Document:

exv10w7

 

EXHIBIT 10.7

U.S. BANCORP

RESTRICTED STOCK UNIT AWARD AGREEMENT

	 	 	 	 	 	 	 
	 	 	 	 	Number of	 	 
	 	 	 	 	U.S. Bancorp Common	 	Social Security
	AWARDED
TO
	 	Award Date
	 	Shares
	 	Number

	

	 	1/2/02

	 	[300,268]
	 	 

	JERRY GRUNDHOFER

	 	Final Vesting Date
	 	 	 	 
	

	 	12/31/06
	 	 	 	 

THIS AGREEMENT is made as of the date in the box above labeled “Award
Date” (the “Award Date”) by and between U.S. Bancorp, a Delaware
corporation (the “Company”), and the individual named in the box above
labeled “Awarded To” (the “Participant”).

WHEREAS, the Company pursuant to Section 4(b)(iii) of the Employment
Agreement between the Company and the Participant, dated as of October 16
2001 (“Employment Agreement”), and the Company’s 2001 Stock Incentive
Plan (the “Plan”), the Company agreed to award to Participant, on or
before the Award Date, restricted stock units corresponding to such
number of Shares of common stock of the Company (“Shares”) as equals the
quotient of (x) $5,600,000 divided by (y) the average New York Stock
Exchange closing price of Shares of the Company during the sixty (60)
trading day period ending on the day prior to the Award Date, subject to
certain restrictions and on the terms and conditions contained in the
Employment Agreement, this Agreement and the Plan.

In consideration of the mutual covenants contained in this Agreement, the
parties agree as follows:

Capitalized terms not defined herein shall have the meaning set forth in
the Plan.

	1.	 	Award

The Company, effective as of the Award Date, grants to Participant a
restricted stock unit award representing the right to acquire the number
of Shares set forth in the box above labeled “Number of U.S. Bancorp
Common Shares” (the “Restricted Stock Units,” and one such “Unit”
representing one such Share) as provided herein. The Participant hereby
acknowledges and accepts such grant and the Shares covered thereby,
subject to the terms and conditions under this Award Agreement.

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	2.	 	Vesting

	 	(a)	 	Subject to the terms and conditions of this Agreement, the
Restricted Stock units shall vest on December 31, 2006, provided
that the Participant has been continuously employed by the Company
or an Affiliate of the Company from the Award Date through December
31, 2006.
	 
	 	(b)	 	Notwithstanding the vesting provisions contained in Section
2(a) above, but subject to the other terms and conditions of this
Agreement, if the Participant has been continuously employed by the
Company or an Affiliate of the Company until the date of a
Qualifying Termination, immediately prior to such Qualifying
Termination, the Participant shall be vested in all of the
Restricted Stock Units granted in this Agreement. For purposes of
this Agreement, the following terms shall have the following
definitions:

	 	(i)	 	“Cause” shall mean: (A) the willful and continued
failure of the Participant to perform substantially the
Participant’s duties with the Company or one of its Affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for
substantial performance is delivered to the Participant by the
Board of Directors (“Board”) which specifically identifies the
manner in which the Board believes that the Participant has
not substantially performed the Participant’s duties, or (B)
the willful engaging by the Participant in illegal conduct or
gross misconduct which is materially and demonstrably
injurious to the Company. For purposes of this provision, no
act or failure to act, on the part of the Participant, shall
be considered “willful” unless it is done, or omitted to be
done, by the Participant in bad faith or without reasonable
belief that the Participant’s action or omission was in the
best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or
omitted to be done, by the Participant in good faith and in
the best interests of the Company. The cessation of
employment of the Participant shall not be deemed to be for
Cause unless and until there shall have been delivered to the
Participant a copy of a resolution duly adopted by the
affirmative vote of a majority of the entire membership of the
Board at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the
Participant and the Participant is given an opportunity,
together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Participant
is guilty of the conduct described in (A) or (B) above, and
specifying the particulars thereof in detail.
	 
