company and the Bank to their assigned duties without distraction in circumstances arising from the possibility of a change in control of the Company. In particular, the Board believes it important, should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able to assess and advise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such other action regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this letter agreement sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company or the Bank is terminated subsequent to a "change in control" of the Company under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company, the Bank or you may terminate your employment at any time, subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a tender offer or exchange offer is made by a Person (as hereinafter defined) for more than 25% of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors ("Voting Securities"), including shares of the common stock of the Company, you agree that you will not leave the employ of the Company or the Bank (other than as a result of Disability or upon Retirement, as such terms are hereinafter defined) and will render the services contemplated in the recitals to this Agreement until such tender offer or exchange offer has been abandoned or terminated or a change in control of the Company, as defined in Section 3 hereof, has occurred. For purposes of this Agreement, the term "Person" shall mean and include any individual, corporation, partnership, group, association or other "person", as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, the Bank, any other subsidiary of the Company or any employee benefit plan(s) sponsored by the Company, the Bank or any other subsidiary of the Company.
2. Term of Agreement. - This Agreement shall commence on the date hereof and shall continue in effect until December 31, 2000; provided, however, that commencing on January 1, 2001 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such January 1st date, the Company or you shall have given notice that this Agreement shall not be extended; and provided, further, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of twenty-four (24) months after a change in control of the Company, as defined in Section 3 hereof, if such change in control shall have occurred during the term of this Agreement, as it may be extended by the first proviso set forth above. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company or the Bank terminate your employment prior to a change in control of the Company.
3. Change in Control. - For purposes of this Agreement, a "change in control" of the Company shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a change in control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a change in control under this Section 3 and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B)during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any
other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
4. Termination Following Change in Control. - If any of the events described in Section 3 hereof constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the termination of your employment with the Company or the Bank within twenty-four (24) months after such event, unless such termination is
(a) because of your death or Retirement, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. - Termination by the Company of your employment based on "Disability" shall mean absence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full time performance of your duties.
(ii) Retirement. - Termination by you or by the Company of your employment based on "Retirement" shall mean termination on or after your attainment of age sixty-five (65).
(iii) Cause. - Termination by the Company or the Bank of your employment for "Cause" shall mean termination upon (a) the willful and continued failure by you to perform substantially your duties with the Company or the Bank (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company or the Chief Executive Officer of the Bank, as appropriate, which specifically identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company or the Bank. For purposes of this paragraph (iii), no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company or the Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company or the Bank shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company and the Bank. It is also expressly understood that your attention to matters not directly related to the business of the Company or the Bank shall not provide a basis for termination for Cause so long as the Board has approved your engagement in such activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you
were guilty of the conduct set forth above in (a) or (b) of this paragraph
(iii) and specifying the particulars thereof in detail.
(iv) Good Reason. - Termination by you of your employment for "Good Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has been an adverse change in your status or position(s) as an executive officer of the Company or the Bank as in effect immediately prior to the change in control, including, without limitation, any adverse change in your status or position as a result of a diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which are inconsistent with such status or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a result of your death or by you other than for Good Reason);
(B) a reduction by the Company or the Bank in your base salary as in effect immediately prior to the change in control;
(C) the failure by the Company or the Bank to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the change in control of the Company (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the change in control, or the taking of any action, or the failure to act, by the Company or the Bank which would adversely affect your continued
participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the change in control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the change in control;
(D) the failure by the Company or the Bank to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with its normal vacation policy as in effect immediately prior to the change in control;
(E) the requirement by the Company or the Bank that you be based at an office that is greater than 35 miles from where your office is located immediately prior to the change in control except for required travel on the business of the Company or the Bank to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company or the Bank prior to the change in control;
(F) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 6 hereof;
(G) any purported termination by the Company or the Bank of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (v) below (and, if applicable, paragraph (iii) above); and for purposes of this Agreement, no such purported termination shall be effective; or
(H) any refusal by the Company or the Bank to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company or the Bank which, prior to the change in control, you were permitted by the Board to attend to or engage in.
Notwithstanding anything herein to the contrary, termination of employment by you for any reason during the 30-day period commencing one (1) year after the date of a change in control shall constitute Good Reason. For purposes of this Agreement, "Plan" shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan
such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company or the Bank intended to benefit employees.
(v) Notice of Termination. - Any purported termination by the Company or the Bank or by you following a change in control shall be communicated by written Notice of Termination to the other party hereto. 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.
(vi) Date of Termination. - "Date of Termination" following a
change in control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the performance of your duties on a full-
time basis during such thirty (30) day period), (b) if your employment is to
be terminated by the Company or the Bank for Cause or by you pursuant to
Sections 4(iv)(F) and 6 hereof or for any other Good Reason, the date
specified in the Notice of Termination, or (c) if your employment is to be
terminated by the Company or the Bank for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be a date
earlier than ninety (90) days after the date on which a Notice of Termination
is given, unless an earlier date has been expressly agreed to by you in
writing either in advance of, or after, receiving such Notice of Termination.
In the case of termination by the Company or the Bank of your employment for
Cause, if you have not previously expressly agreed in writing to the
termination, then within thirty (30) days after receipt by you of the Notice
of Termination with respect thereto, you may notify the Company that a dispute
exists concerning the termination, in which event the Date of Termination
shall be the date set either by mutual written agreement of the parties or by
the arbitrators in a proceeding as provided in Section 13 hereof. During the
pendency of any such dispute, the Company or the Bank will continue to pay you
your full compensation in effect just prior to the time the Notice of
Termination is given and until the dispute is resolved in accordance with
Section 13.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a change in control of the Company that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with Sections 4(i) and 4(vi) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause following a change in control of the Company, the Company or the Bank shall pay you your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and are otherwise payable, but which have not yet been paid to you. Thereupon the Company and the Bank shall have no further obligations to you under this Agreement.
(iii) If, within twenty-four (24) months after a change in control of the Company shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall pay or cause the Bank to pay to you, no later than the fifth business day following the Date of Termination, without regard to any contrary provisions of any Plan, the following:
(A) (x) your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given, (y) any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and otherwise payable, but which have not yet been paid to you and (z) a pro rata portion of your annual bonus for the fiscal year in which the Date of Termination occurs in an amount equal to the result of multiplying (1) the greater of (I) the bonus payable to you (without regard to the date of your termination of employment) pursuant to the terms of the Company's 1994 Management Incentive Compensation Plan (the
"MICP")(or any successor plan) determined based on performance through your Date of Termination and (II) the bonus payable to you under the MICP (or any successor plan) for the fiscal year ended prior to your Date of Termination, and (2) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is three hundred sixty-five (365); and
(B) as severance pay a lump sum in cash equal to the sum of the following amounts:
(1) three times the sum of (x) your annual rate of salary in effect just prior to the time a Notice of Termination is given or, if higher, the annual rate of salary in effect immediately prior to the change in control of the Company and (y) the highest annual bonus earned by you from the Company and its affiliates during the last three (3) completed fiscal years of the Company immediately preceding your Date of Termination, annualized in the event you were not employed by the Company or its affiliates for the whole of any such fiscal year (the "Bonus Amount"); and
(2) the lump sum actuarial equivalent (utilizing actuarial assumptions no less favorable to you than those in effect under the Company's Retirement Plan immediately prior to the change in control) of the excess of the (A) benefits under the Company's Retirement Plan, Excess Benefit Plan and Supplemental Executive Retirement Plan (collectively, the "Defined Benefit Plans") which you would receive if your employment continued for three years after the Date of Termination (and that your age was increased by three years from your age at the Date of Termination), assuming for this purpose that (x) your accrued benefits under the Defined Benefit Plans were fully vested, (y) in each of the three years you received (a) salary at the annual rate in effect immediately prior to the change in control and (b) bonus compensation equal to the Bonus Amount and (z) there were no reduction or offset under the Defined Benefit Plans for the actuarial value of your account under the Employee Stock Ownership Plan of The Bank of New York Company, Inc. (the
"ESOP"), over (B) the vested accrued benefits payable under the Defined Benefit Plans as of the Date of Termination if there were no reduction or offset thereunder for the actuarial value of your ESOP account.
(iv) If, within twenty-four (24) months after a change in control of the Company, as defined in Section 3 above, shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall maintain or cause the Bank to maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (a) three years after the Date of Termination, (b) the commencement date of equivalent benefits from a new employer or (c) your attainment of age sixty-five (65), all insured and self- insured employee welfare benefit Plans in which you were entitled to participate immediately prior to the Date of Termination, provided that your continued participation is possible under the general terms and provisions of such Plans (and any applicable funding media) and you continue to pay an amount equal to your regular contribution under such plans for such participation. If, at the end of three years after the Termination Date, you have not reached your sixty-fifth birthday and you have not previously received or are not then receiving equivalent benefits from a new employer, the Company shall or cause the Bank to arrange, at its sole cost and expense, to enable you to convert your and your dependents' coverage under such Plans to individual policies or programs upon the same terms as employees of the Company and the Bank may apply for such conversions. In the event that your participation in any such Plan is barred, the Company shall or cause the Bank, at its sole cost and expense, to arrange to have issued for the benefit of you and your dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this paragraph (iv) or, if such insurance is not available at a reasonable cost to the Company or the Bank, the Company shall or cause the Bank to otherwise provide you and your dependents with equivalent benefits (on an after-tax basis). You shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans.
(v) In the event it shall be determined that any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a change in control (or any of its affiliated entities) to
or for your benefit, whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5 (the "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay you an additional payment (a "Gross-Up Payment") in an
amount such that after payment by you of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and
(y) the product of any deductions disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made. For purposes of determining the amount of the
Gross-up Payment, you shall be deemed to (i) pay federal income taxes at the
highest marginal rates of federal income taxation for the calendar year in
which the Gross-up Payment is to be made, (ii) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes and (iii) have otherwise allowable deductions for federal income
tax purposes at least equal to those which could be disallowed because of the
inclusion of the Gross-up Payment in the Executive's adjusted gross income.
