EX-10 4 ex10_2.htm EXHIBIT 10.2

 

Exhibit 10.2

 

Change of Control Agreement dated as of July  2003 by and between MBNA Corporation, MBNA America Bank, N.A. and certain executive officers of MBNA Corporation.

 

The following executive officers of MBNA Corporation have entered into the attached Change of Control Agreement:

 

Charles M. Cawley

Bruce L Hammonds

John R. Cochran III

Lance L. Weaver

Richard K. Struthers

Randolph D. Lerner

 

 

 

 

 


 

Exhibit 10.2

 

CHANGE OF CONTROL AGREEMENT

 

This CHANGE

OF CONTROL AGREEMENT is by and between MBNA Corporation, a Maryland corporation,

and MBNA America Bank, N.A., a national bank (together, the "Company"), and

______________(the "Executive"), and dated as of July __, 2003.

 

WHEREAS, the

Board of Directors of the Company (the "Board") has determined that it is in the

best interests of the Company and its stockholders to assure that the Company

will have the continued dedication of the Executive, notwithstanding the

possibility, threat or occurrence of a Change of Control (as defined in Section

2) of the Company.

 

WHEREAS, the

Board believes it is imperative to diminish the potential distraction of the

Executive by virtue of the personal uncertainties and risks created by a pending

or threatened Change of Control and to encourage the Executive's full attention

and dedication to the Company currently and in the event of any threatened or

pending Change of Control by providing the Executive with compensation and

benefits arrangements upon a Change of Control which ensure that the

compensation and benefits expectations of the Executive will be satisfied and

which are competitive with those of other bank holding companies.

 

WHEREAS, in

order to accomplish these objectives, the Board has authorized the Company to

enter into this Agreement with the Executive.

 

NOW,

THEREFORE, for and in consideration of the premises and the mutual covenants and

agreements contained herein, the Company and the Executive hereby agree as

follows:

 

1.

Certain Definitions .

 

 

(a) The

"Effective Date" shall be the first date during the "Change of Control Period"

(as defined in Section 1(b)) on which a Change of Control occurs. Anything in

this Agreement to the contrary notwithstanding, if the Executive's employment

with the Company is terminated by the Company without Cause or is terminated by

the Executive because the terms and conditions of the Executive's employment are

adversely changed in a manner which would constitute Good Reason, in either case

within twelve months before the date of a Change of Control that actually

occurs, and it is reasonably demonstrated that such termination by the Company

or the actions underlying the Good Reason were taken at the request of a third

party who has taken steps reasonably calculated to effect the Change of Control

or otherwise arose in connection with or anticipation of the Change of Control,

then for all purposes of this Agreement the "Effective Date" shall mean the date

immediately prior to the date of such termination of employment or adverse

change.

 

(b) The

"Change of Control Period" is the period commencing on the date hereof and

ending on the third anniversary of such date; provided, however, that commencing

on the date one year after the date hereof, and on each annual anniversary of

such date (such date and each annual anniversary thereof is hereinafter referred

to as the "Renewal Date"), the Change of Control Period shall be automatically

extended without any further action by the Company or the Executive so as to

terminate three years from such Renewal Date; provided, however, that if either

the Company or the Executive shall give notice in writing to the other 120 days

prior to a Renewal Date stating that the Change of Control Period shall not be

extended, then the Change of Control Period shall expire three years from the

date hereof or, if later, three years from the last effective Renewal

Date.

 

2.

Change of Control .

 

 

For the

purpose of this Agreement, a "Change of Control" shall mean:

 

(a) The

acquisition by any individual, entity or group (within the meaning of Section

13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the

"Exchange Act")) (a “Person”) of beneficial ownership (within the meaning of

Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (i) the

then outstanding shares of common stock of the Company (the "Outstanding Company

Common Stock") or (ii) the combined voting power of the then outstanding voting

securities of the Company entitled to vote generally in the election of

directors (the "Outstanding Company Voting Securities"); provided, however, that

for purposes of this subsection (a), the following acquisitions shall not

constitute a Change of Control: (i) any acquisition directly from the Company,

(ii) any acquisition by the Company or any corporation or other entity

controlled by the Company, (iii) any acquisition by any employee benefit plan

(or related trust) sponsored or maintained by the Company or any corporation or

other entity controlled by the Company, (iv) any acquisition pursuant to a

transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of

this Section 2, or (v) any acquisition by an underwriter temporarily holding

securities pursuant to an offering; or

 

(b)

Individuals who, as of the date of this Agreement, constitute the Board (the

"Incumbent Board") cease for any reason to constitute at least a majority of the

Board; provided, however, that any individual becoming a director subsequent to

the date of this Agreement whose election, or nomination for election by the

Company's stockholders, was approved by a vote of at least a majority of the

directors then comprising the Incumbent Board (either by specific vote or by

approval, without prior written notice to the Board objecting to the nomination,

of a proxy statement in which the individual was named as a nominee) shall be

considered as though such individual were a member of the Incumbent Board, but

excluding, for this purpose, any such individual whose initial assumption of

office occurs as a result of an actual or threatened election contest with

respect to the election or removal of directors or other actual or threatened

solicitation of proxies or consents by or on behalf of a Person other than the

Board; or

 

