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Exhibit 10.31
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of August
11 2000, by and between Nationwide Mutual Insurance Company (the "Company") and
Xxxxxxx Xxxxxx ("Executive").
WHEREAS, pursuant to the Offer Letter dated June 15, 2000, between the
Company and Executive (the "Offer Letter"), Executive has agreed to become the
Executive Vice President-Corporate Development of the Company.
WHEREAS, the parties desire to enter into an agreement to reflect
Executive's executive capacities in the Company's business and to provide for
Executive's employment by the Company, upon the terms and conditions set forth
herein.
WHEREAS, Executive has agreed to certain confidentiality,
non-competition and non-solicitation covenants contained hereunder, in
consideration of the benefits provided to Executive under this Agreement.
WHEREAS, certain capitalized terms shall have the meanings given those
terms in Section 4 of this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive's
duties and responsibilities, in accordance with the terms, conditions and
provisions hereinafter set forth. Executive shall commence employment on a date
(not later than August 15, 2000) to be mutually agreed upon by the Company and
Executive. Executive's first day of employment is referred to as the "Employment
Date." The parties agree that the terms of this Agreement shall supersede and
replace the Offer Letter. The parties further agree that Exhibit A hereto
describes the key components of the executive compensation package, and that the
terms of both the Agreement and the Exhibit A apply and that if and to the
extent the provisions of this Agreement and Exhibit A are inconsistent the more
generous to Executive shall apply so that Executive receives the full benefits
of the key components of his compensation package as set forth on Exhibit A and
in this Agreement.
1.1. REPRESENTATIONS. Executive hereby represents to the Company that
Executive is under no contractual obligation to refrain from working for a
competitor of any prior employer. Executive also hereby represents to the
Company that he knows of no circumstances that would adversely affect his
ability to function effectively in the functions essential to the position of
Executive Vice President-Corporate Development as described in this Agreement.
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1.2. EMPLOYMENT TERM. This Agreement shall be effective as of the
Employment Date and shall continue until the third anniversary of the Employment
Date, unless the Agreement is terminated sooner in accordance with Section 2 or
3 below. In addition, the term of the Agreement shall automatically renew for
periods of one year unless either party gives written notice to the other party,
at least 60 days prior to the end of the initial term or at least 60 days prior
to the end of any one-year renewal period, that the Agreement shall not be
further extended. The period commencing on the Employment Date and ending on the
date on which the term of Executive's employment under the Agreement shall
terminate is hereinafter referred to as the "Employment Term." If a Change of
Control (as defined in Section 4) occurs, the Employment Term shall be
automatically extended to the later of (i) the end of the then existing initial
or renewal period or (ii) the date that is two years after the Change of
Control, unless the Employment Term is sooner terminated according to Section 2
or 3 below. The failure of the Company to renew this Agreement shall not be
considered a termination of Executive's employment under this Agreement and
shall not give Executive grounds to terminate employment for Good Reason (as
defined in Section 4) under this Agreement.
1.3. DUTIES AND RESPONSIBILITIES. During the Employment Term, Executive
shall serve as the Executive Vice President-Corporate Development of the
Company, or in such other executive positions as the Board of Directors of the
Company (the "Board") determines. Executive shall report to the Chief Executive
Officer of the Company and shall perform all duties and accept all reasonable
responsibilities incident to such position or as may be reasonably assigned to
him by the Chief Executive Officer or the Board.
1.4. EXTENT OF SERVICE. During the Employment Term, Executive agrees to
use Executive's full and best efforts to carry out Executive's duties and
responsibilities under Section 1.2 hereof with the highest degree of loyalty and
the highest standards of care and, consistent with the other provisions of this
Agreement, Executive agrees to devote substantially all of Executive's business
time, attention and energy thereto. The foregoing shall not be construed as
preventing Executive from making investments in other businesses or enterprises,
provided that Executive agrees not to become engaged in any other business
activity which, in the reasonable judgment of the Board, is likely to interfere
with Executive's ability to discharge Executive's duties and responsibilities to
the Company. The Executive will not serve on the board of directors of an entity
unrelated to the Company (other than a non-profit charitable organization)
without the consent of the Board.
1.5. BASE SALARY. During the Employment Term, for all the services
rendered by Executive hereunder, the Company shall pay Executive a base salary
("Base Salary"), at the annual rate of $450,000 per year, payable in
installments at such times as the Company customarily pays its other employees.
Executive's Base Salary shall be reviewed periodically for appropriate increases
(but not decreases) by the Board (or a committee of the Board) pursuant to the
Board's normal performance review policies for senior level executives.
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1.6. RETIREMENT, WELFARE AND OTHER BENEFIT PLANS AND PROGRAMS. During
the Employment Term, Executive shall be entitled to participate in all employee
retirement and welfare benefit plans and programs made available to the
Company's senior level executives as a group, as such retirement and welfare
plans may be in effect from time to time and subject to the eligibility
requirements of such plans. During the Employment Term, Executive shall be
provided with a Company automobile and other executive fringe benefits and
perquisites under the same terms as those made available to the Company's senior
level executives as a group, as such programs may be in effect from time to
time. During the Employment Term, Executive shall be entitled to vacation and
sick leave in accordance with the Company's vacation, holiday and other pay for
time not worked policies. The Company's current executive policies and programs
are described on Exhibit A. Nothing in this Agreement shall prevent the Company
from amending or terminating any retirement, welfare or other employee benefit
plans, programs, policies or perquisites from time to time as the Company deems
appropriate.
1.7. REIMBURSEMENT OF EXPENSES. During the Employment Term, Executive
shall be provided with reimbursement of reasonable expenses related to
Executive's employment by the Company on a basis no less favorable than that
which may be authorized from time to time for senior level executives as a
group.
1.8. INCENTIVE COMPENSATION. During the Employment Term, Executive
shall be entitled to participate in all short-term and long-term incentive
programs established by the Company for its senior level executives generally,
at levels commensurate with the benefits provided to other senior executives and
Executive's position with the Company. Executive's incentive compensation shall
be subject to the terms of the applicable plans and shall be determined based on
Executive's individual performance and Company performance as determined by the
Board (or a committee of the Board). The initial incentive compensation grants
to be made to Executive are described on the attached Exhibit A.
1.9. SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFIT.
(a) Upon termination of employment for any reason, Executive
will be entitled to receive from the Company a supplemental executive retirement
benefit ("SERB") equal to:
(A) the accrued benefits that Executive would have received
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan and Nationwide Excess Benefit Plan, as in effect at
Executive's last day of active service, had Executive received
Participation Service Credit as discussed in subsection (b) below and
had covered compensation as discussed in subsection (c) below, reduced
by
(B) the accrued benefits that Executive actually receives
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan, Nationwide Excess Benefit Plan, and any other
qualified and nonqualified defined benefit retirement plans of the
Company and its Affiliates (including defined benefit retirement
benefits payable under Section 2.4(b)(vi), 2.4(b)(vii), 3.4(b)(vi)
and/or 3.4(b)(vii) of this Agreement) and (except
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as provided otherwise in subsection (d) below) the accrued benefits
that Executive actually receives under any qualified and nonqualified
defined benefit retirement plans of Executive's former employers.
The SERB shall be paid in the same form and at the same time as Executive's
benefit under the Nationwide Retirement Plan is paid (or would have been paid
had Executive's benefit in the Retirement Plan been fully vested); provided that
payment shall not begin until after the latest of (A), (B) or (C): (A) the
Severance Period if Executive receives severance benefits under Section 2.4 or
3.4 below, (B) Executive's retirement date under the Nationwide Retirement Plan
or (C) age 62. The supplemental benefits payable under this Section 1.9 and
Sections 2.4 and 3.4 below shall not result in any duplication of benefits.
