EXHIBIT 10(M)
FORM OF WACHOVIA CORPORATION
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, made and entered into as of the 1st day of
November, 2001, by and between Wachovia Corporation (the "Company"), a North
Carolina corporation, and ________________ (the "Executive");
WHEREAS, the Management Resources & Compensation Committee (the
"Committee") of 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 service of the Executive.
The Committee believes it is imperative to encourage the Executive's full
attention and dedication to the Company, and to provide the Executive with
compensation and benefits arrangements upon a termination of employment with
the Company which ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with those of other
corporations.
NOW, THEREFORE, in order to accomplish the objectives set forth above
and in consideration of the mutual covenants herein contained, the parties
hereby agree as follows:
1. Employment Period. (a) The "Effective Date" shall mean the
date hereof.
(b) The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company upon the terms and conditions set forth in this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary
thereof (the "Employment Period"); 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 shall be hereinafter
referred to as the "Renewal Date"), unless previously terminated, the
Employment Period shall be automatically extended so as to terminate three
years from such Renewal Date, unless at least 90 days prior to the Renewal Date
the Company or the Executive, respectively, shall give notice to the Executive
or the Company, respectively, that the Employment Period shall not be so
extended. Notwithstanding the foregoing, in the event a "Change in Control" (as
defined herein) occurs, the Employment Period, unless previously terminated,
shall be extended immediately prior to the Change in Control so that the
Employment Period shall terminate no earlier than three years from such Change
in Control.
2. Terms of Employment. (a) Positions and Duties. (i) During the
Employment Period, the Company agrees to employ the Executive, and the
Executive agrees to serve as an employee of the Company and as an employee of
one or more of its subsidiaries. The Executive shall perform such duties and
responsibilities, in such capacity and with such authority, for the Company (or
one or more of its subsidiaries) as the Company may designate from time to
time. Such duties shall be of a type for which the Executive is suited by
background, experience and training, in the Company's reasonable discretion.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote his full professional attention and time during
normal business hours to the business and affairs of the Company and to perform
the responsibilities assigned to the Executive hereunder. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions,
and (C) manage personal investments, so long as such activities do not
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement and are consistent
with the Company's policies. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation. (i) Salary and Bonus. For all services
rendered by the Executive in any capacity under this Agreement, the Company
shall pay the Executive during the Employment Period as compensation (i) an
annual salary in an amount not less than the amount of the Executive's annual
salary as of the Effective Date (the "Annual Base Salary") and (ii) such annual
cash incentive bonus, if any, as may be awarded to
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him by the Board or by a Committee designated by the Board (the "Annual
Bonus"). Such salary shall be payable in accordance with the Company's
customary payroll practices, and any such bonus shall be payable in cash in
accordance with the Company's incentive bonus plans from which the Annual Bonus
is awarded. During the Employment Period prior to the Date of Termination, the
Annual Base Salary shall be reviewed in accordance with the Company's policies
and procedures applicable to the Executive and may be increased from time to
time consistent with such procedures. Any increase in Annual Base Salary shall
not serve to limit or reduce any other obligation to the Executive under this
Agreement. In the event the Executive's actual Annual Base Salary is increased
above the then current Annual Base Salary during the Employment Period, such
increased Annual Base Salary shall constitute "Annual Base Salary" for purposes
of this Agreement, and may not thereafter be reduced except with the written
consent of the Executive.
(ii) Employee Benefits. During the Employment
Period prior to the Date of Termination, the Executive and/or the Executive's
family, as the case may be, shall be eligible to participate in employee
benefit plans generally available to other peer executives of the Company or
its subsidiaries, including without limitation, employee stock purchase plans,
savings plans, retirement plans, welfare benefit plans (including, without
limitation, medical, prescription, dental, disability, life, accidental death,
and travel accident insurance, but excluding severance plans) and similar
plans, practices, policies and programs. In addition, during the Employment
Period, the Executive shall be eligible to participate in the Company's
stock-based incentive compensation plans then available to other peer
executives of the Company with awards thereunder determined by the Board or by
a Committee designated by the Board, in its sole discretion, except as provided
in this Agreement.
(iii) Expenses. During the Employment Period
prior to the Date of Termination, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the Executive in
accordance with the policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at the time the expense is
incurred.