(c)

Consummation of a reorganization, merger or consolidation or sale or other

disposition of all or substantially all of the assets of the Company (a

"Business Combination"), in each case, unless, following such Business

Combination, (i) all or substantially all of the individuals and entities who

were the beneficial owners, respectively, of the Outstanding Company Common

Stock and Outstanding Company Voting Securities immediately prior to such

Business Combination beneficially own, directly or indirectly, more than 50% of,

respectively, the then outstanding shares of common stock and the combined

voting power of the then outstanding voting securities entitled to vote

generally in the election of directors, as the case may be, of the corporation

or other entity resulting from such Business Combination (or a corporation or

other entity which as a result of such transaction owns the Company or all or

substantially all of the Company's assets either directly or through one or more

subsidiaries (either corporation or other entity, a "Resulting Corporation")) in

substantially the same proportion as their ownership, immediately prior to such

Business Combination, of the Outstanding Company Common Stock and Outstanding

Company Voting Securities, as the case may be, (ii) no Person (excluding any

Resulting Corporation or any employee benefit plan (or related trust) of the

Company, such Resulting Corporation or any corporation controlled by either)

beneficially owns, directly or indirectly, 40% or more of, respectively, the

then outstanding shares of common stock of the Resulting Corporation or the

combined voting power of the then outstanding voting securities of such

corporation or other entity except to the extent that such ownership existed

prior to the Business Combination, and (iii) at least a majority of the members

of the board of directors of the corporation or other entity resulting from such

Business Combination were members of the Incumbent Board at the time of the

execution of the initial agreement, or of the action of the Board, providing for

such Business Combination; or

 

(d) Approval

by the shareholders of the Company of a complete liquidation or dissolution of

the Company.

 

Without in any way broadening the definition of "beneficial owner", for purposes of this definition, no Person will be the "beneficial owner" of any security solely (1) because the security has been tendered into a tender or exchange offer until the tendered security is accepted for payment or exchange or (2) because of the power to vote or direct the voting of the security pursuant to a revocable proxy given in response to a public proxy or consent solicitation that was made to more than ten holders of a class of security that is then registered under Section 12 of the Exchange Act. In addition, a Change of Control shall not be deemed to occur solely because any Person acquires beneficial ownership of more than 40% of the Outstanding Company Common Stock or Outstanding Company Voting Securities as a result of the acquisition of securities by the Company or any corporation or other entity controlled by the Company; provided that, if after such acquisition by the Company or corporation or other entity such Person becomes the beneficial owner of additional Outstanding Company Common Stock or Outstanding Company Voting Securities that increases the percentage beneficially owned by such Person and the percentage continues to be above 40%, a Change of Control of the Company shall then occur.

 

3.

Employment Period .

 

 

Subject to

the terms and conditions hereof, the Company hereby agrees to continue the

Executive in its employ, and the Executive hereby agrees to remain in the employ

of the Company, for the period commencing on the Effective Date and ending on

the last day of the thirty-sixth month following the month in which the

Effective Date occurs (the "Employment Period"). Notwithstanding anything in

this Section to the contrary, this Agreement shall terminate if the Executive or

the Company terminates Executive's employment prior to the Effective

Date.

 

 

 

 


 

 

4.

Terms of Employment .

 

 

(a) Office

Location.

 

During the

Employment Period, the Executive's services shall be performed at the location

where the Executive was employed immediately preceding the Effective Date or any

office or location less than 60 miles from such location.

 

(b)

Compensation.

 

(i) Base

Salary. During the Employment Period, the Executive shall receive an annual base

salary ("Annual Base Salary"), which shall be paid at a bi-weekly rate, at least

equal to twelve times the highest monthly base salary amount paid or payable,

including by reason of deferral, to the Executive by the Company and its

affiliated companies for any month during the twelve-month period immediately

preceding the month in which the Effective Date occurs. During the Employment

Period, the Annual Base Salary shall be reviewed at least annually and shall be

increased at any time and from time to time as shall be substantially consistent

with increases in base salary awarded in the ordinary course of business to

other peer executives of the Company and its affiliated companies. Any increase

in Annual Base Salary shall not serve to limit or reduce any other obligation to

the Executive under this Agreement. Annual Base Salary shall not be reduced

after any such increase and the term Annual Base Salary as utilized in this

Agreement shall refer to Annual Base Salary as so increased. As used in this

Agreement, the term "affiliated companies" includes any company controlled by,

controlling or under common control with the Company.