The Gross-up Payment under this paragraph (v) with respect to any Payment
shall be made no later than thirty (30) days following such Payment.
Notwithstanding the foregoing, if it shall be determined that you are entitled to a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is less than 10% of the portion of the Payments that would be treated as "parachute payments" under Section 280G of the Code, then the amounts payable to you under this Agreement shall be reduced (but not below zero) to the maximum
amount that could be paid to you without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be made to you. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 5(iii)(B)(1), unless an alternative method of reduction is elected by you. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment") or Gross-up Payments are made by the Company which should not have been made ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that you are thereafter required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for your benefit. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse you for your Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by you (to the extent you have received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.
(vi) All determinations required to be made under paragraph (v) of this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment or the reduction of the Payments to the Safe Harbor Cap, as well as the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained
by the Company as of the date immediately prior to the change in control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and you within fifteen (15) business days of the receipt of notice from the Company or you that there has been a Payment, or such earlier time as is requested by the Company (collectively, the "Determination"). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in control, you may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and you.
(vii) Except as specifically provided in paragraph (iv) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company or the Bank by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise.
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such Person by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such Person to furnish such assent by the later of (A) three business days prior to the time such Person becomes a Successor or (B) two business days after such Person receives a written request to so assent shall constitute Good Reason for termination by you of your employment if a change in control of the Company occurs or has occurred. For purposes of this
Agreement, "Successor" shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's Voting Securities or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.
(iii) For purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving or continuing entity in respect of any merger, consolidation or form of business combination in which the Company ceases to exist.
7. Fees, Expenses and Interest; Mitigation.
(i) The Company shall, or cause the Bank to, reimburse you, on a
current basis, for all reasonable legal fees and related expenses incurred by
you in connection with the Agreement following a change in control of the
Company, including, without limitation, (a) all such fees and expenses, if
any, incurred in contesting or disputing any termination of your employment or
incurred by you in seeking advice with respect to the matters set forth in
Section 8 hereof or (b) your seeking to obtain or enforce any right or benefit
provided by this Agreement, in each case, regardless of whether or not your
claim is upheld by a court of competent jurisdiction; provided, however, you
shall be required to repay any such amounts to the Company to the extent that
a court issues a final and non-appealable order setting forth the
determination that the position taken by you was frivolous or advanced by you
in bad faith. In addition to the fees and expenses provided herein, you shall
also be paid interest on any disputed amount ultimately paid to you at the
prime rate announced by the Bank from time to time from the date payment
should have been made until paid in full.
(ii) You shall not be required to mitigate the amount of any payment the Company or the Bank becomes obligated to make to you in connection with this Agreement, by seeking other employment or otherwise.
8. Taxes. - All payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income and employment taxes.
9. Survival. - The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of this Agreement shall survive termination of this Agreement.
10. Notice. - For the purposes 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 and addressed, in the case of the Company, to the address set forth on the first page of this Agreement or, in the case of the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, 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 receipt.
11. Miscellaneous. - No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of 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 applied without regard to conflict of laws principles.
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. Arbitration. - Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York City by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators' award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 13.
14. Employee's Commitment. - You agree that subsequent to your period of employment with the Company and the Bank, you will not at any time communicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or any subsidiary or other confidential information concerning their business, affairs, products, suppliers or customers which, if disclosed, would have a material adverse effect upon the business or operations of the Company and its subsidiaries, taken as a whole; it being understood, however, that the obligations of this Section 14 shall not apply to the extent that the aforesaid matters (a) are disclosed in circumstances where you are legally required to do so or (b) become generally known to and available for use by the public otherwise than by your wrongful act or omission.
15. Related Agreements. - To the extent that any provision of any other agreement between the Company, the Bank or any of the Company's other subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.
16. 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.
If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject and will supersede our previous letter agreement dated July 8, 1997.
Sincerely,
THE BANK OF NEW YORK COMPANY, INC.
By \s\ Gerald L. Hassell ------------------------- Name: Title: |
Agreed to this 16th day
Of August, 2000.
\s\ Thomas A. Renyi -------------------- Thomas A. Renyi Address: |
EXHIBIT 10(h)
July 11, 2000
Mr. Gerald Hassell
The Bank of New York
One Wall Street
New York, New York 10286
Dear Mr. Hassell:
The Bank of New York Company, Inc., a New York corporation (the "Company"), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility, and the uncertainty and questions which it may raise among management of the Company and its principal subsidiary, The Bank of New York (the "Bank"), may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of management of the Company and the Bank to their assigned duties without distraction in circumstances arising from the possibility of a change in control of the Company. In particular, the Board believes it important, should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able to assess and advise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such other action regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this letter agreement sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company or the Bank is terminated subsequent to a "change in control" of the Company under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company, the Bank or you may terminate your employment at any time, subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a tender offer or exchange offer is made by a Person (as hereinafter defined) for more than 25% of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors ("Voting Securities"), including shares of the common stock of the Company, you agree that you will not leave the employ of the Company or the Bank (other than as a result of Disability or upon Retirement, as such terms are hereinafter defined) and will render the services contemplated in the recitals to this Agreement until such tender offer or exchange offer has been abandoned or terminated or a change in control of the Company, as defined in Section 3 hereof, has occurred. For purposes of this Agreement, the term "Person" shall mean and include any individual, corporation, partnership, group, association or other "person", as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, the Bank, any other subsidiary of the Company or any employee benefit plan(s) sponsored by the Company, the Bank or any other subsidiary of the Company.
2. Term of Agreement. - This Agreement shall commence on the date hereof and shall continue in effect until December 31, 2000; provided, however, that commencing on January 1, 2001 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such January 1st date, the Company or you shall have given notice that this Agreement shall not be extended; and provided, further, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of twenty-four (24) months after a change in control of the Company, as defined in Section 3 hereof, if such change in control shall have occurred during the term of this Agreement, as it may be extended by the first proviso set forth above. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company or the Bank terminate your employment prior to a change in control of the Company.
3. Change in Control. - For purposes of this Agreement, a "change in control" of the Company shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a change in control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a change in control under this Section 3 and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B)during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any
other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
4. Termination Following Change in Control. - If any of the events described in Section 3 hereof constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the termination of your employment with the Company or the Bank within twenty-four (24) months after such event, unless such termination is
(a) because of your death or Retirement, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. - Termination by the Company of your employment based on "Disability" shall mean absence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full time performance of your duties.
(ii) Retirement. - Termination by you or by the Company of your employment based on "Retirement" shall mean termination on or after your attainment of age sixty-five (65).
(iii) Cause. - Termination by the Company or the Bank of your employment for "Cause" shall mean termination upon (a) the willful and continued failure by you to perform substantially your duties with the Company or the Bank (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company or the Chief Executive Officer of the Bank, as appropriate, which specifically identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company or the Bank. For purposes of this paragraph (iii), no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company or the Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company or the Bank shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company and the Bank. It is also expressly understood that your attention to matters not directly related to the business of the Company or the Bank shall not provide a basis for termination for Cause so long as the Board has approved your engagement in such activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you
were guilty of the conduct set forth above in (a) or (b) of this paragraph
(iii) and specifying the particulars thereof in detail.
(iv) Good Reason. - Termination by you of your employment for "Good Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has been an adverse change in your status or position(s) as an executive officer of the Company or the Bank as in effect immediately prior to the change in control, including, without limitation, any adverse change in your status or position as a result of a diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which are inconsistent with such status or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a result of your death or by you other than for Good Reason);
(B) a reduction by the Company or the Bank in your base salary as in effect immediately prior to the change in control;
(C) the failure by the Company or the Bank to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the change in control of the Company (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the change in control, or the taking of any action, or the failure to act, by the Company or the Bank which would adversely affect your continued
participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the change in control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the change in control;
(D) the failure by the Company or the Bank to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with its normal vacation policy as in effect immediately prior to the change in control;
(E) the requirement by the Company or the Bank that you be based at an office that is greater than 35 miles from where your office is located immediately prior to the change in control except for required travel on the business of the Company or the Bank to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company or the Bank prior to the change in control;
(F) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 6 hereof;
(G) any purported termination by the Company or the Bank of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (v) below (and, if applicable, paragraph (iii) above); and for purposes of this Agreement, no such purported termination shall be effective; or
(H) any refusal by the Company or the Bank to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company or the Bank which, prior to the change in control, you were permitted by the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company or the Bank intended to benefit employees.
(v) Notice of Termination. - Any purported termination by the Company or the Bank or by you following a change in control shall be communicated by written Notice of Termination to the other party hereto. 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.
(vi) Date of Termination. - "Date of Termination" following a
change in control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the performance of your duties on a full-
time basis during such thirty (30) day period), (b) if your employment is to
be terminated by the Company or the Bank for Cause or by you pursuant to
Sections 4(iv)(F) and 6 hereof or for any other Good Reason, the date
specified in the Notice of Termination, or (c) if your employment is to be
terminated by the Company or the Bank for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be a date
earlier than ninety (90) days after the date on which a Notice of Termination
is given, unless an earlier date has been expressly agreed to by you in
writing either in advance of, or after, receiving such Notice of Termination.
