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Exhibit 10.29
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (this "Agreement"), dated as May 3,
1996, by and between National City Corporation, a Delaware corporation (the
"Company"), and Name (the "Executive").
WITNESSETH:
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WHEREAS, the Executive is a senior executive of the Company,
is employed by the Company and/or a Subsidiary (as defined below) and has made
and is expected to continue to make major contributions to the profitability,
growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case of most
companies, the possibility of a Change in Control exists;
WHEREAS, the Company desires to assure itself of both present
and future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executive officers and other key
employees, including the Executive, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its senior
executives and other key employees are not practically disabled from discharging
their duties in respect of a proposed or actual transaction involving a Change
in Control; and
WHEREAS, the Company desires to provide additional inducement
for the Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as
follows:
1. CERTAIN DEFINED TERMS: In addition to terms defined
elsewhere herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a
rate not less than the Executive's annual fixed or base compensation as
in effect for Executive immediately prior to the occurrence of a Change
in Control or such higher rate as may be in effect from time to time.
(b) "Cause" means that, prior to any termination pursuant to
Section 3(a) hereof, the Executive shall have committed:
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(i) an intentional act of fraud, embezzlement or
theft in connection with his duties or in the course of his
employment with the Company or any Subsidiary;
(ii) intentional wrongful damage to property of the
Company or any Subsidiary;
(iii) intentional wrongful disclosure of secret
processes or confidential information of the Company or any
Subsidiary; or
(iv) intentional wrongful engagement in any
Competitive Activity;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an
error in judgment or negligence, but shall be deemed "intentional" only
if done or omitted to be done by the Executive not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the Directors of the Company then in office at a
meeting of the Board of Directors of the Company ("Board") called and
held for such purpose, after reasonable notice to the Executive and an
opportunity for the Executive, together with his counsel (if the
Executive chooses to have counsel present at such meeting), to be heard
before the Board, finding that, in the good faith opinion of the Board,
the Executive had committed an act constituting "Cause" as herein
defined and specifying the particulars thereof in detail. Nothing
herein will limit the right of the Executive or his beneficiaries to
contest the validity or propriety of any such determination.
(c) "Change in Control" means the occurrence during the Term
of any of the following events:
(i) The Company is merged, consolidated or reorganized
into or with another corporation or other legal person, and as a result
of such merger, consolidation or reorganization less than sixty-five
percent of the combined voting power of the then-outstanding securities
of such resulting corporation or person immediately after such
transaction are held in the aggregate by the holders of Voting Stock
(as that term is hereafter defined) of the Company immediately prior to
such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal
person, and as a result of such sale or transfer less than sixty-five
percent of the combined voting power of the then-outstanding Voting
Stock of such corporation or person immediately after such sale or
transfer is held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such sale or transfer;
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(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as the term "person" is
used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of securities representing 15% or more of the
combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors ("Voting Stock") of the
Company;
(iv) The Company files a report or proxy statement with
the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction; or
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Directors of the Company cease for any reason to constitute at least a
majority thereof; PROVIDED, HOWEVER, that for purposes of this clause
(v) each Director who is first elected, or first nominated for election
by the Company's stockholders, by a vote of at least two-thirds of the
Directors of the Company (or a committee thereof) then still in office
who were Directors of the Company at the beginning of any such period
will be deemed to have been a Director of the Company at the beginning
of such period.
Notwithstanding the foregoing provisions of Section 1(c)(i) or
1(c)(ii), in the case where the individuals who constitute the
Directors of the Company at the time a specific transaction described
in Section 1(c)(i) or 1(c)(ii) is first presented or disclosed to the
Board will, by the terms of the definitive agreement for that
transaction, constitute at least a majority of the members of the board
of directors of the resulting corporation or person immediately
following such transaction, then, prior to the occurrence of any event
that would otherwise constitute a Change in Control under any of the
foregoing provisions of this Section 1(c), the Board may determine by
majority vote of the Board that the specific transaction does not
constitute a Change in Control under Section 1(c)(i) or 1(c)(ii); and
notwithstanding the foregoing provisions of Section 1(c)(iii) or
1(c)(iv), unless otherwise determined in a specific case by majority
vote of the Board, a "Change in Control" shall not be deemed to have
occurred for purposes of Section 1(c)(iii) or 1(c)(iv) solely because
(1) the Company, (2) an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting
Stock (a "Subsidiary"), or (3) any employee stock ownership plan or any
other employee benefit plan of the Company or any Subsidiary either
files or becomes obligated to file a report or a proxy statement under
or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule
14A (or any successor schedule, form or report or item therein) under
the Exchange Act disclosing beneficial ownership by it of shares of
Voting Stock
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of the Company, whether in excess of 15% or otherwise, or because the
Company reports that a change in control of the Company has occurred or
will occur in the future by reason of such beneficial ownership.