(b) Executive shall earn Participation Service Credit at an
accrual rate of two months for each full or partial month of Executive's service
with the Company or an Affiliate during the period beginning on the Employment
Date and continuing for the first 60 months of Executive's service (maximum 120
months of Participation Service).
(c) For purposes of the SERB, Executive's "Final Average Pay"
shall be calculated in the same manner as provided in the Nationwide Retirement
Plan and Nationwide Supplemental Retirement Plan; provided, however, in no event
will Executive's Final Average Pay for purposes of the SERB be less than
Executive's initial annual Base Salary as described in Section 1.5 ($450,000 per
year) and guaranteed 2000 annual bonus ($500,000).
(d) The SERB will be subject to reduction for benefits under
qualified and non-qualified defined benefit retirement plans of Executive's
former employers only if Executive voluntarily terminates employment before the
fifth anniversary of the Employment Date (excluding death or Disability and, for
the avoidance of doubt, excluding any termination, removal or resignation
described in Section 2.1, 2.2, 2.3, 3.2 or 3.3), or if Executive's employment is
terminated for Cause before the fifth anniversary of the Employment Date.
(e) In the event of Executive's termination of employment
prior to age 65, Executive may elect to have the accrued SERB commence early
(but not prior to age 62), subject to reduction for early commencement according
to the terms of the Nationwide Retirement Plan. The Company shall calculate the
SERB. The Company's obligation to provide the SERB on the terms described above
shall survive the termination of this Agreement.
2. TERMINATION. Executive's employment shall terminate upon the
occurrence of any of the following events:
2.1. TERMINATION WITHOUT CAUSE.The Company (by action of the Board) may
remove Executive at any time without Cause (as defined in Section 4) from the
position in which Executive is employed hereunder (in which case the Employment
Term shall be deemed to have ended) upon not less than 60 days' prior written
notice pursuant to Section 15 to Executive; provided, however, that, in the
event that such notice is given, Executive shall be under no
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obligation to render any additional services to the Company and shall be allowed
to seek other employment.
2.2. RESIGNATION FOR GOOD REASON AFTER A SUBSTANTIAL REORGANIZATION. If
the Board determines for purposes of this Agreement that a substantial
reorganization of the Company has occurred, the Board may establish a period of
time during which Executive may elect to resign if an event constituting Good
Reason (as defined in Section 4) occurs. In that event, Executive may initiate
termination of employment by resigning under this Section 2.2 for Good Reason
during the period specified by the Board. Executive shall give the Company not
less than 60 days prior written notice pursuant to Section 15 of such
resignation.
2.3. RESIGNATION UPON A CHANGE IN CHIEF EXECUTIVE OFFICER. If X.X.
Xxxxxxxxx ceases to be the Chief Executive Officer of the Company before the
third anniversary of the Employment Date, Executive shall have 120 days after
Xx. Xxxxxxxxx ceases to be Chief Executive Officer to elect to resign. If
Executive elects to so resign, Executive shall give the Company not less than 60
days prior written notice pursuant to Section 15 of such resignation. For
purposes of this Section 2.3, the term "Company" shall include any successor to
the Company by merger or otherwise.
2.4. BENEFITS PAYABLE UPON TERMINATION WITHOUT CAUSE, RESIGNATION FOR
GOOD REASON AFTER A SUBSTANTIAL REORGANIZATION, OR RESIGNATION AFTER A CHANGE IN
CHIEF EXECUTIVE OFFICER.
(a) Upon any removal or resignation described in Section 2.1,
2.2 or 2.3 above, Executive shall be entitled to receive only the amount due to
Executive under the Company's then current severance pay plan for employees, if
any. No other payments or benefits shall be due under this Agreement to
Executive, but Executive shall be entitled to any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.
(b) Notwithstanding the provisions of Section 2.4(a), in the
event of a removal or resignation described in Section 2.1, 2.2 or 2.3 during
the Employment Term, if Executive executes and does not revoke a written release
upon such removal or resignation, substantially in the form attached hereto as
EXHIBIT B (the "Release"), of any and all claims against the Company and all
related parties with respect to all matters arising out of Executive's
employment by the Company, or the termination thereof (other than claims based
upon any severance entitlements under the terms of this Agreement or
entitlements under any plans or programs of the Company under which Executive
has accrued a benefit), Executive shall be entitled to receive the severance
benefits described below, in lieu of the payment described in Section 2.4(a).
Payment of the lump sum benefits described below (other than as described in
subsections (ii) and (iv) below) shall be made within 30 days after Executive's
Termination Date (as defined in Section 4) or the end of the revocation period
for the Release, if later.
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(i) Executive shall receive a lump sum cash payment
equal to two times Executive's annual Base Salary in effect immediately before
the Termination Date (including salary reduction amounts of Base Salary under
the Company's benefit plans and programs).
(ii) Executive shall receive Executive's annual
short-term incentive bonus (PIP) for the year in which Executive's Termination
Date occurs, at the time that annual bonuses for the year are paid to other
executives, based on the Company's actual performance for the year, but in an
amount not less than Executive's target annual bonus in effect for the year.
(iii) The Company shall pay Executive an amount equal
to the after-tax cost to the Executive of continuing the medical and dental
coverage under COBRA or the Company's retiree medical plan, if applicable, for
Executive, and, where applicable, his spouse and dependents, for the greater of
(x) the 18-month period following the Termination Date or (y) the Severance
Period (as defined in Section 4). The COBRA health care continuation coverage
period under Section 4980B of the Code (as defined in Section 4) shall run
concurrently with the period described in the preceding sentence.
(iv) Executive shall receive the following lump sum
payments with respect to the long-term incentive awards (LTPP) in effect for
Executive at his Termination Date:
(x) Executive shall receive a pro rated
portion of each outstanding long-term incentive award for which
Executive's Termination Date does not occur in the final year of the
award period (for example, if the award period is three years, the
awards for which the Termination Date occurs in year one or two). The
pro rated payment for each such long-term incentive award shall be
computed as the target incentive award in effect for Executive
multiplied by a fraction, the numerator of which is the number of years
that the incentive award has been outstanding (including the year in
which the Termination Date occurs as a whole year) and the denominator
of which is the number of years in the incentive award period.
(y) Executive shall receive each long-term
incentive award for which Executive's Termination Date occurs in the
final year of the award period, at the time that such long-term
incentive awards are paid to other executives, based on the Company's
actual performance for the award period, but in an amount not less than
Executive's target long-term incentive award in effect for such period.
The foregoing payments shall be made under the Company's long-term incentive
plan, to the extent consistent with the terms of such plan. If the payments
calculated above exceed the payments actually made to Executive under the
Company's long-term incentive plan with respect to the foregoing awards, any
such excess amount shall be paid to Executive under this Agreement.
(v) Executive's outstanding stock options and
restricted stock with respect to stock of Nationwide Financial Services, Inc. or
any Affiliate of the Company shall become vested and exercisable on the
Termination Date to the extent that such options and
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restricted stock would have become vested and exercisable on the next vesting
date had Executive remained an employee of the Company. All other unvested stock
options and restricted stock shall be forfeited, except to the extent that the
applicable grant agreement requires otherwise. No additional grants shall be
made to Executive after Executive's termination of employment.
(vi) Executive shall receive supplemental benefits
under this Agreement equal to:
(A) the accrued benefits that Executive would have received
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan, Nationwide Excess Benefit Plan, Nationwide Savings
Plan, Nationwide Supplemental Defined Contribution Plan and Nationwide
Individual Deferred Compensation Plan, as in effect at Executive's
Termination Date, had Executive's benefits under those Plans been fully
vested as of Executive's Termination Date, reduced by
(B) the accrued benefits that Executive actually receives
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan, Nationwide Excess Benefit Plan, Nationwide Savings
Plan, Nationwide Supplemental Defined Contribution Plan and Nationwide
Individual Deferred Compensation Plan.