	 	(ii)	 	“Disability” shall mean the absence of the
Participant from the Participant’s duties with the Company on
a full-time basis for 130 consecutive business days as a
result of incapacity due to mental or physical illness which
is determined to be total and permanent

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	 	 	 	by a physician
selected by the Company or its insurers and acceptable to the Participant or
the Participant’s legal representative. If the Company
determines in good faith that the Disability of the
Participant has occurred during the Employment Period (as
defined under the Employment Agreement), it may give to the
Participant written notice in accordance with Section 12(b)
of the Employment Agreement of its intention to terminate the
Participant’s employment. In such event, the Participant’s
employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Participant (the
“Disability Effective Date”), provided that, within the 30
days after such receipt, the Participant shall not have
returned to full-time performance of the Participant’s
duties.

	 	(iii)	 	“Good Reason” shall mean:

	 	(A)	 	the assignment to the Participant of any duties
inconsistent with the Participant’s position (including
status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Section 4(a) of the Employment Agreement, or any other action
by the Company which results in a diminution in such position,
authority, duties or responsibilities; provided, however, that
(subject to the election of the Participant as Chairman as
provided at Section 4(a)(i) of the Employment Agreement) any
change in the Participant’s position (including status, duties
and titles), authority, duties or responsibilities, in
accordance with normal succession planning by the Board shall
not constitute Good Reason if made with the Participant’s
consent;
	 
	 	(B)	 	any failure by the Company to comply with any of
the provisions of Section 4(b) of the Employment Agreement;
	 
	 	(C)	 	the Company’s requiring the Participant to be
based at any office or location after the Effective Date (as
defined under the Employment Agreement) other than where the
Participant was located immediately prior to such Effective
Date other than in connection with a change of the Company’s
headquarters if the Participant is relocated to such
headquarters, or, after such Effective Date, the Company’s
requiring the Participant to travel on Company business to a
substantially greater extent than required immediately prior
to such Effective Date;
	 
	 	(D)	 	any purported termination by the Company of the
Participant’s employment otherwise than as expressly permitted
by the Employment Agreement; or
	 
	 	(E)	 	any failure by the Company to comply with and
satisfy Section 11 (c) of the Employment Agreement.

Notwithstanding the above, “Good Reason” shall exclude an isolated,
insubstantial and inadvertent action or failure to act not taken or
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given

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by the Participant. For purposes of this Section 2(b)(iii), any
good faith determination of “Good Reason” made by the Participant
shall be conclusive.

	 	(iv)	 	“Qualifying Termination” shall mean a termination of the
Participant’s employment with the Company and its Affiliates (A) by
the Company without Cause, or due to Participant’s Disability (as of
his Disability Effective Date), (B) by the Participant for Good
Reason, or (C) as a result of the Participant’s death.

	3.	 	Restriction on Transfer

The Restricted Stock Units granted hereunder to the Participant may not
be transferred, sold, assigned, pledged, alienated, attached or otherwise
encumbered (“Transfer”), and any purported Transfer shall be void and
unenforceable against the Company. No attempt to Transfer the Restricted
Stock Units, whether voluntary or involuntary, by operation of law or
otherwise, shall vest the purported transferee with any interest or right
in or with respect to the Restricted Stock Units or rights thereunder.

	4.	 	Forfeiture

If the Participant ceases to be an employee of the Company and all
Affiliates prior to vesting of the Restricted Stock Units pursuant to
Section 2(a) or Section 2(b) hereof, all of Participant’s rights to all
of the unvested Restricted Stock Units shall be immediately and
irrevocably forfeited. If the Participant shall violate any provision of
Section 10(a) or Section 10(b) hereof, all of Participant’s rights to all
of the vested and unvested Restricted Stock Units shall be immediately
and irrevocably forfeited. Upon forfeiture, Participant shall have no
rights relating to the Restricted Stock Units, including the right to
receive dividends of additional Restricted Stock Units.

	5.	 	Issuance of Shares

	 	(a)	 	Except to the extent the Restricted Stock Units have been
surrendered as hereafter provided, and provided that the Restricted
Stock Units have vested in accordance with Section 2(a) or Section
2(b) hereof, the Company shall deliver to Participant one (1) Share
for each such vested Restricted Stock Unit on January 15 (the
“Distribution Date”) of the calendar year following the calendar
year in which the Participant’s employment with the Company and all
Affiliates shall terminate.
	 
