EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of the
2nd day of November, 2007 by and between Fifth Third Bancorp (“Fifth Third”), an Ohio corporation,
and Xxxxxx X. Xxxxx (“Executive”), an individual residing in Mecklenburg County, North Carolina.
(the Executive and Fifth Third may be referred to hereinafter as the “Parties”).
WITNESSETH:
WHEREAS, Executive is currently employed by First Charter Corporation (“First Charter”) and is
highly knowledgeable about the business and operations of First Charter’s subsidiaries and other
affiliated organizations and the respective markets and customers that they serve;
WHEREAS, Executive is a valued executive of First Charter and its wholly owned subsidiary,
First Charter Bank (the “Bank”) which are merging into Fifth Third (the “Merger”), and, in order to
induce Executive to continue employment with Fifth Third and to enhance Executive’s job security,
Fifth Third desires to enter into this Agreement to provide compensation to Executive in certain
events, including but not limited to Executive’s termination of employment following a change in
control of Fifth Third, as hereinafter provided;
WHEREAS, Fifth Third desires to employ Executive upon the Effective Date of the acquisition of
First Charter (the “Effective Date”), and Executive desires to be employed by Fifth Third after the
Effective Date, subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive is party to an “Amended and Restated Employment Agreement” dated
December 19, 2001, and as amended thereafter, with First Charter (the “First Charter Employment
Agreement”) and the parties hereto desire to terminate the First Charter Employment Agreement for
valuable consideration as set forth in this Agreement; and,
NOW, THEREFORE, in consideration of the terms contained herein, including the compensation
Fifth Third agrees to pay to Executive upon certain events, Executive’s employment with Fifth
Third, Executive’s covenants and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Fifth Third and Executive agree as follows:
1. Employment and Duties.
a. During the Employment Term (as defined in Section 3 below), Fifth Third hereby
employs Executive, and Executive hereby agrees to serve, as President & CEO of the Fifth
Third affiliate bank headquartered in Charlotte, North Carolina. As such, Executive shall
have responsibilities, duties and authority reasonably accorded to, expected of, and
consistent with Executive’s position as a President & CEO of a Fifth
Third affiliate. Executive shall also perform the duties and exercise the powers and
functions that from time to time may be assigned or vested in him by senior management or
the Board of Directors of Fifth Third Bancorp (the “Board”) in relation to: (i) Fifth Third;
and/or (ii) any subsidiary or affiliated company of Fifth Third, including general
responsibility for the management and operations of Fifth Third. Executive hereby accepts
this employment upon the terms and conditions herein contained, and subject to Section 1(c),
agrees to devote substantially all of his business time, attention and best efforts to
promote and further the business of Fifth Third.
b. Executive shall faithfully adhere to, execute and fulfill all lawful requests,
instructions and policies made by the Board or its authorized agent(s).
c. Except as specifically authorized in advance by senior management, Executive shall
not, during the Employment Term (as defined in Section 3 below), be engaged as an employee
or otherwise in any other business or commercial activity pursued for gain, profit or other
pecuniary advantage. The foregoing limitations also shall not be construed as prohibiting
Executive from making personal investments in such form or manner as will neither require
his services in the operation or affairs of the companies or enterprises in which such
investments are made nor violate the terms of Section 3 hereof, provided, however, that
during the Employment Term (as defined in Section 3 below), Executive may not beneficially
own the stock or options to acquire stock totaling more than 5% of the outstanding shares of
any corporation or entity, or otherwise acquire or agree to acquire a significant present or
future equity or other proprietorship interest, whether as a stockholder, partner,
proprietor, or otherwise, with any enterprise, business or division thereof, that is engaged
in Competitive Activity (as defined in Section 11 below) with Fifth Third.
2. Compensation. For all services rendered by Executive during the Employment Term
(as defined in Section 3 below), Fifth Third shall compensate Executive as follows:
a. Base Salary. During the Employment Term (as defined in Section 3 below), Fifth
Third will pay Executive a bi-weekly base salary as compensation for Executive’s services
hereunder of $16,346.40, equivalent to $425,006.40 per year (the “Base Salary”), payable on
a regular basis in accordance with Fifth Third’s standard payroll procedures but not less
than monthly, less applicable deductions required by law. On at least an annual basis
thereafter during the Employment Term (as defined in Section 3 below), Fifth Third will
review Executive’s performance and, based upon the recommendations of the Compensation
Committee, may increase such Base Salary if, in its discretion, such adjustment is
warranted.
