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Exhibit 10(e)
EXECUTIVE AGREEMENT
This is an Agreement by and between Huntington Bancshares
Incorporated, a Maryland corporation, with its principal office at the
Huntington Center, 00 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, XX 00000 ("Huntington"), and
Zuheir Sofia ("Executive"), effective as of January 22, 1997.
Recitals
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A. Executive is an executive officer of Huntington or one or more of
its affiliated companies with significant policy-making and operational
responsibilities in the conduct of its business. For purposes of describing the
employment of Executive, the term "Huntington" shall include the employment of
Executive by Huntington and such affiliated entities as shall be determined by
the Compensation and Stock Option Committee of the Board of Directors of
Huntington Bancshares Incorporated.
X. Xxxxxxxxxx recognizes that Executive is a valuable resource for
Huntington and desires to be assured of the continued dedication and services of
Executive.
X. Xxxxxxxxxx acknowledges that upon a threatened change in control
Executive may have concerns about the continuation of his employment status and
responsibilities and may be approached by others with employment opportunities,
and Huntington desires to provide Executive some assurance as to the
continuation of his employment status and responsibilities in the event of a
change in control.
X. Xxxxxxxxxx desires to assure that if it should receive an offer
involving a possible change of control and Executive would be involved in
deliberations or negotiations in connection therewith, Executive would be in a
secure position to consider such offer and negotiate on behalf of Huntington and
its shareholders as objectively as possible, and to this end Huntington desires
to protect Executive from any direct or implied threat to his financial
well-being under such circumstances.
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E. Executive is willing to continue to serve as such but desires
assurance that in the event of a change in control he will not be exposed to
unreasonable financial hardship or loss of status.
Agreement
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The parties do hereby agree as follows:
1. Definitions. As used herein:
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"Change in Control" - A change in control shall be deemed to have
occurred if and when, after the date hereof any of the following events have
occurred:
(i) Huntington, or in one or more transactions 50% or more of its
assets or earning power, is acquired by or combined with another Person and less
than a majority of the outstanding voting shares of the Person surviving such
transaction (or the ultimate parent of the surviving Person) after such
acquisition or combination is owned, immediately prior to such acquisition or
combination, by the owners of the voting shares of Huntington outstanding
immediately prior to such acquisition or combination;
(ii) 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 (including any "person" as defined 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 10% or
more of the combined voting power of the then outstanding securities entitled to
vote generally in the election of directors ("Voting Stock") of Huntington;
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(iii) Huntington 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 Huntington has occurred or will occur in
the future pursuant to any then-existing contract or transaction; or
(iv) if, during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board of Directors of Huntington
("Board") cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this clause (iv) each Director who is
first appointed, or first nominated for election by Huntington's stockholders,
by a vote of at least two-thirds of the Directors of Huntington (or a committee
thereof) then still in office who were Directors of Huntington at the beginning
of any such period will be deemed to have been a Director of Huntington at the
beginning of such period; or
(v) The occurrence of any other event or circumstance which is not
covered by (i) through (iv) above which the Board determines affects control of
Huntington and, in order to implement the purposes of this Agreement as set
forth above, adopts a resolution that such event or circumstance constitutes a
Change in Control for the purposes of this Agreement.
Notwithstanding the foregoing provisions of paragraphs 1 (ii) or (iii),
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
paragraphs (ii) or (iii) solely because (1) Huntington, (2) an entity in which
Huntington directly or indirectly beneficially owns 50% or more of the entity's
outstanding voting stock (a "Subsidiary"), or (3) any employee stock ownership
plan or any other employee benefit plan of Huntington or any Subsidiary either
files or becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule
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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 of Huntington, whether in excess of 10% or otherwise, or
because Huntington reports that a change in control of Huntington has occurred
or will occur in the future by reason of such beneficial ownership. In defining
"Control," all voting securities of Huntington shall be considered to be a
single class.