The benefits under this subsection (vi) shall be paid in the same forms and at
the same times as Executive's benefits under the applicable Plans described
above are paid (or would have been paid had Executive's interests in the
applicable Plans been fully vested); provided that payments with respect to
benefits under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan and Nationwide Excess Benefit Plan shall not begin until after
the end of the Severance Period. The benefits payable under Section 1.9, this
subsection (vi) and subsection (vii) below shall not result in any duplication
of benefits.
(vii) If Executive's Termination Date occurs within
three years of the date on which Executive would have been first eligible to
retire under the Nationwide Retirement Plan, Executive shall receive a
supplemental benefit under this Agreement equal to:
(A) the accrued benefits that Executive would have received
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan and Nationwide Excess Benefit Plan as in effect at
Executive's Termination Date, had Executive earned service and age
credit for the period ending on the first to occur of (i) three years
after the Termination Date or (ii) the earliest date on which Executive
would have been eligible to retire under the Nationwide Retirement
Plan, and had Executive been fully vested in his benefit under such
Plans, reduced by
(B) the accrued benefits that Executive actually receives
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan and Nationwide Excess Benefit Plan, and the benefits
payable under subsection (vi) above with respect to the
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Nationwide Retirement Plan, Nationwide Supplemental Retirement Plan and
Nationwide Excess Benefit Plan.
The benefits under this subsection (vii) shall be paid after the end of the
Severance Period in the same forms and at the same times as Executive's benefits
under the applicable Nationwide Plans are paid (or would have been paid had
Executive's interests in the applicable Plans been fully vested).
(viii) The Company shall pay Executive a lump sum
cash payment equal to the matching contributions that the Company would have
made for Executive under the Nationwide Savings Plan and the Nationwide
Supplemental Defined Contribution Plan, as in effect at Executive's Termination
Date, as if Executive continued in employment for the Severance Period,
receiving compensation at a rate equal to Executive's covered compensation
amount for the calendar year prior to the year in which the Termination Date
occurs and as if Executive continued making the same rate of contributions to
the Nationwide Savings Plan as in effect immediately before Executive's
Termination Date.
(ix) The Company shall cause Executive to receive
service and age credit for purposes of eligibility under the Company's retiree
medical plan, and service credit for purposes of cost-sharing, until the end of
the Severance Period, as if Executive had continued in employment during the
Severance Period.
(x) During the Severance Period, the Company shall
pay or reimburse Executive for the cost of outplacement assistance services (not
to exceed a total of $11,000) provided by any outplacement agency selected by
Executive.
(xi) During the Severance Period, the Company shall
pay or reimburse Executive for financial counseling services from the Company's
financial counseling vendor in an annual amount equal to the value of the
financial counseling services provided by the Company annually to Executive
immediately before Executive's Termination Date.
(xii) Executive shall have the right to purchase from
the Company the Company-provided automobile used by Executive at Executive's
Termination Date, at a price equal to the then fair market value of the
automobile.
(xiii) Executive shall have the right to retain the
computer, printer, fax machine and office furniture that was provided by the
Company for use by Executive at his residence at the Termination Date.
(xiv) Executive can elect to have the Company
transfer to Executive the country club membership that Executive received in
connection with his employment with the Company, or Executive can elect to have
the Company provide a loss of membership payment to Executive under the terms of
the Company's country club membership program in effect for senior level
executives at Executive's Termination Date.
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(xv) Executive shall receive any other amounts
earned, accrued or owing but not yet paid under Section 1 above and any other
benefits in accordance with the terms of any applicable plans and programs of
the Company.
2.5. RETIREMENT OR OTHER VOLUNTARY TERMINATION. Executive may
voluntarily terminate employment for any reason, including voluntary retirement,
upon 60 days' prior written notice pursuant to Section 15. In such event, after
the effective date of such termination, except as provided in Section 2.2, 2.3
or 3.3 (with respect to a resignation for Good Reason or after a change in Chief
Executive Officer), the Company shall pay to Executive any amounts earned,
accrued or owing but not yet paid under Section 1 above and any benefits accrued
or earned under the Company's benefit plans and programs according to the terms
of such plans and programs.
2.6. DISABILITY. The Company (by action of the Board) may terminate
Executive's employment if Executive has been unable to perform the essential
functions of his position with the Company, with or without reasonable
accommodation, by reason of physical or mental incapacity for a period of six
consecutive months ("Disability"); provided, however, that the Company shall
continue to pay Executive's Base Salary until the Company acts to terminate
Executive's employment. Executive agrees, in the event of a dispute under this
Section 2.6 relating to Executive's Disability, to submit to a physical
examination by a licensed physician selected by the Board. Executive
acknowledges that the provisions of this Section 2.6 supersede the employment
termination provisions otherwise applied to disabled employees. If Executive's
employment terminates on account of Disability, no further payments shall be due
under this Agreement. However, Executive shall be entitled to (i) any benefits
due in accordance with the terms of any applicable benefit plans and programs of
the Company and (ii) a pro rated bonus for the year in which Executive's
Disability occurs, which bonus shall be calculated according to Section
2.4(b)(ii) above.
2.7. DEATH. If Executive dies while employed by the Company, the
Company shall pay to Executive's executor, legal representative, administrator
or designated beneficiary, as applicable, (i) any amounts earned, accrued or
owing but not yet paid under Section 1 above and any benefits accrued or earned
under the Company's benefit plans and programs according to the terms of such
plans and (ii) a pro rated bonus for the year in which Executive's death occurs,
which bonus shall be calculated according to Section 2.4(b)(ii) above.
Otherwise, the Company shall have no further liability or obligation under this
Agreement to Executive's executors, legal representatives, administrators, heirs
or assigns.
2.8. CAUSE. The Company (by action of the Board) may terminate
Executive's employment at any time for Cause upon written notice to Executive,
in which event all payments under this Agreement shall cease, except for Base
Salary and any other accrued obligations (including reimbursement of expenses
properly incurred before the Termination Date in accordance with Company policy)
to the extent already accrued. Executive shall be entitled to any benefits
accrued or earned before his termination in accordance with the terms of any
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applicable benefit plans and programs of the Company; provided that Executive
shall not be entitled to receive any unpaid short-term or long-term cash
incentive payments or unvested options.
3. CHANGE OF CONTROL.
3.1. EFFECT OF CHANGE OF CONTROL. If a Change of Control occurs and
Executive's employment terminates under the circumstances described below, the
provisions of this Section 3 shall apply, instead of the provisions of Section
2.1, 2.2, 2.3 and 2.4.
3.2. TERMINATION WITHOUT CAUSE UPON OR AFTER A CHANGE OF CONTROL. Upon
or after a Change of Control, the Company (by action of the Board) may remove
Executive at any time without Cause from the position in which Executive is
employed hereunder (in which case the Employment Term shall be deemed to have
ended) upon not less than 60 days' prior written notice pursuant to Section 15
to Executive; provided, however, that, in the event that such notice is given,
Executive shall be under no obligation to render any additional services to the
Company and shall be allowed to seek other employment.
3.3. RESIGNATION FOR GOOD REASON UPON OR AFTER A CHANGE OF CONTROL.
Upon or after a Change of Control, Executive may initiate termination of
employment by resigning under this Section 3 for Good Reason (as defined in
Section 4). Executive shall give the Company not less than 60 days' prior
written notice pursuant to Section 15 of such resignation.
3.4. BENEFITS PAYABLE UPON TERMINATION WITHOUT CAUSE OR RESIGNATION FOR
GOOD REASON UPON OR AFTER A CHANGE OF CONTROL.