(iv) Fringe Benefits. During the Employment
Period prior to the Date of Termination, the Executive shall be entitled to
fringe benefits and perquisite plans or programs of the Company and its
affiliated companies generally available to executives who are peers of the
Executive; provided that the Company reserves the right to modify, change or
terminate such fringe benefits and perquisite plans or programs from time to
time, in its sole discretion.
(v) Indemnification/D&O Insurance. During the
Employment Period for acts prior to the Date of Termination, the Executive
shall be entitled to indemnification with respect to the performance of his
duties hereunder, and directors' and officers' liability insurance, on the same
terms and conditions as generally available to other peer executives of the
Company and its affiliated companies.
[(vi) SERP Benefits. During the Employment
Period, the Executive shall continue to accrue the benefits under the Senior
Executive Retirement Agreement, dated ____________, between the Company and the
Executive (the "SERP Agreement"). Pursuant to Section 2(b) of the SERP
Agreement, the provisions of this Agreement, including Section 1(b) above,
constitute an agreement between the Company and the Executive to extend the
Executive's employment past the "Normal Retirement Date" (as defined in the
SERP Agreement) if the Executive's employment extends beyond such date. In
addition, the Company hereby agrees that the "Committee" (as defined in the
SERP Agreement) has approved and the Executive may elect a lump sum payment
option under Section 5 of the SERP Agreement.]
3. Termination of Employment.(a) Retirement, Death or
Disability. The Executive's employment shall terminate automatically upon the
Executive's death or Retirement (as defined herein) during the Employment
Period. For purposes of this Agreement, "Retirement" shall mean either (i)
voluntary termination by the Executive of the Executive's employment upon
satisfaction of the requirements for early retirement under the Company's
tax-qualified defined benefit pension plan or (ii) voluntary termination by the
Executive of the Executive's employment upon satisfaction of the requirements
for normal retirement under the terms of the Company's tax-qualified pension
plan. If the Company determines in good faith that 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 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" shall mean termination of the Executive's employment upon
satisfaction of the requirements to receive benefits under the Company's
long-term disability plan.
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(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) the continued and willful failure of the
Executive to perform substantially the Executive's duties with the Company or
one of its affiliates (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Company which specifically
identifies the manner in which the Company believes that the Executive has not
substantially performed the Executive's duties and a reasonable time for such
substantial performance has elapsed since delivery of such demand, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially injurious to the
Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chairman of the Board
or a senior executive officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best interests of the
Company. Following a Change in Control (as defined herein), the Company's
termination of the Executive's employment shall not be deemed to be for Cause
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-fourths
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
such Board), finding that, in the good faith opinion of such Board, the
Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, in the absence of a written consent of the Executive
which expressly refers to a provision of this Section 3(c):
(i) prior to a Change in Control, the
substantial diminution in the overall importance of the Executive's role, as
determined by balancing (A) any increase or decrease in the scope of the
Executive's management responsibilities against (B) any increase or decrease in
the relative sizes of the businesses, activities or functions (or portions
thereof) for which the Executive has responsibility; provided, however, that
none of (I) a change in the Executive's title, (II) a change in the hierarchy,
(III) a change in the Executive's responsibilities from line to staff or vice
versa, and (IV) placing the Executive on temporary leave pending an inquiry
into whether the Executive has engaged in conduct that could constitute "Cause"
under this Agreement, either individually or in the aggregate shall be
considered Good Reason;
(ii) any failure by the Company to comply with
any material provision of this Agreement (including, without limitation, any
provision of Section 2 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;
(iii) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted by this
Agreement;
(iv) at any time prior to the Executive reaching
age 63, the Company giving notice to the Executive of its intention not to
extend the term of this Agreement as provided in Section 1(b);
(v) following a Change in Control, the
relocation of the principal place of the Executive's employment to a location
that is more than 35 miles from such principal place of employment immediately
prior to the date the proposed Change in Control is publicly announced, or the
Company's requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Change in
Control;
(vi) following a Change in Control, the
Company's requiring the Executive or all or substantially all of the employees
of the Company who report directly to the Executive immediately prior to the
date
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the proposed Change in Control is publicly announced to be based at any office
or location other than such person's office or location on such date;
(vii) any failure by the Company to comply with
and satisfy Section 9(c) of this Agreement; [or]
(viii) following a Change in Control, assignment
to the Executive of any duties inconsistent in any respect with the Executive's
position as in effect immediately prior to the public announcement of the
proposed Change in Control (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, or any other action by
the Company which results in any diminution in such position, authority, duties
or responsibilities[.] OR [; or
(ix) the Executive terminating employment for
any reason during the period from January 1, 2004 to March 31, 2004].
