Exhibit 10.40
EXECUTIVE
AGREEMENT
T HIS A GREEMENT between FIFTH THIRD BANCORP, an Ohio
Corporation, and its Subsidiaries (individually and collectively,
the “Company”) and
(the
“Executive”), effective as of February 19,
2007.
R ECITALS :
WHEREAS , the Board of Directors of the Company (the
“Board”) recognizes that the possibility of a Change in
Control (as hereinafter defined in Section 2(c)) exists and
that the threat of or the occurrence of a Change in Control can
result in significant distractions of its key management personnel
because of the uncertainties inherent in such a situation;
and
WHEREAS , the Board has determined that it is essential
and in the best interest of the Company and its shareholders to
retain the services of the Executive in the event of a threat or
occurrence of a Change in Control and to ensure such
Executive’s continued dedication and efforts in such event
without undue concern for personal financial and employment
security; and
WHEREAS , in order to induce the Executive to remain in
the employ of the Company, particularly in the event of a threat of
or the occurrence of a Change in Control, the Company desires to
enter into this Agreement with the Executive.
A GREEMENT :
1. Term of
Agreement. This Agreement
will begin on the date entered above and will continue in effect
through December 31, 2007. On December 31, 2007, and on
the anniversary date of each term thereafter (a “Renewal
Date”), the term of this Agreement will be extended
automatically for an additional one-year period unless, not later
than 30 days prior to such Renewal Date, the Company gives
written notice to the Executive that it has elected not to extend
this Agreement. Notwithstanding the above, if a “Change in
Control” (as defined herein) of the Company occurs during the
term of this Agreement, the term of this Agreement will be extended
for 24 months beyond the end of the month in which any such
Change in Control occurs.
2. Definitions.
The following defined terms shall
have the meanings set forth below, for purposes of this
Agreement:
(a) Base Annual Salary .
“Base Annual Salary” means the greater of (1) the
highest annual rate of base salary in effect for the Executive
during the 12 month period immediately prior to a Change in
Control or, (2) the annual rate of base salary in effect at
the time Notice of Termination is given (or on the date employment
is terminated if no Notice of Termination is required).
(b) Cause.
“Cause” means any of the following:
(1) The Executive shall have
committed a felony or an intentional act of gross misconduct, moral
turpitude, fraud, embezzlement, or theft in connection with the
Executive’s duties or in the course of the Executive’s
employment with the Company or any Subsidiary, and the Board shall
have determined that such act is materially harmful to the
Company;
(2) The Company or any
Subsidiary shall have been ordered or directed by any federal or
state regulatory agency with jurisdiction to terminate or suspend
the Executive’s employment and such order or directive has
not been vacated or reversed upon appeal; or
(3) After being notified in
writing by the Board to cease any particular Competitive Activity
(as defined herein), the Executive shall have continued such
Competitive Activity and the Board shall have determined that such
act is materially harmful to the Company.
For purposes of this Agreement, no
act or failure to act on the part of the Executive shall be deemed
“intentional” if it was due primarily to an error in
judgment or negligence, but shall be deemed
“intentional” only if done or omitted to be done by the
Executive not in good faith and without reasonable belief that the
Executive’s action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not
be deemed to have been terminated for “Cause” under
this Agreement unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the Board at a
meeting called and held for such purposes, after reasonable notice
to the Executive and an opportunity for the Executive, together
with the Executive’s counsel (if the Executive chooses to
have counsel present at such meeting), to be heard before the
Board, finding that, in the good faith opinion of the Board, the
Executive had committed an act constituting “Cause” as
defined in this Agreement and specifying the particulars of the act
constituting “Cause” in detail. Nothing in this
Agreement will limit the right of the Executive or the
Executive’s beneficiaries to contest the validity or
propriety of any such determination.
(c) “Change in
Control” shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall
have been satisfied:
(i) any person (as such term is used
in Sections 13 (d) and 14 (d) of the Securities Exchange
Act of 1934, as amended from time to time) (other than a trustee or
other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the
common shareholders of the Company in substantially the same
proportions as their ownership of Stock of the Company), is or
becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 25% or more of the combined voting
power of the Company’s then outstanding securities;
or
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(ii) during any
period of two (2) consecutive years (not including any period
prior to the Effective Date), individuals who at the beginning of
such period constitute the Board and any new Director, whose
election by the Board or nomination for election by the
Company’s shareholders, was approved by a vote of at least
two-thirds ( 2 / 3 ) of the Directors
then still in office who either were Directors at the beginning of
the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the consummation of
(1) the sale or disposition of all or substantially all the
Company’s assets; or (2) a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), at least 50% of
the combined voting power of the voting securities of the Company
(or such surviving entity) outstanding immediately after such
merger or consolidation; or
(iv) the shareholders of the Company
approve a plan of complete liquidation of the Company.