(a) Upon any removal or resignation described in Section 3.2
or 3.3 above, Executive shall be entitled to receive only the amount due to
Executive under the Company's then current severance pay plan for employees, if
any. No other payments or benefits shall be due under this Agreement to
Executive, but Executive shall be entitled to any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.
(b) Notwithstanding the provisions of Section 3.4(a), in the
event of a removal or resignation described in Section 3.2 or 3.3 that occurs
upon or after a Change of Control and during the Employment Term, if Executive
executes and does not revoke a written Release upon such removal or resignation,
Executive shall be entitled to receive the severance benefits described below,
in lieu of the payment described in Section 3.4(a). Payment of the lump sum
benefits described below (other than as described in subsection (ii) below)
shall be made within 30 days after Executive's Termination Date or the end of
the revocation period for the Release, if later.
(i) Executive shall receive a lump sum cash payment
equal to three times Executive's Compensation (as defined in Section 4).
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(ii) Executive shall receive Executive's annual
short-term incentive bonus (PIP) for the year in which Executive's Termination
Date occurs, at the time that annual bonuses for the year are paid to other
executives, based on the Company's performance for the year but in an amount not
less than Executive's target annual bonus in effect for the year in which the
Termination Date occurs.
(iii) During the Severance Period, the Company shall
cause Executive, and, where applicable, his spouse and dependents, to continue
to be eligible for the medical, dental and life insurance coverage in effect
immediately before the Change of Control (or generally comparable coverage) as
if Executive had continued in employment during the Severance Period, and the
Company shall pay the cost of such coverage; or, as an alternative, at the
Company's election, the Company may pay Executive cash in lieu of such coverage
in an amount equal to Executive's after-tax cost of continuing such coverage.
The COBRA health care continuation coverage period under Section 4980B of the
Code shall run concurrently with the Severance Period. If Executive qualifies
for retiree medical coverage from the Company during any portion of the
Severance Period, the Company may provide such retiree medical coverage during
such portion of the Severance Period in lieu of the foregoing coverage.
(iv) Executive shall receive a lump sum payment equal
to the long-term incentive awards (LTPP) in effect for Executive on the
Termination Date, based on the Company's actual performance through the
Termination Date, but in an amount not less than the total target long-term
incentive awards in effect for Executive on the Termination Date. The foregoing
payment shall be made under the Company's long-term incentive plan, to the
extent consistent with the terms of such plan. If the payment calculated above
exceeds the payment actually made to Executive under the Company's long-term
incentive plan with respect to the foregoing awards, any such excess benefit
shall be paid to Executive under this Agreement.
(v) All stock options and restricted stock with
respect to stock of Nationwide Financial Services, Inc. or any Affiliate of the
Company that are held by Executive shall become fully vested and exercisable as
of the Termination Date (if not already vested and exercisable pursuant to the
terms of the applicable plan).
(vi) Executive shall receive a supplemental benefit
under this Agreement equal to:
(A) the accrued benefits that Executive would have received
under the Nationwide Savings Plan, Nationwide Supplemental Defined
Contribution Plan and Nationwide Individual Deferred Compensation Plan,
as in effect immediately before the Change of Control had Executive's
benefits under those Plans been fully vested as of Executive's
Termination Date, reduced by
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(B) the accrued benefits that Executive actually receives
under the Nationwide Savings Plan, Nationwide Supplemental Defined
Contribution Plan and Nationwide Individual Deferred Compensation Plan.
The benefits under this subsection (vi) shall be paid in the same forms and at
the same times as the benefits under the applicable Plans described above are
paid (or would have been paid had Executive's interests in the applicable Plans
been fully vested), as in effect immediately before the Change of Control. The
benefits under Section 1.9, this subsection (vi) and subsection (vii) below
shall not result in any duplication of benefits.
(vii) Executive shall receive a supplemental benefit
under this Agreement equal to:
(A) the accrued benefits that Executive would have received
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan and Nationwide Excess Benefit Plan had Executive
received credit for eligibility, age, compensation and benefit accrual
purposes during the Severance Period under the Nationwide Retirement
Plan, Nationwide Supplemental Retirement Plan and Nationwide Excess
Benefit Plan, each as in effect immediately before the Change of
Control, calculated as if Executive had continued in employment during
the Severance Period, receiving compensation at the same times as
compensation is normally paid and in amounts equal to the Compensation,
and as if Executive had been fully vested in his benefits under such
Plans, reduced by
(B) the accrued benefits that Executive actually receives
under the Nationwide Retirement Plan, Nationwide Supplemental
Retirement Plan and Nationwide Excess Benefit Plan.
The benefits under this subsection (vii) shall be paid after the end of the
Severance Period in the same forms and at the same times as benefits under the
applicable Plans described above are paid (or would have been paid had
Executive's interests in the applicable Plans been fully vested), as in effect
immediately before the Change of Control.
(viii) The Company shall pay Executive a lump sum
cash payment equal to the matching contributions that the Company would have
made for Executive under the Nationwide Savings Plan and the Nationwide
Supplemental Defined Contribution Plan, as in effect immediately before the
Change of Control, as if Executive continued in employment for the Severance
Period receiving Executive's Compensation and as if Executive continued making
the same rate of contributions to the Nationwide Savings Plan as in effect
immediately before Executive's Termination Date.
(ix) The Company shall cause Executive to receive
service and age credit for purposes of eligibility, and service credit for
purposes of cost-sharing, under the Company's retiree medical plan until the end
of the Severance Period, as if Executive had continued in employment during that
period.
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(x) During the Severance Period, the Company shall
pay or reimburse Executive for the cost of outplacement assistance services (not
to exceed a total of $11,000) provided by any outplacement agency selected by
Executive.
(xi) During the Severance Period, the Company shall
pay or reimburse Executive for financial counseling services from the Company's
financial counseling vendor in an annual amount equal to the value of the
financial counseling services provided by the Company annually to Executive
immediately before the Change of Control.
(xii) Executive may continue to use the
Company-provided automobile used by Executive at Executive's Termination Date
during the Severance Period (at the cost and expense of the Company). At the end
of the Severance Period, Executive shall have the right to purchase the
automobile from the Company, at a price equal to the then fair market value of
the automobile.
(xiii) Executive shall have the right to retain the
computer, printer, fax machine and office furniture that was provided by the
Company for use by Executive at his residence at the Termination Date.
(xiv) During the Severance Period, the Company shall
continue to pay the dues on the country club membership that Executive received
in connection with his employment with the Company. At the end of the Severance
Period, Executive can elect to have the Company transfer the country club
membership to Executive, or Executive can elect to have the Company provide a
loss of membership payment to Executive under the terms of the Company's country
club membership program in effect for senior level executives at Executive's
Termination Date.
(xiv) Executive shall receive any other amounts
earned, accrued or owing but not yet paid under Section 1 above and any other
benefits in accordance with the terms of any applicable plans and programs of
the Company.
3.5. INCREASE IN PAYMENTS UPON A CHANGE OF CONTROL.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (a "Payment"), would constitute an "excess parachute payment"
within the meaning of Section 280G of the Code, the Company shall pay Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by Executive after deduction of any excise tax imposed under Section 4999 of the
Code, and any federal, state and local income tax, employment tax and excise tax
imposed upon the Gross-Up Payment, shall be equal to the Payment. For purposes
of determining the amount of the Gross-Up Payment, unless Executive specifies
that other rates apply, Executive shall be deemed to pay federal income tax and
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14
employment taxes at the highest marginal rate of federal income and employment
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 rate of taxation in the
state and locality of Executive's residence on Executive's Termination Date, net
of the maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes.