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive after a Change in Control shall be conclusive
(including any such determination when the Executive is then eligible for
Retirement). In the event the Company challenges the Executive's determination
of Good Reason, the Company shall continue to make the payments and provide the
benefits to the Executive as set forth in Section 4(a). If it is finally
determined pursuant to the procedures set forth in this Agreement that the
Executive's termination was not for Good Reason, the Executive shall reimburse
the Company the amounts to which it is finally determined to be entitled.
(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
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) to the extent applicable, 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
30 days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder. To
be effective, a Notice of Termination given by the Executive terminating
employment with the Company for Good Reason must be received by the Company no
later than 60 days from the event(s) giving rise to the Good Reason
termination.
(e) Date of Termination. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, the date
of receipt of the Notice of Termination, unless the Company agrees to a later
date no more than 30 days after such notice, as the case may be, (ii) if the
Executive's employment is terminated by the Executive for Good Reason or
Retirement, the date of receipt of the Notice of Termination or any later date
specified therein within 30 days of such notice, as the case may be, (iii) if
the Executive's employment is terminated by the Company other than for Cause or
Disability, the date on which the Company notifies the Executive of such
termination or any later date specified therein within 30 days of such notice,
as the case may be, (iv) if the Executive's employment is terminated by reason
of death or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be, and (v) if the Executive's employment is
terminated by the Executive for other than Good Reason, death, Disability or
Retirement, the date that is 60 days after the date of receipt of the Notice of
Termination by the Company, provided, however, the Company may elect to waive
such notice or place the Executive on paid leave for all or any part of such
60-day period during which the Executive will be entitled to continue to
receive the Annual Base Salary but shall not receive any Annual Bonus or any
other payment from the Company other than reimbursement for expenses as
contemplated in Section 2(b)(iii) and continued participation in the employee
benefit plans as contemplated in Section 2(b)(ii).
(f) Change in Control. For purpose of this Agreement, a
"Change in Control" shall mean:
(i) 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 20% or more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the Company
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entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"; provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change in
Control: (1) any acquisition directly from the Company, (2) any acquisition by
the Company, (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (4) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (iii) of this
Section 3(f); or
(ii) Individuals who, as of the date hereof,
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 hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection to
such nomination) 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 contests by or on behalf of a
Person other than the Board; or
(iii) Consummation of a reorganization, merger,
share exchange 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, (A) 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 60% 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 resulting from such
Business Combination (including, without limitation, a corporation 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) in
substantially the same proportions 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, (B) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from the Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board immediately prior to the time of the execution
of the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the stockholders of the Company
of a complete liquidation or dissolution of the Company.
4. Obligations of the Company upon Termination. (a) Good Reason;
Company Termination other than for Cause, Death, Disability or Retirement. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, Death, Disability or Retirement or the
Executive shall terminate employment for Good Reason:
(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
(A) the Executive's Annual Base Salary through the Date of Termination to the
extent not theretofore paid, and (B) the product of (1) an Annual Bonus of an
amount equal to the greater of (x) the highest annual cash incentive bonus paid
by the Company to the Executive for the three calendar years prior to the Date
of Termination or (y) the Executive's then applicable "target" incentive bonus
under the then applicable cash incentive compensation plan prior to the Date of
Termination (the greater of clauses (x) or (y) is defined as the "Base Bonus"),
and (2) a fraction, the numerator of which is the number of days in the fiscal
year in which the Date of Termination occurs through the Date of Termination,
and the denominator of which is 365, to the extent not theretofore paid (the
"Pro Rata Bonus"), (C) any unpaid Annual Bonus for the prior year, (D) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and (E) any accrued paid time off, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(A), (B), (C), (D) and (E) shall be hereinafter referred to as the "Accrued
Obligations").