b. Bonus. In addition to the Base Salary set forth above, during the Employment Term
(as set forth in Section 3 below) and as long as Executive remains actively employed by
Fifth Third, Executive will participate in Fifth Third’s Variable Compensation Plan with a
target payment of 60% of Base Salary and a maximum potential of 120% of Base Salary. This
bonus will be paid at the same time and on similar terms as similarly situated employees
receive their Bonus payment. In addition, Executive will be eligible for annual long term
incentive grants up to $600,000 on the
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same terms and conditions as similarly situated employees. These amounts will be
determined by one or more arrangements including but not limited to the 2004 Fifth Third
Bancorp Incentive Compensation Plan, as such may be in effect from time to time
(collectively, the “Bonus”), the amount of which shall be determined in the sole discretion
of the Board. In making its determination of the amount of the Bonus, if any, to be paid,
the Board may take into account, among other things: (i) Executive’s qualifications and
experience; (ii) the duties and responsibilities of Executive; (iii) the services performed
and the contributions of Executive to the success of Fifth Third; (iv) compensation patterns
in similar businesses for similar executives; (v) Fifth Third’s financial resources to pay
the bonus; and (vi) such other factors as the Board shall deem to be relevant.
c. Executive Perquisites, Benefits and Other Compensation. During the Employment Term
(as defined in Section 3 below), Executive shall be entitled to receive additional benefits
and compensation from Fifth Third in such form and to such extent as specified below:
i. Payment of all or a portion of premiums for coverage for Executive and his
dependent family members under health, hospitalization, disability, dental, life and
other insurance plans that Fifth Third may have in effect from time to time.
Benefits provided to Executive under this Section 2(c)(ii) will require Executive to
pay the same proportion of premiums for, and shall provide benefits at least equal
to, the benefits then provided to Fifth Third’s other executive employees.
ii. Reimbursement for all business travel and other out-of-pocket expenses
reasonably incurred by Executive in the performance of his services pursuant to this
Agreement. All reimbursable expenses shall be appropriately documented in
reasonable detail by Executive upon submission of any request for reimbursement, and
in a format and manner consistent with Fifth Third’s expense reporting policy.
iii. Fifth Third shall provide Executive with other employee perquisites as may
be available to or deemed appropriate for Executive by the Board and participation
in all other company-wide employee benefits, including but not limited to, any
qualified and/or nonqualified retirements plans sponsored by Fifth Third, as such
are available from time to time. Such current additional perquisites are listed on
Schedule A, which is attached hereto and incorporated herein, and may be amended
from time to time in the discretion of the Board. In addition, Schedule B, which is
attached hereto and incorporated herein, lists those other supplemental benefits in
which Executive is entitled to participate, and may be amended or modified from time
to time.
3. Term of Agreement. The Parties intend that the term of this agreement provide
the Executive with a three year contract that will expire, unless the Agreement is
terminated sooner as provided in Sections 5 or 7. The term of Executive’s employment under
this Agreement shall be deemed to have commenced on the Effective Date and
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shall be for a period of three years unless sooner terminated as provided in Sections 5 or
7. Executive’s term of employment with Fifth Third under this Agreement is referred to as
the “Employment Term.”
4. Certain Termination of Employment Agreement Payments. Immediately if possible,
but no later than thirty (30) days, after the Effective Date, Employer shall pay to
Executive a lump-sum cash payment in the amount of $353,960.00 as compensation for
terminating the First Charter Employment Agreement, which will terminate and become null and
void upon the Effective Date. No further benefits will be due to Executive under the First
Charter Employment Agreement after the Effective Date.
5. Termination. In addition to the provisions set forth in Section 3 above, the
Employment Term shall terminate immediately upon the occurrence of any of the following
events: (a) immediately upon the death of Executive; (b) upon the Disability of Executive
(as defined below); (c) upon the effective date of Resignation by Executive Without Good
Reason (as defined below); (d) upon the effective date of Resignation by Executive For Good
Reason (as defined below); (e) upon the 60th day following the date senior management or the
Board gives Executive notice of Termination Without Cause (as defined below); or (f) upon
the close of business on the date the Board gives Executive notice of Termination for Cause
(as defined below).
a. Disability. “Disability” shall mean the inability of the Executive to engage in his
profession by reason of any medically determinable physical or mental impairment which can
be expected to result in death or which is to last or can be expected to last for a
continuous period of not less than twelve months, as determined by the Board in its sole
discretion upon certification thereof by qualified physicians selected by the Board after
such physician examines the Executive.
b. Resignation Without Good Reason. “Resignation Without Good Reason” shall mean any
voluntary termination or resignation by Executive for any reason other than death of
Executive, “Disability” or “Resignation for Good Reason”. Executive is required to give at
least 60 days advance written notice of Resignation Without Good Reason to senior
management, and Fifth Third is entitled upon receiving such notice, in its discretion, to
accept such resignation as effective on: (i) the resignation date proposed by Executive, or
(ii) such other earlier date designated by Fifth Third. In addition, Fifth Third will be
required to pay Executive his regular salary and benefits only through Executive’s final
resignation date as agreed to or revised by senior management, regardless of whether
Executive is actually permitted to perform any services for Fifth Third during that period.