"Minimum Annual Base Salary" means the Executive's current base annual
salary, plus such increases to the base annual compensation as the Board or
Compensation and Stock Option Committee of Huntington may authorize in their
discretion from time to time, but in no event less than the annual base salary
in effect at the time of making this agreement.
2. TERMINATION FOLLOWING CHANGE IN CONTROL. Executive shall be entitled
to the benefits described below if a Change in Control shall have occurred and
within three years of such Change in Control either (i) Executive terminates his
employment upon making a determination (which determination will be conclusive
and binding upon the parties hereto provided it has been made in good faith)
that Executive's employment status or employment responsibilities have been
materially and adversely affected thereby, or (ii) his employment is terminated
by Huntington:
(a) Executive shall be entitled to receive after termination
of his employment, his Minimum Annual Base Salary, through the
termination date, as such phrase is defined in any employment
agreement between Executive and Huntington, plus credit for
any vacation accrued but not taken and the amount of any
unpaid bonus,
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incentive compensation or any other benefit to which he is
entitled to under any employment agreement between Executive
and Huntington, if applicable.
(b) If the Minimum Annual Base Salary payable pursuant to
paragraph 2(a) above is less than three times the Minimum
Annual Base Salary in effect for the year in which termination
occurs, then in lieu of any payment of Minimum Annual Base
Salary under paragraph 2(a) Executive shall be entitled to
receive an amount equal to three times his Minimum Annual Base
Salary in effect for the year in which his termination of
employment occurs.
(c) In addition to the amount paid pursuant to subparagraph
(a) or (b) of this paragraph 2, Executive shall also be
entitled to receive three times the average bonus or incentive
compensation paid to him in respect of the three fiscal years
preceding his termination of employment.
(d) At Executive's option the amount payable under paragraphs
2(a) or (b), and paragraph 2(c) shall be paid to him in one
lump sum within thirty days after termination of employment or
in twenty-four equal consecutive monthly payments commencing
on the first day of the month following termination of
employment.
(e) Huntington shall maintain for Executive's benefit until
the earlier of (i) thirty-six months after termination of
employment, or (ii) Executive's commencement of full-time
employment with a new employer (the "Continuation Period"),
all costs and expenses associated with providing a corporate
automobile, all professional memberships, dues in all clubs in
which Executive maintains
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membership, all life insurance, medical, health and accident,
disability plans or programs and such other substantially
similar benefits which Executive shall have been entitled to
prior to termination, provided Executive's continued
participation is permitted under the general terms of such
plans and programs after the termination of employment. In the
event Executive's participation in any such plan or program is
not permitted, Huntington will provide at no cost to Executive
directly the benefits to which Executive would be entitled
under such plans and programs.
(f) Executive also shall be paid the aggregate of the
increases in the single sum actuarial equivalents of
Executive's vested accrued benefits under Huntington's
retirement plan or any successor plan (hereinafter referred to
as the "Pension Plan") and each nonqualified defined benefit
pension plan sponsored by Huntington, including the
supplemental executive retirement plan that would result if
Executive were credited with three additional years of service
and benefit service (as such terms are defined in the Pension
Plan) and three additional years of age under such plans.
(g) Without limiting the rights of Executive at law or in
equity, if Huntington fails to make any payment or provide any
benefit required to be made or provided hereunder on a timely
basis, Huntington will pay interest on the amount or value
thereof at an annualized rate of interest equal to the greater
of (i) 12% or (ii) the prime commercial rate in effect of The
Huntington National Bank or its successor
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from time to time. 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.
3. CONSIDERATION FOR PAYMENTS. Huntington hereby acknowledges that it
will be difficult and may be impossible (a) for Executive to find reasonably
comparable employment, and (b) to measure the amount of damages which Executive
may suffer as a result of termination of employment hereunder. In addition,
Huntington 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 Huntington to Executive in accordance with the terms of this
Agreement is hereby acknowledged by Huntington to be reasonable and will be
liquidated damages, and 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 Executive hereunder or otherwise, except as provided
in Section 2(e). Huntington shall not be entitled to set off or counterclaim
against amounts payable hereunder any claim, debt or obligation of Executive.