(d) "Competitive Activity" means the Executive's
participation, without the written consent of an officer of the
Company, in the management of any business enterprise if such
enterprise engages in substantial and direct competition with the
Company and such enterprise's revenues derived from any product or
service competitive with any product or service of the Company amounted
to 10% or more of such enterprise's revenues for its most recently
completely fiscal year and if the Company's revenues of said product or
service amounted to 10% of the Company's revenues for its most recently
completed fiscal year. "Competitive Activity" will not include (i) the
mere ownership of securities in any such enterprise and the exercise of
rights appurtenant thereto and (ii) participation in the management of
any such enterprise other than in connection with the competitive
operations of such enterprise.
(e) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which Executive is entitled to participate, including
without limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive retirement, or
other retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health, medical/hospital
or other insurance (whether funded by actual insurance or self-insured
by the Company), disability, salary continuation, expense reimbursement
and other employee benefit policies, plans, programs or arrangements
that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter, providing
perquisites, benefits and service credit for benefits at least as great
in the aggregate as are payable thereunder prior to a Change in
Control.
(f) "Incentive Pay" means an annual amount equal to not less
than the highest aggregate annual bonus, incentive or other payments of
cash compensation (including, without limitation, payments made
pursuant to the Company's Long-Term Incentive Plan and Short-Term
Incentive Plan), in addition to Base Pay, made or to be made in regard
to services rendered in any calendar year during the three calendar
years immediately preceding the year in which the Change in Control
occurred pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or
arrangement (whether or not funded), or any successor thereto providing
benefits at least as great as the benefits payable thereunder prior to
a Change in Control.
(g) "Severance Period" means the period of time commencing on
the date of an occurrence of a Change in Control and continuing until
the earliest of (i) the third anniversary of the occurrence of the
Change in Control, (ii) the Executive's death, or (iii) the Executive's
attainment of age 65; PROVIDED, HOWEVER, that on each anniversary of
the Change in Control, the Severance Period will automatically be
extended for an additional year unless, not later than 90 calendar days
prior to such date, either the
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Company or the Executive shall have given written notice to the other
that the Severance Period is not to be so extended.
(h) "Term" means the period commencing as of the date hereof
and expiring as of the later of (i) the close of business on December
31, 1997, or (ii) the expiration of the Severance Period; PROVIDED,
HOWEVER, that (A) commencing on January 1, 1996 and each January 1
thereafter, the term of this Agreement will automatically be extended
for an additional year unless, not later than September 30 of the
immediately preceding year, the Company or the Executive shall have
given notice that it or the Executive, as the case may be, does not
wish to have the Term extended and (B) except as otherwise provided in
the last sentence of Section 8, if, prior to a Change in Control, the
Executive ceases for any reason to be an employee of the Company and
any Subsidiary, thereupon without further action the Term shall be
deemed to have expired and this Agreement will immediately terminate
and be of no further effect. For purposes of this Section 1(h), the
Executive shall not be deemed to have ceased to be an employee of the
Company or any Subsidiary by reason of the transfer of Executive's
employment between the Company and any Subsidiary, or among any
Subsidiaries.
