Exhibit 10.32
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of __, 2004, by and
between National Processing, Inc., an Ohio corporation (the "Company"), and
_______ (the "Executive"). This Agreement supersedes any other Severance
Agreement between the Company and the Executive.
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company and/or a
Subsidiary (as defined below) and has made and is expected to continue to make
major contributions to the profitability, growth and financial strength of the
Company;
WHEREAS, the Company recognizes that, as is the case of most companies,
the possibility of a Change in Control exists;
WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executive officers and other key employees,
including the Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior executives and other
key employees are not practically disabled from discharging their duties in
respect of a proposed or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. CERTAIN DEFINED TERMS: In addition to terms defined elsewhere
herein, the following terms have the following meanings when used in
this Agreement with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a rate
not less than the Executive's annual fixed or base
compensation as in effect for Executive immediately prior to
the occurrence of a Change in Control or such higher rate as
may be in effect from time to time.
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Exhibit 10.32
(b) "Cause" means that, prior to any termination pursuant to
Section 3(a) hereof, the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his/her duties or in the course of
his/her employment with the Company or any Subsidiary;
(ii) intentional wrongful damage to property of the Company
or any Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any
Subsidiary; or
(iv) intentional wrongful engagement in any Competitive
Activity; and any such act shall have been 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 his/her action or omission was in the best
interest of the Company. Nothing herein will limit the
right of the Executive or his/her beneficiaries to
contest the validity or propriety of any such
determination.
(c) "Change in Control" means the occurrence during the Term of
either of the following events:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person other
than NCC, a successor of NCC (direct or indirect, by
purchase, merger, consolidation, reorganization or
otherwise) ("Successor"), or an affiliate of NCC or of a
Successor and as a result of such merger, consolidation
or reorganization less than thirty percent of the
combined voting power of the then outstanding securities
of such resulting corporation or person immediately
after such transaction are held by NCC, a Successor or
an affiliate of NCC or of a Successor; or
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Exhibit 10.32
(ii) The Company sells or otherwise transfers all or
substantially all of its assets or the Company causes or
permits the sale or transfer of all or substantially all
of the assets of any Subsidiary that has assets equal to
or greater than eighty percent of the total assets of
the Company, as reported on a consolidated basis, to
another corporation or other legal person, and as a
result of such sale or transfer less than thirty percent
of the combined voting power of the then outstanding
Voting Stock of such corporation or person immediately
after such sale or transfer is held by NCC, a Successor
or an affiliate of NCC or of a Successor, provided,
however, that a Change in Control of NCC determined by
the standards set forth herein or otherwise shall not
constitute a Change in Control of the Company.
(d) "Competitive Activity" means the 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 competition with the Company. "Competitive
Activity" will not include:
(i) the mere direct or indirect beneficial ownership by
Executive's spouse or parent of securities individually
or in the aggregate of less than five percent (5%) of
the outstanding equity in any such enterprise and the
exercise of rights appurtenant thereto,
(ii) participation in the management of any such enterprise
other than in connection with the competitive operations
of such enterprise or
(iii) participation in the management of any such enterprise
which has been authorized by the Board of Directors of
the Company.
(e) "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 Executive is entitled
to participate, including without limitation any stock option,
stock purchase, stock appreciation savings, pension,
supplemental executive retirement, or other retirement income
or welfare benefit, deferred compensation, incentive
compensation, group or other life, health medical/hospital or
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Exhibit 10.32
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 the
aggregate as are payable thereunder prior to a Change in
Control.
(f) "Incentive Pay" means an annual amount equal to not less than
the highest aggregate annual bonus, incentive or other
payments of cash compensation (including, without limitation,
payments made pursuant to Company's long-term incentive plan
and short-term incentive plan, if any), in addition to Base
Pay, made or to be made in regard to services rendered in any
calendar year during the three calendar years immediately
preceding the year in which the Change in Control occurred
pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program
or arrangement (whether or not funded), or any successor
thereto providing benefits at least as great as the benefits
payable thereunder prior to a Change in Control.
(g) "NCC" means National City Corporation, a Delaware corporation.
(h) "Severance Period" means the period of time commencing on the
date of an occurrence of a Change in Control and continuing
until the earliest of:
(i) the second anniversary of the occurrence of the Change
in Control ;
(ii) the Executive's death, or
(iii) the Executive's attainment of age 65.
(i) "Subsidiary" means an entity in which Company directly or
indirectly beneficially owns 50% or more of the outstanding
Voting Stock.