c. Resignation For Good Reason. “Resignation For Good Reason” shall mean any voluntary
termination or resignation by Executive for: (i) a material reduction in Executive’s
position, duties, responsibilities or status, or a change in Executive’s title resulting in
a material reduction in his responsibilities or position with Fifth Third, in either case
without Executive’s consent, but excluding for this purpose any isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied promptly by Fifth Third
after receiving notice from Executive and further excluding any
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such reductions or changes made in good faith to conform with generally accepted
industry standards for Executive’s position; (ii) a reduction in the rate of Executive’s
Base Salary or a decrease in any Bonus to which Executive was entitled, in either case
without Executive’s consent; provided, however, that a decrease in Executive’s Bonus
amount shall not constitute “Good Reason” and nothing herein shall be construed to guarantee
such bonus awards if performance, either by Fifth Third or Executive, is below such targets
as may reasonably and in good faith be set forth in the 2004 Fifth Third Bancorp Long Term
Incentive Plan or other incentive arrangements; or (iii) the relocation of Executive,
without his consent, to a location outside a fifty (50) mile radius of Charlotte, North
Carolina.
Executive is required to give at least fifteen (15) days advance written notice of
Resignation For Good Reason to senior management, and Fifth Third is entitled upon receiving
such notice, in its discretion, to accept such resignation as effective on the resignation
date proposed by Executive, or such other earlier date designated by senior management.
d. Termination Without Cause. “Termination Without Cause” shall mean any termination
of the employment of Executive by Fifth Third for any reason other than termination due to
the retirement or death of Executive, “Disability” or “Termination for Cause”.
e. Termination For Cause. “Termination for Cause” shall mean termination of the
employment of Executive by Fifth Third as the result of Executive’s: (i) willful misconduct
of a material nature in connection with the performance of his duties as an employee; (ii)
use of alcohol during working hours beyond that customarily authorized in the performance of
Executive’s job duties, repeated use of alcohol after working hours that materially
interferes with Executive’s duties under this Agreement, use of illegal drugs, or violation
of Fifth Third’s drug and/or alcohol policies; (iii) conviction, guilty plea or plea of nolo
contendere for any crime involving moral turpitude or for any felony; (iv) embezzlement or
theft from Fifth Third, the Bank or any of their respective customers and employees; (v)
gross inattention to or dereliction of duty; (vi) commission or omission of any act of fraud
or dishonesty in connection with Executive’s employment with Fifth Third or the Bank; (vii)
breach of any fiduciary duty to Fifth Third, including the duty of loyalty; (viii) breach of
the obligations set forth in Sections 7-9 of this Agreement; (ix) breach, threatened breach
or failure to perform any other provision of this Agreement; or (x) performance of any other
willful act(s) which Executive knew or reasonably should have known would be materially
detrimental to Fifth Third.
6. Rights Upon Termination. Following the termination of the Employment Term for
any reason in Sections 4 or 6, (i) Executive shall be entitled to any earned but unpaid Base
Salary, if any, due at the time of termination of the Employment Term (ii) Executive shall
have the general right to elect certain coverage continuation under COBRA, and (iii)
Executive will not forfeit any vested stock options or vested 401(k) or pension benefits
with Fifth Third and the Bank, if any. Thereafter, except for any benefits or payments which
may be due as set forth in Section 5(a), 5(b), 5(d), 5(e) or Section 7(a), 7(b), 7(c) and
7(d) below, Executive shall not be entitled to receive any additional
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compensation, wages, bonuses, incentive pay, commissions, severance pay, consideration
and/or benefits of any kind from Fifth Third hereunder upon the termination of the
Employment Term.
a. Death. If termination of the Employment Term occurs at any time due to the death of
Executive, then Executive’s personal representative shall be paid all earned but unpaid Base
Salary and accrued Bonus (as those terms are described in Section 2) and an
additional amount representing one (1) year’s Base Salary, such amounts to be paid in the
same manner as provided in Section 2. In addition, all supplemental benefits, awards,
grants and options under any Fifth Third or Bank supplemental agreement, stock option or
grant will be fully vested notwithstanding any other provision in such plan or grant.
b. Disability. If termination of the Employment Term occurs at any time due to the
Disability of Executive, then Executive shall be entitled to receive all earned but unpaid
Base Salary and accrued Bonus (as those terms are described in Section 2) and an
additional amount representing one (1) year’s Base Salary, such amounts to be paid in the
same manner as provided in Section 2, less any amounts which Executive receives from
Fifth Third’s long-term disability plan. In addition, all supplemental benefits, awards,
grants and options under any Fifth Third or Bank supplemental agreement, stock option or
grant will be fully vested notwithstanding any other provision in such plan or grant.