(b) All determinations to be made under this Section 3.5 shall
be made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and Executive
within 20 days after Executive's Termination Date. Any such determination by the
Accounting Firm shall be binding upon the Company and Executive. Within ten days
after the Accounting Firm's determination, the Company shall pay the Gross-Up
Payment to Executive.
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after Executive knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(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 reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order to contest such claim effectively, 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 additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any excise tax, income tax or employment tax, including
interest and penalties, with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3.5, the Company shall control all
proceedings taken in connection with such contest and,
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at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearing and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a termination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine. If the Company directs
Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis and shall
indemnify and hold Executive harmless, on an after-tax basis, from any excise
tax, income tax or employment tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to any imputed
income with respect to such advance. Any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to
which such contested amount is claimed to be due shall be limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder, and
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.
(d) If, after the receipt by Executive of an amount advanced
by the Company pursuant to this Section, Executive becomes entitled to receive
any refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of subsection (b)) promptly pay to the Company
the amount of such refund, together with any interest paid or credited thereon
after taxes applicable thereto. If, after the receipt by Executive of an amount
advanced by the Company pursuant to this Section, a determination is made that
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
(e) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b), (c) and (d) above
shall be borne solely by the Company. The Company agrees to indemnify and hold
harmless the Accounting Firm from any and all claims, damages and expenses
resulting from or relating to its determinations pursuant to subsections (b),
(c) and (d) above, except for claims, damages or expenses resulting from the
gross negligence or wilful misconduct of the Accounting Firm.
4. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings specified in this Section 4:
(a) "AFFILIATE" shall mean any subsidiary of the Company and
any other entity that, directly or indirectly, through one or more
intermediaries, is controlled by or is under common control with the Company, as
determined by the Board.
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(b) "CAUSE" shall mean any of the following grounds for
termination of Executive's employment:
(i) Executive shall have been convicted of a felony;
(ii) Executive neglects, refuses or fails to perform
his material duties to the Company (other than a failure resulting from
Executive's incapacity due to physical or mental illness), which
failure has continued for a period of at least 30 days after a written
notice of demand for substantial performance, signed by a duly
authorized officer of the Company, has been delivered to Executive
specifying the manner in which Executive has failed substantially to
perform;
(iii) Executive engages in misconduct in the
performance of his duties;
(iv) Executive engages in public conduct that is
harmful to the reputation of the Company;
(v) Executive breaches any written non-competition,
non-disclosure or non-solicitation agreement in effect with the
Company, including without limitation the provisions of Section 6 or 7
of this Agreement; or
(vi) Executive breaches the Company's written code of
business conduct and ethics.
(c) "CHANGE OF CONTROL" shall mean the happening of any of the
following events with respect to the Company, as described in subsections (i)
and (ii) below:
(i) The following events shall constitute a Change of
Control:
(A) A sale or other disposition of all or substantially all of
the assets of the Company;
(B) A liquidation or dissolution of the Company;
(C) A change in the composition of 50% or more of the members
of the Board as a result of a merger, financial arrangement (such as
the sale of surplus notes of the Company) or other corporate
transaction, such that the directors who were members of the Board
immediately before the transaction cease, within two years after the
transaction, to constitute 50% or more of the board of directors of the
Company or the successor corporation;
(D) Entry into an affiliation agreement giving any individual,
entity or group, other than policyholders, the power to direct or cause
the direction of the management and policies of the Company;
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(E) Entry into an agreement reinsuring all or substantially
all the business of the Company (other than through an Affiliate of the
Company); or
(F) Consummation of a sale or other disposition of a
controlling interest in the Company, other than to a direct or indirect
wholly owned subsidiary of the Company.
(ii) In addition to the foregoing, the Board may
determine, in its sole discretion, that any of the events described below shall
constitute a Change of Control for purposes of this Agreement. None of the
events described in this Section 4(c)(ii) shall be considered a Change of
Control for purposes of this Agreement unless the Board determines, in a written
resolution, that the event shall be considered a Change of Control for purposes
of this Agreement, and nothing in this Agreement shall obligate the Board to
make any such determination. The following events may constitute a Change of
Control if so designated by the Board:
(A) A demutualization of the Company;
(B) Establishment of a mutual holding company structure for
the Company; or
(C) Any reorganization or other event that the Board considers
appropriate to characterize as a Change of Control for purposes of this
Agreement.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "COMPENSATION" shall mean (i) Executive's annualized Base
Salary in effect at Executive's Termination Date (or immediately before a Change
of Control, if greater), plus (ii) the target annual bonus in effect for
Executive for the year in which the Termination Date occurs (or the year in
which a Change of Control occurs, if greater), together with (iii) all salary
reduction authorized amounts of such compensation under any of the Company's
benefit plans or programs for such calendar year. "Compensation" shall not
include the value of any long-term incentive compensation, restricted stock or
stock options or any exercise thereunder.
(f) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(g) "GOOD REASON" shall mean the occurrence of any of the
following events, except in connection with the termination of Executive's
employment for Disability, Cause, as a result of death or by Executive other
than for Good Reason and except as provided in the last sentence of this
subsection (g):
(i) A change in Executive's position and
responsibilities (including reporting responsibilities) that represents
a substantial diminution, as reasonably
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determined by the Board, of Executive's position and responsibilities
as in effect immediately prior thereto;
(ii) The relocation of the offices of the Company at
which Executive is principally employed to a location more than 50
miles from the location of such offices immediately prior to the
relocation, or the Company's requiring Executive to be based anywhere
other than such offices, except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations at the date of this Agreement;
(iii) The failure of the Company to provide Executive
with aggregate compensation (Base Salary and target long-term and
short-term incentive compensation) or aggregate benefits that are at
least equal (in terms of benefit levels and reward opportunities) to
those provided by the Company to Executive immediately before the
change; provided, however, that a change in compensation or benefits
for all executives of the Company, in which Executive is treated
similarly as all other executives of a comparable responsibility level,
shall not constitute Good Reason under this Agreement; or
(iv) The failure of the Company to obtain from its
successors the express assumption and agreement required under Section
16 hereof.
Notwithstanding the foregoing, Executive shall not have Good Reason for
termination if, within 60 days after the date on which Executive gives notice of
his termination, as provided in Section 5, the Company corrects the action or
failure to act that constitutes the grounds for termination for Good Reason as
set forth in Executive's notice of termination.
(h) "TERMINATION DATE" shall mean the effective date of the
termination of Executive's employment relationship with the Company pursuant to
this Agreement.
(i) "SEVERANCE PERIOD" shall mean (x) in the event of a
termination of employment described in Section 2.1, 2.2 or 2.3, the period
beginning on Executive's Termination Date and ending two years after the
Termination Date and (y) in the event of a termination of employment described
in Section 3.2 or 3.3, the period beginning on Executive's Termination Date and
ending three years after the Termination Date.
5. NOTICE OF TERMINATION. Any termination of Executive's employment
shall be communicated by a written notice of termination to the other party
hereto given in accordance with Section 15. The notice of termination shall (i)
indicate the specific termination provision in this Agreement relied upon, (ii)
briefly summarize the facts and circumstances deemed to provide a basis for a
termination of employment and the applicable provision hereof, and (iii) specify
the Termination Date in accordance with the requirements of this Agreement.