In the case of termination by the Company or the Bank of your employment for
Cause, if you have not previously expressly agreed in writing to the
termination, then within thirty (30) days after receipt by you of the Notice
of Termination with respect thereto, you may notify the Company that a dispute
exists concerning the termination, in which event the Date of Termination
shall be the date set either by mutual written agreement of the parties or by
the arbitrators in a proceeding as provided in Section 13 hereof. During the
pendency of any such dispute, the Company or the Bank will continue to pay you
your full compensation in effect just prior to the time the Notice of
Termination is given and until the dispute is resolved in accordance with
Section 13.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a change in control of the Company that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with Sections 4(i) and 4(vi) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause following a change in control of the Company, the Company or the Bank shall pay you your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and are otherwise payable, but which have not yet been paid to you. Thereupon the Company and the Bank shall have no further obligations to you under this Agreement.
(iii) If, within twenty-four (24) months after a change in control of the Company shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall pay or cause the Bank to pay to you, no later than the fifth business day following the Date of Termination, without regard to any contrary provisions of any Plan, the following:
(A) (x) your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given, (y) any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and otherwise payable, but which have not yet been paid to you and (z) a pro rata portion of your annual bonus for the fiscal year in which the Date of Termination occurs in an amount equal to the result of multiplying (1) the greater of (I) the bonus payable to you (without regard to the date of your termination of employment) pursuant to the terms of the Company's 1994 Management Incentive Compensation Plan (the
"MICP")(or any successor plan) determined based on performance through your Date of Termination and (II) the bonus payable to you under the MICP (or any successor plan) for the fiscal year ended prior to your Date of Termination, and (2) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is three hundred sixty-five (365); and
(B) as severance pay a lump sum in cash equal to the sum of the following amounts:
(1) three times the sum of (x) your annual rate of salary in effect just prior to the time a Notice of Termination is given or, if higher, the annual rate of salary in effect immediately prior to the change in control of the Company and (y) the highest annual bonus earned by you from the Company and its affiliates during the last three (3) completed fiscal years of the Company immediately preceding your Date of Termination, annualized in the event you were not employed by the Company or its affiliates for the whole of any such fiscal year (the "Bonus Amount"); and
(2) the lump sum actuarial equivalent (utilizing actuarial assumptions no less favorable to you than those in effect under the Company's Retirement Plan immediately prior to the change in control) of the excess of the (A) benefits under the Company's Retirement Plan, Excess Benefit Plan and Supplemental Executive Retirement Plan (collectively, the "Defined Benefit Plans") which you would receive if your employment continued for three years after the Date of Termination (and that your age was increased by three years from your age at the Date of Termination), assuming for this purpose that (x) your accrued benefits under the Defined Benefit Plans were fully vested, (y) in each of the three years you received (a) salary at the annual rate in effect immediately prior to the change in control and (b) bonus compensation equal to the Bonus Amount and (z) there were no reduction or offset under the Defined Benefit Plans for the actuarial value of your account under the Employee Stock Ownership Plan of The Bank of New York Company, Inc. (the "ESOP"), over (B) the vested accrued benefits payable under the Defined Benefit Plans as of the Date of Termination if there were no reduction or offset thereunder for the actuarial value of your ESOP account.
(iv) If, within twenty-four (24) months after a change in control of the Company, as defined in Section 3 above, shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall maintain or cause the Bank to maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (a) three years after the Date of Termination, (b) the commencement date of equivalent benefits from a new employer or (c) your attainment of age sixty-five (65), all insured and self- insured employee welfare benefit Plans in which you were entitled to participate immediately prior to the Date of Termination, provided that your continued participation is possible under the general terms and provisions of such Plans (and any applicable funding media) and you continue to pay an amount equal to your regular contribution under such plans for such participation. If, at the end of three years after the Termination Date, you have not reached your sixty-fifth birthday and you have not previously received or are not then receiving equivalent benefits from a new employer, the Company shall or cause the Bank to arrange, at its sole cost and expense, to enable you to convert your and your dependents' coverage under such Plans to individual policies or programs upon the same terms as employees of the Company and the Bank may apply for such conversions. In the event that your participation in any such Plan is barred, the Company shall or cause the Bank, at its sole cost and expense, to arrange to have issued for the benefit of you and your dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this paragraph (iv) or, if such insurance is not available at a reasonable cost to the Company or the Bank, the Company shall or cause the Bank to otherwise provide you and your dependents with equivalent benefits (on an after-tax basis). You shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans.
(v) In the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a change in control (or any of its affiliated entities) to
or for your benefit, whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5 (the "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay you an additional payment (a "Gross-Up Payment") in an
amount such that after payment by you of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and
(y) the product of any deductions disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made. For purposes of determining the amount of the
Gross-up Payment, you shall be deemed to (i) pay federal income taxes at the
highest marginal rates of federal income taxation for the calendar year in
which the Gross-up Payment is to be made, (ii) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes and (iii) have otherwise allowable deductions for federal income
tax purposes at least equal to those which could be disallowed because of the
inclusion of the Gross-up Payment in the Executive's adjusted gross income.
The Gross-up Payment under this paragraph (v) with respect to any Payment
shall be made no later than thirty (30) days following such Payment.
Notwithstanding the foregoing, if it shall be determined that you are entitled to a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is less than 10% of the portion of the Payments that would be treated as "parachute payments" under Section 280G of the Code, then the amounts payable to you under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to you without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be made to you. The
reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 5(iii)(B)(1), unless an alternative method of reduction is elected by you. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment") or Gross-up Payments are made by the Company which should not have been made ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that you are thereafter required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for your benefit. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse you for your Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by you (to the extent you have received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.
(vi) All determinations required to be made under paragraph (v) of this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment or the reduction of the Payments to the Safe Harbor Cap, as well as the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the change in control (the "Accounting Firm") which shall provide detailed supporting calculations both
to the Company and you within fifteen (15) business days of the receipt of notice from the Company or you that there has been a Payment, or such earlier time as is requested by the Company (collectively, the "Determination"). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in control, you may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and you.
(vii) Except as specifically provided in paragraph (iv) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company or the Bank by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise.
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such Person by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such Person to furnish such assent by the later of (A) three business days prior to the time such Person becomes a Successor or (B) two business days after such Person receives a written request to so assent shall constitute Good Reason for termination by you of your employment if a change in control of the Company occurs or has occurred. For purposes of this Agreement, "Successor" shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time),
the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's Voting Securities or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.
(iii) For purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving or continuing entity in respect of any merger, consolidation or form of business combination in which the Company ceases to exist.
7. Fees, Expenses and Interest; Mitigation.
(i) The Company shall, or cause the Bank to, reimburse you, on a
current basis, for all reasonable legal fees and related expenses incurred by
you in connection with the Agreement following a change in control of the
Company, including, without limitation, (a) all such fees and expenses, if
any, incurred in contesting or disputing any termination of your employment or
incurred by you in seeking advice with respect to the matters set forth in
Section 8 hereof or (b) your seeking to obtain or enforce any right or benefit
provided by this Agreement, in each case, regardless of whether or not your
claim is upheld by a court of competent jurisdiction; provided, however, you
shall be required to repay any such amounts to the Company to the extent that
a court issues a final and non-appealable order setting forth the
determination that the position taken by you was frivolous or advanced by you
in bad faith. In addition to the fees and expenses provided herein, you shall
also be paid interest on any disputed amount ultimately paid to you at the
prime rate announced by the Bank from time to time from the date payment
should have been made until paid in full.
(ii) You shall not be required to mitigate the amount of any payment the Company or the Bank becomes obligated to make to you in connection with this Agreement, by seeking other employment or otherwise.
8. Taxes. - All payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income and employment taxes.
9. Survival. - The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of this Agreement shall survive termination of this Agreement.
10. Notice. - For the purposes 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 and addressed, in the case of the Company, to the address set forth on the first page of this Agreement or, in the case of the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, 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 receipt.
11. Miscellaneous. - No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of 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 applied without regard to conflict of laws principles.
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. Arbitration. - Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York City by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators' award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 13.
14. Employee's Commitment. - You agree that subsequent to your period of employment with the Company and the Bank, you will not at any time communicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or any subsidiary or other confidential information concerning their business, affairs, products, suppliers or customers which, if disclosed, would have a material adverse effect upon the business or operations of the Company and its subsidiaries, taken as a whole; it being understood, however, that the obligations of this Section 14 shall not apply to the extent that the afore- said matters (a) are disclosed in circumstances where you are legally required to do so or (b) become generally known to and available for use by the public otherwise than by your wrongful act or omission.
15. Related Agreements. - To the extent that any provision of any other agreement between the Company, the Bank or any of the Company's other subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.
16. 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.
If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject and will supersede our previous letter agreement dated July 8, 1997.
Sincerely,
THE BANK OF NEW YORK COMPANY, INC.
By \s\ Thomas A. Renyi ----------------------- Name: Title: |
Agreed to this 15th day
Of August, 2000.
\s\ Gerald L. Hassell ---------------------- Gerald Hassell Address: |
EXHIBIT 10(i)
July 11, 2000
Mr. Alan R. Griffith
The Bank of New York
One Wall Street
New York, New York 10286
Dear Mr. Griffith:
The Bank of New York Company, Inc., a New York corporation (the "Company"), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility, and the uncertainty and questions which it may raise among management of the Company and its principal subsidiary, The Bank of New York (the "Bank"), may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of management of the Company and the Bank to their assigned duties without distraction in circumstances arising from the possibility of a change in control of the Company. In particular, the Board believes it important, should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able to assess and advise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such other action regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this letter agreement sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company or the Bank is terminated subsequent to a "change in control" of the Company under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company, the Bank or you may terminate your employment at any time, subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a tender offer or exchange offer is made by a Person (as hereinafter defined) for more than 25% of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors ("Voting Securities"), including shares of the common stock of the Company, you agree that you will not leave the employ of the Company or the Bank (other than as a result of Disability or upon Retirement, as such terms are hereinafter defined) and will render the services contemplated in the recitals to this Agreement until such tender offer or exchange offer has been abandoned or terminated or a change in control of the Company, as defined in Section 3 hereof, has occurred. For purposes of this Agreement, the term "Person" shall mean and include any individual, corporation, partnership, group, association or other "person", as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, the Bank, any other subsidiary of the Company or any employee benefit plan(s) sponsored by the Company, the Bank or any other subsidiary of the Company.