However, in no event shall a Change
in Control be deemed to have occurred, with respect to the
Executive, if the Executive is part of a purchasing group which
consummates the Change in Control transaction. The Executive shall
be deemed “part of a purchasing group...” for purposes
of the preceding sentence if the Executive is an equity participant
or has agreed to become an equity participant in the purchasing
company or group (except for (i) passive ownership of less
than 5% of the voting securities of the purchasing company or
(ii) ownership of equity participation in the purchasing
company or group which is otherwise not deemed to be significant,
as determined prior to the Change in Control by a majority of the
continuing members of the Board who are not also
Employees).
(d) Change Year.
“Change Year” means the fiscal year in which a Change
in Control occurs.
(e) Competitive Activity.
“Competitive Activity” means that Executive’s
participation, without the written consent of an officer of the
Company, in the management of any business enterprise if such
enterprise engages in substantial and direct competition with the
Company and such enterprise’s revenues derived from any
product or service competitive with any product or service of the
Company amounted to 10% or more of such enterprise’s revenues
for its most recently completed fiscal year and if the
Company’s revenues for such product or service amounted to
10% of the Company’s revenues for its most recently completed
fiscal year. “Competitive Activity” will not include
(i) the mere ownership of securities in any such enterprise
and the exercise of rights appurtenant thereto and
(ii) participation in the management of any such enterprise
other than in connection with the competitive operations of such
enterprise.
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(f) Disability; Disabled.
“Disability” or “Disabled” means that, as a
result of the Executive’s incapacity due to physical or
mental illness, the Executive shall be eligible for the receipt of
benefits under the Company’s long term disability
plan.
(g) Employee Benefits .
“Employee Benefits” means the perquisites, benefits,
and service credit for benefits as provided under any and all
employee retirement income and welfare benefit policies, plans,
programs, or arrangements in which the Executive is entitled to
participate, including without limitation any stock option, stock
purchase, restricted stock, stock appreciation, interim awards and
accrued and unpaid bonuses under the Variable Compensation Plan,
accrued and unpaid performance units under the Incentive
Compensation Plan, other awards under Stock and Incentive Plans,
savings, pension, supplemental executive retirement, or other
retirement income or welfare benefit, deferred compensation,
incentive compensation, group or other life, health,
medical/hospital, or other insurance (whether funded by actual
insurance or self-insured by the Company), disability, salary
continuation, expense reimbursement, and other employee benefit
policies, plans, programs, or arrangements that may now exist or
any equivalent successor policies, plans, programs, or arrangements
that may be adopted hereafter, providing perquisites, benefits, and
service credit for benefits at least as great in a monetary
equivalent as are payable thereunder prior to a Change in
Control.
(h) Employment Agreement.
“Employment Agreement” means an executed employment
agreement between the Company and the Executive.
(i) Good Reason. “Good
Reason” means the occurrence of any one or more of the
following:
(1) The assignment to the
Executive after a Change in Control of the Company of duties which
are materially different from or inconsistent with the duties,
responsibilities, and status of the Executive’s position at
any time during the 12 month period prior to such Change in
Control, or which result in a significant change in the
Executive’s authority and responsibility as a senior
executive of the Company;
(2) A reduction by the Company
in the Executive’s Base Annual Salary as of the day
immediately prior to a Change in Control of the Company, or the
failure to grant salary increases and bonus payments on a basis
comparable to those granted to other executives of the Company, or
a reduction of the Executive’s Annual Award and Long-Term
Award potential which existed immediately prior to such Change in
Control under the Company’s Variable Compensation Plan,
Long-Term Incentive Plan, or any successor plans;
(3) A demand by the Company
that the Executive relocate to a location in excess of 35 miles
from the location where the Executive is currently based, or in the
event of any such relocation with the Executive’s express
written consent, the failure of the Company or a Subsidiary to
pay
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(or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive relating to a
change of principal residence in connection with such relocation
and to indemnify the Executive against any loss in the sale of the
Executive’s principal residence in connection with any such
change of residence, all to the effect that the Executive shall
incur no loss on an after tax basis;
(4) The failure of the Company
to obtain a satisfactory agreement from any successor to the
Company to assume and agree to perform this Agreement, as
contemplated in Section 15 of this Agreement;
(5) The failure of the Company
to provide the Executive with substantially the same Employee
Benefits that were provided to him immediately prior to the Change
in Control, or with a package of Employee Benefits that, though one
or more of such benefits may vary from those in effect immediately
prior to such Change in Control, is substantially comparable in all
material respects to such Employee Benefits taken as a whole;
or
(6) Any reduction in the
Executive’s compensation or benefits or adverse change in the
Executive’s location or duties, if such reduction or adverse
change occurs at any time after the commencement of any discussion
with a third party relating to a possible Change in Control of the
Company involving such third party, if such reduction or adverse
change is in contemplation of such possible Change in Control and
such Change in Control is actually consummated within
12 months after the date of such reduction or adverse
change.
