<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
of the Securities and Exchange Act of 1934
For the Quarter Ended September 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
of the Securities Exchange Act of 1934
For the transition period from ______ to _____
Commission File No. (0-16163)
INVESTORS BANK CORP.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 41-1566301
- - - ------------------------------- ------------
(state or other jurisdiction of (IRS employer
incorporation or reorganization) identification
number
200 East Lake Street, Wayzata, MN 55391
-----------------------------------------------------------
(Address of Principal Executive Offices Including Zip Code)
(612) 475-8500
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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 for such shorter period and 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 3,505,354 at
October 31, 1994. -----------------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
INVESTORS BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
----------------------------- ---------------------------
1994 1993 1994 1993
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest on loans $ 16,155,502 $ 13,755,444 $ 44,269,345 $ 40,143,704
Interest on cash and investments 633,461 618,441 1,861,326 1,763,677
Interest and dividends on other assets 357,118 302,903 1,026,111 819,901
-------------- ------------- ------------- -------------
TOTAL INTEREST INCOME 17,146,081 14,676,788 47,156,782 42,727,282
-------------- ------------- ------------- -------------
INTEREST EXPENSE:
Interest on deposits 5,702,190 4,968,151 16,026,720 14,855,578
Interest on borrowings 4,724,782 3,376,352 11,365,600 9,146,885
-------------- ------------- ------------- -------------
TOTAL INTEREST EXPENSE 10,426,972 8,344,503 27,392,320 24,002,463
-------------- ------------- ------------- -------------
NET INTEREST INCOME 6,719,109 6,332,285 19,764,462 18,724,819
PROVISION FOR LOAN LOSSES 110,000 84,156 333,800 444,481
-------------- ------------- ------------- -------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,609,109 6,248,129 19,430,662 18,280,338
NONINTEREST INCOME:
Mortgage banking 3,004,068 3,280,717 9,196,772 9,276,498
Loan servicing fees 1,288,789 801,904 3,903,977 2,193,460
Commissions on title insurance sales 67,106 273,367 370,277 629,116
Commissions on annuity sales 120,976 79,769 470,368 407,989
Other 312,149 331,825 812,437 792,916
-------------- ------------- ------------- -------------
TOTAL NONINTEREST INCOME 4,793,088 4,767,582 14,753,831 13,299,979
-------------- ------------- ------------- -------------
NONINTEREST EXPENSE:
Employee compensation and benefits 3,671,678 3,978,544 11,624,058 11,065,665
Occupancy and equipment 1,044,025 962,877 3,039,584 2,754,947
Advertising 287,392 161,344 908,020 647,034
Federal deposit insurance premiums 353,864 318,693 1,038,866 905,778
Other 1,684,359 1,325,993 4,519,021 3,724,878
-------------- ------------- ------------- -------------
TOTAL NONINTEREST EXPENSE 7,041,318 6,747,451 21,129,549 19,098,302
-------------- ------------- ------------- -------------
EARNINGS BEFORE INCOME TAX EXPENSE AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 4,360,879 4,268,260 13,054,944 12,482,015
INCOME TAX EXPENSE 1,868,577 1,844,356 5,450,101 5,136,787
-------------- ------------- ------------- -------------
EARNINGS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 2,492,302 2,423,904 7,604,843 7,345,228
-------------- ------------- ------------- -------------
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 125,000
-------------- ------------- ------------- -------------
NET EARNINGS $ 2,492,302 $ 2,423,904 $ 7,604,843 $ 7,470,228
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
NET EARNINGS AVAILABLE FOR COMMON
STOCKHOLDERS $ 2,283,550 $ 2,181,941 $ 6,978,586 $ 6,744,339
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
EARNINGS PER COMMON SHARE:
BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $0.60 $0.60 $1.86 $1.83
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 0.00 0.00 0.00 0.03
----- ----- ----- -----
NET EARNINGS $0.60 $0.60 $1.86 $1.86
----- ----- ----- -----
----- ----- ----- -----
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES 3,779,970 3,644,177 3,748,682 3,623,773
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
INVESTORS BANK CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
-------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 20,328,079 $ 58,314,515
Investment securities 26,954,348 27,778,989
Mortgage loans held for sale 21,976,565 88,351,696
Mortgage loans 833,774,781 698,895,887
Consumer loans 113,287,541 91,124,400
Federal Home Loan Bank stock 18,250,000 16,250,000
Capitalized servicing rights 3,993,381 4,425,281
Office properties and equipment 15,961,703 15,731,333
Accrued interest receivable 4,956,436 3,653,453
Foreclosed real estate 2,390,219 6,674,799
Other assets 7,567,660 5,884,713
-------------- --------------
TOTAL ASSETS $1,069,440,713 $1,017,085,066
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 612,849,574 $ 603,412,708
Notes payable 365,000,000 325,000,000
Advances and loan payments from borrowers
held under escrow 7,741,745 8,409,797
Income taxes payable 1,225,767 549,263
Subordinated debt 23,391,000 25,800,000
Other liabilities 5,144,629 6,760,035
-------------- --------------
TOTAL LIABILITIES 1,015,352,715 969,931,803
-------------- --------------
STOCKHOLDERS' EQUITY:
Preferred stock 3,036 3,036
Common stock 35,043 33,255
Additional paid-in capital 20,722,264 19,111,504
Unamortized restricted stock (1,035,076) (675,808)
Retained earnings 34,362,731 28,681,276
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY 54,087,998 47,153,263
-------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,069,440,713 $1,017,085,066
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
INVESTORS BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30
------------------------------
1994 1993
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $7,604,843 $7,470,228
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization 1,522,420 2,574,803
Amortization of deferred loan fees and discounts (1,214,915) (1,295,403)
Gain on sales of loan servicing rights (5,978,140) (2,278,559)
Proceeds from sales of loan servicing rights 7,893,153 3,250,899
Gain on sales of mortgage loans (2,754,539) (6,546,946)
Provision for loan and real estate losses 402,166 562,823
Deferred (prepaid) income taxes 2,417,942 (76,782)
Change in:
Capitalized servicing rights (2,058,542) (1,693,410)
Accrued interest receivable (1,302,983) (442,231)
Interest payable on deposit accounts 1,014,757 318,045
Mortgage loans held for sale 69,129,670 (34,058,285)
Other, net (4,835,560) (1,560,837)
-------------- ---------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 71,840,272 (33,775,655)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (156,780,742) (114,572,103)
Purchase of investment securities (3,915,358) (8,943,484)
Maturities of investment securities 4,740,000 5,825,000
Purchase of FHLB stock (2,000,000) (2,071,800)
Sale of foreclosed real estate 4,836,036 4,510,799
Increase in office properties and equipment (1,177,361) (1,882,755)
-------------- ---------------
NET CASH USED BY INVESTING ACTIVITIES (154,297,425) (117,134,343)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 8,422,109 61,257,290
Proceeds from FHLB advances 245,000,000 322,000,000
Repayment of FHLB advances (205,000,000) (252,000,000)
Redemption of subordinated capital notes (2,409,000)
Net proceeds from common stock transactions 1,049,048 105,863
Dividends on preferred stock (626,257) (725,889)
Dividends on common stock (1,297,131) (926,791)
Net increase (decrease) in advances and loan payments
from borrowers held under escrow (668,052) 10,508,839
-------------- ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 44,470,717 140,219,312
-------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (37,986,436) (10,690,686)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 58,314,515 40,179,006
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $20,328,079 $29,488,320
-------------- ---------------
-------------- ---------------
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest $26,437,600 $23,580,965
Income taxes 4,047,000 5,585,000
Noncash transfer of loans to foreclosed real estate 619,822 1,668,724
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
INVESTORS BANK CORP.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Investors
Bank Corp., a Delaware corporation (the Company) and its wholly owned subsidiary
Investors Savings Bank, F.S.B. (the Bank), a federally chartered savings bank
with deposits insured by the Federal Deposit Insurance Corporation (FDIC)
through the Savings Association Insurance Fund. The statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and footnotes necessary for a complete presentation of
financial position, results of operations, and changes in cash flows. The data
presented herein is unaudited, but in the opinion of management of the Company,
includes all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of the financial position of the Company and
its subsidiary and the results of their operations and cash flows. The Company
believes such presentation of the financial position is adequate to make the
information presented not misleading. Results for the interim periods are not
necessarily indicative of results for the entire year.
NOTE 2. MERGER AGREEMENT
On August 21, 1994, the Company, Firstar Corporation ("Firstar") and
Firstar Corporation of Minnesota ("Firstar Minnesota") entered into an Agreement
and Plan of Reorganization (the "Agreement"), pursuant to which the Company will
be merged (the "Merger") with and into Firstar Minnesota. Pursuant to the
Merger, each outstanding share of Common Stock of the Company would become .8676
shares of Firstar Common Stock and each outstanding share of the Company's
Cumulative Perpetual Preferred Stock, Series 1991 would become the right to
receive $27.50 (plus accumulated and unpaid dividends) in cash (subject to
dissenters' rights). The Company's outstanding warrants and options to purchase
shares of the Company Common Stock would become warrants and options to purchase
an equivalent .8676 shares of Firstar Common Stock. The Agreement also calls
for the merger of the Bank with and into Firstar Bank Minnesota, N.A., on the
date of, and immediately after the Merger becomes effective. The Merger is
intended to be accounted for as a pooling of interests.
The Merger is subject to a number of conditions including regulatory
approval. The Agreement requires the Company to use its best efforts to
repurchase shares of the Company Common Stock to be held in treasury for
issuance upon exercise of outstanding
<PAGE>
options and warrants to the extent such repurchases do not exceed $2,000,000.
Subsequent to the Agreement it was determined such a repurchase plan would
violate a covenant in the Company's 9.25% Subordinated Notes. Presently the
Company is attempting to obtain consent of the holders of at least a majority in
principal amount of the outstanding Notes to waive the covenant. The approval
and announcement of the Merger is exempt from the provisions of the Company
Shareholder Rights Plan. To make this clear, Investors has amended its
Shareholder Rights Agreement.
A special meeting of the Company's stockholders will be called to vote on
the Merger. All of the executive officers and directors of the Company have
entered into agreements that require them to vote for the Merger. The Company
may terminate the Agreement if the trading price of Firstar Common Stock during
the ten trading days ending three days before the special stockholders' meeting
to approve the Merger is below $29 per share and at least 12.5% below an index
composed of certain commercial banks.
NOTE 3. INVESTMENT SECURITIES
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY
SECURITIES, as of January 1, 1994. Under SFAS No. 115, the Company must
classify its debt and marketable equity securities in one of three categories:
trading, available for sale, or held to maturity. Trading securities are bought
and held principally for the purpose of selling them in the near term.
Securities available for sale include securities that management intends to use
as part of its asset/liability strategy or that may be sold in response to
changes in interest rate, changes in prepayment risk, the need to increase
regulatory capital, or similar factors. The Company has the ability and intent
to hold its securities to maturity. Accordingly, there are no securities held
in a trading account or available for sale and the adoption of SFAS No. 115 had
no impact on the Company's consolidated financial statements as of January 1,
1994.
NOTE 4. IMPAIRED LOANS
The Company adopted the provisions of SFAS No. 114, "ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN", as of January 1, 1994. SFAS No. 114
specifies how reserves for losses related to "impaired" loans should be
measured. A loan is considered impaired if it is probable that the Company will
be unable to collect all amounts due according to the contractual terms of the
loan agreement. When a loan is impaired, the Company will measure the amount of
impairment based on the present value of expected future cash flows, the loan's
observable market price or the fair value of any collateral. If foreclosure is
probable, the Company shall measure impairment based on the fair value of the
collateral. SFAS No. 114 does not apply to large groups of small balance,
homogeneous loans that are collectively evaluated for impairment. The adoption
of SFAS No. 114 had no effect on the consolidated financial statements as of
January 1, 1994.
2
<PAGE>
NOTE 5. RESERVES FOR LOAN LOSSES
Included in mortgage loans are reserves for losses of $2,812,554 and
$2,414,254 at September 30, 1994 and December 31, 1993, respectively. Included
in consumer loans are reserves for losses of $536,884 and $566,332 at September
30, 1994 and December 31, 1993.
3
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Investors Bank Corp.'s (the Company) net earnings were $2.5 million for the
three months ended September 30, 1994, compared to $2.4 million for the third
quarter of 1993. Net earnings for common shareholders were $2.3 million for the
third quarter of 1994 and $2.2 million for the 1993 third quarter. Earnings
per share were $.60 for both the 1994 and 1993 third quarter on 136 thousand
fewer average outstanding shares in the same quarter of 1993. For the first
nine months of 1994, the Company's net earnings before cumulative effect of
accounting change were $7.6 million, a 4% increase from the $7.3 million for the
same period in 1993. Earnings per share were $1.86 for both nine month periods.
The 1994 third quarter and nine month net earnings were reduced by approximately
$176 thousand or $.05 per share from expenses related to negotiation of the
agreement and plan of reorganization with Firstar Corporation in connection with
the proposed merger of the Company with and into Firstar Minnesota. See Note 2
of the Notes to Consolidated Financial Statements for a discussion of the merger
agreement. The nine month 1993 period included $.03 per share from recognition
of the cumulative effect of a change in accounting method to comply with
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes". Comparing the third quarters of 1994 and 1993, an increase in
net interest income in the 1994 quarter was partially offset by increases in
noninterest expenses. For the nine month periods ending September 30, 1994 and
1993, net interest income and noninterest income both increased and were
partially offset by increased noninterest expense.
Net interest income for the third quarter of 1994 was $6.7 million compared
to $6.3 million for the 1993 quarter and increased due to a 12% increase in
average interest-earning assets to $996 million from $890 million. The
additional interest income generated by the larger amount of interest-earning
assets in the 1994 quarter was offset somewhat by a decline in the interest
margin from 2.87% in the 1993 quarter to 2.72% in the 1994 quarter. For the
nine months ended September 30, 1994, net interest income was $19.8 million, up
6% from the same period in 1993. Average interest-earning assets increased 15%
to $953 million for the first nine months of 1994 compared to $829 million for
the same period in 1993. The additional interest income generated by the
increased average interest-earning assets was more than enough to offset the
decline in interest margin from 3.01% to 2.76% between the 1993 and 1994
periods.
Growth in average interest-earning assets was due primarily to increases in
adjustable rate mortgage loans (ARMs) and consumer loans partially offset by a
reduction in mortgage loans held for sale. The Company's mortgage banking
operation originated significant amounts of ARMs in the latter months of 1993
and during the first nine months of 1994 because of increased demand for these
products. The demand for ARM loans has remained high in 1994 as interest rates
on fixed rate long term mortgages have increased. The Company's average ARM
portfolio increased $134 million to $767 million between the third quarters of
1993 and 1994. Between the same periods, average consumer home equity loans
increased $28 million through promotional efforts by the Company.
<PAGE>
Offsetting a portion of the ARM and consumer loan growth was a drop in average
mortgage loans held for sale of $52 million. The current interest rate
environment supports demand for ARM loans and the Company expects additional
growth in ARMs in the next few months as well as continued growth in consumer
loans from planned promotional efforts while the amount of mortgage loans held
for sale is expected to continue to be low.