2. Term of Agreement. - This Agreement shall commence on the date hereof and shall continue in effect until December 31, 2000; provided, however, that commencing on January 1, 2001 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such January 1st date, the Company or you shall have given notice that this Agreement shall not be extended; and provided, further, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of twenty-four (24) months after a change in control of the Company, as defined in Section 3 hereof, if such change in control shall have occurred during the term of this Agreement, as it may be extended by the first proviso set forth above. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company or the Bank terminate your employment prior to a change in control of the Company.
3. Change in Control. - For purposes of this Agreement, a "change in control" of the Company shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a change in control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a change in control under this Section 3 and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B)during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any
other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
4. Termination Following Change in Control. - If any of the events described in Section 3 hereof constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the termination of your employment with the Company or the Bank
within twenty-four (24) months after such event, unless such termination is
(a) because of your death or Retirement, (b) by the Company for Cause or
Disability or (c) by you other than for Good Reason (as all such capitalized
terms are hereinafter defined).
(i) Disability. - Termination by the Company of your employment based on "Disability" shall mean absence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full time performance of your duties.
(ii) Retirement. - Termination by you or by the Company of your employment based on "Retirement" shall mean termination on or after your attainment of age sixty-five (65).
(iii) Cause. - Termination by the Company or the Bank of your employment for "Cause" shall mean termination upon (a) the willful and continued failure by you to perform substantially your duties with the Company or the Bank (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company or the Chief Executive Officer of the Bank, as appropriate, which specifically identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company or the Bank. For purposes of this paragraph (iii), no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company or the Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company or the Bank shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company and the Bank. It is also expressly understood that your attention to matters not directly related to the business of the Company or the Bank shall not provide a basis for termination for Cause so long as the Board has approved your engagement in
such activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you
were guilty of the conduct set forth above in (a) or (b) of this paragraph
(iii) and specifying the particulars thereof in detail.
(iv) Good Reason. - Termination by you of your employment for "Good Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has been an adverse change in your status or position(s) as an executive officer of the Company or the Bank as in effect immediately prior to the change in control, including, without limitation, any adverse change in your status or position as a result of a diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which are inconsistent with such status or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a result of your death or by you other than for Good Reason);
(B) a reduction by the Company or the Bank in your base salary as in effect immediately prior to the change in control;
(C) the failure by the Company or the Bank to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the change in control of the Company (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the change in control, or the taking of any action, or the failure to act, by the Company or the Bank which would adversely affect your continued
participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the change in control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the change in control;
(D) the failure by the Company or the Bank to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with its normal vacation policy as in effect immediately prior to the change in control;
(E) the requirement by the Company or the Bank that you be based at an office that is greater than 35 miles from where your office is located immediately prior to the change in control except for required travel on the business of the Company or the Bank to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company or the Bank prior to the change in control;
(F) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 6 hereof;
(G) any purported termination by the Company or the Bank of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (v) below (and, if applicable, paragraph (iii) above); and for purposes of this Agreement, no such purported termination shall be effective; or
(H) any refusal by the Company or the Bank to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company or the Bank which, prior to the change in control, you were permitted by the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company or the Bank intended to benefit employees.
(v) Notice of Termination. - Any purported termination by the Company or the Bank or by you following a change in control shall be communicated by written Notice of Termination to the other party hereto. 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.
(vi) Date of Termination. - "Date of Termination" following a
change in control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the performance of your duties on a full-
time basis during such thirty (30) day period), (b) if your employment is to
be terminated by the Company or the Bank for Cause or by you pursuant to
Sections 4(iv)(F) and 6 hereof or for any other Good Reason, the date
specified in the Notice of Termination, or (c) if your employment is to be
terminated by the Company or the Bank for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be a date
earlier than ninety (90) days after the date on which a Notice of Termination
is given, unless an earlier date has been expressly agreed to by you in
writing either in advance of, or after, receiving such Notice of Termination.
In the case of termination by the Company or the Bank of your employment for
Cause, if you have not previously expressly agreed in writing to the
termination, then within thirty (30) days after receipt by you of the Notice
of Termination with respect thereto, you may notify the Company that a dispute
exists concerning the termination, in which event the Date of Termination
shall be the date set either by mutual written agreement of the parties or by
the arbitrators in a proceeding as provided in Section 13 hereof. During the
pendency of any such dispute, the Company or the Bank will continue to pay you
your full compensation in effect just prior to the time the Notice of
Termination is given and until the dispute is resolved in accordance with
Section 13.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a change in control of the Company that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with Sections 4(i) and 4(vi) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause following a change in control of the Company, the Company or the Bank shall pay you your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and are otherwise payable, but which have not yet been paid to you. Thereupon the Company and the Bank shall have no further obligations to you under this Agreement.
(iii) If, within twenty-four (24) months after a change in control of the Company shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall pay or cause the Bank to pay to you, no later than the fifth business day following the Date of Termination, without regard to any contrary provisions of any Plan, the following:
(A) (x) your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given, (y) any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and otherwise payable, but which have not yet been paid to you and (z) a pro rata portion of your annual bonus for the fiscal year in which the Date of Termination occurs in an amount equal to the result of multiplying (1) the greater of (I) the bonus payable to you (without regard to the date of your termination of employment) pursuant to the terms of the Company's 1994 Management Incentive Compensation Plan (the
"MICP")(or any successor plan) determined based on performance through your Date of Termination and (II) the bonus payable to you under the MICP (or any successor plan) for the fiscal year ended prior to your Date of Termination, and (2) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is three hundred sixty-five (365); and
(B) as severance pay a lump sum in cash equal to the sum of the following amounts:
(1) three times the sum of (x) your annual rate of salary in effect just prior to the time a Notice of Termination is given or, if higher, the annual rate of salary in effect immediately prior to the change in control of the Company and (y) the highest annual bonus earned by you from the Company and its affiliates during the last three (3) completed fiscal years of the Company immediately preceding your Date of Termination, annualized in the event you were not employed by the Company or its affiliates for the whole of any such fiscal year (the "Bonus Amount"); and
(2) the lump sum actuarial equivalent (utilizing actuarial assumptions no less favorable to you than those in effect under the Company's Retirement Plan immediately prior to the change in control) of the excess of the (A) benefits under the Company's Retirement Plan, Excess Benefit Plan and Supplemental Executive Retirement Plan (collectively, the "Defined Benefit Plans") which you would receive if your employment continued for three years after the Date of Termination (and that your age was increased by three years from your age at the Date of Termination), assuming for this purpose that (x) your accrued benefits under the Defined Benefit Plans were fully vested, (y) in each of the three years you received (a) salary at the annual rate in effect immediately prior to the change in control and (b) bonus compensation equal to the Bonus Amount and (z) there were no reduction or offset under the Defined Benefit Plans for the actuarial value of your account under the Employee Stock Ownership Plan of The Bank of New York Company, Inc. (the "ESOP"), over (B) the vested accrued benefits payable under the Defined Benefit Plans as of the Date of Termination if there were no reduction or offset thereunder for the actuarial value of your ESOP account.
(iv) If, within twenty-four (24) months after a change in control of the Company, as defined in Section 3 above, shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall maintain or cause the Bank to maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (a) three years after the Date of Termination, (b) the commencement date of equivalent benefits from a new employer or (c) your attainment of age sixty-five (65), all insured and self- insured employee welfare benefit Plans in which you were entitled to participate immediately prior to the Date of Termination, provided that your continued participation is possible under the general terms and provisions of such Plans (and any applicable funding media) and you continue to pay an amount equal to your regular contribution under such plans for such participation. If, at the end of three years after the Termination Date, you have not reached your sixty-fifth birthday and you have not previously received or are not then receiving equivalent benefits from a new employer, the Company shall or cause the Bank to arrange, at its sole cost and expense, to enable you to convert your and your dependents' coverage under such Plans to individual policies or programs upon the same terms as employees of the Company and the Bank may apply for such conversions. In the event that your participation in any such Plan is barred, the Company shall or cause the Bank, at its sole cost and expense, to arrange to have issued for the benefit of you and your dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this paragraph (iv) or, if such insurance is not available at a reasonable cost to the Company or the Bank, the Company shall or cause the Bank to otherwise provide you and your dependents with equivalent benefits (on an after-tax basis). You shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans.
(v) In the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a change in control (or any of its affiliated entities) to
or for your benefit, whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5 (the "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay you an additional payment (a "Gross-Up Payment") in an
amount such that after payment by you of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and
(y) the product of any deductions disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made. For purposes of determining the amount of the
Gross-up Payment, you shall be deemed to (i) pay federal income taxes at the
highest marginal rates of federal income taxation for the calendar year in
which the Gross-up Payment is to be made, (ii) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes and (iii) have otherwise allowable deductions for federal income
tax purposes at least equal to those which could be disallowed because of the
inclusion of the Gross-up Payment in the Executive's adjusted gross income.
The Gross-up Payment under this paragraph (v) with respect to any Payment
shall be made no later than thirty (30) days following such Payment.
Notwithstanding the foregoing, if it shall be determined that you are entitled to a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is less than 10% of the portion of the Payments that would be treated as "parachute payments" under Section 280G of the Code, then the amounts payable to you under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to you without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be made to you. The
reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 5(iii)(B)(1), unless an alternative method of reduction is elected by you. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment") or Gross-up Payments are made by the Company which should not have been made ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that you are thereafter required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for your benefit. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse you for your Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by you (to the extent you have received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.