The existence of Good Reason shall
not be affected by the Executive’s incapacity due to physical
or mental illness. The Executive’s continued employment shall
not constitute a waiver of the Executive’s rights with
respect to any circumstance constituting Good Reason under this
Agreement. The Executive’s determination of Good Reason shall
be conclusive and binding upon the parties to this Agreement
provided such determination has been made in good faith.
(j) Incentive Compensation
Plan. “Incentive Compensation Plan” means the
Company’s Incentive Compensation Plan approved and accepted
by the Company’s Shareholders in 2004, as well as any
successor plan.
(k) Long-Term Award.
“Long-Term Award” means the total amount paid or
payable to the Executive pursuant to Performance Shares or similar
awards made to Executives under the provisions of the Incentive
Compensation Plan and any similar provisions under a successor
plan.
(l) Notice of Termination.
“Notice of Termination” means a written notice
indicating the specific termination provision in this Agreement
relied upon and setting
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forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
employment under the provision so indicated.
(m) Performance Goals.
“Performance Goals” means the written objective
performance goals and criteria determined as applicable either
pursuant to the Variable Compensation Plan or the Long-Term
Awards.
(n) Performance Periods.
“Performance Periods” means the time period designated
by the Company’s Compensation Committee for each Long-Term
Award.
(o) Release.
“Release” shall mean a general release that releases,
waives, remises, and forever discharges the Company from any and
all claims that the Executive has against the Company, including
any claims arising under state or federal statute, including all
state and federal employment discrimination laws including, but not
limited to, Ohio Revised Code Chapter 4112 and Title VII of
the Civil Rights Act of 1964; the Age Discrimination in Employment
Act; the Employee Retirement Income Security Act; and any
applicable state, local, or common laws of similar intent, without
exception. For purposes of the Release, the “Company”
includes the Company as it is defined in this Agreement and as
further defined to include all of the Company’s past,
present, and future assigns, successors, affiliates, parent and
subsidiary organizations, divisions and Company’s, officers,
directors, shareholders, employees, and agents of the same, as well
as their heirs, executors, administrators, successors, assigns, and
other personal representatives, individually and in their
respective corporate and personal capacities.
(p) Retirement.
“Retirement” means having reached normal retirement
age.
(q) Severance Benefits.
“Severance Benefits” means the benefits described in
Section 4 of this Agreement, as adjusted by the applicable
provisions of Section 5 of this Agreement.
(r) Stock and Incentive Plans
. “Stock and Incentive Plans” means the Company’s
1990 Stock Option Plan, the 1998 Stock Option Plan, the Incentive
Compensation Plan and any other Stock and Incentive Compensation
Plan that the Company may adopt from time to time.
(s) Subsidiary and
Subsidiaries. “Subsidiary” means any Company, bank,
or other entity, a majority of the voting control of which is
directly or indirectly owned or controlled at the time by the
Company. “Subsidiaries” means more than one
Subsidiary.
(t) Transition Pay Plan.
“Transition Pay Plan” means any transition or severance
pay plan of the Company in effect as of the Effective Date of this
Agreement, as well as any successor or replacement plan.
(u) Variable Compensation
Plan. “Variable Compensation Plan” means the
Variable Compensation Plan of the Company, authorized under the
Incentive
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Compensation Plan and which provides
for awards in the form of annual cash bonuses, and any successor
plan.