2. OPERATION OF AGREEMENT: This Agreement will be effective
and binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement will not be operative unless and
until a Change in Control occurs, whereupon without further action this
Agreement shall become immediately operative.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL: (a) In the event
the Company, a Subsidiary or a successor of the Company (direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) terminates the
Executive's employment during the Severance Period, the Executive will be
entitled to the severance compensation provided by Section 4; PROVIDED, HOWEVER,
that the Executive shall not be entitled to the severance compensation provided
by Section 4 hereof only upon the occurrence of one or more of the following
events:
(i) The Executive's death occurring prior to termination
of his/her employment;
(ii) Prior to the termination of his/her employment, the
Executive becomes permanently disabled within the meaning of, and
begins actually to receive disability benefits pursuant to, the
long-term disability plan in effect for, or applicable to, Executive
immediately prior to the Change in Control; or
(iii) Cause.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary
during the Severance Period with the right to severance compensation as
provided in Section 4 upon the occurrence of
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one or more of the following events (regardless of whether any other
reason for such termination exists or has occurred, including without
limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain
the Executive in the office or the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary, as the case may be, which the Executive held immediately
prior to a Change in Control, or the removal of the Executive as a
Director of the Company (or any successor thereto) if the Executive
shall have been a Director of the Company immediately prior to the
Change in Control;
(ii) (I) A significant adverse change in the nature or
scope of the authorities, powers, functions, responsibilities or duties
attached to the position with the Company and any Subsidiary which the
Executive held immediately prior to the Change in Control; (II) a
reduction in the aggregate of the Executive's Base Pay and Incentive
Pay received from the Company and any Subsidiary; or (III) the
termination or denial of the Executive's rights to Employee Benefits or
a reduction in the scope or value thereof, which situation is not
remedied within 10 calendar days after written notice to the Company
from the Executive;
(iii) A determination by the Executive (which
determination will be conclusive and binding upon the parties hereto
provided it has been made in good faith and in all events will be
presumed to have been made in good faith unless otherwise shown by the
Company by clear and convincing evidence) that a change in
circumstances has occurred following a Change in Control, including,
without limitation, a change in the scope of the business or other
activities for which the Executive was responsible immediately prior to
the Change in Control, which has rendered the Executive substantially
unable to carry out, has substantially hindered Executive's performance
of, or has caused Executive to suffer a substantial reduction in, any
of the authorities, powers, functions, responsibilities or duties
attached to the position held by the Executive immediately prior to the
Change in Control, which situation is not remedied within 10 calendar
days after written notice to the Company from the Executive of such
determination;
(iv) The liquidation, dissolution, merger, consolidation
or reorganization of the Company or any Subsidiary by which Executive
is employed or transfer of all or substantially all of its business
and/or assets, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to which
all or substantially all of its business and/or assets have been
transferred (directly or by operation of law) assumed all duties and
obligations of the Company under this Agreement pursuant to Section
10(a);
(v) The Company or any Subsidiary by which Executive is
employed relocates its principal executive offices, or requires the
Executive to have his principal location of work changed, to any
location which is in excess of 25 miles from the location thereof
immediately prior to the Change of Control, or requires the Executive
to travel
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away from his office in the course of discharging his responsibilities
or duties hereunder at least 20% more (in terms of aggregate days in
any calendar year or in any calendar quarter when annualized for
purposes of comparison to any prior year) than was required of
Executive in any of the three full years immediately prior to the
Change of Control without, in either case, his prior written consent;
or
(vi) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto.
(c) Notwithstanding anything contained in this Agreement to
the contrary, in the event of a Change in Control, the Executive may
terminate employment with the Company and any Subsidiary for any
reason, or without reason, during the 30-day period immediately
following the first anniversary of the first occurrence of a Change in
Control with the right to severance compensation as provided in Section
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(d) A termination by the Company pursuant to Section 3(a) or
by the Executive pursuant to Section 3(b)or 3(c) will not affect any
rights which the Executive may have pursuant to any agreement, policy,
plan, program or arrangement of the Company providing Employee
Benefits, which rights shall be governed by the terms thereof.
4. SEVERANCE COMPENSATION: (a) If, following the occurrence of
a Change in Control, the Company or any Subsidiary by which Executive is
employed terminates the Executive's employment during the Severance Period other
than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the Executive
terminates his employment pursuant to Section 3(b) or 3(c), the Company will pay
to the Executive the following amounts within five business days after the date
(the "Termination Date") that the Executive's employment is terminated (the
effective date of which shall be the date of termination, or such other date
that may be specified by the Executive if the termination is pursuant to Section
3(b) or 3(c)) and continue to provide to the Executive the following benefits:
(i) A lump sum payment (the "Severance Payment") in
an amount equal to three times the sum of (A) Base Pay (at the highest
rate in effect for any period prior to the Termination Date), plus (B)
Incentive Pay (determined in accordance with the standards set forth in
Section 1(f)).