The reduction in net interest margin between the third quarters of 1994 and
1993 was the result of the costs of interest-bearing liabilities increasing more
rapidly than yields on interest-earning assets between the periods. Asset
yields increased 29 basis points between quarters reflecting the repricing of
ARM and consumer loans indexed to market rates. However liability costs
increased 46 basis points between the periods. Deposit costs increased 15 basis
points, and the cost of Federal Home Loan Bank (FHLB) borrowings, which were
used to fund a substantial portion of the loan growth, increased 122 basis
points because of annual repricings of borrowings indexed to market rates and
the replacement of matured fixed rate borrowings with higher rate borrowings.
The decrease in net interest margin in the nine months ended September 30,
1994 compared to the same 1993 period was primarily from a 29 basis point
reduction in yields on loans while the total costs of interest-bearing
liabilities were down only 1 basis point. The new ARMs originated during 1994
were generally priced below market rates for the first one or two years which is
customary for these types of loans. Also, older ARM loans which are repricing
are limited by annual 2% caps on the amount their interest rates can increase
which is less than the increase in market interest rates over the last year.
Deposit costs decreased 13 basis points between the nine month periods but FHLB
borrowing costs increased 41 basis points from the same factors discussed above.
A substantial portion of the FHLB borrowings now reprices daily or will mature
within several months so the Company expects the cost of these funds to vary
with market interest rates.
The provision for loan losses was $110 thousand in the third quarter of
1994 compared to $84 thousand for the same quarter a year ago. For the nine
months ended September 30, 1994 and 1993, the provisions were $334 thousand and
$444 thousand, respectively. Based on management's review of the loan
portfolio, the 1994 provisions were required only to increase general reserves
to accommodate for the Company's loan growth.
Noninterest income for the third quarters of 1994 and 1993 were almost the
same at $4.8 million. Loan servicing fees were greater in the 1994 quarter but
were largely offset by reduced mortgage banking income and title insurance sales
commissions. For the nine months ended September 30, 1994 noninterest income
was $14.8 million, a 11% increase from the $13.3 million for the first nine
months of 1993. The increase for the nine month period resulted primarily from
increased loan servicing fee income.
Mortgage banking, the most significant source of noninterest income,
decreased 8% between the September quarters to $3.0 million, and was down 1% to
$9.2 million for the first nine months of 1994 compared to the same period last
year. Mortgage banking
2
<PAGE>
income consists primarily of gain on sale of mortgage loans and gain on sale of
loan servicing rights.
Gain on sales of mortgage loans declined substantially to $441 thousand in
the 1994 third quarter from $2.6 million in the 1993 third quarter. For the
first nine months of 1994 the gain on sales of mortgage loans was $2.8 million
compared to $6.5 million for the same 1993 period. The decreases in income
reflect the significantly reduced amounts of mortgage loans sold in the 1994
periods which in turn result from reduced mortgage originations as market
interest rates have risen since 1993. In addition, pricing gains on refinanced
loans were significantly higher for the prior year periods.
To compensate for the reduced income from gain on sales of mortgage loans,
the Company sold increased amounts of loan servicing rights. During the
September 1994 quarter, $140 million of servicing rights were sold for a gain of
$2.4 million compared to the same quarter in 1993 when $37 million in servicing
rights were sold for a gain of $505 thousand. For the first nine months of
1993, the Company sold $176 million of loan servicing rights for a gain of $2.3
million. For the same period in 1994, Company sold $481 million of loan
servicing rights for a gain of $6.0 million. Although the Company has sold more
servicing rights in 1994, market pricing for these rights has been less
favorable than in 1993. The sale in the September 1994 quarter was made to
Firstar at market terms. Under terms of the merger agreement with Firstar, the
Company has agreed not to sell mortgage loan servicing rights in the fourth
quarter of 1994.
While the Company's strategy is to continue generating mortgage banking
income, the amounts of such income are affected by external factors such as
market pricing, general demand for mortgage products and the competitive
environment in the markets in which it originates mortgages. Because of the
increase in market interest rates in 1994, mortgage refinancing activity has
declined to a very low level and has significantly reduced the amount of loans
generated by the Company's mortgage banking activity. As a result, the Company
has experienced and continues to expect reduced amounts of sales of mortgage
loans and reduced gross additions to its portfolio of loans serviced for others.
The Company's servicing fee income was $1.3 million in the September 1994
quarter compared to $802 thousand in the September 1993 quarter. The 1993
servicing fee income was adjusted by $333 thousand for higher than anticipated
prepayments. Servicing fee income for the first nine months of 1994 was $3.9
million, a 78% increase from the $2.2 million of servicing fee income in the
first nine months of 1993. The increase results both from a 16% increase in
year-to-date average loans serviced for others to $1.3 billion and elimination
of the need to adjust servicing fee income for higher than anticipated
prepayments. In the first nine months of 1993 servicing fee income was reduced
$950 thousand by such adjustments. Because of the significantly reduced
mortgage refinancing activity in 1994, the Company does not anticipate that
significant adjustments to its servicing fee income will be required during the
remainder of 1994. Because of the continued sales of loan servicing rights and
the reduced level of mortgage originations, the Company's the portfolio of
loans serviced for others decreased during the September 1994 quarter to end the
quarter at $1.1 billion..
3
<PAGE>
In the other categories of noninterest income, commissions on title
insurance sales were down $206 thousand between the September 1994 and 1993
quarters and decreased $259 thousand between the nine month periods. Income
from commissions on title insurance sales was reduced because of the Company's
reduced mortgage originations. Commissions on annuity sales for the quarter and
nine months ended September 30, 1994 were greater by $41 thousand and $62
thousand than the respective periods in 1993 as customer demand increased along
with the rise in market interest rates.
Noninterest expense was $7.0 million for the September 1994 quarter, a 4%
increase compared to the same quarter last year. Employee compensation and
benefits were $307 thousand less between quarters because of reductions in
compensation related to production volumes in the mortgage banking operation and
staff reductions. Occupancy and equipment increased $81 thousand from the costs
of three banking offices opened in late 1993 and a new mortgage banking office
opened in early 1994. Advertising increased $126 thousand from increased
promotion of consumer lending and retail banking products. The Federal deposit
insurance premium expense was $35 thousand greater in the 1994 quarter because
of growth in deposits since the 1993 quarter. Other expenses were $358 thousand
higher from $176 thousand of expenses related to negotiating of the merger
agreement with Firstar, increased data processing expenses and greater than
normal foreclosure expenses on commercial real estate.
FINANCIAL CONDITION
Total assets of the Company were $1.07 billion at September 30, 1994, which
was up $52 million from December 31, 1993. Cash and cash equivalents declined
$38 million reflecting reduced liquidity levels at September 30, 1994. During
the nine months ended September 30, 1994, $72 million was provided by operating
activities primarily by the reduction in mortgage loans held for sale which in
turn was the result of reduced mortgage banking originations. Cash was applied
in investing activities to fund a $157 million increase in loans. Of the
increase, $134 million was in ARM loans, $22 million was in consumer home equity
loans and $1 million was in commercial real estate loans. Financing activities
provided $44 million in cash. FHLB advances increased by $40 million. Maximum
FHLB borrowings were $365 million during the period and were incurred during
September 1994. Deposits increased by $8 million primarily in certificates of
deposits as customers responded to promotional efforts. As part of its
continuing effort to increase deposits, the Company has acquired land in the St.
Paul area and plans to build and open a branch in early 1995. Additional cash
was used to repay $2.4 million in subordinated notes prior to its original
maturity. The current market interest rate environment has increased demand for
the Company's ARM loan products and the Company expects increases during the
next few months in its ARM portfolio. While the Company continues to promote
its deposit products and expects deposit growth from its twelve existing
offices, it plans to continue using advances from the FHLB as a funding source
when necessary.
Nonperforming assets were $3.8 million at September 30, 1994, down from
$8.6 million at December 31, 1993. The Company has disposed of approximately
$4.8 million in properties including several commercial real estate properties
for $2.8 million.
4
<PAGE>
Nonperforming residential real estate assets were at a very low $1.8 million at
September 30, 1994. Through sales anticipated in the last quarter of 1994, the
Company expects additional reduction of nonperforming commercial real estate
assets, which were $1.9 million at September 30, 1994.
The Company intends to support the Bank's efforts to maintain a capital
level adequate to support its projected growth as well as maintain its "well
capitalized" status. Approximately $3.0 million in funds attained during the
$23 million December 1992 subordinated debt offering remains in the parent
company and is available for future capital needs. During the September 1994
quarter, the Bank paid a common stock dividend of $4 million to the Company.
The annual dividend, which was approved by the Bank's regulators, the Office of
Thrift Supervision (OTS), is intended to provide the Company with the cash
needed for interest and dividend payments.
At September 30, 1994, the Bank met each of the three regulatory capital
standards to continue to be classified as a "well capitalized" institution. The
following is a summary of the Bank's capital position:
<TABLE>
<CAPTION>
<S> <C>
Tier 1 leverage (core) capital standard:
Adjusted total assets $1,068,422,949
Tier 1 capital 68,461,777
Tier 1 capital ratio 6.41%
Tier 1 risk based capital standard:
Risk adjusted total assets $641,801,083
Tier 1 capital 68,461,777
Tier 1 risk based capital ratio 10.67%
Risk based capital standard:
Risk adjusted assets $641,801,083
Risk based capital 71,582,183
Risk based capital ratio 11.15%
</TABLE>
Management believes the Bank will continue to meet all three "well
capitalized" standards in 1994.
In 1993, the OTS issued its final regulations on interest rate risk. Under
this rule, effective January 1, 1994, institutions deemed to have an "above
normal" level of interest rate risk as calculated by the OTS based on quarterly
reports submitted by the Bank are subject to a capital charge and must deduct a
portion of that risk from total risk based regulatory capital. At June 30,
1994, the Bank had, for the first time, incurred an interest rate risk capital
component of $4.0 million. The Bank has not yet been notified by the OTS as to
the impact of the rule on its September 30, 1994 risk based capital. The rules
require that the June 30, 1994, component would first impact the Bank's risk
based capital in the first quarter of 1995. At that time the Bank would be
required to adjust its risk based capital by the lowest of the interest rate
risk components for the preceding three
5
<PAGE>
quarters. Management believes the Bank will continue to have some amount of
interest rate risk component during the next six months.
6
<PAGE>
SIGNATURES
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 thereunto duly authorized.
INVESTORS BANK CORP.
/s/ James M. Burkholder
-----------------------
James M. Burkholder
President
Chief Executive Officer
Dated: 11/11/94
--------------
<PAGE>
PART II.
ITEM 2. CHANGES IN SECURITIES
In connection with the Agreement and Plan of Reorganization between the
Company and Firstar Corporation, On August 21, 1994 the Board of Directors of
the Company adopted a resolution to amending the Rights Agreement dated as of
May 7, 1991 (the "Rights Agreement") to make clear that the transactions
contemplated by the Agreement and Plan of Reorganization do not constitute a
Triggering Event under the Rights Agreement and that Firstar has not become an
Acquiring Person by virtue of the Agreement and Plan of Reorganization.
ITEM 5. OTHER INFORMATION
In connection with the Agreement and Plan of Reorganization, James M.
Burkholder, John G. Lohmann, Jr. and Daniel P. Arrigoni negotiated amendments to
their employment agreements effective upon the effective date of the merger of
the Company with and into Firstar Corporation of Minnesota. Each of such
officers also entered into agreements not to compete with Firstar Corporation,
effective after the effective date of such merger, for periods ranging from two
years to four years after termination of employment.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.1 Agreement and Plan of Reorganization between Investors Bank Corp.,
Firstar Corporation and Firstar Corporation of Minnesota (Incorporated
by Reference to Exhibit 2.1 to the Company's Current Report on Form
8-K filed August 25, 1994)
2.2 Form of Voting Agreement (Incorporated by Reference to Exhibit 2.2 to
the Company's Current Report on Form 8-K filed August 25, 1994)
4.1 First Amendment to Rights Agreement, as executed.
10.1 Employment Agreement dated August 21, 1994 between the Company,
Firstar Corporation and James M. Burkholder
10.2 Employment Agreement dated August 21, 1994 between the Company,
Firstar Corporation and John G. Lohmann, Jr.
10.3 Employment Agreement dated August 21, 1994 between the Company,
Firstar Corporation and Daniel P. Arrigoni
10.4 Noncompetition Agreement dated August 21, 1994 between Firstar
Corporation and James M. Burkholder
10.5 Noncompetition Agreement dated August 21, 1994 between Firstar
Corporation and John G. Lohmann, Jr.
10.6 Noncompetition Agreement dated August 21, 1994 between Firstar
Corporation and Daniel P. Arrigoni
<PAGE>
10.7 Amendment to Severance Pay Agreement dated August 21, 1994 between
Firstar Corporation and Lynn V. Bueltel
11.0 Calculation of Earnings per share
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K with the Commission on
August 25, 1994 reporting the execution of the Agreement and Plan of
Reorganization dated August 21, 1994 with Firstar Corporation.
SIGNATURES
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, thereunto duly authorized.
INVESTORS BANK CORP.
Dated: November 12, 1994 By /s/ JAMES M. BURKHOLDER
------------------------------
James M. Burkholder, President and
Treasurer
and /s/JOHN G. LOHMANN, JR.
---------------------------------
John G. Lohmann, Jr., Executive Vice
President
<PAGE>
EXHIBIT 4.1
FIRST AMENDMENT
AND
SUPPLEMENT TO
RIGHTS AGREEMENT
BETWEEN
INVESTORS BANK CORP.
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
THIS AMENDMENT, is made and executed as of August 21, 1994, by and between
Investors Bank Corp. (the "Company") and Norwest Bank Minnesota, National
Association (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have heretofore entered into that
certain Rights Agreement dated as of May 7, 1991 (the "Rights Agreement")
pursuant to which the Company declared a dividend of preferred stock purchase
rights;
WHEREAS, the Company is engaged in discussions with Firstar Corporation
("Firstar") regarding the possible merger of the Company with Firstar
Corporation of Minnesota ("Sub"), a wholly owned subsidiary of Firstar;
WHEREAS, the Company, Firstar and Sub have negotiated an Agreement and Plan
of Reorganization dated August 21, 1994 ("the Reorganization Agreement") to
effect such merger;
WHEREAS, the Company believes that the Reorganization Agreement does not
effect the Rights Agreement or the rights outstanding thereunder but wishes to
clarify the same by amending the Rights Agreement;
WHEREAS, Section 27 of the Rights Agreement provides that the Rights
Agreement may be amended by action of the Board of Directors of the Company at
any time before a "Distribution Date" (as defined therein); and
WHEREAS, the Board of Directors of the Company has authorized and directed
this amendment.
NOW, THEREFORE, in consideration of the foregoing recitals, the
requirements of the Reorganization Agreement, and for other good and valuable
consideration, the Company and the Rights Agent hereby agree as follows:
1. AMENDMENT TO SECTION 1(A). Section 1(a) of the Rights Agreement is
hereby amended to add a subclause (v) which shall read as follows: "or (v)
Firstar Corporation, or any Affiliate or Associate thereof, so long as such
Persons (A) acquire the Beneficial Ownership of 15% or more of the Common Shares
pursuant to and in accordance with the terms of that certain Agreement and Plan
of Reorganization, dated August 21, 1994 (the "Reorganization Agreement"), among
the Company, Firstar Corporation ("Firstar") and Firstar Corporation of
Minnesota ("Sub"), as the same may be hereafter amended from time to time, or
(B) are deemed to have acquired Beneficial Ownership of 15% or more of such
Common Shares in the aggregate pursuant to those certain Voting Agreements dated
August 21, 1994 (hereafter, the "Voting Agreements") between Firstar Corporation
and each of the executive officers and directors of the Company ."