c. Termination “For Cause” or Resignation “Without Good Reason". If termination of the
Employment Term occurs at any time due to termination by Fifth Third “For Cause” or due to
resignation by Executive “Without Good Reason”, then Executive shall be entitled only to
receive all earned but unpaid Base Salary, unreimbursed expenses and/or accrued, vested
stock options and vested 401(k) or pension benefits through the effective date of the
Termination “For Cause” or Resignation “Without Good Reason”.
d. Termination “Without Cause” or Resignation “For Good Reason". If termination of the
Employment Term occurs at any time due to termination by Fifth Third “Without Cause” or due
to resignation by Executive “For Good Reason”, then Executive shall be entitled to (i) all
accrued, unpaid Base Salary and unreimbursed expenses through the date of such termination;
(ii) any prior year annual incentive bonus earned but not yet paid; (iii) continued payment
of Executive’s Base Salary for the remainder of the Employment Term; (iii) an annual Bonus
amount for the remainder of the Employment Term (calculated as the target Bonus in effect at
the time of the termination); (iv) continuation of health and welfare benefit coverage
(including coverage for Executive’s dependents to the extent such coverage is provided by
Fifth Third for its employees generally) under such plans and programs to which an Executive
was entitled to participate immediately prior to the date of the end of his employment for
the remainder of the Employment Term, provided such continued participation is possible
under the terms and provisions of such plans and programs; and provided further that such
coverage may be provided on a nondiscriminatory, tax-free basis; and (v) acceleration of
vesting of all supplemental benefits, including but not limited to all awards, grants, and
options under any Fifth Third or Bank supplemental agreement, stock option plan or grant
notwithstanding any other provision in such plan or grant.
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e. Deductions. All payments set forth in this Section 6 to Executive and/or his
personal representative, if any, shall be made subject to applicable withholdings as
required by law.
7. Termination Following a Change in Control.
a. The Parties agree that if, during the Employment Term, a Change in Control (as
defined in Section 7.a.ii. hereof) occurs and if, within one (1) year following the Change
in Control, the employment of Executive is terminated by Fifth Third Without Cause (as
defined in Section 5.d. hereof), Executive’s Compensation (as defined in Section 7.a.iii.
below) shall continue to be paid in monthly installments, subject to applicable
withholdings, by Fifth Third for a period of thirty-five (35) months following such
termination of employment. Furthermore, if, within one (1) year following the Change in
Control, the employment of Executive is terminated by Executive for Good Reason, Executive’s
Compensation (as defined in Section 7(a)(iii) below) shall continue to be paid in monthly
installments, subject to applicable withholdings, by Fifth Third for the greater of the
remainder of the Employment Term or two (2) years.
(i) Good Reason. For purposes of this Section 6, termination by Executive for
“Good Reason” shall mean those reasons set forth as “Good Reason” in Section 5(c) of
this Agreement, except that the change in Executive’s position, duties,
responsibilities, status, title, Base Salary or Bonus shall be measured for such
matters as they were in effect immediately preceding the Change in Control.
(ii) Change in Control. For purposes of this Section 7, Change in Control”
shall mean (A) the consummation of a merger, consolidation, share exchange or
similar transaction of Fifth Third with any other corporation as a result of which
the holders of the voting capital stock of Fifth Third as a group would receive less
than 50% of the voting capital stock of the surviving or resulting corporation; (B)
the sale or transfer (other than as security for obligations of Fifth Third) of
substantially all the assets of Fifth Third; (C) in the absence of a prior
expression of approval by the Board, the acquisition of more than 20% of Fifth
Third’s voting capital stock by any person within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a
person, or group including a person, who beneficially owned, as of the date of this
Agreement, more than 5% of Fifth Third’s securities; (D) during any period of two
consecutive years, individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by Fifth Third’s shareholders, of each new
director was approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of the period; or (E) any other change
in control of Fifth Third of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act or the acquisition of control, within the meaning of Section 2(a)(2) of
the Bank Holding Company Act
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of 1956, as amended, or Section 602 of the Change in Bank Control Act of 1978,
of Fifth Third by any person, company or other entity.