 

(ii) Annual

Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for

each fiscal year beginning or ending during the Employment Period, an annual

bonus (the "Annual Bonus") in cash at least equal to the average annualized (for

any fiscal year consisting of less than twelve full calendar months or with

respect to which the Executive has been employed by the Company for less than

twelve full calendar months, assuming in each case that the bonus paid was less

than the bonus potential because the period was less than twelve full calendar

months) bonus (the "Average Annual Bonus") paid or payable to the Executive by

the Company and its affiliated companies in respect of the three fiscal years

immediately preceding the fiscal year in which the Effective Date occurs

(whether paid all or part in cash, restricted stock or some other form), or such

shorter period of the Executive's employment with the Company. Each such Annual

Bonus shall be paid no later than the end of November of the fiscal year for

which the Annual Bonus is awarded, unless the Executive shall elect to defer the

receipt of such Annual Bonus pursuant to deferral plans of the Company. If the

Company establishes a bonus potential amount for the Executive, such amount

shall be no less than the Annual Bonus amount provided under this

subsection.

 

(iii)

Incentive, Savings and Retirement Plans. In addition to Annual Base Salary and

Annual Bonus payable as hereinabove provided, the Executive shall be entitled to

participate during the Employment Period in incentive (including stock option

and restricted share incentive plans), savings and retirement plans, practices,

policies and programs applicable to other peer executives of the Company and its

affiliated companies, but in no event shall such plans, practices, policies and

programs provide the Executive with incentive, savings and retirement benefits

opportunities, in each case, less favorable than the most favorable of those

provided by the Company and its affiliated companies for the Executive under

such plans, practices, policies and programs as in effect at any time during the

one-year period immediately preceding the Effective Date.

 

(iv) Welfare

Benefit Plans. During the Employment Period, the Executive and/or the

Executive's family, as the case may be, shall be eligible for participation in

welfare benefit plans, practices, policies and programs provided by the Company

and its affiliated companies (including, without limitation, medical,

prescription, dental, disability, salary continuance, employee life, group life,

split-dollar life, accidental death and travel accident insurance plans and

programs) on a basis that is at least as favorable as that provided to other

peer executives of the Company and its affiliated companies, but in no event

shall such plans, practices, policies and programs provide benefits which are

less favorable, in the aggregate, than the most favorable of such plans,

practices, policies and programs in effect at any time during the

one-year period

immediately preceding the Effective Date.

 

(v) Expenses.

During the Employment Period, the Executive shall be entitled to receive prompt

reimbursement for all reasonable business and entertainment expenses incurred by

the Executive in accordance with the most favorable policies, practices and

procedures of the Company and its affiliated companies applicable to the

Executive at any time during the one-year period immediately preceding the

Effective Date or, if more favorable to the Executive, as in effect at any time

thereafter with respect to other peer executives of the Company and its

affiliated companies.

 

(vi) Fringe

Benefits. During the Employment Period, the Executive shall be entitled to

fringe benefits in accordance with the most favorable plans, practices, programs

and policies of the Company and its affiliated companies applicable to the

Executive at any time during the one-year period immediately preceding the

Effective Date or, if more favorable to the Executive, as in effect at any time

thereafter with respect to other peer executives of the Company and its

affiliated companies.

 

(vii) Paid

Time Off. During the Employment Period, the Executive shall be entitled to paid

time off in accordance with the most favorable plans, policies, programs and

practices of the Company and its affiliated companies applicable to the

Executive at any time during the one-year period immediately preceding the

Effective Date or, if more favorable to the Executive, as in effect at any time

thereafter with respect to other peer executives of the Company and its

affiliated companies.

 

5.

Termination of Employment .

 

 

(a) Death or

Disability. The Executive's employment shall terminate automatically upon the

Executive's death during the Employment Period. If the Company determines in

good faith that the Disability of the Executive has occurred during the

Employment Period (pursuant to the definition of "Disability" set forth below),

it may give to the Executive written notice in accordance with Section 13(b) of

this Agreement of its intention to terminate the Executive's employment. In such

event, the Executive's employment with the Company shall terminate effective on

the 30th day after receipt of such notice by the Executive (the "Disability

Effective Date"), provided that, within the 30 days after such receipt, the

Executive shall not have returned to full-time performance of the Executive's

duties. For purposes of this Agreement, "Disability" means the absence of the

Executive from the Executive's duties with the Company on a full-time basis for

180 consecutive business days as a result of incapacity due to mental or

physical illness which is determined to be total and permanent by a physician

selected by the Company or its insurers and acceptable to the Executive or the

Executive's legal representative (such agreement as to acceptability not to be

withheld unreasonably).

 

(b) Cause.

The Company may terminate the Executive's employment during the Employment

Period for "Cause". For purposes of this Agreement, "Cause" means conviction of

the Executive for a crime that constitutes a felony for embezzling Company funds

or for theft of Company property.

 

(c) Good

Reason. The Executive's employment may be terminated during the Employment

Period by the Executive for Good Reason. For purposes of this Agreement, "Good

Reason" means:

 

(i) any

failure by the Company to comply with any of the provisions of Section 4(b) of

this Agreement, other than an isolated, insubstantial and inadvertent failure

not occurring in bad faith and which is remedied by the Company promptly after

receipt of notice thereof given by the Executive; or

 

 

(ii) the

Company's requiring the Executive to be based at any office or location other

than that described in Section 4(a) hereof; or

 

(iii) any

purported termination by the Company of the Executive's employment otherwise

than as expressly permitted by this Agreement; or

 

(iv) any

failure by the Company to comply with and satisfy Section 12(c) of this

Agreement.