	 	(b)	 	Section 5(a) to the contrary notwithstanding, the Participant
shall be allowed to elect, in writing, delivered to the Committee no
later than the October 1 immediately preceding the Distribution
Date, to surrender all or fewer than all of the Restricted Stock
Units, if vested, effective on the Distribution Date in exchange for
an additional benefit under the Firstar Corporation Non-Qualified
Retirement Plan (or successor to such plan, the “NNRP”) commencing
at age 62 (or earlier on an actuarially reduced basis to the extent
so provided under the NQRP). The present value of such additional
benefit on the Distribution Date shall be equal to the greater of
(i) the product of (A) the number of Restricted Stock Units
surrendered, multiplied by (B) the average closing price of Shares
over the thirty (30) trading

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	 	 	 	day period immediately preceding the Distribution Date or (ii) such product
determined by substituting the average closing price of Shares over
the thirty (30) trading day period immediately preceding such
October 1 (such greater product is the “Conversion Value”). The
Conversion Value shall be converted to the normal form of annuity
under the NQRP, using actuarial assumptions based on the FAS 87
interest rate and mortality assumptions in effect on such October
1, and the annuity so converted from the Conversion Value shall be
added to any benefit payable to the Participant under the NQRP (in
addition to any other such benefit provided under the Employment
Agreement) at retirement. In the event of the Participant’s death
prior to the Distribution Date, the Participant’s beneficiary under
the NQRP shall have all rights of Participant to surrender
Restricted Stock Units, to the extent vested pursuant to Section
2(a) or Section 2(b) hereof, for an additional benefit under the
NQRP as set forth above; provided, the thirtieth (30th) day after
Participant’s death shall be substituted for “October 1” thereunder
and the “Distribution Date” shall be the ninetieth (90th) day after
Participant’s death.

	 	(c)	 	Participant shall not have any right, title or interest in,
be entitled to vote, or (except as provided at Section 6 hereof)
receive distributions in respect of, or otherwise be considered the
owner of, any of the Shares covered by this Restricted Stock Unit
Award, except to the extent that such Shares have been delivered
pursuant to Section 5(a) hereof.

	6.	 	Dividends

To the extent that cash dividends are paid on Shares after the effective
date of the Employment Agreement (as first set forth therein) and prior
to the Distribution Date, the Participant shall be entitled to receive
additional Restricted Stock Units on each dividend payment date of the
Company (including any dividend declared prior to the Distribution Date
and payable after such date, which shall be deemed paid on the
Distribution Date) having a fair market value (based on the closing price
of Shares on such payment date) equal to the amount of dividends paid on
Shares represented by the Restricted Stock Units, which additional
Restricted Stock Units shall vest in accordance with Section 2(a) or
Section 2(b) hereof.

	7.	 	Securities Law Compliance

The delivery of all or any of the Shares shall only be effective at such
time that the issuance of such Shares will not violate any state or
federal securities or other laws. The Company is under no obligation to
effect any registration of the Shares under the Securities Act of 1933 or
to effect any state registration or qualification of the Shares. The
Company may, in its sole discretion, delay the delivery of the Shares or
place restrictive legends on such Shares in order to ensure that the
issuance of any Shares will be in compliance with federal or state
securities laws and the rules of the New York Stock Exchange or any other
exchange upon which the Company’s Common Stock is traded.

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	8.	 	Distributions and Adjustments

	 	(a)	 	Subject to the foregoing provisions of this Award Agreement,
in the event that any dividend or other distribution (whether in the
form of cash, shares of Common Stock, or other securities or other
property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Stock or other
securities of the Company or other similar corporate transaction or
event affecting the Shares would be reasonably likely to result in
the diminution or enlargement of any of the benefits or potential
benefits intended to be made available pursuant to this Agreement,
the committee of the Board of Directors administering the Plan (the
“Committee”) shall, in such manner as it shall deem equitable or
appropriate in order to prevent such diminution or enlargement of
any such benefits or potential benefits make adjustments to the
award, including adjustments in the number and type of shares of
Common Stock represented by the Restricted Stock Units that
Participant would have received; provided, however, that the number
of shares covered by this Award shall always be a whole number.
	 
	 	(b)	 	Any additional Shares, any other securities of the Company
and any other property (except for cash dividends) distributed with
respect to Shares represented by the Restricted Stock Units prior to
the Distribution Date shall be subject to the same restrictions,
terms and conditions as the Restricted Stock Units. Any cash
dividends payable with respect to the Common Stock represented by
the Restricted Stock Units shall be distributed to Participant in
accordance with Section 6 hereof.