6. CONFIDENTIAL INFORMATION/PUBLIC ANNOUNCEMENT.
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(a) Executive recognizes and acknowledges that, by reason of
Executive's employment by and service to the Company during and, if applicable,
after the Employment Term, Executive will continue to have access to certain
confidential and proprietary information relating to the business of the
Company, which may include, but is not limited to, trade secrets, trade
"know-how", customer information, supplier information, cost and pricing
information, marketing and sales techniques, strategies and programs, computer
programs and software and financial information (collectively referred to as
"Confidential Information"). Executive acknowledges that such Confidential
Information is a valuable and unique asset of the Company and Executive
covenants that Executive will not, unless expressly authorized in writing by the
Board, at any time during the course of Executive's employment, use any
Confidential Information or divulge or disclose any Confidential Information to
any person, firm or corporation except in connection with the performance of
Executive's duties for the Company and in a manner consistent with the Company's
policies regarding Confidential Information. Executive also covenants that at
any time after the termination of such employment, directly or indirectly,
Executive will not use any Confidential Information or divulge or disclose any
Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Executive or except when
required to do so by law or legal process, in which case Executive will inform
the Company in writing promptly of such required disclosure, but in any event at
least two business days prior to disclosure. All written Confidential
Information (including, without limitation, in any computer or other electronic
format) which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Except as required in the
performance of Executive's duties for the Company, or unless expressly
authorized in writing by the Board, Executive shall not remove any written
Confidential Information from the Company's premises, except in connection with
the performance of Executive's duties for the Company and in a manner consistent
with the Company's policies regarding Confidential Information. Upon termination
of Executive's employment, Executive agrees immediately to return to the Company
all written Confidential Information in Executive's possession. For the purposes
of this Section 6, the term "Company" shall be deemed to include the Company,
its Affiliates and their successors.
(b) The Executive and the Company shall mutually agree on the
timing, substance and other elements of a press release or any other
announcement pertaining to Executive's employment by the Company. Executive and
the Company agree not to communicate or disclose Executive's position with the
Company or the facts and circumstances leading up to this agreement, exclusive
of attorneys, agents and persons with a need to know, until such mutually
agreeable press release, other announcement or public disclosure is made.
7. NON-COMPETITION; NON-SOLICITATION.
(a) During Executive's employment by the Company and for a
period of one year after Executive's termination of employment for any reason,
Executive will not, except with the prior written consent of the Board, directly
or indirectly, own, manage, operate, join, control, finance or participate in
the ownership, management, operation, control or financing of, or be
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connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit Executive's name
to be used in connection with, any business or enterprise which is engaged in
any financial services, insurance or other business that is competitive with any
business or enterprise in which the Company is engaged, anywhere in the world,
during Executive's employment or (with respect to the application of this
covenant after Executive's termination of employment) during the two year period
preceding Executive's termination of employment. The parties acknowledge that
the Company engages in its business on a worldwide basis, and Executive
acknowledges that his responsibilities extend to the Company's worldwide
operations.
(b) The foregoing restrictions shall not be construed to
prohibit the ownership by Executive of less than five percent of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Exchange Act,
provided that such ownership represents a passive investment and that neither
Executive nor any group of persons including Executive in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising Executive's rights as a shareholder, or seeks to
do any of the foregoing. Further, the foregoing restrictions shall not prohibit
Executive from engaging in private law practice, and shall not prohibit
Executive from representing any clients, whether or not engaged in any financial
services, insurance or other business that is competitive with any business or
enterprise in which the Company is engaged pursuant to such private law
practice.
(c) Executive further covenants and agrees that during
Executive's employment by the Company and for a period of one year thereafter,
Executive will not, except with the prior written consent of the Board, directly
or indirectly, solicit or hire, or encourage the solicitation or hiring of, any
person who was a managerial or higher level employee of the Company at any time
during the term of Executive's employment by the Company by any employer other
than the Company for any position as an employee, independent contractor,
consultant or otherwise. The foregoing covenant of Executive shall not apply to
any person after 12 months have elapsed after the date on which such person's
employment by the Company has terminated.
(d) The covenants described in this Section 7 shall continue
to apply during the period specified herein after Executive's termination of
employment for any reason, without regard to whether Executive executes a
Release or receives any severance benefits as a result of such termination. If
Executive breaches any of the covenants described in this Section 7, the
applicable period during which the covenant applies shall be tolled during the
period of the breach.
(e) For the purposes of this Section 7, the term "Company"
shall be deemed to include the Company, its Affiliates and their successors.
8. EQUITABLE RELIEF.
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(a) Executive acknowledges and agrees that the restrictions
contained in Sections 6 and 7 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by the
Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) Executive has been advised by the
Company to consult Executive's own legal counsel in respect of this Agreement,
and (ii) Executive has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with Executive's counsel.
(b) Executive further acknowledges and agrees that a breach of
any of the restrictions in Sections 6 and 7 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 6 or 7 hereof, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled. In the event that any of the provisions of
Sections 6 or 7 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provision shall be
amended to the extent of the maximum time, geographic, service, or other
limitations permitted by applicable law, that such amendment shall apply only
within the jurisdiction of the court that made such adjudication and that the
provision otherwise be enforced to the maximum extent permitted by law.
(c) Notwithstanding anything in this Agreement to the
contrary, if Executive breaches any of Executive's obligations under Sections 6
or 7 hereof, the Company shall thereafter be obligated only for the compensation
and other benefits provided in any Company benefit plans, policies or practices
then applicable to Executive in accordance with the terms thereof, and all
payments under Sections 1.9, 2 and 3 of this Agreement shall cease.
(d) Executive irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of Section 6 or 7 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may be
brought in a United States District Court for Ohio, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Columbus, Ohio, (ii) consents to the non-exclusive jurisdiction
of any such court in any such suit, action or proceeding, and (iii) waives any
objection which Executive may have to the laying of venue of any such suit,
action or proceeding in any such court. Executive also irrevocably and
unconditionally consents to the service of any process, pleadings, notices or
other papers in a manner permitted by the notice provisions of Section 15
hereof.
(e) Executive agrees that for a period of three years
following the termination of Executive's employment for any reason, Executive
will provide, and at all times after the date
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hereof the Company may similarly provide, a copy of Sections 6 and 7 hereof to
any business or enterprise (i) which Executive may directly or indirectly own,
manage, operate, finance, join, control or in which Executive may participate in
the ownership, management, operation, financing, or control, or (ii) with which
Executive may be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise, or in connection with
which Executive may use or permit to be used Executive's name; provided,
however, that this provision shall not apply in respect of Section 7 after
expiration of the time periods set forth therein.
(f) For the purposes of this Section 8, the term "Company"
shall be deemed to include the Company, its Affiliates and their successors.
9. INDEMNIFICATION. The Company shall indemnify Executive with respect
to his actions in the performance of his duties as set forth in Section 1.3 to
the fullest extent permitted by the Company's Amended and Restated Code of
Bylaws as in effect from time to time.
10. NON-EXCLUSIVITY OF RIGHTS; RESIGNATION FROM BOARDS.
(a) Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in or rights under any benefit,
bonus, incentive or other plan or program provided by the Company and for which
Executive may qualify; provided, however, that if Executive becomes entitled to
and receives the payments described in Section 2.4(b) or 3.4(b) of this
Agreement, Executive hereby waives Executive's right to receive payments under
any severance plan or similar program applicable to all employees of the
Company.
(b) If Executive's employment with the Company terminates for
any reason, Executive shall immediately resign from all boards of directors of
the Company, any Affiliates and any other entities for which Executive serves as
a representative of the Company.
11. SURVIVORSHIP. The respective rights and obligations of the parties
under this Agreement (including without limitation Sections 6, 7 and 8) shall
survive any termination of Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.
12. MITIGATION. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise, and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.
13. BENEFIT PLANS; OUTSTANDING AWARDS. All references in this Agreement
to specific retirement or other benefit plans of the Company shall be deemed to
include any successor retirement or other benefit plans. The terms of
Executive's outstanding stock options, restricted stock and long-term incentive
awards are hereby amended to provide that, without adversely affecting any
rights that Executive has under such award agreements, the award agreements are
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amended to provide for the accelerated vesting and payments upon termination of
employment as provided in Sections 2.4(b)(iv), 2.4(b)(v), 3.4(b)(iv) and
3.4(b)(v) of this Agreement, to the extent consistent with the applicable plans.