(j) "Term" means the period commencing as of the date hereof and
expiring as of the later of:
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Exhibit 10.32
(i) the close of business on May 15, 2006, or
(ii) the expiration of the Severance Period; PROVIDED,
HOWEVER, that (A) commencing on May 15, 2005 and each
May 15 thereafter, the Term of this Agreement will
automatically be extended for an additional year unless,
not later than December 31 of the immediately preceding
year, the Company or the Executive shall have given
notice that it or the Executive, as the case may be,
does not wish to have the Term extended and (B) except
as otherwise provided in the last sentence of Section 7,
if, prior to a Change in Control, the Executive ceases
for any reason to be an employee of the Company or any
Subsidiary, thereupon without further action the Term
shall be deemed to have expired and this Agreement will
immediately terminate and be of no further effect. For
purposes of this Section 1(j), the Executive shall not
be deemed to have ceased to be an employee of the
Company or any Subsidiary by reason of the transfer of
Executive's employment between the Company and any
Subsidiary, or among any Subsidiaries.
(k) "Voting Stock" means the then outstanding securities entitled
to vote generally in the election of directors of the Company.
2. OPERATION OF AGREEMENT: This Agreement will be effective and binding
immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement will not be operative
unless and until a Change in Control occurs, whereupon without
further action this Agreement shall become immediately operative.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL:
(a) In the event the Company, a Subsidiary or a successor of the
Company (direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) terminates the
Executive's employment during the Severance Period, the
Executive will be entitled to the severance compensation
provided by Section 4; PROVIDED, HOWEVER, that the Executive
shall not be entitled to the severance compensation provided
by Section 4 hereof only upon the occurrence of one or more of
the following events:
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Exhibit 10.32
(i) The Executive's death occurring prior to termination of
his/her employment;
(ii) Prior to the termination of his/her employment, the
Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability
benefits pursuant to, the long-term disability plan in
effect for, or applicable to, Executive immediately
prior to the Change in Control; or
(iii) Cause.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any
Subsidiary during the Severance Period with the right to
severance compensation as provided in Section 4 upon the
occurrence of one or more of the following events (regardless
of whether any other reason for such termination exists or has
occurred, including without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a
substantially equivalent or higher level office or
position, of or with the Company and/or a Subsidiary, as
the case may be, which the Executive held immediately
prior to a Change in Control, or the removal of the
Executive as a Director of the Company (or any successor
thereto) if the Executive shall have been a Director of
the Company immediately prior to the Change in Control;
(ii) (I) A significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities
or duties attached to the position with the Company and
any Subsidiary which the Executive held immediately
prior to the Change in Control; (II) a reduction in the
aggregate of the Executive's Base Pay and the formula
for determining Incentive Pay received from the Company
and any Subsidiary; or (III) the termination or denial
of the Executive's rights to Employee Benefits or a
reduction in the scope or value thereof, which situation
is not remedied within 10 calendar days after written
notice to the Company from the Executive;
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Exhibit 10.32
(iii) A determination by the Executive (which determination
will be conclusive and binding upon the parties hereto
provided it has been made in good faith and in all
events will be presumed to have been made in good faith
unless otherwise shown by the Company by clear and
convincing evidence) that a change in circumstances has
occurred following a Change in Control, including,
without limitation, a change in the scope of the
business or other activities for which the Executive was
responsible immediately prior to the Change in Control,
which has rendered the Executive substantially unable to
carry out, has substantially hindered Executive's
performance of, or has caused Executive to suffer a
substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached
to the position held by the Executive immediately prior
to the Change in Control, which situation is not
remedied within 10 calendar days after written notice to
the Company from the Executive of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or any Subsidiary by which
Executive is employed or transfer of all or
substantially all of its business and/or assets, unless
the successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to
which all or substantially all of its business and/or
assets have been transferred (directly or by operation
of law) assumed all duties and obligations of the
Company under this Agreement pursuant to Section 9(a);
(v) The Company or any Subsidiary by which Executive is
employed relocates its principal executive offices, or
requires the Executive to have his/her principal
location of work changed, to any location which is in
excess of 25 miles from the location thereof immediately
prior to the Change of Control, or requires the
Executive to travel away from his/her office in the
course of discharging his/her responsibilities or duties
hereunder at least 20% more (in terms of aggregate days
in any calendar year or in any calendar quarter when
annualized for purposes of comparison to any prior year)
than was required of Executive in any of the three full
years immediately
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Exhibit 10.32
prior to the Change in Control without, in either case,
his/her prior written consent; or
(vi) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the
Company or any successor thereto.
(c) A termination by the Company pursuant to Section 3(a) or by
the Executive pursuant to Section 3(b) will not affect any
rights which the Executive may have pursuant to any agreement,
policy, plan, program or arrangement of the Company providing
Employee Benefits, which rights shall be governed by the terms
thereof.