2. AMENDMENT TO SECTION 3. Section 3 of the Rights Agreement is hereby
amended by adding the words "; PROVIDED, HOWEVER that the execution of the
Voting Agreements and any public announcement thereof shall not constitute a
Share Acquisition Date; PROVIDED FURTHER that the execution of the
<PAGE>
Reorganization Agreement and any public announcement thereof shall not
constitute the commencement or announcement by Firstar or Sub of an intention to
commence a tender or exchange offer the consummation of which will result in
such persons becoming the Beneficial Owner of Common Shares aggregating 15% or
more of the then outstanding Common Shares" to the end of the first sentence
thereof.
3. AMENDMENT TO SECTION 7(A). Section 7(a) of the Rights Agreement is
hereby amended by deleting the word "or" immediately preceding "(iii)" therein
and replacing the same with a comma and by adding a subclause (iv) at the end
of such Section 7(a) which shall read as follows: "or (iv) the time at which
the merger of the Company with and into Firstar Corporation of Minnesota
pursuant to the Reorganization Agreement is effective."
4. OTHER CHANGES. Except with respect to the changes set forth above, the
Rights Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this Amendment has been executed by the undersigned
authorized officers as of the 21st day of August, 1994.
INVESTORS BANK CORP.
By /S/ JAMES M. BURKHOLDER
-----------------------------
James M. Burkholder, President and
Attest: Chief Executive Officer
/S/ LYNN V. BUELTEL
- - - --------------------------------------
Lynn V. Bueltel, Senior Vice President
and Chief Financial Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /S/ KENNETH P. SWANSON
------------------------------
Its ASSISTANT VICE PRESIDENT
Attest
NANCY J. ROSEN
- - - -------------------------------
Assistant Secretary
<PAGE>
Exhibit 10.1
JAMES M. BURKHOLDER
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated August 21, 1994, is made by and between
Investors Bank Corp., a Delaware corporation ("INVESTORS"), Firstar Corporation,
a Wisconsin corporation ("FIRSTAR CORPORATION"), and James M. Burkholder, an
individual resident of the state of Minnesota ("EXECUTIVE").
WHEREAS, Executive has heretofore been employed as an executive
officer of Investors;
WHEREAS, Executive and Investors have heretofore entered into an
Amended and Restated Employment Agreement, dated as of December 1, 1993 (the
"Original Agreement");
WHEREAS, Investors may be purchased by or otherwise combined with
Firstar Corporation and/or one or more of its affiliate entities (collectively
"FIRSTAR");
WHEREAS, as a condition precedent to such purchase or combination,
Firstar is requiring that Executive agree to the terms of this Agreement;
WHEREAS, Executive acknowledges that he will receive substantial
benefit from the planned purchase or combination as a result of the sale of his
stock and other benefits; and
WHEREAS, the parties desire this Agreement to supersede the Original
Agreement as of the "Effective Time" (as such term is defined in the Agreement
and Plan of Reorganization, dated August 21, 1994 (the "REORGANIZATION
AGREEMENT"), between, among others, Investors and Firstar) of any merger or
other combination of Investors with any Firstar affiliate (called the "EFFECTIVE
TIME" or the "EFFECTIVE DATE" in this Agreement).
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of Investors, Firstar and Executive set forth below, Investors,
Firstar and Executive agree as follows:
1. EMPLOYMENT. On the Effective Date, Firstar Home Mortgage
Corporation ("EMPLOYER" or "FHMC") shall employ Executive pursuant to this
Agreement. Executive hereby accepts such employment and agrees to perform
services for Employer for the period and upon the other terms and conditions set
forth in this Agreement.
2. TERM. Unless terminated at an earlier date in accordance with
Sections 5 and 8 of this Agreement, the term of Executive's employment hereunder
shall commence on the Effective Date and shall extend for a period of four years
thereafter (the fourth anniversary of the Effective Date being herein referred
to as the "CONTRACT END DATE"). The term of this Agreement shall not be renewed
or extended unless Firstar and Executive shall so agree in writing.
3. POSITION AND DUTIES.
3.01 SERVICES. During the term of this Agreement, Executive shall
serve as President and Chief Executive Officer of Employer. Executive also
agrees to serve, for any periods for which he is elected, as a director of
Firstar Bank of Minnesota, N.A. ("FBM") and of Firstar Corporation of Minnesota
("FMC"); provided, however, that Executive shall not be entitled to any
additional compensation for serving as a director of FBM or FMC.
<PAGE>
3.02 PERFORMANCE OF DUTIES. Executive agrees to serve Firstar
faithfully and to the best of his ability and to devote his full time, attention
and efforts to the business and affairs of Employer and other Firstar entities
during the term of this Agreement. Executive hereby confirms that he is under
no contractual commitments inconsistent with his obligations set forth in this
Agreement, and that during the term of this Agreement, he will not render or
perform services for any other corporation, firm, entity or person which are
inconsistent with the provisions of this Agreement.
4. COMPENSATION.
4.01 BASE SALARY. As base compensation for all services to be
rendered under this Agreement during the term of this Agreement, Employer shall
pay to Executive an annual salary of $210,000 (the"BASE SALARY"), which salary
shall be paid in accordance with Firstar's normal payroll procedures and
policies (which currently provide for bi-weekly payments). The base salary
shall be reviewed annually by Employer's Board of Directors and may be increased
to such higher rate as Employer's Board of Directors determines, whereby such
increased base salary shall constitute the Base Salary for all purposes of this
Agreement.
4.02 BONUS AND INCENTIVE COMPENSATION. In addition to the Base Salary
described in Section 4.01, Executive shall be entitled to an annual bonus of
$100,000 (the "ANNUAL BONUS"), to be paid at the same time that annual incentive
compensation payments are normally paid to Employer's executive officers.
Executive shall also be entitled to participate in such bonus or incentive
compensation plans as have been or may be established by Employer's Board of
Directors from time to time for executive level employees (collectively, the
"PLANS"). For purposes of calculating incentive compensation under the Plans,
Executive's Base Salary identified in Section 4.01 will be used as the base
salary.
4.03 PARTICIPATION IN BENEFIT PLANS. During the term of this
Agreement, Executive shall be entitled to receive such medical and
hospitalization insurance and other fringe benefits as are being provided to the
key executive employees of Employer from time to time to the extent that
Executive's age, position or other factors qualify him for such fringe benefits,
which benefits shall include, without limitation, continuation of an automobile
allowance comparable to other key executive employees; except that the existing
lease for the automobile currently used by Executive will be continued until the
expiration date (but not any optional extensions thereof), and Executive shall
continue to use such automobile during the remainder of the lease period.
4.04 DISABILITY/LIFE INSURANCE BENEFITS. Firstar shall maintain (i) a
key man disability insurance policy for Executive; and (ii) a term life
insurance policy on Executive's life, both on such terms as existed on the date
of the Original Agreement. This insurance coverage will be in lieu of any
coverage normally provided to Employer's officers.
4.05 EXPENSES. Employer will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, including any food and lodging
expense required of Executive during duties in Milwaukee, Wisconsin, subject to
the presentment of appropriate vouchers in accordance with Employer's normal
policies for expense verification.
4.06 TAX EXPENSE. Employer shall pay Executive a bonus at such time
as is necessary for Executive to satisfy his federal income tax obligation, to
offset any income tax expense resulting f rom issuance of Firstar Corporation
Common Stock in exchange for the fair value of Executive's Restricted Stock
under agreement dated December 31, 1992.
<PAGE>
5. TERMINATION.
5.01 TERMINATION BY EMPLOYER. During the term of this Agreement,
Employer:
(a) shall have the right to terminate Executive from employment at
any time for Cause (as defined in Section 5.03 hereof), by written notice to
Executive, specifying the particulars of the conduct of Executive forming the
basis for such termination, and shall not be obligated to pay Executive the
benefits provided in Section 5.04 hereof; and
(b) shall have the right to terminate Executive's employment without
Cause, and Executive shall, upon the occurrence of such termination without
Cause, be entitled to receive the benefits provided in Section 5.04 hereof.
5.02 TERMINATION BY EXECUTIVE. The Executive shall also be entitled
to receive the benefits defined in Section 5.04 hereof upon the voluntary
termination of Executive's employment by Executive for Good Reason (as defined
in Section 5.03 hereof). Executive shall evidence a voluntary termination for
Good Reason by written notice to Employer given within 60 days after the date of
the occurrence of any event that Executive knows or should reasonably have known
constitutes Good Reason for voluntary termination. Such notice need only
identify Executive and set forth in reasonable detail the facts and
circumstances claimed by Executive to constitute Good Reason. Any notice given
by Executive pursuant to this Section 5.02 shall be effective five business days
after the date it is given by Executive.
5.03 DEFINITIONS.
(a) "CAUSE" shall mean the Executive has (i) engaged in serious
misconduct which results in demonstrable and serious injury to Firstar or FHMC,
monetary or otherwise; (ii) been convicted of a felony, as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion or lapse of all right of appeal; or
(iii) unreasonably neglected or refused to perform the Executive's duties or
responsibilities (unless significantly changed without the Executive's consent).
(b) "DISABILITY" shall mean any physical or mental illness or
disability that renders Executive unable to perform substantially all of his
duties and services hereunder for a period of six months during any one-year
period.
(c) "GOOD REASON" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of Executive's employment for Cause or by any reason
of his death or Disability:
(i) the assignment to the Executive of employment responsibilities
which are not of comparable responsibility and status of the position of
President and Chief Executive Officer of FHMC, consisting generally of the
duties described by Michael Schmitz in a letter delivered contemporaneously
with the execution of this Agreement;
(ii) a reduction by Firstar in the Executive's base salary below the
base salary in effect for the Executive on August 1, 1994;
<PAGE>
(iii) Firstar's failure to permit the Executive's participation in
incentive compensation programs on a comparable basis to that provided to
other executives of Firstar entities with comparable duties;
(iv) Firstar's or FHMC's requiring the Executive to be based anywhere
other than within 50 miles of the Executive's office location immediately
prior to the Effective Date, except for requirements of temporary business
travel to an extent substantially consistent with the Executive's business
travel obligations immediately prior to the Effective Date, and except that
Executive acknowledges that Employer's main offices are located in
Milwaukee, Wisconsin, and that Executive will spend such time at the main
offices as is necessary to perform his duties, or such other locations
which are mutually agreed upon by the Executive and Firstar;
(v) except to the extent otherwise required by applicable law, the
failure of Firstar to continue the Executive's participation in any benefit
or compensation plan, stock ownership plan, stock purchase plan, bonus
plan, life insurance plan, health plan or disability plan, or any fringe
benefit (including vacation time) on a comparable basis to that provided to
other executives of Firstar entities with comparable duties; or
(vi) the failure of Firstar to obtain, as specified in Section 9.10
hereof, an assumption of the obligations of Firstar to perform this
Agreement by any successor of Firstar within 15 days after written notice
by the Executive.
5.04 SEVERANCE PAYMENT. Upon the termination of the employment of
Executive pursuant to Section 5.01(b) or 5.02 hereof, Executive shall be
entitled to receive the benefits specified in this Section 5.04. The amounts
due to Executive under subparagraphs (a) or (b)(i) of this Section 5.04 shall be
paid to Executive not later than one business day prior to the date that the
termination of Executive's employment becomes effective (except as noted below).
(a) Employer shall pay to Executive (i) the full base salary earned
by him and unpaid through the date that the termination of Executive's
employment becomes effective, at the rate in effect at the time written notice
of termination (voluntary or involuntary) was given, (ii) any amount earned by
Executive as a bonus with respect to the fiscal year of Employer preceding the
termination of his employment if such bonus has not theretofore been paid to
Executive and (iii) an amount representing credit for any vacation earned or
accrued by him but not taken;
(b) In lieu of any further base salary, incentive compensation and
bonus payments, as well as continued participation in any stock purchase or
similar plan and all other benefit plans or programs of any nature, to Executive
for periods subsequent to the date that the termination of Executive's
employment becomes effective, Employer shall pay as severance pay to Executive
his choice of either:
(i) A lump-sum cash amount equal to the remaining Base Salary
and Annual Bonus payments due to Executive from the date of
termination to the Contract End Date. Employer shall also continue
Executive's participation in health insurance plans and shall maintain
the life and disability insurance coverage referenced above until the
Contract End Date (but executive will not be eligible for continued
participation in the pension or Thrift & Sharing Plans); or
<PAGE>
(ii) bi-weekly severance payments and continued benefits which
are provided to Firstar "executive" employees in accordance with the
terms of Firstar's severance program in effect on the date of
termination.
If option (ii) is selected, Executive will be subject to all of the terms of
Firstar's severance program then in effect, including the requirement that
Executive execute a Severance Agreement, including a release of claims.
Notwithstanding the requirement that severance payments be made in a lump sum,
if option (ii) is selected, payments will be made bi-weekly.
(c) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 5.04 by seeking other employment or
otherwise. The amount of any payment or benefit provided in this Section 5.04
shall not be reduced by any compensation earned by Executive as a result of any
employment by another employer.
It is the intention of Employer and Executive that no portion of any
payment under this Agreement, or payments to or for the benefit of Executive
under any other agreement or plan, be deemed to be an excess parachute payment
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"CODE"), or of any successor provision. It is agreed that the present value of
all payments to or for the benefit of Executive in the nature of compensation to
which Section 280G of the Code applies (in the aggregate "TOTAL PAYMENTS")
shall not exceed an amount equal to one dollar less than the maximum amount
which Executive may receive without becoming subject to the tax imposed by
Section 4999 of the Code or which Employer may pay without loss of deduction
under Section 280G(a) of the Code. Present value for purposes of this Agreement
shall be calculated in accordance with Section 280G(d)(4) of the Code. Within
30 days following the earlier of (x) the effective date of such termination or
(y) the giving of notice by Employer to Executive of its belief that there is a
payment or benefit due Executive which will result in an excess parachute
payment as defined in Section 280G of the Code, the chief financial officer of
Employer shall make a good faith determination of the amount of any reduction
necessary to comply with the provisions of this section, after consultation with
the advisors then regularly retained by Employer, including tax counsel selected
by Employer and reasonably acceptable to Executive. A written statement setting
forth the calculation thereof shall be prepared and provided to Executive. In
the event that such calculation determines that there would be an excess
parachute payment, the payments to be made hereunder shall be modified, reduced
or eliminated as specified by Executive in writing delivered to Employer within
30 days of his receipt of such calculation or, if Executive fails to so notify
Employer, then as Employer shall reasonably determine, so that under the basis
of calculation prepared by Employer there will be no excess parachute payment.
The provisions of this section, including the calculations and notices provided
for herein shall be based upon the conclusive presumption that (x) the
compensation and benefits provided for in Section 5.04(a) hereof and (y) any
other compensation earned prior to the Effective Time by Executive pursuant to
Investors' compensation programs if such payments would have been made in the
future in any event, even though the timing of such payment is triggered by a
change in control (as defined in the Original Agreement ), are reasonable
compensation for services rendered prior to such change in control. In the
event that the provisions of Sections 280G and 4999 of the Code are repealed
without succession this section shall be of no further force or effect.