4. EXCISE TAX PAYMENTS. In the event that Executive becomes entitled to
the benefits described in this Agreement ("Severance Payments"), if any of the
Severance Payments will be subject to the tax (the "Excise Tax") imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any similar federal or state excise tax, Huntington shall pay to Executive at
the time specified in Section 2(d) above, an additional amount (the "Gross-Up
Payment") such that the net amount retained by Executive after payment of any
Excise Tax, and
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any federal, state and local income tax on the Gross-Up Payment itself, shall be
equal to the amount of the Severance Payments stated herein.
For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax:
(a) any other payments or benefits received or to be received
by Executive in connection with a Change in Control of
Huntington or the termination of employment (whether pursuant
to the terms of this Agreement or of any other plan,
arrangement or agreement with Huntington, or with any Person
whose actions result in a Change in Control or with any other
Person affiliated with Huntington or such Person) shall be
treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments"
within the meaning of Section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax
counsel selected by Huntington's independent auditors and
acceptable to Executive, other payments or benefits (in whole
or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code;
(b) the amount of the Severance Payments which shall be
treated as subject to the Excise Tax shall be equal to the
lesser of (i) the total amount of the Severance Payments or
(ii) the amount of excess parachute payments within the
meaning of Sections 280G(b)(1) and (4) (after applying clause
(a), above); and
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(c) the value of any noncash benefits or any deferred payment
or benefit shall be determined by Huntington's independent
auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rates of taxation in the state and locality of Executive's residence on the date
of termination, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes.
If the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder at the time of termination of employment, Executive
shall repay to Huntington, at the time the reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction.
If the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of termination of employment, Huntington shall make an
additional Gross-Up Payment to Executive in respect of such excess at the time
the amount of such excess is finally determined.
5. ARRANGEMENTS NOT EXCLUSIVE. The specific benefit arrangements
referred to in this Agreement are not intended to exclude Executive from
participation in or from other benefits available to executive personnel
generally or to preclude Executive's right to other compensation or benefits as
may be authorized by the Board of Huntington at any time. The provisions of this
Agreement and any payments provided for hereunder shall not reduce any amounts
otherwise payable, or in any way diminish Executive's existing rights, or rights
which would accrue solely
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as the result of the passage of time under any benefit plan, incentive plan,
stock option plan, employment agreement or other contract, plan or arrangement
except as may be specified in such contract, plan or arrangement.
6. HUNTINGTON'S RIGHT TO TERMINATE EMPLOYMENT. This Agreement sets
forth the severance benefits payable to Executive in the event his employment
with Huntington is terminated under certain conditions subsequent to a Change in
Control (as defined in Section 1 hereof). This Agreement is not an employment
contract nor is it intended to confer upon the Executive any right to continued
employment. Notwithstanding the foregoing, any termination of employment of
Executive or the removal of the Executive from the current office or position of
Executive at Huntington 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 Executive after a Change in Control for purposes
of this Agreement.
7. ENFORCEMENT COSTS; INTEREST. Huntington is aware that, upon the
occurrence of a Change in Control, the Board or a stockholder of Huntington may
then cause or attempt to cause Huntington to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause Huntington to
institute, or may institute, litigation seeking to have this Agreement declared
unenforceable, or may take, or attempt to take, other action to deny Executive
the benefits intended under this Agreement. In these circumstances, the purpose
of this Agreement could be frustrated. It is the intent of Huntington that
Executive not be required to incur the expenses associated with the enforcement
of his rights under this Agreement by litigation or other legal action nor be
bound to negotiate any settlement of his rights hereunder under threat of
incurring such expenses because the cost and expense thereof would substantially
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detract from the benefits intended to be extended to Executive hereunder.