 

For purposes

of this Section 5(c), any good faith determination of "Good Reason" made by the

Executive shall be conclusive. Anything in this Agreement to the contrary

notwithstanding, a termination by the Executive for any reason during the 30 day

period immediately following the first anniversary of the Effective Date shall

be deemed to be a termination for Good Reason for all purposes of this

Agreement.

 

(d) Notice of

Termination. Any termination by the Company for Cause or by the Executive for

Good Reason shall be communicated by Notice of Termination to the other party

hereto given in accordance with Section 13(b) of this Agreement. For purposes of

this Agreement, a "Notice of Termination" means a written notice which (i)

indicates the specific termination provision in this Agreement relied upon, (ii)

sets forth in reasonable detail the facts and circumstances claimed to provide a

basis for termination of the Executive's employment under the provision so

indicated and (iii) if the Date of Termination (as defined below) is other than

the date of receipt of such notice, specifies the termination date (which date

shall be not more than 15 days after the giving of such notice). No purported

termination of the Executive's employment shall be effective without a Notice of

Termination. The failure by the Executive or the Company, as the case may be, to

set forth in the Notice of Termination any fact or circumstance which

contributes to a showing of Good Reason or Cause, as the case may be, shall not

waive any right of the Executive or the Company, as the case may be, hereunder

or preclude the Executive or the Company, as the case may be, from asserting

such fact or circumstance in enforcing the Executive's or the Company's rights

hereunder.

 

(e) Date of

Termination. "Date of Termination" means the date of receipt of the Notice of

Termination or any later date specified therein, as the case may be; provided,

however, that (i) if the Executive's employment is terminated by the Company

other than for Cause or Disability, the Date of Termination shall be the date on

which the Company notifies the Executive of such termination and (ii) if the

Executive's employment is terminated by reason of death or Disability, the Date

of Termination shall be the date of death of the Executive or the Disability

Effective Date, as the case may be.

 

6.

Obligations of the Company Upon Termination .

 

 

(a) Death. If

the Executive's employment is terminated by reason of the Executive's death

during the Employment Period, this Agreement shall terminate without further

obligations to the Executive's legal representatives under this Agreement, other

than the sum of the following obligations: (i) the Executive's Annual Base

Salary through the Date of Termination to the extent not theretofore paid, (ii)

the product of (A) the greater of (x) the Annual Bonus paid or payable (and

annualized for any fiscal year consisting of less than 12 full months or for

which the Executive has been employed for less than 12 full months assuming in

each case that the bonus paid was less than the bonus potential because the

period was less than twelve full calendar months) to the Executive for the most

recently completed fiscal year during the Employment Period (whether paid all or

part in cash, restricted stock or some other form), if any, and (y) the Average

Annual Bonus (such greater amount hereafter referred to as the "Highest Annual

Bonus") and (B) a fraction, the numerator of which is the number of days in the

current fiscal year through the Date of Termination, and the denominator of

which is 365, with such amount under this subsection (ii) reduced by the amount

of the Annual Bonus already paid (if any) for the year in which the Date of

Termination occurs, (iii) payment of any bonus earned or accrued by the

Executive as of the end of the fiscal year prior to the Date of Termination and

not yet paid by the Company, and (iv) any payment of any compensation previously

deferred by the Executive other than pursuant to a tax qualified plan (together

with any accrued interest or earnings thereon) and not yet paid by the Company

(the amounts described in subparagraphs (i)-(iv) are hereafter referred to as

"Accrued Obligations"). All Accrued Obligations shall be paid to the Executive's

estate or beneficiary, as applicable, in a lump sum in cash within 30 days of

the Date of Termination. Anything in this Agreement to the contrary

notwithstanding, the Executive's family shall be entitled to receive benefits at

least equal to the most favorable benefits provided by the Company and any of

its affiliated companies to surviving families of peer executives of the Company

and such affiliated companies under such plans, programs, practices and policies

relating to family death benefits, if any, as in effect with respect to other

peer executives and their families at any time during the one-year period

immediately preceding the Effective Date or, if more favorable to the

Executive's family, as in effect on the date of the Executive's death with

respect to other peer executives of the Company and its affiliated companies and

their families.

 

(b)

Disability. If the Executive's employment is terminated by reason of the

Executive's Disability during the Employment Period, this Agreement shall

terminate without further obligations to the Executive, other than for Accrued

Obligations. All Accrued Obligations shall be paid to the Executive in a lump

sum in cash within 30 days of the Date of Termination. Anything in this

Agreement to the contrary notwithstanding, the Executive shall be entitled after

the Disability Effective Date to receive disability and other benefits at least

equal to the most favorable of those provided by the Company and its affiliated

companies to disabled executives and/or their families in accordance with such

plans, programs, practices and policies relating to disability, if any, as in

effect with respect to other peer executives and their families at any time

during the one-year period

immediately preceding the Effective Date or, if more favorable to the Executive

and/or the Executive's family, as in effect on the Disability Effective Date

with respect to other peer executives of the Company and its affiliated

companies and their families.