(iii) Compensation. For purposes of this Section 7, Executive’s Compensation
shall consist of the following: (A) Executive’s Base Salary in effect immediately
preceding the Change in Control, plus (B) an annual bonus equal to the target Bonus
in effect under this agreement immediately preceding the Change in Control.
b. Upon termination of Executive’s employment entitling Executive to Compensation set
forth in Section 7(a) above, Fifth Third shall maintain in full force and effect for the
continued benefit of Executive for such thirty-five month period health insurance (including
coverage for Executive’s dependents to the extent dependent coverage is provided by Fifth
Third for its employees generally) under such plans and programs in which Executive was
entitled to participate immediately prior to the date of such termination of employment,
provided that Executive’s continued participation is possible under the general terms and
provisions of such plans and programs. In the event that participation in any such plan or
program is barred, Fifth Third shall arrange to provide Executive with health insurance
benefits at Fifth Third’s expense for such thirty-five month period substantially similar to
those which Executive would otherwise have been entitled to receive under such plans and
programs from which his continued participation is barred. However, in no event will
Executive receive from Fifth Third the health insurance contemplated by this Section 7(b) if
Executive receives comparable insurance from any other source.
c. Upon termination of Executive’s employment entitling Executive to Compensation as
set forth in Section 7(a) above, Executive shall become immediately vested in any and all
stock options and shares of restricted stock previously granted by Fifth Third
notwithstanding any provision to the contrary of any plan under which the options or
restricted stock are granted. Executive may exercise such options only at the times and in
the method described in such options. All restrictions on shares of Fifth Third’s stock
granted under any plan shall lapse upon a Change of Control. Fifth Third will amend such
options or plans in any manner necessary to facilitate the provisions of this Section 7(c).
d. All payments provided for under this Section 7 shall be paid in cash from the
general funds of Fifth Third, and no special or separate fund shall be established, and no
other segregation of assets shall be made to assure payment, except as provided to the
contrary in funded benefits plans. Executive shall have no right, title or interest
whatsoever in or to any investments that Fifth Third may make to aid Fifth Third in meeting
its obligations under this Section 7. Nothing contained herein, and no action taken
pursuant to the provisions hereof, shall create or be construed to create a trust of any
kind or a fiduciary relationship between Fifth Third and Executive or any other person. To
the extent that any person acquires a right to receive payments from Fifth Third hereunder,
such right shall be no greater than the right of an unsecured creditor of Fifth Third.
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e. All payments set forth in this Section 7 to Executive, if any, shall be made subject
to applicable withholdings as required by law.
8. Certain Additional Payments by the Employer.
a. Anything in this Agreement to the contrary notwithstanding, if it shall be
determined that any payment, benefit or distribution to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms of this
Agreement (including without limitation pursuant to Section 4 above), pursuant to the
Company’s or its affiliates’ benefit plans or programs, pursuant to the benefit plans of
Employer or its affiliates, pursuant to or as a result of the Merger Agreement or the
Merger, or otherwise (a “Payment”) would, either alone or when taken together with any other
payments, benefits or distributions to or for the benefit of Executive, be (i) subject to
the excise tax imposed by Section 4999 of the Code (“4999 Excise Tax”), then in such
instance Executive shall be entitled to receive from Employer an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by Executive of all taxes,
including, 4999 Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the aggregate amount of the 4999 Excise Tax imposed upon the
Payment. To compute the Gross-Up Payment, the highest applicable federal marginal income
tax rate and the highest applicable state marginal income tax rate (after reduction for the
federal income tax benefit received from the state income tax rate) shall be used.
b. Executive shall notify Employer in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by Employer of a Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than fifteen (15)
business days after Executive is informed in writing of such claim and shall apprise
Employer 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 thirty (30) day
period following the date on which it gives such notice to Employer (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due). If
Employer notifies Executive in writing prior to the expiration of such 30-day period that it
desires to contest such claim, Executive shall, at Employer’s sole cost and expense:
| (i) | give Employer any information reasonably requested by Employer
relating to such claim, |
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| (ii) | take such action in connection with contesting such claim as
Employer 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 Employer, |
||
| (iii) | cooperate with Employer in good faith effectively to contest
such claim, and |
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| (iv) | permit Employer to participate in any proceedings relating to
such claim; |
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provided, however, that Employer shall bear and pay directly
all costs and expenses (including attorneys’ fees and additional interest
and penalties) incurred in connection with such contest and shall indemnify
and hold Executive harmless, on an after-tax basis, for any 4999 Excise Tax,
(including interest and penalties with respect thereto) imposed as a result
of such representation and for payment of any and all costs and expenses.
Employer’s involvement in any 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. |
| 9. | Compliance with Section 409A of the Code. This Agreement is intended in good
faith to comply with Section 409A of the Internal Revenue Code of 1986, as amended from
time to time, (the “Code”) and the rules and regulations promulgated thereunder
(collectively, “Section 409A”) with respect to certain payments, and to be exempt from
Section 409A with respect to other payments. With respect to payments made, or to be made,
hereunder upon a “termination of employment” that are subject to Section 409A, whether a
“termination of employment” has occurred shall be determined in accordance with Treas. Reg.