(vi) All determinations required to be made under paragraph (v) of this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment or the reduction of the Payments to the Safe Harbor Cap, as well as the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the change in control (the "Accounting Firm") which shall provide detailed supporting calculations both
to the Company and you within fifteen (15) business days of the receipt of notice from the Company or you that there has been a Payment, or such earlier time as is requested by the Company (collectively, the "Determination"). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in control, you may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and you.
(vii) Except as specifically provided in paragraph (iv) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company or the Bank by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise.
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such Person by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such Person to furnish such assent by the later of (A) three business days prior to the time such Person becomes a Successor or (B) two business days after such Person receives a written request to so assent shall constitute Good Reason for termination by you of your employment if a change in control of the Company occurs or has occurred. For purposes of this Agreement, "Successor" shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time),
the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's Voting Securities or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.
(iii) For purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving or continuing entity in respect of any merger, consolidation or form of business combination in which the Company ceases to exist.
7. Fees, Expenses and Interest; Mitigation.
(i) The Company shall, or cause the Bank to, reimburse you, on a
current basis, for all reasonable legal fees and related expenses incurred by
you in connection with the Agreement following a change in control of the
Company, including, without limitation, (a) all such fees and expenses, if
any, incurred in contesting or disputing any termination of your employment or
incurred by you in seeking advice with respect to the matters set forth in
Section 8 hereof or (b) your seeking to obtain or enforce any right or benefit
provided by this Agreement, in each case, regardless of whether or not your
claim is upheld by a court of competent jurisdiction; provided, however, you
shall be required to repay any such amounts to the Company to the extent that
a court issues a final and non-appealable order setting forth the
determination that the position taken by you was frivolous or advanced by you
in bad faith. In addition to the fees and expenses provided herein, you shall
also be paid interest on any disputed amount ultimately paid to you at the
prime rate announced by the Bank from time to time from the date payment
should have been made until paid in full.
(ii) You shall not be required to mitigate the amount of any payment the Company or the Bank becomes obligated to make to you in connection with this Agreement, by seeking other employment or otherwise.
8. Taxes. - All payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income and employment taxes.
9. Survival. - The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of this Agreement shall survive termination of this Agreement.
10. Notice. - For the purposes 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 and addressed, in the case of the Company, to the address set forth on the first page of this Agreement or, in the case of the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, 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 receipt.
11. Miscellaneous. - No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of 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 applied without regard to conflict of laws principles.
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. Arbitration. - Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York City by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators' award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 13.
14. Employee's Commitment. - You agree that subsequent to your period of employment with the Company and the Bank, you will not at any time communicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or any subsidiary or other confidential information concerning their business, affairs, products, suppliers or customers which, if disclosed, would have a material adverse effect upon the business or operations of the Company and its subsidiaries, taken as a whole; it being understood, however, that the obligations of this Section 14 shall not apply to the extent that the aforesaid matters (a) are disclosed in circumstances where you are legally required to do so or (b) become generally known to and available for use by the public otherwise than by your wrongful act or omission.
15. Related Agreements. - To the extent that any provision of any other agreement between the Company, the Bank or any of the Company's other subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.
16. 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.
If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject and will supersede our previous letter agreement dated July 8, 1997.
Sincerely,
THE BANK OF NEW YORK COMPANY, INC.
By \s\ Gerald L. Hassell
-------------------------
Name:
Title:
Agreed to this 22nd day
Of September, 2000.
\s\ Alan R. Griffith
---------------------
Alan R. Griffith
Address:
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EXHIBIT 10(j)
July 11, 2000
Bruce Van Saun
The Bank of New York
One Wall Street
New York, New York 10286
Dear Mr. Van Saun:
The Bank of New York Company, Inc., a New York corporation (the "Company"), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility, and the uncertainty and questions which it may raise among management of the Company and its principal subsidiary, The Bank of New York (the "Bank"), may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of management of the Company and the Bank to their assigned duties without distraction in circumstances arising from the possibility of a change in control of the Company. In particular, the Board believes it important, should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able to assess and advise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such other action regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this letter agreement sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company or the Bank is terminated subsequent to a "change in control" of the Company under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company, the Bank or you may terminate your employment at any time, subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a tender offer or exchange offer is made by a Person (as hereinafter defined) for more than 25% of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors ("Voting Securities"), including shares of the common stock of the Company, you agree that you will not leave the employ of the Company or the Bank (other than as a result of Disability or upon Retirement, as such terms are hereinafter defined) and will render the services contemplated in the recitals to this Agreement until such tender offer or exchange offer has been abandoned or terminated or a change in control of the Company, as defined in Section 3 hereof, has occurred. For purposes of this Agreement, the term "Person" shall mean and include any individual, corporation, partnership, group, association or other "person", as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, the Bank, any other subsidiary of the Company or any employee benefit plan(s) sponsored by the Company, the Bank or any other subsidiary of the Company.
2. Term of Agreement. - This Agreement shall commence on the date hereof and shall continue in effect until December 31, 2000; provided, however, that commencing on January 1, 2001 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such January 1st date, the Company or you shall have given notice that this Agreement shall not be extended; and provided, further, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of twenty-four (24) months after a change in control of the Company, as defined in Section 3 hereof, if such change in control shall have occurred during the term of this Agreement, as it may be extended by the first proviso set forth above. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if
you or the Company or the Bank terminate your employment prior to a change in control of the Company.
3. Change in Control. - For purposes of this Agreement, a "change in control" of the Company shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a change in control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a change in control under this Section 3 and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B)during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any
other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
4. Termination Following change in Control. - If any of the events described in Section 3 hereof constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the termination of your employment with the Company or the Bank within twenty-four (24) months after such event, unless such termination is
(a) because of your death or Retirement, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. - Termination by the Company of your employment based on "Disability" shall mean absence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full time performance of your duties.
(ii) Retirement. - Termination by you or by the Company of your employment based on "Retirement" shall mean termination on or after your attainment of age sixty-five (65).
(iii) Cause. - Termination by the Company or the Bank of your employment for "Cause" shall mean termination upon (a) the willful and continued failure by you to perform substantially your duties with the Company or the Bank (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company or the Chief Executive Officer of the Bank, as appropriate, which specifically identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company or the Bank. For purposes of this paragraph (iii), no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company or the Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company or the Bank shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company and the Bank. It is also expressly understood that your attention to matters not directly related to the business of the Company or the Bank shall not provide a basis for termination for Cause so long as the Board has approved your engagement in
such activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you
were guilty of the conduct set forth above in (a) or (b) of this paragraph
(iii) and specifying the particulars thereof in detail.
(iv) Good Reason. - Termination by you of your employment for "Good Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has been an adverse change in your status or position(s) as an executive officer of the Company or the Bank as in effect immediately prior to the change in control, including, without limitation, any adverse change in your status or position as a result of a diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which are inconsistent with such status or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a result of your death or by you other than for Good Reason);
(B) a reduction by the Company or the Bank in your base salary as in effect immediately prior to the change in control;
(C) the failure by the Company or the Bank to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the change in control of the Company (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the change in control, or the taking of any action, or the failure to act, by the Company or the Bank which would adversely affect your continued
participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the change in control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the change in control;
(D) the failure by the Company or the Bank to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with its normal vacation policy as in effect immediately prior to the change in control;
(E) the requirement by the Company or the Bank that you be based at an office that is greater than 35 miles from where your office is located immediately prior to the change in control except for required travel on the business of the Company or the Bank to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company or the Bank prior to the change in control;
(F) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 6 hereof;
(G) any purported termination by the Company or the Bank of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (v) below (and, if applicable, paragraph (iii) above); and for purposes of this Agreement, no such purported termination shall be effective; or
(H) any refusal by the Company or the Bank to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company or the Bank which, prior to the change in control, you were permitted by the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company or the Bank intended to benefit employees.
(v) Notice of Termination. - Any purported termination by the Company or the Bank or by you following a change in control shall be communicated by written Notice of Termination to the other party hereto. 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.
(vi) Date of Termination. - "Date of Termination" following a
change in control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the performance of your duties on a full-
time basis during such thirty (30) day period), (b) if your employment is to
be terminated by the Company or the Bank for Cause or by you pursuant to
Sections 4(iv)(F) and 6 hereof or for any other Good Reason, the date
specified in the Notice of Termination, or (c) if your employment is to be
terminated by the Company or the Bank for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be a date
earlier than ninety (90) days after the date on which a Notice of Termination
is given, unless an earlier date has been expressly agreed to by you in
writing either in advance of, or after, receiving such Notice of Termination.
In the case of termination by the Company or the Bank of your employment for
Cause, if you have not previously expressly agreed in writing to the
termination, then within thirty (30) days after receipt by you of the Notice
of Termination with respect thereto, you may notify the Company that a dispute
exists concerning the termination, in which event the Date of Termination
shall be the date set either by mutual written agreement of the parties or by
the arbitrators in a proceeding as provided in Section 13 hereof. During the
pendency of any such dispute, the Company or the Bank will continue to pay you
your full compensation in effect just prior to the time the Notice of
Termination is given and until the dispute is resolved in accordance with
Section 13.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a change in control of the Company that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with Sections 4(i) and 4(vi) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause following a change in control of the Company, the Company or the Bank shall pay you your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and are otherwise payable, but which have not yet been paid to you. Thereupon the Company and the Bank shall have no further obligations to you under this Agreement.