6. CONFIDENTIAL INFORMATION. Except as permitted or directed by
Employer's Board of Directors, during the term of this Agreement or at any time
thereafter, Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of Firstar)
any confidential or secret knowledge or information of Investors or any related
entity (collectively the "INVESTORS ENTITIES") or any Firstar entities which
Executive has acquired or become acquainted with or will acquire or become
acquainted with during the period of his employment by Employer or any other
Firstar entity, whether developed by himself or by others, concerning any trade
<PAGE>
secrets, any customer lists of any Investors Entity or any Firstar entity,
or any other confidential information or secret aspects of the business of any
Investors Entity or any Firstar entity. Executive acknowledges that the
above-described knowledge or information constitutes a unique and valuable
asset of Firstar and represents a substantial investment of time and expense
by Firstar, and that any disclosure or other use of such knowledge or
information other than for the sole benefit of Firstar would be wrongful
and would cause irreparable harm to Firstar. Both during and after the term of
this Agreement, Executive will refrain from any acts or omissions that would
reduce the value of such knowledge or information to Firstar. The foregoing
obligations of confidentiality shall not apply to any knowledge or information
which is now published or which subsequently becomes generally publicly known
in the form in which it was obtained from Firstar, other than as a direct or
indirect result of the breach of this Agreement by Executive.
7. NONCOMPETITION COVENANT.
7.01 AGREEMENT NOT TO COMPETE. Executive acknowledges that he will be
signing a separate noncompetition agreement (the "NONCOMPETITION AGREEMENT") as
part of Firstar's acquisition of Investors, and the accompanying sale of his
stock in Investors. Firstar is entering into the purchase agreement with
Investors, and Firstar is entering into the Agreement, in part in exchange for
the Executive's agreement to the terms of the Noncompetition Agreement; and the
terms of the Noncompetition Agreement are incorporated into this Agreement by
reference.
7.02 SOLICITATION OF EMPLOYEES. Executive also agrees that -- during
the non-compete period identified in the Noncompetition Agreement -- he will not
to solicit, cause or seek to cause any employee of Employer or any other Firstar
entity to terminate, curtail or otherwise modify his or her employment
relationship with Employer or Firstar for the purpose of entering into an
employment or other relationship with Executive or with any other entity, firm,
business, activity or enterprise involved in any competitive business.
7.03 INDIRECT COMPETITION. Executive further agrees that, during the
term of this Agreement and for the period after termination of employment that
the noncompetition covenant of Section 7.01 is effective, he will not, directly
or indirectly, assist or encourage any other person in carrying out, directly or
indirectly, any activity that would be prohibited by the above provisions of
this Section 7 if such activity were carried out by Executive, either directly
or indirectly; and, in particular, Executive agrees that he will not, directly
or indirectly, induce any employee of Employer or any Firstar entity to carry
out, directly or indirectly, any such activity.
7.04 MODIFICATION. In the event that a court of competent
jurisdiction determines that the provisions of this Section 7 are excessively
broad as to duration, geographical scope or activity, it is expressly agreed
that this covenant shall be construed so that the remaining provisions shall not
be affected but shall remain in full force and effect, and any such overbroad
provisions shall be deemed, without further action on the part of any person, to
be modified, amended, and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
8. TERMINATION PROVISIONS.
8.01 POST-TERMINATION AGREEMENTS. This Agreement may be terminated at
any time: (i) by the mutual agreement of both parties to this Agreement, (ii)
upon the death or Disability of Executive, (iii) by Executive for Good Reason,
(iv) by Firstar for Cause or (v) by either party upon a breach of a material
term of this Agreement by the other party hereto. This Agreement may also be
terminated by Employer without Cause with payment of the amounts specified in
Section 5.04. For purposes of this Section 8.01, "Cause," "Disability," and
Good Reason" shall have the meanings
<PAGE>
assigned to them in Section 5.03. Notwithstanding any termination of this
Agreement, Executive, in consideration of his employment hereunder to the date
of such termination, shall remain bound by the provisions of this Agreement
which specifically relate to periods, activities or obligations upon or
subsequent to the termination of Executive's employment.
8.02 SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with Firstar, Executive shall deliver promptly to Firstar all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of Firstar or which relate in any way to the business, products,
practices or techniques of Firstar or its subsidiaries, and all other property,
trade secrets and confidential information of Firstar Corporation or its
subsidiaries, including, but not limited to, all documents which in whole or in
part contain any trade secrets or confidential information of Firstar
Corporation or its subsidiaries, which in any of these cases are in his
possession or under his control.
9. MISCELLANEOUS.
9.01 REGULATORY INVALIDITY. Notwithstanding any provision in this
Agreement to the contrary, no payment shall be due Executive hereunder, and
Employer shall not be obligated and shall not make any payment hereunder, if,
because of the condition of Firstar Corporation or any insured institution
subsidiary of Firstar Corporation or the acts of the Executive, such payment
would be prohibited pursuant to Section 18 of the Federal Deposit Insurance Act,
as amended, 12 U.S.C. SECTION 1828(k), or the regulations governing insured
depositary institutions or depository institution holding companies promulgated
pursuant thereto.
9.02 SATISFACTION. Employer shall not have any obligation under this
Agreement with respect to any payment, action, or benefit required of it for any
period by any provision herein to the extent that such payment, action or
benefit has been satisfied or provided by another Firstar entity with respect to
such period. Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require any other Firstar entity to satisfy any obligation set forth
herein. Without limiting the generality of the foregoing, Executive expressly
acknowledges that Investors Savings Bank, F.S.B. (the "BANK") is a federal
savings bank subject to regulation of the Office of Thrift Supervision under the
Home Owners Loan Act, and particularly to regulation relating to the level and
form of employment agreement and compensation which such a savings institution
may pay its executive officers. The Bank is not a party to this Agreement and
nothing in this Agreement shall create any obligation enforceable against the
Bank or imply any course of conduct or level of compensation to which the Bank
will be bound.
9.03 LEGAL FEES AND EXPENSES. Employer shall pay to Executive all
legal fees and expenses incurred by Executive in seeking to obtain or enforce
any right or benefit provided to Executive by this Agreement whether by
arbitration or otherwise.
9.04 GOVERNING LAW. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Minnesota.
9.05 PRIOR AGREEMENTS. This Agreement restates, amends and in all
respects replaces the Original Agreement and the parties hereby mutually agree
that the Original Agreement will be terminated upon the Effective Date. This
Agreement contains the entire Agreement of the parties relating to the
employment of Executive by Employer and the other matters discussed herein and
supersedes all prior Agreements and understandings with respect to such subject
matter, and the parties
<PAGE>
hereto have made no Agreements, representations or warranties relating to the
subject matter of this Agreement which are not set forth herein.
9.06 WITHHOLDING TAXES. Employer may withhold from any compensation
or other benefits payable under this Agreement all federal, state, city or other
taxes as shall be required pursuant to any law or governmental regulation or
ruling.
9.07 AMENDMENTS. After the Effective Date, no amendment, termination
or modification of this Agreement shall be deemed effective unless made in
writing and signed by Executive and Employer. Prior to the Effective Date, no
amendment, termination or modification of this Agreement (other than pursuant to
Section 10) shall be deemed effective unless made in writing and signed by
Executive, Investors and Firstar Corporation.
9.08 NO WAIVER. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
9.09 ASSIGNMENT. Other than as expressly contemplated herein with
respect to the merger or other combination of Investors with and into an
affiliate of Firstar Corporation, this Agreement shall not be assignable, in
whole or in part, by either party without the written consent of the other
party, except that Firstar may, without the consent of Executive, assign its
rights and obligations under this Agreement to any corporation, firm or other
business entity with or into which Firstar may merge or consolidate, or to which
Firstar may sell or transfer all or substantially all of its assets, or of which
50% or more of the equity investment and of the voting control is owned,
directly or indirectly, by, or is under common ownership with, Firstar. After
any such assignment by Firstar, Employer shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be Employer
for the purposes of all provisions of this Agreement including this Section
9.09. Notwithstanding the foregoing, this Agreement shall inure to the benefit
of and be enforceable by Executive's personal or legal representatives,
executors, administrators, heirs, distributees, devisees and legatees.
9.10 SUCCESSORS AND BINDING AGREEMENT. Firstar will require any
successor (whether direct or to substantially all of the business and/or assets
of Firstar), by agreement in form and substance satisfactory to Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that Employer would be required to perform it if no such
succession had taken place. Failure of Firstar to obtain such Agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement
(subject to Executive's duty to provide 15 days' notice, as described above),
and shall entitle Executive to compensation from Employer in the same amount and
on the same terms as Executive would be entitled hereunder if Executive
terminated his employment for Good Reason, except that for purposes of
implementing the forgoing, the date on which any such succession becomes
effective shall be deemed the date that the termination of Executive's
employment becomes effective. As used in this Agreement, "Firstar" shall mean
Firstar and any successor to its business and/or assets which executes and
delivers the Agreement provided for in this Section 9.10 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
9.11 INJUNCTIVE RELIEF. Executive agrees that it would be difficult
to compensate Firstar fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Sections 6, 7 and
8. Accordingly, Executive specifically agrees that Firstar
<PAGE>
shall be entitled to temporary and permanent injunctive relief to enforce the
provisions of this Agreement and that such relief may be granted without the
necessity of proving actual damages. This provision with respect to injunctive
relief shall not, however, diminish the right of Firstar to claim and recover
damages in addition to injunctive relief.
9.12 SEVERABILITY. To the extent that any provision of this Agreement
shall be determined to be invalid or unenforceable, the invalid or unenforceable
portion of such provision shall be deleted from this Agreement, and the validity
and enforceability of the remainder of such provision and of this Agreement
shall be unaffected.
10. EXPIRATION. This Agreement shall automatically expire and shall
thereafter be of no force and effect whatsoever in the event that the
Reorganization Agreement should expire or be terminated in accordance with its
terms.
INVESTORS BANK CORP.
By
-----------------------------------------
Its
----------------------------------
FIRSTAR CORPORATION
By
-----------------------------------------
Its
----------------------------------
-----------------------------------------
James M. Burkholder
<PAGE>
Exhibit 10.2
JOHN G. LOHMANN, JR.
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated August 21, 1994, is made by and between
Investors Bank Corp., a Delaware corporation ("INVESTORS"), Firstar Corporation,
a Wisconsin corporation ("FIRSTAR CORPORATION"), and John G. Lohmann, Jr., an
individual resident of the state of Minnesota ("EXECUTIVE").
WHEREAS, Executive has heretofore been employed as an executive
officer of Investors;
WHEREAS, Executive and Investors have heretofore entered into an
Amended and Restated Employment Agreement, dated as of December 1, 1993 (the
"ORIGINAL AGREEMENT");
WHEREAS, Investors may be purchased by or otherwise combined with
Firstar Corporation and/or one or more of its affiliate entities (collectively
"FIRSTAR");
WHEREAS, as a condition precedent to such purchase or combination,
Firstar is requiring that Executive agree to the terms of this Agreement;
WHEREAS, Executive acknowledges that he will receive substantial
benefit from the planned purchase or combination as a result of the sale of his
stock and other benefits; and
WHEREAS, the parties desire this Agreement to supersede the Original
Agreement as of the "Effective Time" (as such term is defined in the Agreement
and Plan of Reorganization, dated August 21, 1994 (the "REORGANIZATION
AGREEMENT"), between, among others, Investors and Firstar) of any merger or
other combination of Investors with any Firstar affiliate (called the "EFFECTIVE
TIME" or the "EFFECTIVE DATE" in this Agreement).
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of Investors, Firstar and Executive set forth below, Investors,
Firstar and Executive agree as follows:
1. EMPLOYMENT. On the Effective Date, Firstar Bank of Minnesota,
N.A. ("EMPLOYER" or "FBM") shall employ Executive pursuant to this Agreement.
Executive hereby accepts such employment and agrees to perform services for
Employer for the period and upon the other terms and conditions set forth in
this Agreement.
2. TERM. Unless terminated at an earlier date in accordance with
Sections 5 and 8 of this Agreement, the term of Executive's full-time
employment hereunder shall commence on the Effective Date and shall extend for
a period of three months. Thereafter, Executive shall be employed part-time
(requiring no more than 20 hours of work per week) for a period of nine months
(the anniversary of the Effective Date being herein referred to as the
"CONTRACT END DATE"). The term of this Agreement shall not be renewed or
extended unless Firstar and Executive shall so agree in writing.
3. POSITION AND DUTIES.
3.01 SERVICES. During the term of this Agreement, Executive shall
serve as Executive Vice President of Employer.
3.02 PERFORMANCE OF DUTIES. Executive agrees to serve Firstar
faithfully and to the best of his ability and, for the first three months after
the Effective Date, to devote his full time,
<PAGE>
attention and efforts to the business and affairs of Employer and other Firstar
entities during the term of this Agreement. Thereafter, and until the first
anniversary of the Agreement, he shall devot such time to the business and
affairs of Employer and other Firstar entities, not to exceed twenty hours per
week, as Firstar and Executive shall mutually agree. Executive hereby confirms
that he is under no contractual commitments inconsistent with his obligations
set forth in this Agreement, and that during the term of this Agreement, he will
not render or perform services for any other corporation, firm, entity or person
which are inconsistent with the provisions of this Agreement.
4. COMPENSATION.
4.01 BASE SALARY. As base compensation for all services to be
rendered under this Agreement for the first twelve months of this Agreement,
Employer shall pay to Executive an annualized salary of $165,000 (the "BASE
SALARY"), which salary shall be paid in accordance with Firstar's normal payroll
procedures and policies (which currently provide for bi-weekly payments).
4.02 PARTICIPATION IN BENEFIT PLANS. During the term of this
Agreement, Executive shall be entitled to receive such medical and
hospitalization insurance and other fringe benefits as are being provided to the
key executive employees of Employer from time to time to the extent that
Executive's age, position or other factors qualify him for such fringe benefits,
which benefits shall include, without limitation, continuation of an automobile
allowance comparable to other key executive employees; except that the existing
lease for the automobile currently used by Executive will be continued until the
earlier of the expiration date of the lease or the Contract End Date (but not
any optional extensions thereof), and Executive shall continue to use such
automobile until the earlier of such two dates.
4.03 DISABILITY/LIFE INSURANCE BENEFITS. Firstar shall maintain (i) a
key man disability insurance policy for Executive; and (ii) a term life
insurance policy on Executive's life, both on such terms as existed on the date
of the Original Agreement. This insurance coverage will be in lieu of any
coverage normally provided to Employer's officers.
4.04 EXPENSES. Employer will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with Employer's normal policies for expense
verification.
4.05 COMPENSATION FOR NONCOMPETE. In consideration of the
noncompetition covenant pursuant to Section 7.01(b), Firstar shall pay to
Executive an aggregate of $140,000 for the period after the Contract End Date to
the third anniversary after the Effective Date. Such amount shall be prorated
and paid bi-weekly during said two-year period in accordance with the regular
payroll practices of Firstar.
4.06 TAX EXPENSE. Employer shall pay Executive a bonus at such time
as is necessary for Executive to satisfy his federal income tax obligation,
to offset any income tax expense resulting from issuance of Firstar Corporation
Common Stock in exchange for the fair value of Executive's Restricted Stock
under agreement dated December 31, 1992.