 

(c) Cause;

Other Than for Good Reason. If the Executive's employment shall be terminated

for Cause or other than for Good Reason during the Employment Period, this

Agreement shall terminate without further obligations to the Executive other

than the obligation to pay to the Executive Annual Base Salary through the Date

of Termination plus the amount of any compensation previously deferred by the

Executive other than pursuant to a tax qualified plan (together with any accrued

interest or earnings thereon) to the extent theretofore unpaid. In such case,

such amounts shall be paid to the Executive in a lump sum in cash within 30 days

of the Date of Termination.

 

(d) Good

Reason; Other Than for Cause or Disability. If, during the Employment Period,

the Company shall terminate the Executive's employment other than for Cause or

Disability, or if the Executive shall terminate employment under this Agreement

for Good Reason, or the Executive dies after a delivery of a valid Notice of

Termination for Good Reason or without Cause:

 

(i) the

Company shall pay to the Executive in a lump sum in cash within 30 days after

the Date of Termination the aggregate of the following amounts:

 

(A) all

Accrued Obligations; and

 

(B) an amount

equal to the product of (x) three and (y) the sum of (i) the greater of Annual

Base Salary and the highest salary paid to the Executive for any consecutive 12

month period during the period beginning three full calendar years prior to the

Change of Control and ending with the date of termination of employment and (ii)

the Highest Annual Bonus (whether paid all or part in cash, restricted stock or

some other form); and

 

(C) (i) the

employer matching contributions, if any, that the Company would have made on the

Executive's behalf to the MBNA Corporation 401(k) Savings Plan or other similar

or successor plan in which the Executive is a participant (the "Savings Plan")

and the MBNA Corporation Deferred Compensation Plan or similar plan in which the

Executive is a participant (assuming the maximum employee deferral election, and

the maximum employer matching contribution rate, permitted under each of the

Savings Plan and Deferred Compensation Plan) if the Executive's employment

continued at the compensation level provided for in Section 4(b)(i) for three

years, plus (ii) the amount, if any, of his account in the Savings Plan which is

forfeitable on the Date of Termination; and

 

(ii) for

three years after the Executive's Date of Termination, or such longer period as

any plan, program, practice or policy may provide, the Company shall continue

benefits to the Executive and/or the Executive's family at least equal to those

which would have been provided in accordance with the applicable plans,

programs, practices and policies described in Section 4(b)(iv) of this Agreement

as if the Executive's employment had not been terminated or, if more favorable

to the Executive, as in effect at any time thereafter with respect to other peer

executives of the Company and its affiliated companies and their families;

provided, however, that if the Executive is employed during this period, such

benefits shall be secondary to any benefits provided by the Executive's

employer. For purposes of determining eligibility of the Executive for retiree

benefits pursuant to such plans, practices, programs and policies, the Executive

shall be considered to have remained employed until three years after the Date

of Termination and to have retired on the last day of such period; and

 

 

(iii) the

Company shall pay for all relocation expenses to a location in the United States

if the Executive is based in another country in accordance with the most

favorable relocation policies, practices and procedures of the Company and its

affiliated companies in effect at any time during the one-year period

immediately preceding the Effective Date or, if more favorable to the Executive,

as in effect at any time thereafter with respect to other peer executives of the

Company and its affiliated companies; and

 

(iv) all

outstanding stock options, restricted shares and other stock based awards

granted or issued to the Executive during the Employment Period shall vest,

notwithstanding any restriction on vesting, upon the Date of Termination and all

such stock options or similar stock based awards shall be exercisable during the

90 day period immediately following the Date of Termination or, if longer, the

time period set forth in the terms of the awards.

 

7.

Non-exclusivity of Rights .

 

 

Nothing in

this Agreement shall prevent or limit the Executive's continuing or future

participation in any benefit, bonus, incentive or other plans, programs,

policies or practices, provided by the Company or any of its affiliated

companies and for which the Executive may qualify, nor shall anything herein

limit or otherwise affect such rights as the Executive may have under any other

agreements with the Company or any of its affiliated companies, including but

not limited to the Company’s Supplemental Executive Retirement Plan and 1991 and

1997 Long Term Incentive Plans. Amounts which are vested benefits or which the

Executive is otherwise entitled to receive under any plan, policy, practice or

program of the Company or any of its affiliated companies at or subsequent to

the Date of Termination, including but not limited to the Company’s Supplemental

Executive Retirement Plan and 1991 and 1997 Long Term Incentive Plans, shall be

payable in accordance with such plan, policy, practice or program except as

explicitly modified by this Agreement by specific reference to such plan,

policy, practice or program. Notwithstanding anything in this Agreement to the

contrary, the payments and benefits under this Agreement are in lieu of any

payments or benefits to which the Executive may be entitled under the Company's

severance pay plans. Notwithstanding anything in this Agreement to the contrary,

if the Executive is party to an Executive Non-Competition Agreement (or any

similar agreement) with the Company that provides for continuation of salary or

other payments following termination of employment, the lump sum payment made

pursuant to Section 6(d)(i)(B) of this Agreement shall satisfy the Company's

payment obligations under such other agreement for the period of time the lump

sum payment represents as a continuation of salary or other payments under such

other agreement. The Company and the Executive agree that, as applied to the

Executive, the definition of "Change in Control" and "Cause" in the Policies for

the MBNA Corporation 1997 and 1991 Long Term Incentive Plans shall have the same

meaning as "Change of Control" and "Cause", respectively, in this Agreement, and

the definition of "Change of Control", "Cause" and "Good Reason" in the

Company’s Supplemental Executive Retirement Plan shall have the same meaning as

in this Agreement.