§ 1.409A-1(h). Notwithstanding any provisions of the Agreement to the contrary, if the
Employer in its discretion reasonably believes any amount to be paid to Executive hereunder
is “deferred compensation” subject to Section 409A, and that the Executive is a “Specified
Employee” (as defined under Section 409A) as of the date of Executive’s termination of
employment hereunder, then, to the extent the Employer in its discretion reasonably
believes it necessary to avoid the imposition of excise taxes or other penalties under
Section 409A, the payment of benefits, if any, scheduled to be paid to Executive hereunder
during the first six (6) month period following the date of a termination of employment
hereunder shall not be paid until the date which is the first business day following the
six-month anniversary of Executive’s termination of employment for any reason other than
death. Notwithstanding anything in Section 8 to the contrary, all Gross-Up Payments shall
be paid by the end of Executive’s taxable year next following Executive’s taxable year in
which the related taxes are remitted to the Internal Revenue Service or other taxing
authority |
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| 10. | Covenant Not to Disclose Confidential Information. |
a. Executive understands that his position with Fifth Third is one of trust and
confidence because of Executive’s access to trade secrets and confidential and proprietary
business information. Executive pledges his best efforts and utmost diligence to protect
and keep confidential the trade secrets and confidential or proprietary business information
of Fifth Third.
b. Unless required by Fifth Third in connection with his employment or with Fifth
Third’s express written consent, Executive agrees that he will not, either during his
employment or afterwards, directly or indirectly, use, misappropriate, disclose or aid
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anyone else in disclosing to any third party for Executive’s own benefit or the benefit
of another: (1) all or any part of any of Fifth Third’s or its subsidiaries’ trade secrets
or confidential or proprietary information, whether or not the information is acquired,
learned, or developed by Executive alone or in conjunction with others; or (2) the details
of any contracts, business transactions or negotiations to which Fifth Third or its
subsidiaries are a party or of any tenders, offer or proposals submitted to or to be
submitted by Fifth Third and/or its subsidiaries in connection with their business.
Executive makes the same pledge with regard to the confidential information of Fifth Third’s
and its subsidiaries’ customers, contractors, or others with whom Fifth Third or its
subsidiaries have a business relationship.
c. Executive understands that trade secrets and confidential or proprietary
information, for purposes of this Agreement, shall include, but not be limited to, any and
all versions of Fifth Third’s or its subsidiaries’ computer software, hardware, and
documentation; all methods, processes, techniques, practices, product designs, pricing
information, billing histories, customer requirements, customer lists, account data, loan
records, employee lists and salary/commission information, personnel matters, financial
data, operating results, plans, contractual relationships, and projections for business
opportunities for new or developing business of Fifth Third or its subsidiaries; and all
other confidential or proprietary information, patents, ideas, know-how and trade secrets
which are in the possession of Fifth Third or its subsidiaries, no matter what the source,
including any such information that Fifth Third or its subsidiaries obtain from a customer,
contractor or another party or entity and that Fifth Third treats or designates as
confidential or proprietary information, whether or not such information is owned or was
developed by Fifth Third.
d. Executive also agrees that all notes, records (including all computer and electronic
records), software, drawings, handbooks, manuals, policies, contracts, memoranda, sales
files, customer lists, employee lists or other documents that are made or compiled by
Executive, or which were available to Executive while he was employed at Fifth Third, in
whatever form, including but not limited to all such documents and data concerning any
processes, inventions, services or products used or developed by Executive during his
employment, shall be the property of Fifth Third. Executive further agrees to deliver and
make available all such documents and data to Fifth Third, regardless of how stored or
maintained and including all originals, copies and compilations thereof, upon the separation
of his employment, for any reason, or at any other time at Fifth Third’s request.
e. Executive understands that Fifth Third expects him to respect any trade secrets or
confidential information of any of Executive’s former employers, business associates, or
other business relationships. Executive also agrees to respect Fifth Third’s express
direction to Executive not to disclose to Fifth Third, its officers, or any of its employees
any such information so long as it remains confidential.
11. Covenant Not to Compete. Immediately, if possible, but no later than thirty
(30) days after the Effective Date, Employer shall pay to Executive the sum of $1,750,000.00
as consideration for the Restrictive Covenants contained within this section. In exchange,
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Executive agrees that, unless specifically authorized by Fifth Third in writing, Executive
will not until the later of: (i) a period of two (2) years after the last payment is
received by the Executive as a result of termination for any reason during the Employment
Period or (ii) for a period of two (2) years after his employment with Fifth Third has
terminated or ended (whatever the reason for the end of the employment relationship):
a. Engage in any “Competitive Activity” (as defined below) within the “Restricted
Territory” (as defined below);
b. Serve as an employee, director, owner, partner, contractor, consultant or agent of,
or own any interest in (except for beneficially owning the stock or options to acquire stock
totaling less than 5% of the outstanding shares in a “public” competitor), any person, firm
or corporation that engages in “Competitive Activity” within the “Restricted Territory”; or
c. Engage in any “Competitive Activity” with, for or towards or divert, attempt to
divert or direct others to divert any business of Fifth Third from a then existing Fifth
Third customer, a joint venturer or other business partner of Fifth Third (hereinafter
referred to as an “affiliate”), or from a potential customer identified through leads or
relationships developed during the last two (2) years of Executive’s employment with Fifth
Third, within the “Restricted Territory”.