In all respects not amended, the provisions of such outstanding awards shall
remain in effect according to their terms.
14. ARBITRATION; EXPENSES. In the event of any dispute under the
provisions of this Agreement, other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Columbus, Ohio in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. In the event of a dispute, each
party shall be responsible for its own expenses (including attorneys' fees)
relating to the conduct of the arbitration, and the parties shall share equally
the fees of the American Arbitration Association. Each party shall give the
other party written notice as described in Section 15 of its intent to submit a
claim under this Agreement to arbitration and a description of the basis of such
claim, within six months after the event giving rise to the claim occurs.
15. NOTICES. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to:
Nationwide Mutual Insurance Company
Xxx Xxxxxxxxxx Xxxxx, 0-00-00
Xxxxxxxx, XX 00000
Attention: Senior Vice President - Chief Human Resources Officer
Senior Vice President - General Counsel
With a required copy (not constituting notice) to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esquire
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If to Executive, to:
Xxxxxxx Xxxxxx
0000 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
With a required copy (not constituting notice) to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esquire
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
16. CONTENTS OF AGREEMENT; AMENDMENT AND ASSIGNMENT.
(a) This Agreement and the Exhibits attached hereto set forth
the entire understanding between the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment approved by the Board and executed on its behalf by a
duly authorized officer of the Company and by Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Executive
under this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company shall 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, within 15 days of such succession, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent as
the Company would be required to perform if no such succession had taken place.
17. SEVERABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
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25
18. REMEDIES CUMULATIVE; NO WAIVER. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or power
under this Agreement or existing at law or in equity shall be construed as a
waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.
19. BENEFICIARIES/REFERENCES. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or other
legal representative.
20. MISCELLANEOUS. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.
21. WITHHOLDING; TAXES. All payments under this Agreement shall be made
subject to applicable tax withholding, and the Company shall withhold from any
payments under this Agreement all federal, state and local taxes as the Company
is required to withhold pursuant to any law or governmental rule or regulation.
Except as specifically provided otherwise in this Agreement, Executive shall be
responsible for all taxes applicable to amounts payable under this Agreement and
payments under this Agreement shall not be grossed up for taxes.
22. GOVERNING LAW. This Agreement shall be governed by and interpreted
under the laws of the State of Ohio without giving effect to any conflict of
laws provisions.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
NATIONWIDE MUTUAL INSURANCE COMPANY
By:
----------------------------------
Name:
Title:
Page 25
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EXHIBIT A
---------
NATIONWIDE BENEFITS - KEY COMPONENTS
XXXXXXX XXXXXX
The key components of the current Nationwide benefits for Executive are
described below. All benefits are subject to the terms of the applicable plans
and programs.
SHORT TERM INCENTIVE
- Performance Incentive Plan (PIP)
- PIP: 80% of base salary is target = $360,000 (annualized)
Maximum is not determinable, but is at least 160% of base salary =
$720,000+
- Exceptions; Full-year participation for 2000 plan year; guaranteed
3/2001 payment of no less than $500,000, and 3/2002 payment at no less
than target, if Executive remains an employee through the payment date
or payment is otherwise due under the Agreement
LONG-TERM INCENTIVE (HAS 2 COMPONENTS: LTPP & LTEP)
NFS, Inc. Equity
----------------
Long-term Equity (LTEP)
-----------------------
- Participation in NFS, Inc. Long-Term Equity Plan (LTEP)
- Grants require NFS Compensation Committee approval
- 2000 grant = 24,200 shares of non-qualified NFS stock options
- Vesting is _ per year (100% vesting after 3 years)
- Total option term is 10 years
- Option price is FMV on grant date
- Will have the standard provisions for executive grants
- Future participation consistent with executive grade level
- Hiring Inducement Exception:
* 5,000 shares of NFS restricted stock
* Restrictions lapse: 50% after 3 years, 75% after 4 years, 100%
after 5 years
* Restricted stock carries dividend and voting rights
* Will have the standard provisions for executive grants
Long-Term Performance Plan (LTPP)
---------------------------------
- Participation in Nationwide Insurance (P/C) Long-Term Performance Plan
(LTPP)
- 2000-2002 performance cycle grant = $434,000 target award opportunity
(guaranteed if Executive remains an employee through the payout date or
payment is otherwise due under the Agreement)
- Payout maximum is 200% of target = $868,000
- Exception: Full cycle participation; not prorated for new hire
- Payout date: March 2003
- Requires Nationwide Compensation Committee approval
- Will have the standard provisions for executive grants
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27
NATIONWIDE BENEFITS - KEY COMPONENTS
XXXXXXX XXXXXX
PAGE 2
Long-Term Performance Plan (LTPP) (continued)
---------------------------------
- Future participation consistent with executive grade level
- Hiring Inducement Exception:
* Special participation in the 1999-2001 LTPP performance cycle
* $362,000 target award opportunity (guaranteed if Executive
remains an employee through the payout date or payment is
otherwise due under the Agreement)
* _ pro-rated participation
* Payout date: March 2002
* Will have the standard provisions for executive grants
SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFIT
- Described in Employment Agreement
TERMINATION PROVISIONS
- Described in Employment Agreement
COMPANY CAR
- Executive perquisite automobile as provided by Nationwide policy;
includes underground Executive Garage Parking; car maintenance and wash
service included
VACATION
- Automatic 4 weeks vacation for elected officers, including 2000
- Award 11 holiday/personal days per year
- Award 3 family illness days per year
401(K)-NATIONWIDE SAVINGS PLAN (NSP)
- Tax-qualified profit sharing plan
- 50% match on first 6%
- 66% match on first 6% effective January, 2001
- Pays a lump sum benefit, or can be paid monthly or in installments
based on life expectancy
- Eligible after 1 month of service
- Covered compensation maximum under tax code (currently $170,000)
- 15 investment funds, daily valuation, loans, limited in-service
withdrawals
RETIREMENT
- Nationwide Retirement Plan - defined benefit pension plan
- Covered compensation subject to tax code limit
INDIVIDUAL DEFERRED COMPENSATION
- Nationwide plan that offers multiple investment options to tax defer
base salary and/or cash incentive compensation until retirement,
termination, or other specified period during employment
- Nationwide executives have the option to defer up to 100% of base
salary and incentives
- Elections are made at hire and every year
SUPPLEMENTAL RETIREMENT PLAN
- Non-qualified plan designed to "make up" lost retirement benefits
limited by IRS (covered compensation, service, integration)
A-2
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NATIONWIDE BENEFITS - KEY COMPONENTS
XXXXXXX XXXXXX
PAGE 3
SUPPLEMENTAL DEFINED CONTRIBUTION PLAN
- Non-qualified plan designed to "make up" lost 401(k) company match
contributions limited by IRS (covered compensation)
TEMPORARY HOUSING AND TRANSPORTATION EXPENSE BUDGET
- An expense budget will be established by the Company for up to 12
months for the purpose of providing temporary corporate housing and
commuting to and from Executive's current home to permanent Columbus
residence as needed
EXECUTIVE RELOCATION PACKAGE
- Complete executive relocation package provided
COUNTRY CLUB MEMBERSHIP
- Nationwide will sponsor a country club membership of Executive's
choice; includes initiation fees and membership dues
EXECUTIVE ON LINE (EOL) PROGRAM
- Nationwide will provide home-based PC, printing, faxing, copying, and
integration with office databases
EXECUTIVE DINING ROOM
- Use privileges for the Executive Dining Room
FINANCIAL PLANNING SERVICES
- Asset Management Group provides financial planning services for
executives
- Available to Nationwide Senior Officer Council or Executive Management
Council
EXECUTIVE PHYSICALS PROGRAM
- Provided to Executive at no cost
HOME SECURITY SERVICES
- Provided to Executive at no cost
COMPANY PLANE
- Executive officers can request use of Company plane for business
purposes; available based on need to groups of employees.