(iii) If, within twenty-four (24) months after a change in control of the Company shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall pay or cause the Bank to pay to you, no later than the fifth business day following the Date of Termination, without regard to any contrary provisions of any Plan, the following:
(A) (x) your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given, (y) any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and otherwise payable, but which have not yet been paid to you and (z) a pro rata portion of your annual bonus for the fiscal year in which the Date of Termination occurs in an amount equal to the result of multiplying (1) the greater of (I) the bonus payable to you (without regard to the date of your termination of employment) pursuant to the terms of the Company's 1994 Management Incentive Compensation Plan (the "MICP")(or any successor plan) determined based on performance through your Date of Termination and (II) the bonus payable to you under the MICP (or any
successor plan) for the fiscal year ended prior to your Date of Termination, and (2) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is three hundred sixty-five (365); and
(B) as severance pay a lump sum in cash equal to the sum of the following amounts:
(1) three times the sum of (x) your annual rate of salary in effect just prior to the time a Notice of Termination is given or, if higher, the annual rate of salary in effect immediately prior to the change in control of the Company and (y) the highest annual bonus earned by you from the Company and its affiliates during the last three (3) completed fiscal years of the Company immediately preceding your Date of Termination, annualized in the event you were not employed by the Company or its affiliates for the whole of any such fiscal year (the "Bonus Amount"); and
(2) the lump sum actuarial equivalent (utilizing actuarial assumptions no less favorable to you than those in effect under the Company's Retirement Plan immediately prior to the change in control) of the excess of the (A) benefits under the Company's Retirement Plan, Excess Benefit Plan and Supplemental Executive Retirement Plan (collectively, the "Defined Benefit Plans") which you would receive if your employment continued for three years after the Date of Termination (and that your age was increased by three years from your age at the Date of Termination), assuming for this purpose that (x) your accrued benefits under the Defined Benefit Plans were fully vested, (y) in each of the three years you received (a) salary at the annual rate in effect immediately prior to the change in control and (b) bonus compensation equal to the Bonus Amount and (z) there were no reduction or offset under the Defined Benefit Plans for the actuarial value of your account under the Employee Stock Ownership Plan of The Bank of New York Company, Inc. (the "ESOP"), over (B) the vested accrued benefits payable under the Defined Benefit Plans as of the Date of Termination if there were no reduction or offset thereunder for the actuarial value of your ESOP account.
(iv) If, within twenty-four (24) months after a change in control of the Company, as defined in Section 3 above, shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall maintain or cause the Bank to maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (a) three years after the Date of Termination, (b) the commencement date of equivalent benefits from a new employer or (c) your attainment of age sixty-five (65), all insured and self- insured employee welfare benefit Plans in which you were entitled to participate immediately prior to the Date of Termination, provided that your continued participation is possible under the general terms and provisions of such Plans (and any applicable funding media) and you continue to pay an amount equal to your regular contribution under such plans for such participation. If, at the end of three years after the Termination Date, you have not reached your sixty-fifth birthday and you have not previously received or are not then receiving equivalent benefits from a new employer, the Company shall or cause the Bank to arrange, at its sole cost and expense, to enable you to convert your and your dependents' coverage under such Plans to individual policies or programs upon the same terms as employees of the Company and the Bank may apply for such conversions. In the event that your participation in any such Plan is barred, the Company shall or cause the Bank, at its sole cost and expense, to arrange to have issued for the benefit of you and your dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this paragraph (iv) or, if such insurance is not available at a reasonable cost to the Company or the Bank, the Company shall or cause the Bank to otherwise provide you and your dependents with equivalent benefits (on an after-tax basis). You shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans.
(v) In the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a change in control (or any of its affiliated entities) to
or for your benefit, whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5 (the "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay you an additional payment (a "Gross-Up Payment") in an
amount such that after payment by you of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and
(y) the product of any deductions disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made. For purposes of determining the amount of the
Gross-up Payment, you shall be deemed to (i) pay federal income taxes at the
highest marginal rates of federal income taxation for the calendar year in
which the Gross-up Payment is to be made, (ii) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes and (iii) have otherwise allowable deductions for federal income
tax purposes at least equal to those which could be disallowed because of the
inclusion of the Gross-up Payment in the Executive's adjusted gross income.
The Gross-up Payment under this paragraph (v) with respect to any Payment
shall be made no later than thirty (30) days following such Payment.
Notwithstanding the foregoing, if it shall be determined that you are entitled to a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is less than 10% of the portion of the Payments that would be treated as "parachute payments" under Section 280G of the Code, then the amounts payable to you under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to you without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be made to you. The
reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 5(iii)(B)(1), unless an alternative method of reduction is elected by you. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment") or Gross-up Payments are made by the Company which should not have been made ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that you are thereafter required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for your benefit. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse you for your Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by you (to the extent you have received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.
(vi) All determinations required to be made under paragraph (v) of this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment or the reduction of the Payments to the Safe Harbor Cap, as well as the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the change in control (the "Accounting Firm") which shall provide detailed supporting calculations both
to the Company and you within fifteen (15) business days of the receipt of notice from the Company or you that there has been a Payment, or such earlier time as is requested by the Company (collectively, the "Determination"). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in control, you may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and you.
(vii) Except as specifically provided in paragraph (iv) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company or the Bank by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise.
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such Person by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such Person to furnish such assent by the later of (A) three business days prior to the time such Person becomes a Successor or (B) two business days after such Person receives a written request to so assent shall constitute Good Reason for termination by you of your employment if a change in control of the Company occurs or has occurred. For purposes of this Agreement, "Successor" shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time),
the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's Voting Securities or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.
(iii) For purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving or continuing entity in respect of any merger, consolidation or form of business combination in which the Company ceases to exist.
7. Fees, Expenses and Interest; Mitigation.
(i) The Company shall, or cause the Bank to, reimburse you, on a
current basis, for all reasonable legal fees and related expenses incurred by
you in connection with the Agreement following a change in control of the
Company, including, without limitation, (a)all such fees and expenses, if any,
incurred in contesting or disputing any termination of your employment or
incurred by you in seeking advice with respect to the matters set forth in
Section 8 hereof or (b) your seeking to obtain or enforce any right or benefit
provided by this Agreement, in each case, regardless of whether or not your
claim is upheld by a court of competent jurisdiction; provided, however, you
shall be required to repay any such amounts to the Company to the extent that
a court issues a final and non-appealable order setting forth the
determination that the position taken by you was frivolous or advanced by you
in bad faith. In addition to the fees and expenses provided herein, you shall
also be paid interest on any disputed amount ultimately paid to you at the
prime rate announced by the Bank from time to time from the date payment
should have been made until paid in full.
(ii) You shall not be required to mitigate the amount of any payment the Company or the Bank becomes obligated to make to you in connection with this Agreement, by seeking other employment or otherwise.
8. Taxes. - All payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income and employment taxes.
9. Survival. - The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of this Agreement shall survive termination of this Agreement.
10. Notice. - For the purposes 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 and addressed, in the case of the Company, to the address set forth on the first page of this Agreement or, in the case of the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, 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 receipt.
11. Miscellaneous. - No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of 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 applied without regard to conflict of laws principles.
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. Arbitration. - Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York City by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators' award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 13.
14. Employee's Commitment. - You agree that subsequent to your period of employment with the Company and the Bank, you will not at any time communicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or any subsidiary or other confidential information concerning their business, affairs, products, suppliers or customers which, if disclosed, would have a material adverse effect upon the business or operations of the Company and its subsidiaries, taken as a whole; it being understood, however, that the obligations of this Section 14 shall not apply to the extent that the aforesaid matters (a) are disclosed in circumstances where you are legally required to do so or (b) become generally known to and available for use by the public otherwise than by your wrongful act or omission.
15. Related Agreements. - To the extent that any provision of any other agreement between the Company, the Bank or any of the Company's other subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.
16. 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.
If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject and will supersede our previous letter agreement dated July 8, 1997.
Sincerely,
THE BANK OF NEW YORK COMPANY, INC.
By \s\ Gerald L. Hassell ------------------------- Name: Title: |
Agreed to this 11th day
Of August, 2000.
\s\ Bruce Van Saun ------------------- Bruce Van Saun Address: |
EXHIBIT 10(k)
July 11, 2000
Mr. Robert J. Mueller
The Bank of New York
One Wall Street
New York, New York 10286
Dear Mr. Mueller:
The Bank of New York Company, Inc., a New York corporation (the "Company"), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility, and the uncertainty and questions which it may raise among management of the Company and its principal subsidiary, The Bank of New York (the "Bank"), may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of management of the Company and the Bank to their assigned duties without distraction in circumstances arising from the possibility of a change in control of the Company. In particular, the Board believes it important, should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able to assess and advise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such other action regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of your own situation.
In order to induce you to remain in the employ of the Company, this letter agreement sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company or the Bank is terminated subsequent to a "change in control" of the Company under the circumstances described below.
1. Agreement to Provide Services; Right to Terminate.
(i) Except as otherwise provided in paragraph (ii) below, the Company, the Bank or you may terminate your employment at any time, subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof.
(ii) In the event a tender offer or exchange offer is made by a Person (as hereinafter defined) for more than 25% of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors ("Voting Securities"), including shares of the common stock of the Company, you agree that you will not leave the employ of the Company or the Bank (other than as a result of Disability or upon Retirement, as such terms are hereinafter defined) and will render the services contemplated in the recitals to this Agreement until such tender offer or exchange offer has been abandoned or terminated or a change in control of the Company, as defined in Section 3 hereof, has occurred. For purposes of this Agreement, the term "Person" shall mean and include any individual, corporation, partnership, group, association or other "person", as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, the Bank, any other subsidiary of the Company or any employee benefit plan(s) sponsored by the Company, the Bank or any other subsidiary of the Company.