4. SEVERANCE COMPENSATION:
(a) If, following the occurrence of a Change in Control, the
Company or any Subsidiary by which Executive is employed
terminates the Executive's employment during the Severance
Period other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), or if the Executive terminates his/her employment
pursuant to Section 3(b), the Company will pay to the
Executive the following amounts within five business days
after the date (the "Termination Date") that the Executive's
employment is terminated (the effective date of which shall be
the date of termination, or such other date that may be
specified by the Executive if the termination is pursuant to
Section 3(b)) and continue to provide to the Executive the
following benefits:
(i) A lump sum payment (the "Severance Payment") in an
amount equal to two (2) times the sum of (A) Base Pay
(at the highest rate in effect for any period prior to
the Termination Date), plus (B) Incentive Pay
(determined in accordance with the standards set forth
in Section 1(f)) less the sum of (A) any and all
payments received by the Executive from the Company, any
Subsidiary, NCC, a Successor or an affiliate of NCC or a
Successor following the occurrence of a Change in
Control plus (B) any future payments to be made to the
Executive in accordance with any employment agreements
or contracts between the Company, a Subsidiary, NCC or
its affiliates, or a Successor and the Executive
(specifically excluding payments from any deferred
compensation plan).
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Exhibit 10.32
(ii) (A) For twenty-four (24) months (the "Continuation
Period") following the occurrence of a Change in
Control, the Company will arrange to provide the
Executive with Employee Benefits that are welfare
benefits (but not stock option, stock purchase, stock
appreciation or similar compensatory benefits)
substantially similar to those which the Executive was
receiving or entitled to receive immediately prior to
the occurrence of a Change in Control Date, and (B) such
continuation Period will be considered service with the
Company, assuming the amount of Base Pay and Incentive
Pay payable to the Executive during the calendar year
immediately preceding the year in which the Termination
Date occurs, for the purpose of determining service
credits and benefits due and payable to the Executive
under the Company's retirement, supplemental executive
retirement and other benefit plans of the Company
applicable to the Executive, his/her dependents or
his/her beneficiaries immediately prior to the
Termination Date. If beneficiaries and to the extent
that any benefit described in subsections (A) and (B) of
this Section 4(a)(ii) is not or cannot be paid or
provided under any policy, plan, program or arrangement
of the Company or any Subsidiary, as the case may be,
then the Company will itself pay or provide for the
payment to the Executive, his/her dependents and
beneficiaries, of such Employee Benefits. Without
otherwise limiting the purposes or effect of Section 5,
Employee Benefits otherwise receivable by the Executive
pursuant to the subsection (A) of this Section 4(a)(ii)
will be reduced to the extent comparable welfare
benefits are actually received by the Executive from
another employer during the Continuation Period, and any
such benefits received by the Executive shall be
reported by the Executive to the Company.
(b) There will be no right of set-off or counterclaim in respect
of any claim, debt or obligation against any payment to or
benefit for the Executive provided for in this Agreement,
except as expressly provided in the last sentence of Section
4(a)(ii).
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Exhibit 10.32
(c) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide
any benefit required to be made or provided hereunder on a
timely basis, the Company will pay interest on the amount or
value thereof at an annualized rate of interest equal to the
so-called composite "prime rate" as quoted from time to time
during the relevant period in the Midwest Edition of The WALL
STREET JOURNAL. Such interest will be payable as it accrues on
demand. Any change in such prime rate will be effective on and
as of the date of such change.
(d) Notwithstanding any other provision hereof, the parties'
respective rights and obligations under this Section 4 and
under Section 6 will survive any termination or expiration of
this Agreement following a Change in Control or the
termination of the Executive's employment following a Change
in Control for any reason whatsoever.
(e) If the Executive shall become entitled to the benefits
provided by Section 4(a)(i) and Section 4(a)(ii), then the
Executive may, by notice to the Company as provided by Section
10, be released from any covenant not-to-compete with the
Company that the Executive has theretofore undertaken;
provided, however, that if the Executive gives such notice for
relief from a covenant not-to-compete, then the benefits
provided by Section 4(a)(i) shall be reduced by an amount
equal to the sum of (A) Executive's Base Pay (at the highest
rate in effect for any period prior to the Termination Date)
plus (B) Incentive Pay (determined in accordance with the
standards set forth in Section 1(f)) and any remaining
benefits to be provided pursuant to Section 4(a)(ii) shall be
terminated; and provided further, however, that if Executive
shall have received payment of the benefit provided by Section
4(a)(i) prior to receipt by the Company of the notice
contemplated by this Section 4(e), then prior to and as a
condition precedent to Executive being relieved from any
covenant not to compete, the Executive shall reimburse Company
an amount of money equal (i) the sum of (A) Executive's Base
Pay (at the highest rate in effect for any period prior to the
Termination Date) plus (B) Incentive Pay (determined in
accordance with the standards set forth in Section 1(f)) (ii)
less any non-recoverable income taxes paid by Executive
relating to that portion of his 4(a)(i) payment. The waiver of
any covenant not-to-compete contemplated by this Section 4(e)
shall not include any
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Exhibit 10.32
covenant by Executive to maintain and not misapply any of the
Company's confidential business information.