	9.	 	Income Tax Withholding

In order to comply with all applicable federal or state income tax laws
or regulations, the Company may take such action as it deems appropriate
to ensure that all applicable federal or state payroll, withholding,
income or other taxes, which are the sole and absolute responsibility of
Participant, are withheld or collected from Participant. Participant
may, at Participant’s election, satisfy applicable tax withholding
obligations arising from the receipt of, or lapse of restrictions
relating to, the Shares by (i) electing to have the Company withhold a
portion of the Shares otherwise to be delivered with a Fair Market Value
equal to the amount of such taxes or (ii) delivering to the Company
Shares or other securities issued by the Company with a Fair Market Value
equal to the amount of such taxes. The election must be made on or
before the date that the amount of tax to be withheld is determined.

	10.	 	Confidential Information; Covenant Not to Compete

	 	(a)	 	Confidential Information. The Participant shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Participant during the
Participant’s employment by the Company or any of its affiliated
companies and

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	 	 	 	which shall not be or become public knowledge (other
than by acts by the Participant or representatives of the Participant in violation of
this Agreement or the Employment Agreement). After termination of
the Participant’s employment with the Company, the Participant
shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.

	 	(b)	 	Covenant Not to Compete.

	 	(i)	 	Participant agrees that during the Employment
Period (as defined under the Employment Agreement) and for a
period of three (3) years following his termination of
employment with the Company for any reason, he will not in any
way engage in conduct which is detrimental to the Company or
engage in, represent, furnish consulting services to, be
employed by, or have any interest in any “Financial Services
Company” (as hereinafter defined) within the United States;
provided, the Participant shall be permitted to continue to
serve as a member of the boards of directors of The Midland
Company and Ohio National Life Insurance Company. Further,
Participant shall not during the Employment Period and for a
period of three (3) years following his termination of
employment with the Company for any reason (1) induce or
attempt to induce any person or entity which is a customer of
the Company or any of its affiliates as of the date of
termination of Participant’s employment to cease or reduce
doing business with the Company or any of its affiliates, or
(2) solicit or endeavor to cause any employee of the Company
or its affiliates to leave the employ of the Company or any of
its affiliates. Notwithstanding the foregoing, the
Participant shall not be prevented from owning up to three
percent (3%) of the outstanding stock of any publicly traded
company which is a Financial Services Company.
	 
	 	(ii)	 	As used herein, the term “Financial Services
Company” means any national or state chartered bank; any bank
holding company; any other institution that engages as its
principal activity in taking deposits or making loans; any
entity that engages in commercial or consumer secured and
unsecured lending, transaction processing, insurance,
investment services, security brokerage, or trust services; or
any affiliates of any such institutions.
	 
	 	(iii)	 	Participant agrees that this covenant is
reasonable with respect to its duration, geographic area and
scope, and acknowledges that compliance with this Section
10(b) is necessary to protect the business and goodwill of the
Company.

	 	(c)	 	Consequences of Violation. In the event that the Participant
violates either Section 10(a) or Section 10 (b) above, the
Participant agrees that he shall:

	 	(i)	 	forfeit all vested but undistributed Restricted
Stock Units;

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	 	(ii)	 	assign and tender to the Company, free and clear
of all liens and encumbrances, that number of Shares then
owned directly or beneficially, by the Participant equal to
the number of such Shares distributed to the Participant
pursuant to this Award of Restricted Stock Units;
	 
	 	(iii)	 	pay cash to the Company an amount equal to the
gross proceeds realized by the Participant upon the sale
through the New York Stock Exchange, or if sold or otherwise
disposed in any other manner (including, without limitation, a
disposition without receipt of consideration such as by gift)
the value (such value to be equal to the product of such
number of Shares multiplied by the average of the highest and
lowest sale prices of Shares on the day of such sale or
disposition (or if not traded on such day then the immediately
preceding trading day)), of the difference between (A) all
Shares directly or beneficially owned by the Participant not
to exceed the number of Shares distributed to the Participant
pursuant to this Award of Restricted Stock Units, minus (B)
the number of Shares tendered to the Company pursuant to
Section 10(c)(ii), such sale or other disposition occurring
during the one-year period immediately prior to the occurrence
of the Participant’s conduct which constitutes such violation;
and
	 
	 	(iv)	 	be subject to such other consequences as provided
under the Employment Agreement.