2. Term of Agreement. - This Agreement shall commence on the date hereof and shall continue in effect until December 31, 2000; provided, however, that commencing on January 1, 2001 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such January 1st date, the Company or you shall have given notice that this Agreement shall not be extended; and provided, further, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of twenty-four (24) months after a change in control of the Company, as defined in Section 3 hereof, if such change in control shall have occurred during the term of this Agreement, as it may be extended by the first proviso set forth above. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company or the Bank terminate your employment prior to a change in control of the Company.
3. Change in Control. - For purposes of this Agreement, a "change in control" of the Company shall be deemed to occur if (A) any "person" (as such term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Company or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ("Voting Securities"); provided, however, that the event described in this clause (A) shall not be deemed to be a change in control if (x) it involves the acquisition of the Company's Voting Securities from the Company in connection with the acquisition by the Company of a business or operations of or controlled by such person, (y) a majority of the Incumbent Directors (as defined below) approve a resolution providing expressly that such acquisition does not constitute a change in control under this Section 3 and (z) such person does not become the beneficial owner of 35% or more of the Company's Voting Securities; or (B)during any period of not more than two years, individuals who constitute the Board as of the beginning of the period (the "Incumbent Directors") and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A) or (C) of this sentence) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board, either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination (each such new director shall also be deemed to be an Incumbent Director) cease for any reason to constitute a majority of the Board; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors, as a result of any
other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board or as a result of an actual or threatened acquisition of 25% or more of the Company's Voting Securities shall be deemed to be an Incumbent Director; or (C) there occurs the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (i) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 95% or more of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company's Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Company's Voting Securities among the holders thereof immediately prior to the Business Combination and (ii) after giving effect to the Business Combination, at least (I) a majority of the members of the board of directors of the Surviving Corporation and of any corporation that owns 25% or more but less than 50% of the Voting Securities of the Surviving Corporation or (II) a majority of the members of the board of directors of any corporation that owns at least 50% of the Voting Securities of the Surviving Corporation, were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination; or (D) the shareholders of the Company approve a plan of complete liquidation of the Company; or (E) the consummation of the sale or disposition by the Company of all or substantially all of the Company's assets.
4. Termination Following Change in Control. - If any of the events described in Section 3 hereof constituting a change in control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the termination of your employment with the Company or the Bank within twenty-four (24) months after such event, unless such termination is
(a) because of your death or Retirement, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined).
(i) Disability. - Termination by the Company of your employment based on "Disability" shall mean absence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full time performance of your duties.
(ii) Retirement. - Termination by you or by the Company of your employment based on "Retirement" shall mean termination on or after your attainment of age sixty-five (65).
(iii) Cause. - Termination by the Company or the Bank of your employment for "Cause" shall mean termination upon (a) the willful and continued failure by you to perform substantially your duties with the Company or the Bank (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company or the Chief Executive Officer of the Bank, as appropriate, which specifically identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company or the Bank. For purposes of this paragraph (iii), no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company or the Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company or the Bank shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company and the Bank. It is also expressly understood that your attention to matters not directly related to the business of the Company or the Bank shall not provide a basis for termination for Cause so long as the Board has approved your engagement in
such activities. Notwithstanding the foregoing, you shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you
were guilty of the conduct set forth above in (a) or (b) of this paragraph
(iii) and specifying the particulars thereof in detail.
(iv) Good Reason. - Termination by you of your employment for "Good Reason" shall mean termination based on:
(A) a determination by you, in your reasonable judgment, that there has been an adverse change in your status or position(s) as an executive officer of the Company or the Bank as in effect immediately prior to the change in control, including, without limitation, any adverse change in your status or position as a result of a diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which are inconsistent with such status or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a result of your death or by you other than for Good Reason);
(B) a reduction by the Company or the Bank in your base salary as in effect immediately prior to the change in control;
(C) the failure by the Company or the Bank to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the change in control of the Company (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the change in control, or the taking of any action, or the failure to act, by the Company or the Bank which would adversely affect your continued
participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the change in control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the change in control;
(D) the failure by the Company or the Bank to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with its normal vacation policy as in effect immediately prior to the change in control;
(E) the requirement by the Company or the Bank that you be based at an office that is greater than 35 miles from where your office is located immediately prior to the change in control except for required travel on the business of the Company or the Bank to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company or the Bank prior to the change in control;
(F) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 6 hereof;
(G) any purported termination by the Company or the Bank of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (v) below (and, if applicable, paragraph (iii) above); and for purposes of this Agreement, no such purported termination shall be effective; or
(H) any refusal by the Company or the Bank to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company or the Bank which, prior to the change in control, you were permitted by the Board to attend to or engage in.
For purposes of this Agreement, "Plan" shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company or the Bank intended to benefit employees.
(v) Notice of Termination. - Any purported termination by the Company or the Bank or by you following a change in control shall be communicated by written Notice of Termination to the other party hereto. 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.
(vi) Date of Termination. - "Date of Termination" following a
change in control shall mean (a) if your employment is to be terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the performance of your duties on a full-
time basis during such thirty (30) day period), (b) if your employment is to
be terminated by the Company or the Bank for Cause or by you pursuant to
Sections 4(iv)(F) and 6 hereof or for any other Good Reason, the date
specified in the Notice of Termination, or (c) if your employment is to be
terminated by the Company or the Bank for any reason other than Cause, the
date specified in the Notice of Termination, which in no event shall be a date
earlier than ninety (90) days after the date on which a Notice of Termination
is given, unless an earlier date has been expressly agreed to by you in
writing either in advance of, or after, receiving such Notice of Termination.
In the case of termination by the Company or the Bank of your employment for
Cause, if you have not previously expressly agreed in writing to the
termination, then within thirty (30) days after receipt by you of the Notice
of Termination with respect thereto, you may notify the Company that a dispute
exists concerning the termination, in which event the Date of Termination
shall be the date set either by mutual written agreement of the parties or by
the arbitrators in a proceeding as provided in Section 13 hereof. During the
pendency of any such dispute, the Company or the Bank will continue to pay you
your full compensation in effect just prior to the time the Notice of
Termination is given and until the dispute is resolved in accordance with
Section 13.
5. Compensation Upon Termination or During Disability; Other Agreements.
(i) During any period following a change in control of the Company that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with Sections 4(i) and 4(vi) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause following a change in control of the Company, the Company or the Bank shall pay you your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and are otherwise payable, but which have not yet been paid to you. Thereupon the Company and the Bank shall have no further obligations to you under this Agreement.
(iii) If, within twenty-four (24) months after a change in control of the Company shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall pay or cause the Bank to pay to you, no later than the fifth business day following the Date of Termination, without regard to any contrary provisions of any Plan, the following:
(A) (x) your salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given, (y) any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned and otherwise payable, but which have not yet been paid to you and (z) a pro rata portion of your annual bonus for the fiscal year in which the Date of Termination occurs in an amount equal to the result of multiplying (1) the greater of (I) the bonus payable to you (without regard to the date of your termination of employment) pursuant to the terms of the Company's 1994 Management Incentive Compensation Plan (the
"MICP")(or any successor plan) determined based on performance through your Date of Termination and (II) the bonus payable to you under the MICP (or any successor plan) for the fiscal year ended prior to your Date of Termination, and (2) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is three hundred sixty-five (365); and
(B) as severance pay a lump sum in cash equal to the sum of the following amounts:
(1) three times the sum of (x) your annual rate of salary in effect just prior to the time a Notice of Termination is given or, if higher, the annual rate of salary in effect immediately prior to the change in control of the Company and (y) the highest annual bonus earned by you from the Company and its affiliates during the last three (3) completed fiscal years of the Company immediately preceding your Date of Termination, annualized in the event you were not employed by the Company or its affiliates for the whole of any such fiscal year (the "Bonus Amount"); and
(2) the lump sum actuarial equivalent (utilizing actuarial assumptions no less favorable to you than those in effect under the Company's Retirement Plan immediately prior to the change in control) of the excess of the (A) benefits under the Company's Retirement Plan, Excess Benefit Plan and Supplemental Executive Retirement Plan (collectively, the "Defined Benefit Plans") which you would receive if your employment continued for three years after the Date of Termination (and that your age was increased by three years from your age at the Date of Termination), assuming for this purpose that (x) your accrued benefits under the Defined Benefit Plans were fully vested, (y) in each of the three years you received (a) salary at the annual rate in effect immediately prior to the change in control and (b) bonus compensation equal to the Bonus Amount and (z) there were no reduction or offset under the Defined Benefit Plans for the actuarial value of your account under the Employee Stock Ownership Plan of The Bank of New York Company, Inc. (the "ESOP"), over (B) the vested accrued benefits payable under the Defined Benefit Plans as of the Date of Termination if there were no reduction or offset thereunder for the actuarial value of your ESOP account.
(iv) If, within twenty-four (24) months after a change in control of the Company, as defined in Section 3 above, shall have occurred, your employment by the Company or the Bank shall be terminated (a) by the Company or the Bank other than for Cause, Disability or Retirement or (b) by you for Good Reason, then the Company shall maintain or cause the Bank to maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (a) three years after the Date of Termination, (b) the commencement date of equivalent benefits from a new employer or (c) your attainment of age sixty-five (65), all insured and self- insured employee welfare benefit Plans in which you were entitled to participate immediately prior to the Date of Termination, provided that your continued participation is possible under the general terms and provisions of such Plans (and any applicable funding media) and you continue to pay an amount equal to your regular contribution under such plans for such participation. If, at the end of three years after the Termination Date, you have not reached your sixty-fifth birthday and you have not previously received or are not then receiving equivalent benefits from a new employer, the Company shall or cause the Bank to arrange, at its sole cost and expense, to enable you to convert your and your dependents' coverage under such Plans to individual policies or programs upon the same terms as employees of the Company and the Bank may apply for such conversions. In the event that your participation in any such Plan is barred, the Company shall or cause the Bank, at its sole cost and expense, to arrange to have issued for the benefit of you and your dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this paragraph (iv) or, if such insurance is not available at a reasonable cost to the Company or the Bank, the Company shall or cause the Bank to otherwise provide you and your dependents with equivalent benefits (on an after-tax basis). You shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans.