<PAGE>
5. TERMINATION.
5.01 TERMINATION BY EMPLOYER. During the term of this Agreement,
Employer:
(a) shall have the right to terminate Executive from employment at
any time for Cause (as defined in Section 5.03 hereof), by written notice to
Executive, specifying the particulars of the conduct of Executive forming the
basis for such termination, and shall not be obligated to pay Executive the
benefits provided in Section 5.04 hereof; and
(b) shall have the right to terminate Executive's employment without
Cause, and Executive shall, upon the occurrence of such termination without
Cause, be entitled to receive the benefits provided in Section 5.04 hereof.
5.02 TERMINATION BY EXECUTIVE. The Executive shall also be entitled
to receive the benefits defined in Section 5.04 hereof upon the voluntary
termination of Executive's employment by Executive for Good Reason (as defined
in Section 5.03 hereof). Executive shall evidence a voluntary termination for
Good Reason by written notice to Employer given within 60 days after the date of
the occurrence of any event that Executive knows or should reasonably have known
constitutes Good Reason for voluntary termination. Such notice need only
identify Executive and set forth in reasonable detail the facts and
circumstances claimed by Executive to constitute Good Reason. Any notice given
by Executive pursuant to this Section 5.02 shall be effective five business
days after the date it is given by Executive.
5.03 DEFINITIONS.
(a) "CAUSE" shall mean the Executive has (i) engaged in serious
misconduct which results in demonstrable and serious injury to Firstar, FHMC or
FBM, monetary or otherwise; (ii) been convicted of a felony, as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion or lapse of all right of appeal; or
(iii) unreasonably neglected or refused to perform the Executive's duties or
responsibilities (unless significantly changed without the Executive's consent).
(b) "DISABILITY" shall mean any physical or mental illness or
disability that renders Executive unable to perform substantially all of his
duties and services hereunder for a period of six months during any one-year
period.
(c) "GOOD REASON" shall mean the occurrence of any of the following
events, except for the occurrence of such an event in connection with the
termination or reassignment of Executive's employment for Cause or by any
reason of his death or Disability:
(i) the assignment to the Executive of employment responsibilities
which are not of comparable responsibility and status of the position of
Executive Vice President of FBM, consisting generally of the duties
described by Michael Schmitz in a letter delivered contemporaneously with
the execution of this Agreement;
(ii) a reduction by Firstar in the Executive's base salary below the
amount set forth in Section 4.01;
<PAGE>
(iii) Firstar's or FBM's requiring the Executive to be based
anywhere other than within 50 miles of the Executive's office location
immediately prior to the Effective Date, except for requirements of
temporary business travel to an extent substantially consistent with the
Executive's business travel obligations immediately prior to the Effective
Date;
(iv) except to the extent otherwise required by applicable law, the
failure of Firstar to continue the Executive's participation in any
benefit plan, health plan, or any fringe benefit (including vacation time)
on a comparable basis to that provided to other executives of Firstar
entities with comparable duties (Executive acknowledges that he will not
be eligible to participate in any incentive compensation, stock purchase
or other similar plan) or
(v) the failure of Firstar to obtain, as specified in Section 9.10
hereof, an assumption of the obligations of Firstar to perform this
Agreement by any successor of Firstar within 15 days after written notice
by the Executive.
5.04 SEVERANCE PAYMENT. Upon the termination of the employment of
Executive pursuant to Section 5.01(b) or 5.02 hereof, Executive shall be
entitled to receive the benefits specified in this Section 5.04. The amounts
due to Executive under subparagraphs (a) or (b) of this Section 5.04 shall be
paid to Executive not later than one business day prior to the date that the
termination of Executive's employment becomes effective (except as noted below).
(a) Employer shall pay to Executive (i) the full base salary earned
by him and unpaid through the date that the termination of Executive's
employment becomes effective, at the rate in effect at the time written notice
of termination (voluntary or involuntary) was given, (ii) any amount earned by
Executive as a bonus (if any) with respect to the fiscal year of Employer
preceding the termination of his employment if such bonus has not theretofore
been paid to Executive and (iii) an amount representing credit for any vacation
earned or accrued by him but not taken.
(b) In lieu of any further base salary, incentive compensation and
bonus payments, as well as continued participation in any stock purchase or
similar plan and all other benefit plans or programs of any nature, to Executive
for periods subsequent to the date that the termination of Executive's
employment becomes effective, Employer shall pay as severance pay to Executive a
lump-sum cash amount equal to the remaining Base Salary payments due to
Executive from the date of termination to the Contract End Date. Employer shall
also continue Executive's participation in health insurance plans and shall
maintain the life and disability insurance coverage referecned above until the
Contract End Date (but executive will not be eligible for continued
participation in the pension or Thrift & Sharing plans).
(c) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 5.04 by seeking other employment or
otherwise. The amount of any payment or benefit provided in this Section 5.04
shall not be reduced by any compensation earned by Executive as a result of any
employment by another employer.
It is the intention of Employer and Executive that no portion of any
payment under this Agreement, or payments to or for the benefit of Executive
under any other agreement or plan, be deemed to be an excess parachute payment
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"CODE"), or of any successor provision. It is agreed that the present value of
all payments to or for the benefit of Executive in the nature of compensation to
which Section 280G of the Code applies (in the aggregate "TOTAL PAYMENTS")
shall not exceed an amount equal to one dollar less than the maximum amount
which Executive may receive without becoming subject to the tax imposed by
Section 4999 of the Code or which Employer may pay without loss of deduction
under Section 280G(a) of
<PAGE>
the Code. Present value for purposes of this Agreement shall be calculated in
accordance with Section 280G(d)(4) of the Code. Within 30 days following the
earlier of (x) the effective date of such termination or (y) the giving of
notice by Employer to Executive of its belief that there is a payment or benefit
due Executive which will result in an excess parachute payment as defined in
Section 280G of the Code, the chief financial officer of Employer shall make a
good faith determination of the amount of any reduction necessary to comply with
the provisions of this section, after consultation with the advisors then
regularly retained by Employer, including tax counsel selected by Employer and
reasonably acceptable to Executive. A written statement setting forth the
calculation thereof shall be prepared and provided to Executive. In the event
that such calculation determines that there would be an excess parachute
payment, the payments to be made hereunder shall be modified, reduced or
eliminated as specified by Executive in writing delivered to Employer within 30
days of his receipt of such calculation or, if Executive fails to so notify
Employer, then as Employer shall reasonably determine, so that under the basis
of calculation prepared by Employer there will be no excess parachute payment.
The provisions of this section, including the calculations and notices provided
for herein shall be based upon the conclusive presumption that (x) the
compensation and benefits provided for in Section 5.04(a) hereof and (y) any
other compensation earned prior to the Effective Time by Executive pursuant to
Investors' compensation programs if such payments would have been made in the
future in any event, even though the timing of such payment is triggered by a
change in control (as defined in the Original Agreement ), are reasonable
compensation for services rendered prior to such change in control. In the
event that the provisions of Sections 280G and 4999 of the Code are repealed
without succession this section shall be of no further force or effect.
6. CONFIDENTIAL INFORMATION. Except as permitted or directed by
Employer's Board of Directors, during the term of this Agreement or at any time
thereafter, Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of Firstar)
any confidential or secret knowledge or information of Investors or any related
entity (collectively the "INVESTORS ENTITIES") or any Firstar entities which
Executive has acquired or become acquainted with or will acquire or become
acquainted with during the period of his employment by employer or any other
Firstar entity, whether developed by himself or by others, concerning any trade
secrets, any customer lists of any Investor Entity or any Firstar entity, or
any other confidential information or secret aspects of the business of any
Investor Entity or any Firstar entity or any such subsidiary. Executive
acknowledges that the above-described knowledge or information constitutes a
unique and valuable asset of Firstar and represents a substantial investment
of time and expense by Firstar, and that any disclosure or other use of such
knowledge or information other than for the sole benefit of Firstar would be
wrongful and would cause irreparable harm to Firstar. Both during and after
the term of this Agreement, Executive will refrain from any acts or omissions
that would reduce the value of such knowledge or information to Firstar. The
foregoing obligations of confidentiality shall not apply to any knowledge or
information which is now published or which subsequently becomes generally
publicly known in the form in which it was obtained from Firstar, other than
as a direct or indirect result of the breach of this Agreement by Executive.
7. NONCOMPETITION COVENANT.
7.01 AGREEMENT NOT TO COMPETE. Executive acknowledges that he will be
signing a separate noncompetition agreement (the "NONCOMPETITION AGREEMENT") as
part of Firstar's acquisition of Investors, and the accompanying sale of his
stock in Investors. Firstar is entering into the purchase agreement with
Investors, and Firstar is entering into the Agreement, in part in exchange for
the Executive's agreement to the terms of the Noncompetition Agreement; and the
terms of the Noncompetition Agreement are incorporated into this Agreement by
reference.
<PAGE>
7.02 SOLICITATION OF EMPLOYEES. Executive also agrees that -- during
the non-compete period identified in the Noncompetition Agreement -- he will not
to solicit, cause or seek to cause any employee of Employer or any other
Firstar entity to terminate, curtail or otherwise modify his or her employment
relationship with Employer or Firstar for the purpose of entering into an
employment or other relationship with Executive or with any other entity, firm,
business, activity or enterprise involved in any competitive business.
7.03 INDIRECT COMPETITION. Executive further agrees that, during the
term of this Agreement and for the period after termination of employment that
the noncompetition covenant of Section 7.01 is effective, he will not, directly
or indirectly, assist or encourage any other person in carrying out, directly or
indirectly, any activity that would be prohibited by the above provisions of
this Section 7 if such activity were carried out by Executive, either directly
or indirectly; and, in particular, Executive agrees that he will not, directly
or indirectly, induce any employee of Employer or any Firstar entity to carry
out, directly or indirectly, any such activity.
7.04 MODIFICATION. In the event that a court of competent
jurisdiction determines that the provisions of this Section 7 are excessively
broad as to duration, geographical scope or activity, it is expressly agreed
that this covenant shall be construed so that the remaining provisions shall not
be affected but shall remain in full force and effect, and any such overbroad
provisions shall be deemed, without further action on the part of any person, to
be modified, amended, and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
8. TERMINATION PROVISIONS.
8.01 POST-TERMINATION AGREEMENTS. This Agreement may be terminated at
any time: (i) by the mutual agreement of both parties to this Agreement, (ii)
upon the death or Disability of Executive, (iii) by Executive for Good Reason,
(iv) by Firstar for Cause or (v) by either party upon a breach of a material
term of this Agreement by the other party hereto. This Agreement may also be
terminated by Employer without Cause with payment of the amounts specified in
Sections 4.05 and 5.04. For purposes of this Section 8.01, "Cause,"
"Disability," and Good Reason" shall have the meanings assigned to them in
Section 5.03. Notwithstanding any termination of this Agreement, Executive, in
consideration of his employment hereunder to the date of such termination of
this Agreement, shall remain bound by the provisions of this Agreement
which specifically relate to periods, activities or obligations upon or
subsequent to the termination of Executive's employment.
8.02 SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with Firstar, Executive shall deliver promptly to Firstar all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of Firstar or which relate in any way to the business, products,
practices or techniques of Firstar or its subsidiaries, and all other property,
trade secrets and confidential information of Firstar Corporation or its
subsidiaries, including, but not limited to, all documents which in whole or in
part contain any trade secrets or confidential information of Firstar
Corporation or its subsidiaries, which in any of these cases are in his
possession or under his control.
9. MISCELLANEOUS.
9.01 REGULATORY INVALIDITY. Notwithstanding any provision in this
Agreement to the contrary, no payment shall be due Executive hereunder, and
Employer shall not be obligated and shall not make any payment hereunder, if,
because of the condition of Firstar Corporation or any insured institution
subsidiary of Firstar Corporation or the acts of the Executive, such payment
would be
<PAGE>
prohibited pursuant to Section 18 of the Federal Deposit Insurance Act, as
amended, 12 U.S.C. Section 1828(k), or the regulations governing insured
depositary institutions or depository institution holding companies promulgated
pursuant thereto.
9.02 SATISFACTION. Employer shall not have any obligation under this
Agreement with respect to any payment, action, or benefit required of it for any
period by any provision herein to the extent that such payment, action or
benefit has been satisfied or provided by another Firstar entity with respect to
such period. Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require any other Firstar entity to satisfy any obligation set forth
herein. Without limiting the generality of the foregoing, Executive expressly
acknowledges that Investors Savings Bank, F.S.B. (the "BANK") is a federal
savings bank subject to regulation of the Office of Thrift Supervision under the
Home Owners Loan Act, and particularly to regulation relating to the level and
form of employment agreement and compensation which such a savings institution
may pay its executive officers. The Bank is not a party to this Agreement and
nothing in this Agreement shall create any obligation enforceable against the
Bank or imply any course of conduct or level of compensation to which the Bank
will be bound.
9.03 LEGAL FEES AND EXPENSES. Employer shall pay to Executive all
legal fees and expenses incurred by Executive in seeking to obtain or enforce
any right or benefit provided to Executive by this Agreement whether by
arbitration or otherwise.
9.04 GOVERNING LAW. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Minnesota.
9.05 PRIOR AGREEMENTS. This Agreement restates, amends and in all
respects replaces the Original Agreement and the parties hereby mutually agree
that the Original Agreement will be terminated upon the Effective Date. This
Agreement contains the entire Agreement of the parties relating to the
employment of Executive by Employer and the other matters discussed herein and
supersedes all prior Agreements and understandings with respect to such subject
matter, and the parties hereto have made no Agreements, representations or
warranties relating to the subject matter of this Agreement which are not set
forth herein.
9.06 WITHHOLDING TAXES. Employer may withhold from any compensation
or other benefits payable under this Agreement all federal, state, city or other
taxes as shall be required pursuant to any law or governmental regulation or
ruling.
9.07 AMENDMENTS. After the Effective Date, no amendment, termination
or modification of this Agreement shall be deemed effective unless made in
writing and signed by Executive and Employer. Prior to the Effective Date, no
amendment, termination or modification of this Agreement (other than pursuant to
Section 10) shall be deemed effective unless made in writing and signed by
Executive, Investors and Firstar Corporation.
9.08 NO WAIVER. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
9.09 ASSIGNMENT. Other than as expressly contemplated herein with
respect to the merger or other combination of Investors with and into an
affiliate of Firstar Corporation, this
<PAGE>
Agreement shall not be assignable, in whole or in part, by either party without
the written consent of the other party, except that Firstar may, without the
consent of Executive, assign its rights and obligations under this Agreement to
any corporation, firm or other business entity with or into which Firstar may
merge or consolidate, or to which Firstar may sell or transfer all or
substantially all of its assets, or of which 50% or more of the equity
investment and of the voting control is owned, directly or indirectly, by, or is
under common ownership with, Firstar. After any such assignment by Firstar,
Employer shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be Employer for the purposes of all
provisions of this Agreement including this Section 9.09. Notwithstanding the
foregoing, this Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.