(ii) (A) for thirty-six months (the "Continuation
Period") following the Termination Date, the Company will arrange to
provide the Executive with Employee Benefits that are welfare benefits
(but not stock option, stock purchase, stock appreciation or similar
compensatory benefits) substantially similar to those which the
Executive was receiving or entitled to receive immediately prior to the
Termination Date, and (B) such Continuation Period will be considered
service with the Company, assuming the amount of Base Pay and Incentive
Pay payable to the Executive during the calendar year immediately
preceding the year in which the Change in Control occurs, for the
purpose of determining service credits and benefits due and payable to
the Executive under the
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Company's retirement income, supplemental executive retirement and
other benefit plans of the Company applicable to the Executive, his
dependents or his beneficiaries immediately prior to the Termination
Date. If and to the extent that any benefit described in subsections
(A) and (B) of this Section 4(a)(ii) is not or cannot be paid or
provided under any policy, plan, program or arrangement of the Company
or any Subsidiary, as the case may be, then the Company will itself pay
or provide for the payment to the Executive, his dependents and
beneficiaries, of such Employee Benefits. Without otherwise limiting
the purposes or effect of Section 5, Employee Benefits otherwise
receivable by the Executive pursuant to the subsection (A) of this
Section 4(a)(ii) will be reduced to the extent comparable welfare
benefits are actually received by the Executive from another employer
during the Continuation Period, and any such benefits received by the
Executive shall be reported by the Executive to the Company.
(b) There will be no right of set-off or counterclaim in
respect of any claim, debt or obligation against any payment to or
benefit for the Executive provided for in this Agreement, except as
expressly provided in the last sentence of Section 4(a)(ii).
(c) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the
Company will pay interest on the amount or value thereof at an
annualized rate of interest equal to the so-called composite "prime
rate" as quoted from time to time during the relevant period in the
Midwest Edition of THE WALL STREET JOURNAL. Such interest will be
payable as it accrues on demand. Any change in such prime rate will be
effective on and as of the date of such change.
(d) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 4 and under
Section 7 will survive any termination or expiration of this Agreement
following a Change in Control or the termination of the Executive's
employment following a Change in Control for any reason whatsoever.
5. NO MITIGATION OBLIGATION: The Company hereby acknowledges
that it will be difficult and may be impossible (a) for the Executive to find
reasonably comparable employment following the Termination Date, and (b) to
measure the amount of damages which Executive may suffer as a result of
termination of employment hereunder. In addition, the Company acknowledges that
its severance pay plans applicable in general to its salaried employees do not
provide for mitigation, offset or reduction of any severance payment received
thereunder. Accordingly, the payment of the severance compensation by the
Company to the Executive in accordance with the terms of this Agreement is
hereby acknowledged by the Company to be reasonable and will be liquidated
damages, and the Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
nor will any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise, except as expressly provided
in the last sentence of Section 4(a)(ii).
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6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY: (a) Anything in
this Agreement to the contrary notwithstanding, in the event that this Agreement
shall become operative and it shall be determined (as hereafter provided) that
any payment or distribution by the Company or any of its affiliates to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the vesting
or exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code (or any
successor provision thereto) by reason of being considered "contingent on a
change in ownership or control" of the Company, within the meaning of Section
280G of the Internal Revenue Code (or any successor provision thereto) or to any
similar tax imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such interest and
penalties, being hereafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no Gross-up
Payment shall be made with respect to the Excise Tax, if any, attributable to
(A) any incentive stock option, as defined by Section 422 of the Internal
Revenue Code ("ISO"), granted prior to the execution of this Agreement, or (B)
any stock appreciation or similar right, whether or not limited, granted in
tandem with any ISO described in clause (A). The Gross-Up Payment shall be in an
amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 6(f) hereof, all
determinations required to be made under this Section 6, including
whether an Excise Tax is payable by the Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid
by the Company to the Executive and the amount of such Gross-Up
Payment, if any, shall be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the Termination
Date, if applicable, and any such other time or times as may be
requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company
shall pay the required Gross-Up Payment to the Executive within five
business days after receipt of such determination and calculations with
respect to any Payment to the Executive. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall, at
the same time as it makes such determination, furnish the Company and
the Executive an opinion that the Executive has substantial authority
not to report any Excise Tax on his federal, state or local income or
other tax return. As a result of the uncertainty in the application of
Section 4999 of the Internal Revenue Code (or any successor provision
thereto) and the possibility of similar uncertainty regarding
applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments
which will not
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have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts or fails to pursue
its remedies pursuant to Section 6(f) hereof and the Executive
thereafter is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive
as promptly as possible. Any such Underpayment shall be promptly paid
by the Company to, or for the benefit of, the Executive within five
business days after receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Section 6(b) hereof. Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment shall be binding upon the Company and
the Executive.