 

8.

Full Settlement .

 

 

The Company's

obligation to make the payments provided for in this Agreement and otherwise to

perform its obligations hereunder shall not be affected by any set-off,

counterclaim, recoupment, defense or other claim, right or action which the

Company may have against the Executive or others. In no event shall the

Executive be obligated to seek other employment or take any other action by way

of mitigation of, and, except as specifically provided herein no amounts earned

by the Executive at such other employment or otherwise shall reduce, the amounts

payable to the Executive under any of the provisions of this Agreement. The

Company agrees to pay, to the full extent permitted by law, all legal fees and

expenses which the Executive may reasonably incur as a result of any contest

(regardless of the outcome thereof) by the Company, the Executive or others of

the validity or enforceability of, or liability under, any provision of this

Agreement or, in the event of a Change of Control, any provision of any benefit,

bonus, incentive or other plans, programs, policies or practices, including but

not limited to the Company’s Supplemental Executive Retirement Plan and 1991 and

1997 Long Term Incentive Plans provided by the Company or any of its affiliated

companies or any guarantee of performance of any of the foregoing (including as

a result of any contest by the Executive about the amount of any payment

pursuant to Section 9 of this Agreement), plus in each case interest at the

applicable Federal rate provided for in Section 7872(f)(2) of the Internal

Revenue Code of 1986, as amended (the "Code"), unless the Executive instituted

the proceeding and the judge, arbitrator or other person presiding over the

proceeding affirmatively finds that the Executive instituted the proceeding in

bad faith.

 

9.

Certain Additional Payments by the Company .

 

 

(a) Anything

in this Agreement to the contrary notwithstanding, in the event it shall be

determined that any payment or distribution by the Company to or for the benefit

of the Executive (whether paid or payable or distributed or distributable

pursuant to the terms of this Agreement, the Company's stock incentive plans,

supplemental executive retirement plan or otherwise, but determined without

regard to any additional payments required under this Section 9) (a "Payment")

would be subject to the excise tax imposed by Section 4999 of the Code or any

interest or penalties are incurred by the Executive with respect to such excise

tax (such excise tax, together with any such interest and penalties, are

hereinafter collectively referred to as the "Excise Tax"), then the Executive

shall be entitled to receive an additional payment (a "Gross-Up Payment") in an

amount such that after payment by the Executive of all taxes (including any

interest or penalties imposed with respect to such taxes), including, without

limitation, any income taxes (and any interest and penalties imposed with

respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive

retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon

the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if

it shall be determined that the difference between (i) the sum of the Payments

and (ii) the amount of the Payments reduced to the extent necessary so that no

portion thereof shall be subject to the Excise Tax, is less than $50,000, then

(x) no Gross-Up Payment shall be made pursuant to this Section 9 and (y) the

Payments shall be reduced to the minimum extent necessary so that no portion

thereof shall be subject to the Excise Tax.

 

(b) Subject

to the provisions of Section 9(c), all determinations required to be made under

this Section 9, including whether and when a Gross-Up Payment is required and

the amount of such Gross-Up Payment and the assumptions to be utilized in

arriving at such determination, shall be made by an accounting firm of national

standing reasonably selected by the Company (the "Accounting Firm") which shall

provide detailed supporting calculations both to the Company and the Executive

within 15 business days of the date requested by the Company or the Executive.

All fees and expenses to the Accounting Firm shall be borne solely by the

Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall

be paid by the Company to the Executive within five days of the receipt of the

Accounting Firm's determination. If the Accounting Firm determines that no

Excise Tax is payable by the Executive, it shall furnish the Executive with a

written opinion that failure to report the Excise Tax on the Executive's

applicable federal income tax return would not result in the imposition of a

negligence or similar penalty. If the Accounting Firm determines that a

reduction in Payments is required as a result of the provisions of the last

sentence of Section 9(a), the Executive, in the Executive’s sole and absolute

discretion, may determine which Payments shall be reduced to the extent

necessary so that no portion thereof shall be subject to the Excise Tax, and the

Company shall pay such reduced amount to the Executive. Any determination by the

Accounting Firm shall be binding upon the Company and the Executive. As a result

of the uncertainty in the application of Section 4999 of the Code at the time of

the initial determination by the Accounting Firm hereunder, it is possible that

Gross-Up Payments which will not have been made by the Company should have been

made ("Underpayment") or Gross-Up Payments are made by the Company which should

not have been made ("Overpayments"), consistent with the calculations required

to be made hereunder. In the event that the Company exhausts its remedies

pursuant to Section 9(c) and the Executive thereafter is required to make a

payment of any Excise Tax, the Accounting Firm shall determine the amount of the

Underpayment that has occurred and any such Underpayment shall be promptly paid

by the Company to or for the benefit of the Executive. In the event the amount

of the Gross-Up Payment exceeds the amount necessary to reimburse the Executive

for his Excise Tax, the Accounting Firm shall determine the amount of the

Overpayment that has been made and any such Overpayment shall be promptly paid

by the Executive to or for the benefit of the Company.