9.10 SUCCESSORS AND BINDING AGREEMENT. Firstar will require any
successor (whether direct or to substantially all of the business and/or assets
of Firstar), by agreement in form and substance satisfactory to Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that Employer would be required to perform it if no such
succession had taken place. Failure of Firstar to obtain such Agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement
(subject to Executive's duty to provide 15 days' notice, as described above),
and shall entitle Executive to compensation from Employer in the same amount and
on the same terms as Executive would be entitled hereunder if Executive
terminated his employment for Good Reason, except that for purposes of
implementing the forgoing, the date on which any such succession becomes
effective shall be deemed the date that the termination of Executive's
employment becomes effective. As used in this Agreement, "Firstar" shall mean
Firstar and any successor to its business and/or assets which executes and
delivers the Agreement provided for in this Section 9.10 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
9.11 INJUNCTIVE RELIEF. Executive agrees that it would be difficult
to compensate Firstar fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Sections 6, 7 and
8. Accordingly, Executive specifically agrees that Firstar shall be entitled to
temporary and permanent injunctive relief to enforce the provisions of this
Agreement and that such relief may be granted without the necessity of proving
actual damages. This provision with respect to injunctive relief shall not,
however, diminish the right of Firstar to claim and recover damages in addition
to injunctive relief.
9.12 SEVERABILITY. To the extent that any provision of this Agreement
shall be determined to be invalid or unenforceable, the invalid or unenforceable
portion of such provision shall be deleted from this Agreement, and the validity
and enforceability of the remainder of such provision and of this Agreement
shall be unaffected.
10. EXPIRATION. This Agreement shall automatically expire and shall
thereafter be of no force and effect whatsoever in the event that the
Reorganization Agreement should expire or be terminated in accordance with its
terms.
<PAGE>
INVESTORS BANK CORP.
By
---------------------------------------
Its
---------------------------------
FIRSTAR CORPORATION
By
---------------------------------------
Its
---------------------------------
------------------------------------------
John G. Lohnmann, Jr.
<PAGE>
Exhibit 10.3
DANIEL A. ARRIGONI
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated August 21, 1994, is made by and between
Investors Bank Corp., a Delaware corporation ("INVESTORS"), Firstar Corporation,
a Wisconsin corporation ("FIRSTAR CORPORATION"), and Daniel A. Arrigoni, an
individual resident of the State of Minnesota ("EXECUTIVE").
WHEREAS, Executive has heretofore been employed as an executive
officer of Investors;
WHEREAS, Executive and Investors have heretofore entered into a
Severance Pay Agreement, dated as of May 15, 1994 (the "ORIGINAL AGREEMENT");
WHEREAS, Investors may be purchased by or otherwise combined with
Firstar Corporation and/or one or more of its affiliate entities (collectively
"FIRSTAR");
WHEREAS, as a condition precedent to such purchase or combination,
Firstar is requiring that Executive agree to the terms of this Agreement;
WHEREAS, Executive acknowledges that he will receive substantial
benefit from the planned purchase or combination as a result of the sale of his
stock and other benefits; and
WHEREAS, the parties desire this Agreement to supersede the Original
Agreement as of the "Effective Time" (as such term is defined in the Agreement
and Plan of Reorganization, dated August 21, 1994 (the "REORGANIZATION
AGREEMENT"), between, among others, Investors and Firstar) of any merger or
other combination of Investors with any Firstar affiliate (called the "EFFECTIVE
TIME" or the "EFFECTIVE DATE" in this Agreement).
NOW, THEREFORE, in consideration of the premises, the respective
undertakings of Investors, Firstar and Executive set forth below, Investors,
Firstar and Executive agree as follows:
1. EMPLOYMENT. On the Effective Date, Firstar Home Mortgage
Corporation ("EMPLOYER" or "FHMC") shall employ Executive pursuant to this
Agreement. Executive hereby accepts such employment and agrees to perform
services for Employer for the period and upon the other terms and conditions set
forth in this Agreement.
2. TERM. Unless terminated at an earlier date in accordance with
Sections 5 and 8 of this Agreement, the term of Executive's employment hereunder
shall commence on the Effective Date and shall extend for a period of 30 months
thereafter (the date 30 months after the Effective Date being herein referred to
as the "CONTRACT END DATE"). The term of this Agreement shall not be renewed or
extended unless Firstar and Executive shall so agree in writing.
3. POSITION AND DUTIES.
3.01 SERVICES. During the term of this Agreement, Executive
shall serve as Executive Vice President of Employer.
3.02 PERFORMANCE OF DUTIES. Executive agrees to serve Firstar
faithfully and to the best of his ability and to devote his full time, attention
and efforts to the business and affairs of Employer and other Firstar entities
during the term of this Agreement. Executive hereby confirms that he is under
no contractual commitments inconsistent with his obligations set forth in this
Agreement,
<PAGE>
and that during the term of this Agreement, he will not render or perform
services for any other corporation, firm, entity or person which are
inconsistent with the provisions of this Agreement.
4. COMPENSATION.
4.01 BASE SALARY. As base compensation for all services to be
rendered under this Agreement during the term of this Agreement, Employer shall
pay to Executive an annual salary of $158,000 (the "BASE SALARY"), which salary
shall be paid in accordance with Firstar's normal payroll procedures and
policies (which currently provide for bi-weekly payments). The base salary
shall be reviewed annually by Employer's Board of Directors and may be increased
to such higher rate as Employer's Board of Directors determines, whereby such
increased base salary shall constitute the Base Salary for all purposes of this
Agreement.
4.02 BONUS AND INCENTIVE COMPENSATION. In addition to the Base
Salary described in Section 4.01, Executive shall be entitled to an annual bonus
of $100,000 (the "ANNUAL BONUS"), to be prorated and one-twelfth paid each
month. In addition, Executive shall be entitled to participate in an incentive
compensation plan (the "INCENTIVE PLAN") to be created by Employer which will
contain terms similar to those contained in the incentive plans which Investors
has in place for Executive as of August 1, 1994. The Annual Bonus will be
credited to the first $100,000 of the amount payable under the Incentive Plan.
For example, if Executive is eligible for an incentive compensation payment of
$125,000 under the terms of the Incentive Plan, he will receive the $100,000
Annual Bonus and an additional $25,000 under the Incentive Plan.
4.03 PARTICIPATION IN BENEFIT PLANS. During the term of this
Agreement, Executive shall be entitled to receive such medical and
hospitalization insurance and other fringe benefits as are being provided to the
key executive employees of Employer from time to time to the extent that
Executive's age, position or other factors qualify him for such fringe benefits,
which benefits shall include, without limitation, (i) an automobile allowance
comparable to other key executive employees, and in any event at least equal to
$650 per month, and (ii) dues on a golf club membership at a facility to be
chosen by Executive; PROVIDED, HOWEVER, that Employer shall not be obligated to
reimburse Executive for more than $3,000 of such dues annually.
4.04 DISABILITY/LIFE INSURANCE BENEFITS. Executive shall be
entitled to disability and life insurance benefits comparable to other executive
officers of Employer.
4.05 EXPENSE. Employer will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with Employer's normal policies for expense
verification.
5. TERMINATION.
5.01 TERMINATION BY EMPLOYER. During the term of this Agreement,
Employer:
(a) shall have the right to terminate Executive from employment
at any time for Cause (as defined in Section 5.03 hereof), by written notice to
Executive, specifying the particulars of the conduct of Executive forming the
basis for such termination, and shall not be obligated to pay Executive the
benefits provided in Section 5.04 hereof; and
<PAGE>
(b) shall have the right to terminate Executive's employment
without Cause, and Executive shall, upon the occurrence of such termination
without Cause, be entitled to receive the benefits provided in Section 5.04
hereof.
5.02 TERMINATION BY EXECUTIVE. The Executive shall also be
entitled to receive the benefits defined in Section 5.04 hereof upon the
voluntary termination of Executive's employment by Executive for Good Reason (as
defined in Section 5.03 hereof). Executive shall evidence a voluntary
termination for Good Reason by written notice to Employer given within 60 days
after the date of the occurrence of any event that Executive knows or should
reasonably have known constitutes Good Reason for voluntary termination. Such
notice need only identify Executive and set forth in reasonable detail the facts
and circumstances claimed by Executive to constitute Good Reason. Any notice
given by Executive pursuant to this Section 5.02 shall be effective five
business days after the date it is given by Executive.
5.03 DEFINITIONS.
(a) "CAUSE" shall mean the Executive has (i) engaged in serious
misconduct which results in demonstrable and serious injury to Firstar or FHMC,
monetary or otherwise; (ii) been convicted of a felony, as evidenced by a
binding and final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion or lapse of all right of appeal; or
(iii) unreasonably neglected or refused to perform the Executive's duties or
responsibilities (unless significantly changed without the Executive's consent).
(b) "DISABILITY" shall mean any physical or mental illness or
disability that renders Executive unable to perform substantially all of his
duties and services hereunder for period of six months during any one-year
period.
(c) "GOOD REASON" shall mean the occurrence of any of the
following events, except for the occurrence of such an event in connection with
the termination or reassignment of Executive's employment for Cause or by any
reason of his death or Disability:
(i) the assignment to me Executive of employment
responsibilities which are not of comparable responsibility and status
of the position of Executive Vice President of FHMC, consisting
generally of the duties described by Michael Schmitz in a letter
delivered contemporaneously with the execution of this Agreement;
(ii) a reduction by Firstar in the Executive's base salary below
the Base Salary and Annual Bonus below the amounts set forth in
Sections 4.01 and 4.02;
(iii) Firstar's failure to permit the Executive's
participation in the Incentive Plan;
(iv) Firstar's or FHMC's requiring the Executive to be based
anywhere other than within 50 miles of the Executive's office location
immediately prior to the Effective Date, except for requirements of
temporary business travel to an extent substantially consistent with
the Executive's business travel obligations immediately prior to the
Effective Date;
(v) except to the extent otherwise required by applicable law,
the failure of Firstar to continue the Executive's participation in
any life insurance plan, health
<PAGE>
plan or disability plan, or any fringe benefit (including vacation
time) on a comparable basis to that provided to other executives of
Firstar entities with comparable duties; or
(vi) the failure of Firstar to obtain, as specified in Section
9.10 hereof, an assumption of the obligations of Firstar to perform
this Agreement by any successor of Firstar within 15 days after
written notice by the Executive.
5.04 SEVERANCE PAYMENT. Upon the termination of the employment
of Executive pursuant to Section 5.01(b) or 5.02 hereof, Executive shall be
entitled to receive the benefits specified in this Section 5.04. The amounts
due to Executive under subparagraphs (a) or (b)(i) of this Section 5.04 shall be
paid to Executive not later than one business day prior to the date that the
termination of Executive's employment becomes effective (except as noted below).
(a) Employer shall pay to Executive (i) the full base salary
earned by him and unpaid through the date that the termination of Executive's
employment becomes effective, at the rate in effect at the time written notice
of termination (voluntary or involuntary) was given, (ii) any amount earned by
Executive as a bonus with respect to the fiscal year of Employer preceding the
termination of his employment if such bonus has not theretofore been paid to
Executive and (iii) an amount representing credit for any vacation earned or
accrued by him but not taken;
(b) In lieu of any further base salary, Annual Bonus, incentive
compensation and bonus payments, as well as continued participation in the
Incentive Plan or any other plan and all other benefit plans or programs of any
nature, to Executive for periods subsequent to the date that the termination of
Executive's employment becomes effective, Employer shall pay as severance pay
to Executive his choice of either:
(i) A lump-sum cash amount equal to the remaining Base Salary
and Annual Bonus payments due to Executive from the date of
termination to the Contract End Date. Employer shall also continue
Executive's participation in life, health and other insurance plans,
until the Contract End Date (but Executive will not be eligible for
continued participation in the pension or Thrift & Sharing plans); or
(ii) bi-weekly severance payments and continued benefits which
are provided to Firstar "executive" employees in accordance with the
terms of Firstar's severance program in effect on the date of
termination.
If option (ii) is selected, Executive will be subject to all of the
terms of Firstar's severance program then in effect, including the
requirement that Executive execute a Severance Agreement, including a
release of claims. Notwithstanding the requirement that severance
payments be made in a lump sum, if opinion (ii) is selected, payments
will be made bi-weekly.
(c) Executive shall not be required to mitigate the amount of
any payment provided for in this Section 5.04 by seeking other employment or
otherwise. The amount of any payment or benefit provided in this Section 5.04
shall not be reduced by any compensation earned by Executive as a result of any
employment by another employer.
It is the intention of Employer and Executive that no portion of
any payment under this Agreement, or payments to or for the benefit of Executive
under any other agreement or plan, be deemed to be an excess parachute payment
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"CODE"), or of any successor provision. It is agreed that the present value of
all
<PAGE>
payments to or for the benefit of Executive in the nature of compensation to
which Section 280G of the Code applies (in the aggregate "TOTAL PAYMENTS") shall
not exceed an amount equal to one dollar less than the maximum amount which
Executive may receive without becoming subject to the tax imposed by Section
4999 of the Code or which Employer may pay without loss of deduction under
Section 280G(a) of the Code. Present value for purposes of this Agreement shall
be calculated in accordance with Section 280G(d)(4) of the Code. Within 30 days
following the earlier of (x) the effective date of such termination or (y) the
giving of notice by Employer to Executive of its belief that there is a payment
or benefit due Executive which will result in an excess parachute payment as
defined in Section 280G of the Code, the chief financial officer of Employer
shall make a good faith determination of the amount of any reduction necessary
to comply with the provisions of this section, after consultation with the
advisors then regularly retained by Employer, including tax counsel selected by
Employer and reasonably accepted to Executive. A written statement setting
forth the calculation thereof shall be prepared and provided to Executive. In
the event that such calculation determines that there would be an excess
parachute payment, the payments to be made hereunder shall be modified, reduced
or eliminated as specified by Executive in writing delivered to Employer within
30 days of his receipt of such calculation, or, if Executive fails to so notify
Employer, then as Employer shall reasonably determine, so that under the basis
of calculation prepared by Employer there will be no excess parachute payment.
The provisions of this section, including the calculations and notices provided
for herein shall be based upon the conclusive presumption that (x) the
compensation and benefits provided for in Section 5.04(a) hereof and (y) any
other compensation earned prior to the Effective Time by Executive pursuant to
Investor's compensation programs if such payments would have been made in the
future in any event, even though the timing of such payment is triggered by a
change in control (as defined in the Original Agreement), are reasonable
compensation for services rendered prior touch change in control. In the event
that the provisions of Sections 280G and 4999 of the Code are repealed without
succession this section shall be of no further force or effect.
6. CONFIDENTIAL INFORMATION. Except as permitted or directed by
Employer's Board of Directors, during the term of this Agreement or at any time
thereafter, Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of Firstar)
any confidential or secret knowledge or information of Investors or any related
entity (collectively the "INVESTORS ENTITIES") or any Firstar entities which
Executive has acquired or become acquainted with or will acquire or become
acquainted with during the period of his employment by Employer or any other
Firstar entity, whether developed by himself or by others, concerning any trade
secrets, any customer lists of any Investors Entity or any Firstar entity, or
any other confidential information or secret aspects of the business of any
Investors Entity or any Firstar entity. Executive acknowledges that the above-
described knowledge or information constitutes a unique and valuable asset of
Firstar and represents a substantial investment of time and expense by Firstar,
and that any disclosure or other use of such knowledge or information other than
for the sole benefit of Firstar would be wrongful and would cause irreparable
harm to Firstar. Both during and after the term of this Agreement, Executive
will refrain from any acts or omissions that would reduce the value of such
knowledge or information to Firstar. The foregoing obligations of
confidentiality shall not apply to any knowledge or information which is now
published or which subsequently becomes generally publicly known in the form in
which it was obtained from Firstar, other than as direct or indirect result of
the breach of this Agreement by Executive.