(d) The federal, state and local income or other tax returns
filed by the Executive shall be prepared and filed on a consistent
basis with the determination of the Accounting Firm with respect to the
Excise Tax payable by the Executive. The Executive shall make proper
payment of the amount of any Excise Payment, and at the request of the
Company, provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting
Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to the
Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations
contemplated by Section 6(b) hereof shall be borne by the Company. If
such fees and expenses are initially paid by the Executive, the Company
shall reimburse the Executive the full amount of such fees and expenses
within five business days after receipt from the Executive of a
statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as promptly as
practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive shall further
apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid (in each case, to the extent known
by the Executive). The Executive shall not pay such claim
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prior to the earlier of (i) the expiration of the 30-calendar-day
period following the date on which he gives such notice to the Company
and (ii) the date that any payment of such amount with respect to such
claim is due. If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or
documents in his possession relating to such claim reasonably requested
by the Company;
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time
to time, including without limitation accepting legal representation
with respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 6(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 6(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; PROVIDED, HOWEVER, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
PROVIDED FURTHER, HOWEVER, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
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(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 6(f) hereof, the Executive receives
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 6(f) hereof) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 6(f)
hereof, a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial or refund prior to the
expiration of 30 calendar days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of any such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this Section 6.
7. LEGAL FEES AND EXPENSES. It is the intent of the Company
that the Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether
the Executive prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys' and related fees and expenses incurred by the Executive in
connection with any of the foregoing.
8. EMPLOYMENT RIGHTS; TERMINATION PRIOR TO CHANGE IN CONTROL:
Nothing expressed or implied in this Agreement will create any right or duty on
the part of the Company or the Executive to have the Executive remain in the
employment of the Company or any Subsidiary prior to or following any Change in
Control. Any termination of employment of the Executive or the removal of the
Executive from the office or position in the Company following the commencement
of any discussion with a third person that ultimately results in a Change in
Control shall be deemed to be a termination or removal of the Executive after a
Change in Control for purposes of this Agreement.
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9. WITHHOLDING OF TAXES: The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
the Company is required to withhold pursuant to any law or government regulation
or ruling.
10. SUCCESSORS AND BINDING AGREEMENT: (a) The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor shall thereafter be deemed the "Company" for the purposes of this
Agreement), but will not otherwise be assignable, transferable or delegable by
the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 10(a) and 10(b)
hereof. Without limiting the generality or effect of the foregoing, the
Executive's right to receive payments hereunder will not be assignable,
transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by Executive's will or
by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section 10(c), the
Company shall have no liability to pay any amount so attempted to be
assigned, transferred or delegated.
11. NOTICES: For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier service
such as Federal Express, UPS, or Purolator, addressed to the Company (to the
attention of the Secretary of the Company) at its principal executive office and
to the Executive at his principal residence, or to such other address as any
party may have furnished to the other in writing and in accordance herewith,
except that notices of changes of address shall be effective only upon receipt.
12. GOVERNING LAW: The validity, interpretation, construction
and performance of this Agreement will be governed by and construed in
accordance with the
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substantive laws of the State of Delaware, without giving effect to the
principles of conflict of laws of such State.
13. VALIDITY: If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances will not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
14. MISCELLANEOUS: No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. References to Sections are to references to
Sections of this Agreement.
15. COUNTERPARTS: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
16. In the event of a transaction described in Section 1(c)(i)
or 1(c)(ii) that would constitute a Change in Control but for a determination by
the Board pursuant to Section 1(c) that such transaction does not constitute a
Change in Control, prior to consummation of such transaction, the chief
executive officer of the Company shall provide the Compensation and Organization
Committee of the Board (the "Committee") the proposed management organization
for the resulting corporation or person. The chief executive officer shall also
advise the Committee with respect to the Executive's position in the proposed
management organization. The Committee shall then determine if the Executive's
employment will be terminated or the Executive will be assigned to a changed or
different position as contemplated by Section 3(b) hereof within a period of two
years following consummation of the transaction. If the Committee so determines
that the Executive will be either terminated or assigned to a changed or
different position, then the Executive shall be entitled to payment of the full
amount of severance compensation provided by Section 4 hereof, payable in
accordance with the provisions of such Section 4, following such termination of
the Executive's employment by the Company or any Subsidiary by which the
Executive is employed or following the Executive's resignation, if such
resignation occurs within 90 days following a change in the Executive's position
as contemplated herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.
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NATIONAL CITY CORPORATION
By
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Xxxxx X. Xxxxxxx
Chairman and CEO
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Name
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