All payments, assignments and tenders provided under this Section
10(c) shall be paid by the Participant to the Company within 60
days following notice of such violation from the Company.

	11.	 	Miscellaneous

	 	(a)	 	This Agreement is issued pursuant to the Plan and is subject
to its terms. Participant acknowledges receipt of a copy of the
Plan. The Plan is also available for inspection on the intranet and
during business hours at the principal office of the Company.
	 
	 	(b)	 	Subject to the Employment Agreement, this Agreement shall not
confer on Participant any right with respect to continuance of
employment with the Company or any Affiliate, nor will it interfere
in any way with the right of the Company or any Affiliate to
terminate such employment at any time.
	 
	 	(c)	 	Until the Shares shall have been issued to Participant (or
his beneficiary) as provided in this Agreement, the Participant
shall not have any right, title or interest in, or be entitled to
vote, or (except as provided above) to receive distributions in
respect of, or otherwise be considered the owner of, any of the
Shares covered by this Restricted Stock Unit Award. Subject to the
restrictions and terms of this Agreement, after such issuance,
Participant (or his beneficiary) shall have all of the rights of a
shareholder with respect to the Shares.

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	 	(d)	 	Participant may designate, upon forms to be furnished by and
filed with the Company, one or more primary beneficiaries or
alternative beneficiaries to receive all or a specified part of
Participant’s Restricted Stock Units in the event of Participant’s
death. Participant may change or revoke any such designation from
time to time without notice to or consent from any beneficiary or
spouse. No such designation, change or revocation shall be
effective unless executed by Participant and received by the Company
during Participant’s lifetime. If Participant fails to designate a
beneficiary, designates a beneficiary and revokes such designation
without naming another beneficiary, or designates one or more
beneficiaries and all such beneficiaries so designated fail to
survive Participant, then Participant’s Restricted Stock Units, or
the part as to which Participant’s designation fails, as the case
may be, shall be paid to the representative of Participant’s estate.

	12.	 	Governing Law

This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year first above written.

U.S. BANCORP

	 	 	 	 	 
	By:

	 	/s/ Stephen E. Smith

	 	/s/ Jerry A. Grundhofer

	Its:

	 	EVP-Human Resources
	 	Jerry Grundhofer

9exv10w8

 

EXHIBIT 10.8

AMENDMENT NO. 2 OF EMPLOYMENT AGREEMENT

     This AMENDMENT NO. 2 OF EMPLOYMENT AGREEMENT entered into by and between
U.S Bancorp, a Delaware corporation (the “Company”) and Jerry A. Grundhofer
(the “Executive”), is entered into effective October 19, 2004.

RECITALS

     WHEAREAS, the Company and the Executive entered into that certain
Employment Agreement effective October 16, 2001;

     WHEREAS, the Company and the Executive entered into an Amendment of
Employment Agreement, effective January 1, 2004; and

     WHEREAS, the parties desire to further amend such Employment Agreement.

AMENDMENT

NOW THEREFORE, it is agreed:

	 	1.	 	Section 4. Terms of Employment (a) Position and Duties is
deleted in its entirety and replaced as follows:

“During the Employment Period, the Executive shall be Chairman and Chief
Executive Officer of the Company, and, in such capacity, the Executive
shall be responsible for the strategic direction and operations of the
Company, and shall serve on the Company’s Board of Directors and shall
have such other duties, responsibilities, and authorities as shall be
consistent therewith. The Executive shall also be Chairman and Chief
Executive Officer of U.S. Bank, N.A. and shall serve on its Board of
Directors.”

	 	2.	 	In all other respects, the Employment Agreement is approved,
ratified and continued, as amended hereby.
	 
	 	3.	 	This Amendment may be executed in one or more counterparts,
each of which shall be an original and all of which, taken together,
shall constitute one and the same agreement.

 

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused this
Amendment to be executed in its name on its behalf, all as of the day and year
first above written.

	 	 	 
	

	 	/s/ Jerry A. Grundhofer

	

	 	Jerry A. Grundhofer
	 
	 	 
	

	 	U.S. Bancorp
	 
	 	 
	

	 	/s/ David B. O'Maley

by: David B. O’Maley
	

	 	Chairman, Compensation Committee
	

	 	Board of Directors

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