 

(c) The

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

the Gross-Up Payment. Such notification shall be given as soon as practicable

but no later than ten business days after the Executive receives written

notification 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. The Executive

shall not pay such claim prior to the expiration of the 30-day period following

the date on which it 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 the Executive in writing prior to the expiration of such

period that it desires to contest such claim, the 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 the Executive harmless, on an after-tax basis,

    for any taxes, including any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result

    of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c),

    the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo

    any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim

    and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any

    permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal,

    in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if

    the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such

    payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis,

    from any taxes, including any Excise Tax or income 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; and provided, further, that any

    extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which

    such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, 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 the Executive

    shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other

    taxing authority.

 

(d) If, after

the receipt by the Executive of an amount advanced by the Company pursuant to

Section 9(c), the Executive becomes entitled to receive any refund with respect

to such claim, the Executive shall (subject to the Company's complying with the

requirements of Section 9(c)) 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 the Executive of an amount

advanced by the Company pursuant to Section 9(c), a determination is made that

the Executive shall not be entitled to any refund with respect to such claim and

the Company does not notify the Executive in writing of its intent to contest

such denial 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.

 

10.

Confidential Information; Cooperation.

 

(a) The

Executive acknowledges that all information concerning the Company, its plans,

programs, policies, finances, customers, vendors, employees and business shall

be deemed confidential, provided, however, confidential information does not

include information (i) that was or becomes generally available to the Executive

on a non-confidential basis, if the source of this information was not

reasonably known to the Executive to be bound by a duty of confidentiality, (ii)

that was or becomes generally available to the public, other than as a result of

a disclosure by the Executive, directly or indirectly, or (iii) that was

independently developed by the Executive without reference to any confidential

information. Following the end of the Executive’s employment by the Company, or

sooner upon request of the Company, the Executive will deliver to the Company

the originals and all copies of all records and other documents acquired in the

Executive’s capacity as an employee of the Company which relate to confidential

information and which are in the Executive’s possession or within the

Executive’s control, other than records and other documents which (i) relate

directly and primarily to the Executive’s compensation and benefits as an

employee of the Company, or (ii) the Company gives the Executive permission to

retain in the Executive’s possession. The Executive shall not retain or deliver

to any other person any copies of any such confidential records or documents.

 

 

(b) The

Executive agrees that the confidential information is the exclusive property of

the Company, and agrees to use and disclose confidential information only for

the benefit of the Company (including its subsidiaries) and in accordance with

any restrictions placed on its use or disclosure by the Company.

 

(c) The

Executive shall not disclose this Agreement or any provision of this Agreement

to any person without the Company’s prior written consent except that (i) the

Executive may disclose the terms of this Agreement and applicable confidential

information as necessary, in connection with obtaining personal tax, financial

planning or legal advice; (ii) in the event of a dispute between the Company and

the Executive, the Executive may disclose the terms of this Agreement and

applicable confidential information to the arbitrator or court that is

considering the dispute; and (iii) the Executive may disclose the terms of

Section 11 to any person who proposes to engage the Executive as an employee or

consultant. This obligation of the Executive shall continue notwithstanding the

filing of a copy of this Agreement with the Securities and Exchange

Commission.

 

(d)

Disclosure which otherwise would constitute a breach of this Section 10 shall

not be deemed a breach thereof to the extent such disclosure is required by

law.

 

(e) Subject

to Sections 10(c) and 10(d) hereof and notwithstanding any termination of the

Executive's employment with the Company, the obligations of the Executive under

Section 10(a) and 10(b) shall continue so long as the information remains

confidential.

 

(f) Following

termination of the Executive's employment the Executive shall provide such

assistance and cooperation as may reasonably be requested by the Company

concerning any internal, regulatory, governmental or other investigation or any

pending or threatened suit, action or proceeding. Such assistance and

cooperation shall be provided at reasonable times and upon reasonable prior

notice to the Executive, and the Company shall promptly reimburse the Executive

for all out-of-pocket costs reasonably incurred by the Executive in providing

such assistance and cooperation.

 

11.