Furthermore, Executive will not during his employment with Fifth Third and until the
later of: (i) a period of three (3) years after the last payment is received by the
Executive as a result of termination for any reason during the Employment Period or (ii) a
period of two (2) years after his employment with Fifth Third has terminated or ended
(whatever the reason for the end of the employment relationship) solicit or hire for
employment or as an independent contractor any employee of Fifth Third, the Bank or any of
Fifth Third’s affiliates, or solicit, assist, induce, recruit, or assist or induce anyone
else to recruit, or cause another person in the employ of Fifth Third, the Bank or any of
Fifth Third’s affiliates to leave his employment with Fifth Third, the Bank or Fifth Third’s
affiliate for the purpose of joining, associating, or becoming employed with any business or
activity with which Executive is or expects to be directly or indirectly associated or
employed.
“Competitive Activity” means: (1) the business activities engaged in by Fifth Third
during Executive’s employment with Fifth Third, including the sales, marketing, distribution
and provision of banking, financial and insurance services or other products or services of
the type of which Executive was involved during his employment with Fifth Third; and/or (2)
the performance of any other business activities competitive with Fifth Third and/or the
Bank for or on behalf of any financial or insurance services entity.
“Restricted Territory” means: (1) the geographic area encompassing a twenty-five (25)
mile radius of Charlotte, North Carolina; and/or (2) any Metropolitan Statistical Area (as
defined by the United States Department of Commerce) from which Fifth Third generated at
least five percent (5%) of its gross annual revenue during the last two calendar years
before the end of Executive’s employment with Fifth Third.
12
Executive further agrees that except with the express written consent of senior
management or the Board, Executive will not engage in any Competitive Activity individually
or with any entity or individual other than Fifth Third, the Board or its subsidiaries
during the Employment Term.
12. Acknowledgments by Executive.
a. Executive acknowledges that the restrictions placed upon him by Sections 10 and 11
of this Agreement are reasonable given the nature of Executive’s position with Fifth Third,
the area in which Fifth Third markets its products and services, and the consideration
provided by Fifth Third to Executive pursuant to this Agreement. Specifically, Executive
acknowledges that the length of the Covenant Not to Disclose Confidential Information and
Covenant Not to Compete in Sections 10 and 11 are reasonable and that the definitions of
“Competitive Activity” and “Restricted Territory” are reasonable.
b. Executive acknowledges that all of the provisions of the Agreement are fair and
necessary to protect the interests of Fifth Third. Accordingly, Executive agrees not to
contest the validity or enforceability of Sections 10 or 11 hereof.
c. Executive understands that every provision of this Agreement is severable from each
other provision of this Agreement. Therefore, if any provision of this Agreement, including
but not limited to all provisions of Sections 10 and 11, is held invalid or unenforceable,
every other provision of this Agreement will continue to be fully valid and enforceable. In
the event that any provision of this Agreement is determined by a court of competent
jurisdiction to be void or unenforceable, Executive and Fifth Third agree that such
provision shall be enforced to the extent reasonable under the circumstances and that all
other provisions shall be enforceable to the fullest extent permissible by law. Executive
and Fifth Third further agree that, if any court makes such a determination, such court
shall have the power to reduce the duration, scope and/or area of such provisions and/or
delete specific words and phrases by “blue penciling” and, in its reduced or blue penciled
form, such provisions shall then be enforceable as allowed by law.
d. Executive understands that his obligations under Sections 10 and 11 of this
Agreement will continue whether or not his employment with Fifth Third is terminated
voluntarily or involuntarily, or with or without Cause or Good Reason.
13. Breach by Executive. Executive agrees that in the event of any breach or
threatened breach of the provisions of Sections 10 and 11 hereof by Executive, Fifth Third’s
remedies at law would be inadequate, and Fifth Third shall be entitled to an injunction
(without any bond or other security being required), restraining such breach, and costs and
attorneys’ fees relating to any such proceeding or any other legal action to enforce the
provisions of this Agreement, but nothing herein shall be construed to preclude Fifth Third
from pursuing any other remedies at law or in equity available to it for any such breach or
threatened breach. Moreover, Executive also agrees that if Executive breaches any of
Sections 10 or 11 above, Executive shall forfeit at the time of
13
the breach the right to any additional future payments or benefits under this Agreement,
except to the extent such benefits or payments are vested and earned. In such case,
Executive and Fifth Third agree that the confidential information and non-compete
obligations contained in this Agreement shall remain valid and enforceable based upon the
consideration actually paid.