5. NO MITIGATION OBLIGATION: The Company hereby acknowledges that it
will be difficult and may be impossible
(a) for the Executive to find reasonably comparable employment
following the Termination Date, and
(b) to measure the amount of damages which Executive may suffer as
a result of termination of employment hereunder. In addition,
the Company acknowledges that its severance pay plans
applicable in general to its salaried employees do not provide
for mitigation, offset or reduction of any severance payment
received thereunder. Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance
with the terms of this Agreement is hereby acknowledged by the
Company to be reasonable and will be liquidated damages, and
the Executive will not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, nor will any profits, income,
earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise, except as
expressly provided in the last sentence of Section 4(a)(ii).
6. LEGAL FEES AND EXPENSES. It is the intent of the Company that the
Executive not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense
of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to the Executive
hereunder. Accordingly, if it should appear to the Executive that
the company has failed to comply with any of its obligations under
this Agreement or in the event that the Company or any other person
takes or threatens to take any action to declare this Agreement void
or unenforceable, or institutes any litigation or other action or
proceeding designed to deny, or to recover from, the Executive the
benefits provided or intended to be provided to the Executive
hereunder, the company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense
of the company as hereafter provided, to advise and represent the
Executive in connection with any such interpretation, enforcement or
defense, including without limitation the initiation or defense of
any litigation or other legal action, whether by or against
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Exhibit 10.32
the Company or any Director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding
any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the
Executive's entering into an attorney-client relationship with such
counsel, and in that connection the Company and the Executive agree
that a confidential relationship shall exist between the Executive
and such counsel. Without respect to whether the Executive prevails,
in whole or in part, in connection with any of the foregoing, the
Company will pay and be solely financially responsible for any and
all attorneys' and related fees and expenses incurred by the
Executive in connection with any of the foregoing.
7. EMPLOYMENT RIGHTS; TERMINATION PRIOR TO CHANGE IN CONTROL: Nothing
expressed or implied in this Agreement will create any right or duty
on the part of the Company or the Executive to have the Executive
remain in the employment of the Company or any Subsidiary prior to
or following any Change in Control. Any termination of employment of
the executive or the removal of the Executive from the office or
position in the Company following the commencement of any discussion
with a third person that ultimately results in a Change in Control
shall be deemed to be a termination or removal of the Executive
after a Change in Control for purposes of this Agreement.
8. WITHHOLDING OF TAXES: The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes
as the Company is required to withhold pursuant to any law or
government regulation or ruling.
9. SUCCESSORS AND BINDING AGREEMENT:
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding
upon and inure to the benefit of the Company and any successor
to the Company, including without limitation any persons
acquiring directly or indirectly all or substantially all of
the business or assets of the Company whether by purchase,
merger, consolidation,
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Exhibit 10.32
reorganization or otherwise (and such successor shall
thereafter be deemed the "Company" for the purposes of this
Agreement), but will not otherwise be assignable, transferable
or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable
by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in Sections
9(a) and 9(b) hereof. Without limiting the generality or
effect of the foregoing, the Executive's right to receive
payments hereunder will not be assignable, transferable or
delegable, whether by pledge, creation of a security interest,
or otherwise, other than by a transfer by Executive's will or
by the last of descent and distribution and, in the event of
any attempted assignment or transfer contrary to this Section
9(c), the Company shall have no liability to pay an amount so
attempted to be assigned, transferred or delegated.
10. NOTICES: For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in
writing and will be deemed to have been duly given when hand
delivered or dispatched by electronic facsimile transmission (with
receipt thereof orally confirmed), or five business days after
having been mailed by United States registered or certified mail,
return receipt requested, postage prepaid, or three business days
after having been sent by a nationally recognized overnight courier
service such as Federal Express, UPS, or Purolator, addressed to the
Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Executive at his/her principal
residence, or to such other address as any party may have furnished
to the other in writing and in accordance herewith, except that
notices of changes of address shall be effective only upon receipt.
11. GOVERNING LAW: The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the Commonwealth of
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Exhibit 10.32
Kentucky, without giving effect to the principles of conflict of
laws of such Commonwealth.
12. VALIDITY: If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or
circumstances will not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal will be reformed to the
extent (and only to the extent) necessary to make it enforceable,
valid or legal.
13. MISCELLANEOUS: No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and the Company.
No waiver by either party hereto at any time of any breach by the
other party hereto or compliance with any condition or provision of
this Agreement to be performed by such other party will be deemed a
waiver of similar or dissimilar provisions or conditions at the same
or at any prior to subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with
respect to the subject matter hereof have been made by either party
which are not set forth expressly in this Agreement. References to
sections are to references to sections of this Agreement.
14. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
NATIONAL PROCESSING, INC. Executive
By: _____________________________ __________________________
Its _____________________________
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