3. Eligibility for Severance
Benefits. The Company or
its successor shall pay or provide to the Executive the Severance
Benefits if the Executive’s employment is terminated
voluntarily or involuntarily during the term of this Agreement,
either:
(a) by the Company (1) at
any time within 24 months after a Change in Control of the
Company, or (2) at any time prior to a Change in Control but
after the commencement of any discussions with a third party
relating to a possible Change in Control of the Company involving
such third party, if such termination is in contemplation of such
possible Change in Control and such Change in Control is actually
consummated within 12 months after the date of such termination, in
either case unless the termination is on account of the
Executive’s death or Disability or for Cause, provided that,
in the case of a termination on account of the Executive’s
Disability or for Cause, the Company shall give Notice of
Termination to the Executive with respect thereto; or
(b) by the Executive for Good
Reason (1) at any time within 24 months after a Change in
Control of the Company or (2) at any time after the
commencement of any discussions with a third party relating to a
possible Change in Control of the Company involving such third
party, if such Change in Control is actually consummated within
12 months after the date of such termination, and, in any such
case, provided that the Executive shall give Notice of Termination
to the Company with respect thereto.
For purposes of clarity, with
respect to Section 3 above, an Executive who is collecting
Disability benefits will not be eligible for benefits under this
Agreement. An Executive who is no longer Disabled will be eligible
for benefits under this Agreement if, in the period extending from
12 months before the Change in Control to 24 months after
the Change in Control, either of the following occur: (1) the
Executive attempts to return to his or her position, and no such
position is available, or (2) the Executive returns to
employment and is subsequently terminated pursuant to
Section 3(a) or Section 3(b) above.
4. Severance
Benefits. The Executive,
if eligible under Section 3, shall receive the following
Severance Benefits, adjusted by the applicable provisions of
Section 5 (in addition to other Employee Benefits that the
Executive was otherwise entitled to):
(a) Base Annual Salary. In
addition to any accrued compensation payable as of the
Executive’s termination of employment (either by reason of an
Employment Agreement or otherwise), a lump sum cash amount equal to
the Executive’s Base Annual Salary, multiplied by
2.0.
(b) Variable Compensation. In
addition to any interim award that the Company owes to the
Executive under the Variable Compensation Plan (or any similar
provisions in a successor to the Variable Compensation Plan), the
Executive shall be paid a lump sum cash amount equal to 2.0 times
the target annual award under the Variable
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Compensation Plan for the
Executive’s job for the calendar year during which the Change
in Control occurs. In order to be entitled to a payment pursuant to
this Section 4(b), the Executive must have been a participant
in the Company’s Variable Compensation Plan at some time
during the calendar year in which the Change in Control occurred or
the calendar year immediately preceding the calendar year in which
the Change in Control occurred.
(c) Long-Term Incentive
Compensation. Long-Term Awards granted to the Executive and
outstanding at the time that a Change in Control occurs shall be
treated in the manner set forth in the Company’s Incentive
Compensation Plan.
(d) Insurance Benefits. For a
24 month period after the date the employment is terminated, the
Company will arrange to provide to the Executive and family members
who are currently covered and remain eligible under the terms of
the Medical Plan at the Company’s expense, with:
(1) Health Care . Health care
coverage comparable to that in effect for the Executive immediately
prior to the termination (or, if more favorable to the Executive,
that furnished generally to salaried employees of the Company),
including, but not limited to, hospital, surgical, medical, dental
and prescription. Upon the expiration of the health care benefits
required to be provided pursuant to this subsection 4(d), the
Executive shall be entitled to the continuation of such benefits
under the provisions of the Consolidated Omnibus Budget
Reconciliation Act (COBRA). After the COBRA coverage expires if the
Executive would have been eligible for retiree medical coverage
they may elect that coverage at the current retiree medical rates.
Health care benefits otherwise receivable by the Executive pursuant
to this subsection 4(d) shall be reduced to the extent comparable
benefits are actually received by the Executive from a subsequent
employer during the 24 month period following the date the
employment is terminated and any such benefits actually received by
the Executive shall be reported by the Executive to the Company.
For purposes of clarity and otherwise, to the extent the Executive
receives any greater health care benefits or health care benefits
for a longer time period under an employment agreement between the
Executive and the Company, the Company shall provide the Executive
with the health care benefits described in the employment
agreement.
(2) Life Insurance . Life and
accidental death and dismemberment insurance coverage (including
any supplemental coverage, purchase opportunity, and double
indemnity for accidental death that was available to the Executive)
equal (including policy terms) to that in effect at the time Notice
of Termination is given (or on the date the employment is
terminated if no Notice of Termination is required) or, if more
favorable to the Executive, equal to that in effect at the date the
Change in Control occurs.
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In the event the Executive’s
participation in any such plan or program is not permitted, the
Company will directly provide, at its discretion and at no
after-tax cost to the Executive,