14. Assignment and Binding Effect. This Agreement shall be binding upon, and inure
to the benefit of, Executive and Fifth Third and their respective permitted successors and
assigns. Neither this Agreement nor any right or interest hereunder shall be assignable by
Executive, his beneficiaries, or legal representatives without Fifth Third’s prior written
consent. Fifth Third will require any successor (whether direct or indirect, by purchase,
merger, consolidation, share exchange or otherwise) to all or substantially all of the
business and/or assets of Fifth Third, by agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform all of Fifth Third’s obligations under
this Agreement in the same manner and to the same extent that Fifth Third would be required
to perform it if no such succession had taken place, and to perform all obligations to
Executive as provided in Section 7. Failure of Fifth Third to obtain such agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement and shall
entitle Executive to compensation from Fifth Third in the same amount and on the same terms
as he would be entitled to hereunder if he terminated his employment for Good Reason, except
that for purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the date Executive’s employment was terminated. As used
in this Agreement, “Fifth Third” shall mean Fifth Third as defined herein and any successor
to its business and/or assets as aforesaid that executes and delivers the agreement provided
for in this Section 14 or that otherwise becomes bound by the all terms and provisions of
this Agreement by operation of law.
15. Complete Agreement. This written Agreement is the final, complete and exclusive
statement and expression of the Employment Agreement between Fifth Third and Executive and
of all the terms of this Agreement, and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This written Agreement
may not be later modified except by a further writing signed by a duly authorized officer of
Fifth Third and Executive, and no term of this Agreement may be waived except by writing
signed by the party waiving the benefit of such term.
16. Notice. Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
| To Fifth Third: | Xxxx Xxxxxxxx | |||
| Executive Vice President & General Counsel | ||||
| Fifth Third Bank | ||||
| ML 10AT76 | ||||
| Xxxxxxxxxx, Xxxx 00000 | ||||
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| To Executive: | Xxxxxx X. Xxxxx | |||
| 0000 Xxxxx Xxxxxxx | ||||
| Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 |
Notice shall be deemed given and effective on the earlier of three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail, certified, return receipt
requested, or when actually received. Either party may change the address for notice by notifying
the other party of such change in accordance with this Section 16.
17. Headings. The section headings herein are for reference purposes only and are not
intended in any way to describe, interpret, define or limit the extent or intent of the Agreement
or of any part hereof.
18. Governing Law. This Agreement shall in all respects be construed according to the
laws of the State of North Carolina.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first
above written.
| FIFTH THIRD BANCORP | ||||
| By: | /s/ XXXX X. XXXXXXXX | |||
| Name: | XXXX X. XXXXXXXX | |||
| Title: | Executive Vice President, Secretary and General Counsel | |||
| EXECUTIVE | ||||
| /s/ XXXXXX X. XXXXX | ||||
| XXXXXX X. XXXXX | ||||
15
Schedule A
| • | Business related travel and entertainment expenses |
|
| • | Mobile telephone expenses |
|
| • | Country club membership dues |
|
| • | Civic club membership dues |
|
| • | Car Allowance of $15,000 (minus statutory deductions) |
|
| • | Life Insurance Premiums of $11,429.07 (minus statutory deductions) |
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Schedule B
| • | Medical Insurance |
|
| • | Dental Insurance |
|
| • | Benefit Choice Dollars at 4% of base pay capped at $4,000 |
|
| • | Short-term Disability with a fourteen (14) day elimination period, and a benefit of at
least 60% of base pay during illness for a maximum of one hundred eighty (180) calendar days.
Employee accrues 12 days per year and unused days carry-over and are paid at 100% during an
illness |
|
| • | Long-term Disability with a ninety (180) day elimination period and a benefit of 60% of
base salary, up to $20,000 per month, once approved by the Long-term Disability carrier. |
|
| • | Life Insurance equivalent to one times base pay, with a $1,000,000 maximum benefit. |
|
| • | Accidental Death and Dismemberment Insurance equivalent to one times base pay, with a
$1,000,000 maximum benefit. |
|
| • | Fifth Third Master Profit Sharing Plan 401(k) Plan |
|
| • | Benefit Restoration Match and profit sharing for contributions limited under the Fifth
Third Master Profit Sharing Plan 401(k) Plan |
|
| • | Fifth Third Executive Deferred Compensation Plan |
|
| • | Employee Stock Purchase Plan |
|
| • | Vacation of four (4) weeks for Executive Vice President |
|
| • | Supplemental Life Insurance policy and Personal Accident |
17