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For purposes of determining the Base Bonus hereunder, the Company shall exclude
any special or one-time bonuses and any premium enhancements to bonuses but
shall include any portions of bonuses (other than the excluded bonuses) which
have been deferred by the Executive;
(ii) for each of the three years after the
Executive's Date of Termination (the "Compensation Continuance Period"), the
Company shall pay to the Executive a cash benefit equal to the sum of (A) the
Executive's highest Annual Base Salary during the twelve months immediately
prior to the Date of Termination, (B), the Base Bonus, and (C) the amount equal
to the highest matching contribution by the Company to the Executive's account
in the Company's 401(k) plan for the five years immediately prior to the Date
of Termination (the payments described in clauses (A), (B) and (C) shall be
hereinafter referred to as the "Compensation Continuance Payments" and,
together with the benefits referred to in Sections 4(a)(iii), (iv), (v), (vi)
[and (vii)] OR [, (vii) and (viii)], shall be hereinafter referred to as the
"Compensation Continuance Benefits"). The Company shall make the Compensation
Continuance Payments no more frequently than semi-monthly (and may make the
Compensation Continuance Payments in accordance with the Company's normal
payroll policies and practices), and shall withhold from the Compensation
Continuance Payments all applicable federal, state and local taxes.
Notwithstanding anything contained in this Agreement to the contrary, in the
event a Change of Control has occurred on or prior to the Date of Termination,
the Company shall pay the Compensation Continuance Payments to the Executive in
a lump sum in cash within 30 days after the Date of Termination.
(iii) during the Compensation Continuance Period
(or for the remainder of the Executive's life if such Date of Termination is
after a Change in Control), or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, the Company shall
continue medical, dental and life insurance benefits to the Executive and/or
the Executive's family on a substantially equivalent basis to those which would
have been provided to them in accordance with the medical, dental and life
insurance plans, programs, practices and policies described in Section 2(b)(iv)
of this Agreement if the Executive's employment had not been terminated.
Notwithstanding the foregoing, in the event the Executive becomes reemployed
with another employer and becomes eligible to receive medical, dental and/or
life insurance benefits from such employer, the medical, dental and/or life
insurance benefits described herein shall be secondary to such benefits during
the period of the Executive's eligibility, but only to the extent that the
Company reimburses the Executive for any increased cost and provides any
additional benefits necessary to give the Executive the benefits provided
hereunder. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive shall be considered
to have terminated employment with the Company on the Date of Termination.
Notwithstanding the foregoing, if the Company reasonably determines that
providing continued coverage under one or more of its welfare benefit plans
contemplated herein could adversely affect the tax treatment of other
participants covered under such plans, or would otherwise have adverse legal
ramifications, the Company may, in its discretion, either (A) provide other
coverage at least as valuable as the continued coverage through insurance or
otherwise, or (B) pay the Executive a lump sum cash amount that reasonably
approximates the after-tax value to the Executive of the premiums for continued
coverage, in lieu of providing such continued coverage;
(iv) during the Compensation Continuance Period,
to the extent not otherwise vested in accordance with the Company's stock
compensation plans, all unvested options to purchase shares of Company common
stock and restricted stock awards will continue to vest in accordance with the
applicable terms of such stock option or restricted stock grants as if the
Executive's employment with the Company had not been terminated. At the end of
the Compensation Continuance Period, to the extent not otherwise vested in
accordance with the preceding sentence, all unvested stock options and
restricted stock awards will vest. Notwithstanding the termination of the
Executive's employment with the Company, all stock options granted to the
Executive as of the date of this Agreement and during the Employment Period
will be exercisable until the scheduled expiration date of such stock options;
provided, however, in the event any such stock options are designated as
"incentive stock options" pursuant to section 422 of the Code (as defined
herein), such stock options shall be treated as non-qualified stock options for
purposes of this sentence to the extent that they are exercised after the
period specified in section 422(a)(2) of the Code (to the extent such provision
applies);
(v) during the Compensation Continuance Period,
the Executive shall be entitled to continue to participate in the Company's
fringe benefit and perquisite plans or programs in which the Executive
participated immediately prior to the Date of Termination, in each case in
accordance with the Company's plans, programs, practices and policies;
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(vi) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (excluding any severance
plan, program, policy or practice) through the Date of Termination (such other
amounts and benefits shall be hereinafter referred to as the "Other Benefits");
[and]
(vii) the Company will provide outplacement
services to the Executive in accordance with the Company's policies generally
applicable to involuntarily terminated employees[.] OR [; and
(viii) for the purpose of computing the benefits
payable to the Executive under the SERP Agreement (A) the Executive shall be
credited with service as if the Executive continued to be employed by the
Company during the Compensation Continuance Period, and (B) one-third of the
aggregate Compensation Continuance Payments (whether or not such payments are
paid in a lump sum) shall be considered as the annual compensation paid to the
Executive during each year of the Compensation Continuance Period.]