7. NONCOMPETITION COVENANT.
7.01 AGREEMENT NOT TO COMPETE. Executive acknowledges that he
will be signing a separate noncompetition agreement (the "NONCOMPETITION
AGREEMENT") as part of Firstar's acquisition of Investors, and the accompanying
sale of his stock in Investors. Firstar is entering into the purchase agreement
with Investors, and Firstar is entering into the Agreement, in part in exchange
for
<PAGE>
the Executive's agreement to the terms of the Noncompetition Agreement; and the
terms of the Noncompetition Agreement are incorporated into this Agreement by
reference.
7.02 SOLICITATION OF EMPLOYEES. Executive also agrees that --
during the noncompete period identified in the Noncompetition Agreement -- he
will not to solicit, cause or seek to cause any employee of Employer or any
other Firstar entity to terminate, curtail or otherwise modify his or her
employment relationship with Employer or Firstar for the purpose of entering
into an employment or other relationship with Executive or with any other
entity, firm, business, activity or enterprise involved in any competitive
business.
7.03 INDIRECT COMPETITION. Executive further agrees that, during
the term of this Agreement and for the period after termination of employment
that the noncompetition covenant of Section 7.01 is effective, he will not,
directly or indirectly, assist or encourage any other person in carrying out,
directly or indirectly any activity that would be prohibited by the above
provisions of this Section 7 if such activity were carried out by Executive,
either directly or indirectly; and, in particular, Executive agrees that he will
not, directly or indirectly, induce any employee of Employer or any Firstar
entity to carry out, directly or indirectly, any such activity.
7.04 MODIFICATION. In the event that a court of competent
jurisdiction determines that the provisions of this Section 7 are excessively
broad as to duration, geographical scope or activity, it is expressly agreed
that this covenant shall be construed so that the remaining provisions shall not
be affected but shall remain in full force and effect, and any such overbroad
provisions shall be deemed, without further action on the part of any person, to
be modified, amended, and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
8. TERMINATION PROVISIONS.
8.01 POST-TERMINATION AGREEMENTS. This Agreement may be
terminated at any time: (i) by the mutual agreement of both parties to this
Agreement, (ii) upon the death or Disability of Executive, (iii) by Executive
for Good Reason, (iv) by Firstar for Cause or (v) by either party upon a breach
of a material term of this Agreement by the other party hereto. This Agreement
may also be terminated by Employer without Cause with payment of the amounts
specified in Section 5.04. For purposes of this Section 8.01, "Cause,"
"Disability," and "Good Reason" shall have the meanings assigned to them in
Section 5.03. Notwithstanding any termination of this Agreement, Executive, in
consideration of his employment hereunder to the date of such termination, shall
remain bound by the provisions of this Agreement which specifically relate to
periods, activities or obligations upon or subsequent to the termination of
Executive's employment.
8.02 SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with Firstar, Executive shall deliver promptly to Firstar all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of Firstar or which relate in any way to the business, products,
practices or techniques of First or its subsidiaries, and all other property,
trade secrets, and confidential information of Firstar Corporation or its
subsidiaries, including, but not limited to, all documents which in whole or in
part contain any trade secrets or confidential information of Firstar
Corporation or its subsidiaries, which in any of these cases are in his
possession or under his control.
<PAGE>
9. MISCELLANEOUS.
9.01 REGULATORY INVALIDITY. Notwithstanding any provision in
this Agreement to the contrary, no payment shall be due Executive hereunder, and
Employer shall not be obligated and shall not make any payment hereunder, if,
because of the condition of Firstar Corporation or any insured institution
subsidiary of Firstar Corporation or the acts of the Executive, such payment
would be prohibited pursuant to Section 18 of the Federal Deposit Insurance Act,
as amended, 12 U.S.C. SECTION 1828(k), or the regulations governing insured
depository institutions or depository institution holding companies promulgated
pursuant thereto.
9.02 SATISFACTION. Employer shall not have any obligation under
this Agreement with respect to any payment, action, or benefit required of it
for any period by any provision herein to the extent that such payment, action
or benefit has been satisfied or provided by another Firstar entity with respect
to such period. Notwithstanding the foregoing, nothing in this Agreement shall
be deemed to require any other Firstar entity to satisfy any obligation set
forth herein. Without limiting the generality of the foregoing, Executive
expressly acknowledges that Investors Savings Bank, F.S.B. (the "BANK") is a
federal savings bank subject to regulation of the Office of Thrift Supervision
under the Home Owners Loan Act, and particularly to regulation relating to the
level and form of employment agreement and compensation which such a savings
institution may pay its executive officers. The Bank is not a party to this
Agreement and nothing in this Agreement shall create any obligation enforceable
against the Bank or imply any course of conduct or level of compensation to
which the Bank will be bound.
9.03 LEGAL FEES AND EXPENSES. Employer shall pay to Executive
all legal fees and expenses incurred by Executive in seeking to obtain or
enforce any right or benefit provided to Executive by this Agreement whether by
arbitration or otherwise.
9.04 GOVERNING LAW. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Minnesota.
9.05 PRIOR AGREEMENTS. This Agreement restates, amends and in
all respects replaces the Original Agreement and the parties hereby mutually
agree that the Original Agreement will be terminated upon the Effective Date.
This Agreement contains the entire agreement of the parties relating to the
employment of Executive by Employer and the other matters discussed herein and
supersedes all prior agreements and understandings with respect to such subject
matter, and the parties hereto have made no agreements, representations or
warranties relating to the subject matter of this Agreement which are not set
forth herein.
9.06 WITHHOLDING TAXES. Employer may withhold from any
compensation or other benefits payable under this Agreement all federal, state,
city or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
9.07 AMENDMENTS. After the Effective Date, no amendment,
termination or modification of this Agreement shall be deemed effective unless
made in writing and signed by Executive and Employer. Prior to the Effective
Date, no amendment, termination or modification of this Agreement (other than
pursuant to Section 10) shall be deemed effective unless made in writing and
signed by Executive, Investors and Firstar Corporation.
9.08 NO WAIVER. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate
<PAGE>
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future or as to any act other than that
specifically waived.
9.09 ASSIGNMENT. Other than as expressly contemplated herein
with respect to the merger or other combination of Investors with and into an
affiliate of Firstar Corporation, this Agreement shall not be assignable, in
whole or in part, by either party without the written consent of the other
party, except that Firstar may, without the consent of Executive, assign its
rights and obligations under this Agreement to any corporation, firm or other
business entity with or into which Firstar may merge or consolidate, or to which
Firstar may sell or transfer all or substantially all of its assets, or of which
50% or more of the equity investment and of the voting control is owned,
directly or indirectly, by, or is under common ownership with, Firstar. After
such assignment by Firstar, Employer shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be Employer
for the purposes of all provisions of this Agreement including this Section
9.09. Notwithstanding the foregoing, this Agreement shall inure to the benefit
of and be enforceable by Executive's personal or legal representatives,
executors, administrators, heirs, distributees, devisees and legatees.
9.10 SUCCESSORS AND BINDING AGREEMENT. Firstar will require any
successor (whether direct or to substantially all of the business and/or assets
of Firstar), by agreement in form and substance satisfactory to Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that Employer would be required to perform it if no such
succession had taken place. Failure of Firstar to obtain such Agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
(subject to Executive's duty to provide 15 days' notice, as described above),
and shall entitle Executive to compensation from Employer in the same amount and
on the same terms as Executive would be entitled hereunder if Executive
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date that the termination of Executive's
employment becomes effective. As used in this Agreement, "Firstar" shall mean
Firstar and any successor to its business and/or assets which executes and
delivers the Agreement prided for in this Section 9.10 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
9.11 INJUNCTIVE RELIEF. Executive agrees that it would be
difficult to compensate Firstar fully for damages for any violation of the
provisions of this Agreement, including without limitation the provisions of
Sections 6, 7 and 8. Accordingly, Executive specifically agrees that Firstar
shall be entitled to temporary and permanent injunctive relief to enforce the
provisions of this Agreement and that such relief may be granted without the
necessity of proving actual damages. This provision with respect to injunctive
relief shall not,however, diminish the right of Firstar to claim and recover
damages tin addition to injunctive relief.
9.12 SEVERABILITY. To the extent that any provision of this
Agreement shall be determined to be invalid or unenforceable, the invalid or
unenforceable portion of such provision shall be deleted from this Agreement,
and the validity and enforceability of the remainder of such provision and of
this Agreement shall be unaffected.
10. EXPIRATION. This Agreement shall automatically expire and shall
thereafter be of no force and effect whatsoever in the event that the
Reorganization Agreement should expire or be terminated in accordance with its
terms.
<PAGE>
INVESTORS BANK CORP.
By________________________
Its________________________
FIRSTAR CORPORATION
By________________________
Its________________________
__________________________
Daniel A. Arrigoni
<PAGE>
Exhibit 10.4
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "AGREEMENT"), dated as of August 21,
1994, is between James M. Burkholder (the "EXECUTIVE") and Firstar Corporation.
In consideration of the planned purchase or other combination of Investors
Bank Corp. ("INVESTORS") with Firstar Corporation ("FIRSTAR CORPORATION") and/or
one or more of its affiliate entities (collectively "FIRSTAR"), pursuant to
which the Executive's stock in Investors will be acquired and Firstar's
agreement to continue to employ Executive after said merger, the Executive
agrees as follows:
1. NONCOMPETE. The Executive agrees that for a period of 4 years from
the "Effective Date" identified in the Second Amended and Restated Employment
Agreement among Investors, Firstar Corporation and Executive dated August 21,
1994 (the "NONCOMPETE PERIOD"), he will not, in any capacity whatsoever,
directly or indirectly, participate in or assist in the organization, planning,
ownership, financing, management, operation or control nor have any beneficial
interest in more than five percent of the equity of, any corporation,
partnership, association or other person or entity which directly competes or is
planning directly to compete with Employer, Firstar Corporation and/or any
subsidiary or affiliate of Firstar Corporation (collectively the "FIRSTAR
ENTITIES") within the seven counties comprising the Minneapolis/St. Paul
metropolitan statistical area.
Notwithstanding the restrictions outlined above, Executive may do any of
the foregoing with respect to a single bank or other financial institution with
less than $50 million of assets, a controlling interest in which is owned by
Executive or by Executive with John Lohmann, provided that such bank or other
financial institution does not sell single family mortgage loans in excess of
$5,000,000 annually, and that such bank or other financial institution is not
merged or combined with another financial institution which, when combined,
exceeds $50,000,000.
2. SOLICITATION OF EMPLOYEES. The Executive further agrees that during
the Noncompete Period, the Executive will not hire, attempt to hire or solicit
for employment any employee of any Firstar Entity who was employed by Investors
prior to the merger, or who was employed by any Firstar Entity within the
Executive's supervision at any time prior to the Executive's termination.
3. NO EVASION. The Executive will not engage in any practice the purpose
of which is to evade the provisions of this covenant nor commit any act which
adversely affects any Firstar Entity.
4. MODIFICATION. In the event that a court of competent jurisdiction
determines that the provisions of this covenant are excessively broad as to
duration, geographical scope or activity, it is expressly agreed that this
covenant shall be construed so that the remaining provisions shall not be
affected but shall remain in full force and effect, and any such overbroad
provision shall be deemed, without further action on the part of any person, to
be modified, amended, and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
5. GOVERNING LAW. The Executive's residence and primary place of
employment are located in Minnesota, and this Agreement will be governed by and
interpreted in accordance with the laws of the State of Minnesota.
<PAGE>
FIRSTAR CORPORATION
By
------------------------------------
Its
--------------------------------
__________________________
James M. Burkholder
<PAGE>
Exhibit 10.5
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "AGREEMENT"), dated as of August 21,
1994, is between John G. Lohmann, Jr. (the "EXECUTIVE") and Firstar Corporation.
In consideration of the planned purchase or other combination of Investors
Bank Corp. ("INVESTORS") with Firstar Corporation ("FIRSTAR CORPORATION") and/or
one or more of its affiliate entities (collectively "FIRSTAR"), pursuant to
which the Executive's stock in Investors will be acquired and Firstar's
agreement to continue to employ Executive after said merger, the Executive
agrees as follows:
1. NONCOMPETE. The Executive agrees that for a period of 3 years from
the "EFFECTIVE DATE" identified in the Second Amended and Restated Employment
Agreement among Investors, Firstar Corporation and Executive dated August 21,
1994 (the "NONCOMPETE PERIOD"), he will not, in any capacity whatsoever,
directly or indirectly, participate in or assist in the organization, planning,
ownership, financing, management, operation or control nor have any beneficial
interest in more than five percent of the equity of, any corporation,
partnership, association or other person or entity which directly competes or is
planning directly to compete with Firstar Home Mortgage Corporation, Firstar
Bank of Minnesota, N.A., Firstar Corporation and/or any subsidiary or affiliate
of Firstar Corporation (collectively the "FIRSTAR ENTITIES") within the seven
counties comprising the Minneapolis/St. Paul metropolitan statistical area.
Notwithstanding the restrictions outlined above, Executive may do any of
the foregoing with respect to a single bank or other financial institution with
less than $50 million of assets, a controlling interest in which is owned by
Executive or by Executive with James Burkholder, provided that such bank or
other financial institution does not sell single family mortgage loans in excess
of $5,000,000 annually, and that such bank or other financial institution is not
merged or combined with another financial institution which, when combined,
exceeds $50,000,000.
2. SOLICITATION OF EMPLOYEES. The Executive further agrees that during
the Noncompete Period, the Executive will not hire, attempt to hire or solicit
for employment any employee of any Firstar Entity who was employed by Investors
prior to the merger, or who was employed by any Firstar Entity within the
Executive's supervision at any time prior to the Executive's termination.
3. NO EVASION. The Executive will not engage in any practice the purpose
of which is to evade the provisions of this covenant nor commit any act which
adversely affects any Firstar Entity.
4. MODIFICATION. In the event that a court of competent jurisdiction
determines that the provisions of this covenant are excessively broad as to
duration, geographical scope or activity, it is expressly agreed that this
covenant shall be construed so that the remaining provisions shall not be
affected but shall remain in full force and effect, and any such overbroad
provision shall be deemed, without further action on the part of any person, to
be modified, amended, and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
5. GOVERNING LAW. The Executive's residence and primary place of
employment are located in Minnesota, and this Agreement will be governed by and
interpreted in accordance with the laws of the State of Minnesota.
<PAGE>
FIRSTAR CORPORATION
By
-----------------------------------
Its
-----------------------------
__________________________
John G. Lohmann, Jr.
<PAGE>
Exhibit 10.6
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "AGREEMENT"), dated as of August
21, 1994, is between DANIEL A. ARRIGONI (the "EXECUTIVE") and Firstar
Corporation.