Non-Competition 

 

 

If during the

Employment Period, the Company shall terminate the Executive's employment other

than for Cause or Disability, or if the Executive shall terminate employment

under this Agreement for Good Reason, in consideration of the payments and other

benefits provided under this Agreement, and unless otherwise agreed in writing

by the Company, the Executive will not, directly or indirectly, in any capacity

(including as director, officer, employee, stockholder, partner, owner,

consultant or advisor) provide services of any kind, anywhere in the world,

until two years following the end of the Executive’s employment by the Company

(“Restricted Period”), to any issuer of MasterCard, VISA, American Express,

Discover Card or any other type of credit card or charge card, any bank or other

lender which makes consumer loans of any kind, any insurance company or agency

which issues or markets personal lines insurance policies, or any affiliate of

any such entity. These services include, but are not limited to, services

relating to (i) sales, endorsement, co-branding or similar agreements, (ii)

product development and marketing, (iii) credit approval and collections, (iv)

customer service, (v) funding or other treasury matters, (vi) loan portfolio

acquisitions, mergers or other acquisitions, (vii) financial, legal or

accounting matters, or (viii) acquisition of or advice or assistance to others

to acquire the Company or MBNA America Bank, N.A. or other subsidiaries or

beneficial ownership of 10% or more of the Company’s Common Stock. In addition,

the Executive agrees that during the Restricted Period, the Executive will not

provide services to any affinity group or commercial organization, or any

affiliate of such entity, relating to an affinity or co-branded credit card,

consumer loan or personal lines insurance program with the Company or any other

entity. Furthermore, during the Restricted Period the Executive shall not

identify to any person, or hire or attempt to hire on behalf of any person, any

individual who is an officer or employee of the Company or any affiliate of the

Company for a position with or otherwise for the purposes of providing services

to any person. The Executive agrees that these restrictions are

reasonable.

 

12.

Successors 

 

(a) This

Agreement is personal to the Executive and without the prior written consent of

the Company shall not be assignable by the Executive otherwise than by will or

the laws of descent and distribution. This Agreement shall inure to the benefit

of and be enforceable by the Executive's legal representatives.

 

(b) This

Agreement shall inure to the benefit of and be binding upon the Company and its

successors and assigns.

 

(c) The

Company will require any successor (whether direct or indirect, by purchase,

merger, consolidation or otherwise) to all or substantially all of the business

and/or assets of the Company to assume expressly and agree to perform this

Agreement in the same manner and to the same extent that the Company would be

required to perform it if no such succession had taken place. As used in this

Agreement, "Company" shall mean the Company as hereinbefore defined and any

successor to its business and/or assets as aforesaid which assumes and agrees to

perform this Agreement by operation of law, or otherwise.

 

13.

Miscellaneous 

 

(a) This

Agreement shall be governed by and construed in accordance with the laws of the

State of Delaware, without reference to principles of conflict of laws. The

captions of this Agreement are not part of the provisions hereof and shall have

no force or effect. This Agreement may not be amended or modified otherwise than

by a written agreement executed by the parties hereto or their respective

permitted successors and legal representatives.

 

(b) All

notices and other communications hereunder shall be in writing and shall be

given by hand delivery to the other party or by registered or certified mail,

return receipt requested, postage prepaid, addressed as follows:

 

If to the

Executive:

 

To the

address shown on the Company’s records for tax reporting purposes.

 

If to the

Company:

 

MBNA

Corporation

Wilmington,

Delaware 19884-0233

 

Attention:

Executive Compensation Department


 

                or such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and 

                communications shall be effective when actually received by the addressee.

 

(c) The

Executive agrees that any breach by the Executive of any provision of Sections

10 or 11 of this Agreement would cause the Company irreparable damage and that

no remedy in this Agreement or available at law would be adequate for such

breach. Accordingly, in addition to any other remedies available under this

Agreement or at law or in equity, the Company may immediately seek enforcement

of this Agreement in a court of appropriate jurisdiction by means of specific

performance or injunction or in any other manner, in any case without the need

for posting of a bond or security of any type. Sections 9, 10 and 11 shall

survive any termination of this Agreement.

 

(d) It is the

intention of the parties that this Agreement shall be enforceable to the fullest

extent allowed by law. In the event that a court holds any provision of this

Agreement to be unenforceable, the parties agree that, if allowed by law, that

provision shall be reduced to the degree necessary to render it enforceable

without affecting the rest of this Agreement, and, if such reduction is not

allowed by law, the parties shall promptly agree in writing to a provision to be

substituted therefor which will have an effect as close as possible to the

invalid provision that is consistent with applicable law. The invalidity or

unenforceability of any provision of this Agreement shall not affect the

validity or enforceability of any other provision of this Agreement.

 

 

(e) The

Company may withhold from any amounts payable under this Agreement such Federal,

state or local taxes as shall be required to be withheld pursuant to any

applicable law or regulation.

 

(f) The

Executive's failure to insist upon strict compliance with any provision hereof

shall not be deemed to be a waiver of such provision or any other provision

hereof.

 

(g) This

Agreement contains the entire understanding of the Company and the Executive

with respect to the subject matter hereof. Until the Effective Date, subject to

the terms of any other employment agreement between the Executive and the

Company, the Executive shall continue to be an "employee at will".

 

 

 

 


 

 

 

IN WITNESS

WHEREOF, the Executive has executed this Agreement and the Company has caused

this Agreement to be executed by its duly authorized officer as of the day and

year first above-written.

 

 

EXECUTIVE:

 


 

MBNA CORPORATION

 

 

By:

 

Name:


Title:


 


 

 

MBNA AMERICA BANK, N.A.

 

 

By:

 

Name:


Title