Accordingly, if following a Change in Control it should appear to Executive that
Huntington has failed to comply with any of its obligations under this Agreement
or in the event that Huntington or any other person takes any action to declare
this Agreement void or unenforceable, or institute any litigation or other legal
action designed to deny, diminish or to recover from Executive, the benefits
intended to be provided to Executive hereunder, Huntington irrevocably
authorizes Executive from time to time to retain counsel of his choice at the
expense of Huntington as provided in this Section 7 to represent Executive in
connection with the initiation or defense of any litigation or other legal
action, whether by or against Huntington or any director, officer, stockholder
or other person affiliated with Huntington. Notwithstanding any existing or
prior attorney-client relationship between Huntington and such counsel,
Huntington irrevocably consents to Executive entering into an attorney-client
relationship with such counsel, and in that connection Huntington and Executive
agree that a confidential relationship shall exist between Executive and such
counsel. The reasonable fees and expenses of counsel selected from time to time
by Executive as hereinabove provided shall be paid or reimbursed to Executive by
Huntington on a regular, periodic basis upon presentation by Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices. In any action involving this Agreement, Executive shall be
entitled to prejudgment interest on any amounts found to be due him from the
date such amounts would have been payable to Executive pursuant to this
Agreement at an annual rate of interest equal to the greater of (a) 12%, or (b)
the prime commercial rate in effect at The Huntington National Bank or its
successor from time to time during the prejudgment period.
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8. TERMINATION. This Agreement shall terminate if the employment of
Executive with Huntington shall terminate prior to a Change in Control.
9. SUCCESSORS AND ASSIGNS. In the event that Huntington shall merge or
consolidate with any other corporation or all or substantially all Huntington's
business or assets shall be transferred in any manner to any other Person, such
Person shall thereupon succeed to, and be subject to, all rights, interests,
duties and obligations of, and shall thereafter be deemed for all purposes
hereof to be, Huntington hereunder. This Agreement shall be binding upon and
inure to the benefit of any such successor and the personal and legal
representatives of Executive. If Executive should die while any amounts are
still payable to him hereunder, all such amounts shall be paid in accordance
with the terms of this Agreement to Executive's beneficiary indicated on the
Beneficiary Designation, attached hereto as Exhibit A.
10. SEVERABILITY. In the event that any section, paragraph, clause or
other provision of this Agreement shall be determined to be invalid or
unenforceable in any jurisdiction for any reason, such section, paragraph,
clause or other provision shall be enforceable in any other jurisdiction in
which valid and enforceable and, in any event, the remaining sections,
paragraphs, clauses and other provisions of this Agreement shall be unaffected
and shall remain in full force and effect to the fullest extent permitted by
law.
11. INDEMNIFICATION. For a period of five years after any termination
of Executive's employment, Huntington shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense, and shall indemnify,
hold harmless and defend Executive (and his heirs, executors and administrators)
to the fullest extent permitted under Maryland law against all expenses and
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liabilities reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his having
been a director or officer of Huntington or any subsidiary (whether or not he
continues to be a director or officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements.
12. TERMINATION OF PRIOR AGREEMENTS. The Executive hereby agrees to a
mutual termination, effective as of the effective date of this Agreement, of any
prior existing change in control agreement providing benefits to the Executive
upon a termination of employment following a Change in Control of the Company,
to which he and Huntington are parties, and as to such prior agreement, if any,
the Executive releases all claims, rights and entitlement.
IN WITNESS WHEREOF, this Agreement has been executed on
January 22, 1997.
HUNTINGTON BANCSHARES INCORPORATED
By /s/ Xxxxx Xxxxx
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/s/ Zuheir Sofia
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Zuheir Sofia
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Exhibit A
Beneficiary Designation
In the event of my death, I hereby direct that any amounts due me under
the agreement to which this Beneficiary Designation is attached shall be
distributed to the person designated below. If no beneficiary shall be living to
receive such assets they shall be paid to the administrator or executor of my
estate.
1/24/97 /s/ Zuheir Sofia
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Date Zuheir Sofia
"The A. Zuheir Sofia
Restatement of Trust dated
March 1, 1996 with Xxxxx
X. Sofia and A. Zuheir
Sofia Co-Trustee."
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Beneficiary
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Relationship to Executive
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