A-3
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EXHIBIT B
SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE
WHEREAS ______________ ("Executive") has been employed by
________________ (the "Company"), and because the Executive's employment with
the Company will terminate effective _____________, Executive and the Company
agree as follows:
1. In consideration of the promises of the Company set forth
in paragraph 3 below, Executive, and his or her heirs, executors and
administrators, intending to be legally bound, hereby permanently and
irrevocably agrees to the termination of Executive's employment with the Company
effective on _____________ (or such earlier date as may be communicated in
writing by ___________) (the "Termination Date") and hereby REMISE, RELEASE and
FOREVER DISCHARGE the Company and any individual or organization related to the
Company and against whom or which Executive could assert a claim, including
_____________________ (hereinafter referred to collectively as "Releasees"), of
and from any and all causes of action, suits, debts, claims and demands
whatsoever, which he had, has, or may have against Releasees up until the date
of his execution of this Agreement and General Release, other than the Release
Exclusions (as defined below). Particularly, but without limitation, Executive
so releases all claims relating in any way to his employment or the termination
of his employment relationship with the Company, including without limitation
claims under the Ohio Fair Employment Practice Law, Ohio Rev. Code Xxx. ss.
4112.01 ET SEQ. ("Ohio Fair Employment Practice Law"), Title VII of the Civil
Rights Act of 1964, AS AMENDED, ss. 42 U.S.C. 2000e ET SEQ. ("Title VII"), the
Americans with Disabilities Act, 42 U.S.C. ss. 12101 ET SEQ. (thE "ADA"), the
Employee Retirement Income Security Act 29 U.S.C. ss. 1001 ET SEQ. ("ERISA"),
the Age Discrimination in Employment Act, AS AMENDED 29 U.S.C. ss. 621 ET SEQ.
(the "ADEA"), any common law claims and all claims for counsel fees and costs.
Executive agrees that Executive will not file any charge of discrimination
against the Company or any of Releasees under the Ohio Fair Employment Practice
Law, Title VII, ERISA, the ADA or the ADEA, or any other federal, state or local
law. Executive further agrees and covenants that should any person,
organization, or other entity file, charge, claim, xxx, or cause or permit to be
filed any civil action, suit or legal proceeding involving any matter occurring
at any time in the past, Executive will not seek or accept any personal relief
in such civil action, suit or legal proceeding. This release also does not give
up Executive's rights, if any, to the following claims that Executive has or may
have (the "Release Exclusions"): (i) to seek indemnification pursuant to
applicable state law and the Company's By-Laws and (ii) to seek coverage under
directors' and officers' liability insurance policies maintained or required to
be maintained by the Company.
2. Executive shall promptly take all steps necessary to
dismiss with prejudice any and all pending complaints, charges and grievances
against the Company or Releasees, regardless of whether they are or have been
filed internally or externally. Executive waives his or her right to institute
or have pursued on his behalf any further complaints or grievances against the
Company or Releasees for any matter occurring up to the present, regardless of
the forum, other than the Release Exclusions. Executive also agrees that the
payment in Paragraph 3 is in full satisfaction of any liability or obligation to
Executive under the Employment Agreement, dated as of January 1, 2000, between
the Company and Executive.
3. In full consideration of Executive's execution of this
Separation of Employment Agreement and General Release, and his or her agreement
to be legally bound by its terms, the Company will provide Executive with the
following consideration, to which Executive acknowledges he or she would not
otherwise be entitled:
(a)-(b) [Refer to applicable sections of Employment Agreement]
Executive understands and expressly agrees that each
benefit enhancement and payment under paragraphs (a) and (b) above
is expressly contingent on Executive's continued employment
through _________________, or such earlier date as may be
communicated in writing by the Company.
B-1
30
Except as set forth in this Agreement, it is expressly agreed
and understood that Releasees do not have, and will not have, any obligation to
provide Executive at any time in the future with any payments, benefits or
considerations other than those recited in this paragraph, or those required by
law, other than under the terms of any benefit plans which provide benefits or
payments to former employees according to their terms and other than the Release
Exclusions.
4. If Executive brings a legal action against the Company or
Releasees in contravention of any part of this Agreement and General Release,
including paragraph 1 of this Agreement, Executive agrees and acknowledges that
he or she will reimburse the Company or Releasees for all their reasonable
attorneys' fees in defending such action.
5. The parties acknowledge that the performance of the
promises of each are expressly contingent upon the fulfillment and satisfaction
of the obligations of the other party as set forth in this Agreement and General
Release.
6. Executive hereby agrees and recognizes that, as of his or
her Termination Date, Executive's employment relationship with the Company or
Releasees will be permanently and irrevocably severed and that Executive waives
his or her right to be hired or rehired in the future by the Company and any of
its affiliates. It is further agreed and understood that Executive will continue
to be available and cooperate in a reasonable manner in providing assistance to
the Company in concluding any matters which are reasonably related to the duties
and responsibilities which Executive had while employed by the Company, provided
that such cooperation and assistance does not interfere with any subsequent
employment obtained by Executive.
7. Executive agrees and acknowledges that this Agreement is
not and shall not be construed to be an admission of any violation of any
federal, state or local statute or regulation, or of any duty owed by Releasees.
8. Executive agrees, covenants and promises that Executive
will not communicate or disclose the terms of this Agreement and General Release
to any persons with the exception of members of Executive's immediate family and
Executive's attorney and financial advisor. Executive further agrees to refrain
from using or disclosing for the benefit of any person, business or entity other
than the Company, any confidential information relating to the Company's
business, which includes but is not limited to information relating to the
Company's employees, processors, suppliers, customers, services, plans,
marketing studies or analyses, and financial or business affairs. Executive
represents that any and all documents containing such confidential information
will be returned to the Company upon termination of employment.
9. This Agreement and General Release, and the provisions of
the Employment Agreement that survive Executive's termination of employment,
constitute the complete and entire understanding between the parties, and
supersede any and all prior agreements and understandings between the parties to
the extent they are inconsistent with this Agreement.
10. Executive hereby certifies that Executive has read the
terms of this Agreement and General Release, that Executive has been advised by
the Company to consult with an attorney of his or her own choice prior to
executing this Agreement, that Executive has had an opportunity to do so, and
that Executive understands this Agreement's terms and effects. Executive further
certifies that neither Releasees nor any representative of Releasees has made
any representations to Executive concerning this Agreement and General Release
other than those contained herein.
B-2
31
11. Executive acknowledges that Executive has been informed
that this Agreement and General Release includes a waiver of claims under the
ADEA, and that Executive has the right to consider this Agreement and General
Release for a period of 21 days. Executive also understands that he or she has
the right to revoke this Agreement and General Release for a period of seven
days following his execution of this Agreement and General Release by giving
written notice to the Company in care of ___________________, Xxx Xxxxxxxxxx
Xxxxx, Xxxxxxxx, XX 00000.
12. If any provision of this Agreement and General Release is
deemed invalid, the remaining provisions shall not be affected.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
the parties have executed the foregoing Agreement and General Release on the
dates indicated below.
WITNESS:
-------------------- -----------------------------
Executive
DATE:
-----------------------
WITNESS: BY:
-------------------- ------------------------
TITLE:
---------------------
DATE:
----------------------
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