(v) In the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a change in control (or any of its affiliated entities) to
or for your benefit, whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5 (the "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Company shall pay you an additional payment (a "Gross-Up Payment") in an
amount such that after payment by you of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and
(y) the product of any deductions disallowed because of the inclusion of the
Gross-up Payment in your adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made. For purposes of determining the amount of the
Gross-up Payment, you shall be deemed to (i) pay federal income taxes at the
highest marginal rates of federal income taxation for the calendar year in
which the Gross-up Payment is to be made, (ii) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes and (iii) have otherwise allowable deductions for federal income
tax purposes at least equal to those which could be disallowed because of the
inclusion of the Gross-up Payment in the Executive's adjusted gross income.
The Gross-up Payment under this paragraph (v) with respect to any Payment
shall be made no later than thirty (30) days following such Payment.
Notwithstanding the foregoing, if it shall be determined that you are entitled to a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is less than 10% of the portion of the Payments that would be treated as "parachute payments" under Section 280G of the Code, then the amounts payable to you under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to you without giving rise to the Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be made to you. The
reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 5(iii)(B)(1), unless an alternative method of reduction is elected by you. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Agreement shall be reduced pursuant to this provision.
As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment") or Gross-up Payments are made by the Company which should not have been made ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that you are thereafter required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for your benefit. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse you for your Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by you (to the extent you have received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.
(vi) All determinations required to be made under paragraph (v) of this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment or the reduction of the Payments to the Safe Harbor Cap, as well as the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the change in control (the "Accounting Firm") which shall provide detailed supporting calculations both
to the Company and you within fifteen (15) business days of the receipt of notice from the Company or you that there has been a Payment, or such earlier time as is requested by the Company (collectively, the "Determination"). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in control, you may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish you with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and you.
(vii) Except as specifically provided in paragraph (iv) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company or the Bank by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise.
6. Successors; Binding Agreement.
(i) The Company will seek, by written request at least five business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such Person by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such Person to furnish such assent by the later of (A) three business days prior to the time such Person becomes a Successor or (B) two business days after such Person receives a written request to so assent shall constitute Good Reason for termination by you of your employment if a change in control of the Company occurs or has occurred. For purposes of this Agreement, "Successor" shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time),
the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's Voting Securities or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.
(iii) For purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving or continuing entity in respect of any merger, consolidation or form of business combination in which the Company ceases to exist.
7. Fees, Expenses and Interest; Mitigation.
(i) The Company shall, or cause the Bank to, reimburse you, on a
current basis, for all reasonable legal fees and related expenses incurred by
you in connection with the Agreement following a change in control of the
Company, including, without limitation, (a) all such fees and expenses, if
any, incurred in contesting or disputing any termination of your employment or
incurred by you in seeking advice with respect to the matters set forth in
Section 8 hereof or (b) your seeking to obtain or enforce any right or benefit
provided by this Agreement, in each case, regardless of whether or not your
claim is upheld by a court of competent jurisdiction; provided, however, you
shall be required to repay any such amounts to the Company to the extent that
a court issues a final and non-appealable order setting forth the
determination that the position taken by you was frivolous or advanced by you
in bad faith. In addition to the fees and expenses provided herein, you shall
also be paid interest on any disputed amount ultimately paid to you at the
prime rate announced by the Bank from time to time from the date payment
should have been made until paid in full.
(ii) You shall not be required to mitigate the amount of any payment the Company or the Bank becomes obligated to make to you in connection with this Agreement, by seeking other employment or otherwise.
8. Taxes. - All payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income and employment taxes.
9. Survival. - The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of this Agreement shall survive termination of this Agreement.
10. Notice. - For the purposes 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 and addressed, in the case of the Company, to the address set forth on the first page of this Agreement or, in the case of the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, 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 receipt.
11. Miscellaneous. - No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of 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 applied without regard to conflict of laws principles.
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. Arbitration. - Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York City by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators' award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 13.
14. Employee's Commitment. - You agree that subsequent to your period of employment with the Company and the Bank, you will not at any time communicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or any subsidiary or other confidential information concerning their business, affairs, products, suppliers or customers which, if disclosed, would have a material adverse effect upon the business or operations of the Company and its subsidiaries, taken as a whole; it being understood, however, that the obligations of this Section 14 shall not apply to the extent that the aforesaid matters (a) are disclosed in circumstances where you are legally required to do so or (b) become generally known to and available for use by the public otherwise than by your wrongful act or omission.
15. Related Agreements. - To the extent that any provision of any other agreement between the Company, the Bank or any of the Company's other subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.
16. 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.
If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject and will supersede our previous letter agreement dated July 8, 1997.
Sincerely,
THE BANK OF NEW YORK COMPANY, INC.
By \s\ Gerald L. Hassell ------------------------- Name: Title: |
Agreed to this 16th day
Of August, 2000.
\s\ Robert J. Mueller ---------------------- Robert J. Mueller Address: |
EXHIBIT 12
THE BANK OF NEW YORK COMPANY, INC.
Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges,
and Distributions on Preferred Trust Securities
(Dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
EARNINGS
--------
Income Before Income Taxes $ 604 $1,343 $1,756 $2,410
Fixed Charges, Excluding Interest
on Deposits 137 105 392 333
------ ------ ------ ------
Income Before Income Taxes and Fixed
Charges Excluding Interest on Deposits 741 1,448 2,148 2,743
Interest on Deposits 501 320 1,494 961
------ ------ ------ ------
Income Before Income Taxes and Fixed
Charges, Including Interest on Deposits $1,242 $1,768 $3,642 $3,704
====== ====== ====== ======
FIXED CHARGES
-------------
Interest Expense, Excluding Interest
on Deposits $ 127 $ 97 $ 364 $ 309
One-Third Net Rental Expense* 10 8 28 24
------ ------ ------ ------
Total Fixed Charges, Excluding Interest
on Deposits 137 105 392 333
Interest on Deposits 501 320 1,494 961
------ ------ ------ ------
Total Fixed Charges, Including Interest
on Deposits $ 638 $ 425 $1,886 $1,294
====== ====== ====== ======
DISTRIBUTION ON PREFERRED TRUST
SECURITIES, PRE-TAX BASIS $ 28 $ 28 $ 85 $ 84
-------------------------------
====== ====== ====== ======
EARNINGS TO FIXED CHARGES RATIOS
--------------------------------
Excluding Interest on Deposits 5.41x 13.79x 5.48x 8.24x
Including Interest on Deposits 1.95 4.16 1.93 2.86
EARNINGS TO COMBINED FIXED CHARGES,
DISTRIBUTION ON PREFERRED TRUST SECURITIES,
& PREFERRED STOCK DIVIDENDS RATIOS
-------------------------------------------
Excluding Interest on Deposits 4.49 10.89 4.50 6.58
Including Interest on Deposits 1.86 3.90 1.85 2.69
*The proportion deemed representative of the interest factor.
|
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
| ARTICLE 9 |
| This schedule contains summary financial information extracted from the Bank of New York Company, Inc.'s Form 10-Q for the period ended September 30, 2000 and is qualified entirely by reference to such Form 10-Q. |
| CIK: 0000009626 |
| NAME: THE BANK OF NEW YORK COMPANY, INC. |
| MULTIPLIER: 1,000,000 |
| PERIOD TYPE | 9 MOS |
| FISCAL YEAR END | DEC 31 2000 |
| PERIOD START | JAN 01 2000 |
| PERIOD END | SEPT 30 2000 |
| CASH | 4,222 |
| INT BEARING DEPOSITS | 5,047 |
| FED FUNDS SOLD | 3,184 |
| TRADING ASSETS | 10,157 |
| INVESTMENTS HELD FOR SALE | 5,926 |
| INVESTMENTS CARRYING | 849 |
| INVESTMENTS MARKET | 833 |
| LOANS | 37,398 |
| ALLOWANCE | 617 |
| TOTAL ASSETS | 75,409 |
| DEPOSITS | 53,299 |
| SHORT TERM | 5,677 |
| LIABILITIES OTHER | 5,140 |
| LONG TERM | 2,957 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 1 |
| COMMON | 7,377 |
| OTHER SE | (1,459) |
| TOTAL LIABILITIES AND EQUITY | 75,409 |
| INTEREST LOAN | 2,183 |
| INTEREST INVEST | 283 |
| INTEREST OTHER | 781 |
| INTEREST TOTAL | 3,247 |
| INTEREST DEPOSIT | 1,494 |
| INTEREST EXPENSE | 1,858 |
| INTEREST INCOME NET | 1,389 |
| LOAN LOSSES | 70 |
| SECURITIES GAINS | 105 |
| EXPENSE OTHER | 1,865 |
| INCOME PRETAX | 1,756 |
| INCOME PRE EXTRAORDINARY | 1,057 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 1,057 |
| EPS BASIC | 1.44 |
| EPS DILUTED | 1.42 |
| YIELD ACTUAL | 2.95 |
| LOANS NON | 163 |
| LOANS PAST | 14 |
| LOANS TROUBLED | 0 |
| LOANS PROBLEM | 55 |
| ALLOWANCE OPEN | 595 |
| CHARGE OFFS | (62) |
| RECOVERIES | 14 |
| ALLOWANCE CLOSE | 617 |
| ALLOWANCE DOMESTIC | 522 |
| ALLOWANCE FOREIGN | 73 |
| ALLOWANCE UNALLOCATED | 22 |