In consideration of the planned purchase or other combination of
Investors Bank Corp. ("INVESTORS") with Firstar Corporation ("FIRSTAR
CORPORATION") and/or one or more of its affiliate entities (collectively
"FIRSTAR"), pursuant to which the Executive's stock in Investors will be
acquired and Firstar's agreement to continue to employ Executive after said
merger, the Executive agrees as follows:
1. NONCOMPETE. The Executive agrees that for a period of 30 months
from the "Effective Date" identified in the Employment Agreement among
Investors, Firstar Corporation and Executive dated August 21, 1994 (the
"NONCOMPETENT PERIOD"), he will not, in any capacity whatsoever, directly or
indirectly, participate in or assist in the organization, planning, ownership,
financing, management, operation or control nor have any beneficial interest in
more than five percent of the equity of, any corporation, partnership,
association or other person or entity which directly competes or is planning
directly to compete with Employer, Firstar Corporation and/or any subsidiary or
affiliate of Firstar Corporation (collectively the "FIRSTAR ENTITIES") with
respect to mortgage banking and any other real estate related financing
activities within the seven counties comprising the Minneapolis/St. Paul
metropolitan statistical area.
2. SOLICITATION OF EMPLOYEES. The Executive further agrees that
during the Noncompete Period, the Executive will not hire, attempt to hire or
solicit for employment any employee of any Firstar Entity who was employed by
Investors prior to the merger, or who was employed by any Firstar Entity within
the Executive's supervision at any time prior to the Executive's termination.
3. NO EVASION. The Executive will not engage in any practice the
purpose of which is to evade the provisions of this covenant nor commit any act
which adversely affects any Firstar Entity.
4. MODIFICATION. In the event that a court of competent
jurisdiction determines that the provisions of this covenant are excessively
broad as to duration, geographical scope or activity, it is expressly agreed
that this covenant shall be construed so that the remaining provisions shall not
be affected but shall remain in full force and effect, and any such overbroad
provisions shall be deemed, without further action on the part of any person, to
be modified, amended, and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
5. GOVERNING LAW. The Executive's residence and primary place of
employment are located in Minnesota, and this Agreement will be governed by and
interpreted in accordance with the laws of the State of Minnesota.
FIRSTAR CORPORATION
By:________________________
Its:________________________
__________________________
Daniel A. Arrigoni
<PAGE>
Exhibit 10.7
AMENDMENT TO SEVERANCE PAY AGREEMENT
This is an amendment (the "AMENDMENT") to the Severance Pay Agreement
(the "AGREEMENT") dated May 15, 1994, between Investors Bank Corp. (the
"COMPANY") and LYNN V. BUELTEL (the "EMPLOYEE").
WHEREAS, the Employee and the Company entered into a Severance Pay
Agreement dated as of May 15, 1992 (the "ORIGINAL AGREEMENT"), which Original
Agreement was replaced and superseded by the Agreement;
WHEREAS, the Company may be purchased by or otherwise combined with
Firstar Corporation and/or one or more of its affiliate entities (collectively
"FIRSTAR");
WHEREAS, as a condition precedent to such purchase or combination,
Firstar is requiring that the Employee agree to the terms of this Amendment; and
WHEREAS, the Employee acknowledges that he receives substantial
benefit from the planned purchase.
TERMS OF AGREEMENT
NOW, THEREFORE, the Employee and the Company agree that the Agreement
is amended as follows:
1. EFFECTIVE DATE. This Amendment becomes effective upon
effectiveness of the merger of the Company into a subsidiary of Firstar (the
"EFFECTIVE DATE"). On the Effective Date, the Firstar entity employing the
Employee will be considered to be the "Company" under the terms of the
Agreement.
2. TERM OF AGREEMENT. Section 1 of the Agreement is deleted and
replaced with the following:
"This Agreement shall be for one-year term commencing on the
Effective Date and continuing until one year after the Effective
Date (the "CONTRACT END DATE")."
3. TERMINATION OF EMPLOYMENT. Section 2 of the Agreement is amended
by deleting subsection (b) ["(b) the Employee shall have voluntarily exercised
his option to terminate his employment with one hundred twenty (120) days of the
date of Change in Control,; or"]. The Employee will only be entitled to receive
the benefits outlined in the Agreement if he terminates employment for "Good
Reason" (as defined in the Agreement).
Section 2 is further amended by adding the following at the end of
Section iii:
"Notwithstanding the foregoing, the Company can terminate the Employee
without Cause, death or disability provided that the severance amount
is paid."
<PAGE>
4. CHANGE IN CONTROL. The following is added to the end of Section
3(i) ["Change in Control"]:
"The purchase, acquisition or other combination of Investors Bank
Corp. ("INVESTORS") by Firstar will be considered a 'Change in
Control,' effective as of the Effective Date. The parties agree that,
for purposes of this Agreement (as amended), a Change in Control will
be deemed to have taken place on (but not prior to) the Effective
Date, regardless of any contrary language in the Agreement."
5. TERMINATION FOR "GOOD REASON." Subsections 3(ii)(a) - (e) are
deleted and replaced with the following:
"(i) the assignment to the Employee of employment
responsibilities which are not of comparable responsibility and status
of the position of Senior Vice President of Firstar Bank Minnesota,
N.A., consisting generally of the duties described by Michael Schmitz
in a letter delivered contemporaneously with this Amendment;
(ii) a reduction by the Company in the Employee's base salary
below the base salary in effect for the Employee on August 1, 1994;
(c) The Company's requiring the Employee to be based anywhere
other than within 50 miles of the Employee's office location
immediately prior to a Change in Control, except for requirements of
temporary travel on the Company's business to an extent substantially
consistent with the Employee's business travel obligations immediately
prior to a Change in Control; or
(d) except to the extent otherwise required by applicable law,
the failure of the Company to continue the Employee's participation in
any benefit or compensation plan, stock ownership plan, stock purchase
plan, bonus plan, life insurance plan, health plan or disability plan,
or any fringe benefit (including vacation time) on a comparable basis
to that provided to other Firstar executives with comparable duties;
(e) the failure of the Company to obtain, as specified in
Section 5(i) hereof, an assumption of the obligations of the Company
to perform this Agreement by any successor of the Company within 15
days after written notice by the Employee.
Notwithstanding the foregoing, none of the foregoing events shall be
considered "Good Reason" if it occurs in connection with the
Employee's death or disability."
6. DEFINITION OF "CAUSE." Section 3(iii) is deleted and replaced
with the following:
"'Cause' shall mean the Employee has (i) engaged in serious misconduct
which results in demonstrable and serious injury to the Company,
monetary or otherwise; (ii) been convicted of a felony, as evidenced
by a binding and final judgment, order or decree of a court of
competent jurisdiction, in effect after exhaustion or lapse of all
right of appeal; or (iii) unreasonably neglected or refused to perform
the Employee's duties or responsibilities (unless significantly
changed without the Employee's consent)."
7. SEVERANCE PAYMENT. Subparagraph (ii) of Section 4 of the
Agreement is deleted and replaced with the following:
<PAGE>
"(ii) In lieu of any further base salary, incentive
compensation and bonus payments, as well as continued participation in
any other stock purchase plan or similar plan and all other benefit
plans and programs of any nature, to the Employee for periods
subsequent to the date that the termination of the Employee's
employment becomes effective, the Company shall pay as severance pay
to the employee the Employee's choice of either:
(a) A lump-sum cash amount equal to the remaining base
salary payments (plus a prorated bonus based on the prior year's
bonus paid to similarly situated employees) due to the Employee
from the date of termination to the Contract End Date. OR
(b) Bi-weekly severance payments and continued benefits
which are provided to Firstar employees (with a similar length of
service) who are subject to a reduction-in-force in accordance
with the terms of Firstar's severance program in effect on the
date of termination. If option '(b)' is selected, the Employee
will be subject to all of the terms of Firstar's severance
program then in effect, including the requirement that the
Employee execute a Severance Agreement, including a release of
claims. Notwithstanding the requirement that severance payments
be made in a lump sum, if this option '(b)' is selected, payments
will be made bi-weekly.
It is the intention of the Company and the Employee that no portion of
any payment under this Agreement, or payments to or for the benefit of
the Employee under any other agreement or plan, be deemed to be an
excess parachute payment as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "CODE"), or of any successor
provision. It is agreed that the present value of all payments to or
for the benefit of the Employee in the nature of compensation to which
Section 280G of the Code applies (in the aggregate "TOTAL PAYMENTS")
shall not exceed an amount equal to one dollar less than the maximum
amount which the Employee may receive without becoming subject to the
tax imposed by Section 4999 of the Code or which the Company may pay
without loss of deduction under Section 280G(a) of the Code. Present
value for purposes of this Agreement shall be calculated in accordance
with Section 280G(d)(4) of the Code. Within 30 days following the
earlier of (x) the effective date of such termination or (y) the
giving of notice by the Company to the Employee of its belief that
there is a payment or benefit due the Employee which will result in an
excess parachute payment as defined in Section 280G of the Code, the
chief financial officer of the Company shall make a good faith
determination of the amount of any reduction necessary to comply with
the provisions of this section, after consultation with the advisors
then regularly retained by the Company, including tax counsel selected
by the Company and reasonably acceptable to the Employee. A written
statement setting forth the calculation thereof shall be prepared and
provided to the Employee. In the event that such calculation
determines that there would be an excess parachute payment, the
payments to be made hereunder shall be modified, reduced or eliminated
as specified by the Employee in writing delivered to the Company
within 30 days of his receipt of such calculation or, if the Employee
fails to so notify the Company, then as the Company shall reasonably
determine, so that under the basis of calculation prepared by the
Company there will be no excess parachute payment. The provisions of
this section, including the calculations and notices provided for
herein shall be based upon the conclusive presumption that (x) the
compensation and benefits provided for in
<PAGE>
Section 5.04(a) hereof and (y) any other compensation earned prior to
the Change in Control by the Employee pursuant to the Company's
compensation programs if such payments would have been made in the
future in any event, even though the timing of such payment is
triggered by the Change in Control, are reasonable compensation for
services rendered prior to the Change in Control. In the event that
the provisions of Section 280G and 4999 of the Code are repealed
without succession this section shall be of no further force or
effect."
8. SUCCESSORS. The Employee acknowledges that Firstar's (or any
affiliate's) agreement to the term of this Agreement satisfies the requirement
that the Company obtain any successor's consent to assume the Agreement, as
outlined in Section 5 and other portions of the Agreement.
9. AMENDMENT. The Agreement, as amended by this Amendment, may not
be further amended without written consent of Firstar.
10. OTHER TERMS. Except as modified in this Amendment, the terms of
the Agreement remain in full force and effect.
Dated: as of August 1, 1994, but not effective until the Effective
Date identified in paragraph 1 above.
INVESTORS BANK CORP.
By:________________________
Name and Title: ______________
EMPLOYEE:
__________________________
Lynn V. Bueltel
<PAGE>
The undersigned, on behalf of Firstar Corporation and its affiliates,
approves the foregoing, and agrees to assume the above-referenced Agreement(as
amended by this Amendment) if Firstar purchases or otherwise is combined with
Investors Bank Corp.
FIRSTAR CORPORATION
By:________________________
Name and Title: ______________
<PAGE>
EXHIBIT 11
INVESTORS BANK CORP.
COMPUTATION OF EARNINGS PER COMMON SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------------------- -------------------------
1994 1993(1) 1994 1993(1)
---------- ---------- ---------- ----------
PRIMARY:
<S> <C> <C> <C> <C>
Average shares outstanding 3,496,725 3,301,630 3,446,610 3,294,328
Net effect of the assumed purchase of stock
under the stock option plan based on the
treasury stock method using average
market price 180,473 282,791 211,860 278,651
Net effect of the assumed exercise of common
stock warrants based on the treasury
stock method using average market price 102,772 59,757 90,212 50,795
---------- ---------- ---------- ----------
3,779,970 3,644,177 3,748,682 3,623,773
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings before preferred stock dividends and
cumulative effect of accounting change $2,492,302 $2,423,904 $7,604,843 $7,345,228
Preferred stock dividends 208,752 241,963 626,257 725,889
---------- ---------- ---------- ----------
Earnings for common stockholders before
cumulative effect of accounting change 2,283,550 2,181,941 6,978,586 6,619,339
Cumulative effect of accounting change 125,000
---------- ---------- ---------- -----------
Net earnings available for common stockholders $2,283,550 $2,181,941 $6,978,586 $6,744,339
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per common share:
Earnings for common stockholders before
cumulative effect of accounting change $0.60 $0.60 $1.86 $1.83
Cumulative effect of accounting change 0.03
----- ----- ----- -----
Net earnings available for common stockholders $0.60 $0.60 $1.86 $1.86
----- ----- ----- -----
----- ----- ----- -----
FULLY DILUTED:
Average shares outstanding 3,496,725 3,301,630 3,446,610 3,294,328
Net effect of the assumed purchase of stock
under the stock option plan based on the
treasury stock method using ending
market price 189,569 309,391 229,617 314,716
Net effect of the assumed exercise of common
stock warrants based on the treasury
stock method using ending market price 110,794 85,337 110,857 85,337
---------- ---------- ---------- ----------
3,797,088 3,696,358 3,787,084 3,694,381
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings before preferred stock dividends and
cumulative effect of accounting change $2,492,302 $2,423,904 $7,604,843 $7,345,228
Preferred stock dividends 208,752 241,963 626,257 725,889
---------- ---------- ---------- ----------
Earnings for common stockholders before
cumulative effect of accounting change 2,283,550 2,181,941 6,978,586 6,619,339
Cumulative effect of accounting change 125,000
---------- ---------- ---------- ----------
Net earnings available for common stockholders $2,283,550 $2,181,941 $6,978,586 $6,744,339
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per common share:
Earnings for common stockholders before
cumulative effect of accounting change $0.60 $0.59 $1.84 $1.80
Cumulative effect of accounting change 0.03
----- ----- ----- -----
Net earnings available for common stockholders $0.60 $0.59 $1.84 $1.83
----- ----- ----- -----
----- ----- ----- -----
<FN>
NOTE 1. Restated for the effects of the four-for-three common stock split on
December 31, 1993.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 20,328,079
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 26,954,348
<INVESTMENTS-MARKET> 26,061,704
<LOANS> 972,388,325
<ALLOWANCE> 3,349,438
<TOTAL-ASSETS> 1,069,440,713
<DEPOSITS> 612,894,574
<SHORT-TERM> 266,391,000
<LIABILITIES-OTHER> 13,679,894
<LONG-TERM> 122,432,247
<COMMON> 46,496,998
0
7,591,000
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 1,069,440,713
<INTEREST-LOAN> 44,269,345
<INTEREST-INVEST> 1,861,326
<INTEREST-OTHER> 1,026,111
<INTEREST-TOTAL> 47,156,782
<INTEREST-DEPOSIT> 16,026,720
<INTEREST-EXPENSE> 27,392,320
<INTEREST-INCOME-NET> 19,764,462
<LOAN-LOSSES> 333,800
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 21,129,549
<INCOME-PRETAX> 13,054,944
<INCOME-PRE-EXTRAORDINARY> 13,054,944
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,604,843
<EPS-PRIMARY> 1.86
<EPS-DILUTED> 1.84
<YIELD-ACTUAL> 6.60
<LOANS-NON> 1,374,829
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,798,700
<ALLOWANCE-OPEN> 2,980,586
<CHARGE-OFFS> 9,077
<RECOVERIES> 44,129
<ALLOWANCE-CLOSE> 3,349,438
<ALLOWANCE-DOMESTIC> 988,121
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,361,317
</TABLE>