(b) 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 for payment of Accrued
Obligations, Other Benefits, and the payment of an amount equal to the
Executive's Annual Base Salary. Accrued Obligations and cash payments pursuant
to the preceding sentence 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. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 4(b) shall include, without limitation,
and the Executive's estate and/or beneficiaries shall be entitled to receive,
death benefits then applicable to the Executive.
(c) Retirement. If the Executive's employment is
terminated by reason of the Executive's Retirement during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive under this Agreement, other than for payment of Accrued Obligations
and Other Benefits. Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this
Section 4(c) shall include, without limitation, and the Executive shall be
entitled to receive, all retirement benefits then applicable to the Executive,
including but not limited to any SERP benefits then applicable to the Executive
under the SERP Agreement.
(d) 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 payment of Accrued Obligations, Other Benefits, and
the payment of an amount equal to the Executive's Annual Base Salary. Accrued
Obligations and the cash payments pursuant to the preceding sentence shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 4(d) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive, disability
and other benefits then applicable to the Executive.
(e) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated by the Company for Cause or by the
Executive without Good Reason (other than for Retirement) during the Employment
Period, this Agreement shall terminate without further obligations of the
Company to the Executive other than the obligation to pay to the Executive (x)
his Annual Base Salary through the Date of Termination, (y) the amount of any
compensation previously deferred by the Executive, and (z) Other Benefits, in
each case only to the extent owing and theretofore unpaid.
5. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify (excluding any
severance plan or program of the Company), nor subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company or any of its affiliated companies
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
7
6. Full Settlement. Except as specifically provided in this
Agreement, 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 the amounts payable to the Executive under
any of the provisions of this Agreement and, such amounts shall not be reduced
whether or not the Executive obtains other employment. The Executive
acknowledges and agrees that subject to the payment by the Company of the
benefits provided in this Agreement to the Executive, in no event will the
Company or its subsidiaries or affiliates be liable to the Executive for
damages under any claim of breach of contract as a result of the termination of
the Executive's employment. In the event of such termination, the Company shall
be liable only to provide the benefits specified in this Agreement. The Company
agrees to pay as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"). Notwithstanding the foregoing, if it is finally
judicially determined that the Executive brought any claims contemplated in the
previous sentence in bad faith, the Executive shall reimburse the Company for
such fees and expenses which are reasonably related to such bad faith claim.
7. Covenants. (a) The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret, non-public or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their related businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company or any of its
affiliated companies (or predecessors thereto). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it. In addition to the
foregoing, the Executive will refrain from taking any action or making any
statements, written or oral, which are intended to or which disparage the
business, goodwill or reputation of the Company or any of its affiliated
companies, or their respective directors, officers, executives or other
employees, or which could adversely affect the morale of employees of the
Company or any of its affiliated companies.
(b) (i) While employed by the Company and for three
years after the Date of Termination (which may include the Compensation
Continuance Period), the Executive shall not, directly or indirectly, on behalf
of the Executive or any other person, (A) solicit for employment by other than
the Company, (B) encourage to leave the employ of the Company, or (C) interfere
with the Company's or its affiliated companies' relationship with, any person
employed by the Company or its affiliated companies.
(ii) While employed by the Company and for three
years after the Date of Termination (which may include the Compensation
Continuance Period), the Executive will not become a director, officer,
employee or consultant engaging in activities similar to those performed by a
senior officer for any business which is in competition with any line of
business of the Company or its affiliates and in which the Executive
participated in a direct capacity while he was employed by the Company or its
affiliates (including predecessors thereof) at any time within the one year
period preceding the Effective Date and which has offices in any location in
which the Executive had supervisory responsibility in the geographic footprint
of First Union National Bank (or successors thereto, including but not limited
to, Florida, Georgia, South Carolina, Tennessee, North Carolina, Virginia,
Maryland, Pennsylvania, New Jersey, Delaware, New York, Connecticut, and
Washington, D.C. plus any other state or states added during the Employment
Period) during that one year period. The Executive expressly acknowledges the
reasonableness of such restrictions and such geographic area. Further, during
such period, the Executive will not acquire an equity or equity-like interest
in such an organization for his own account, except that he may acquire equity
interests of not more than 5% of any such organization from time to time as an
investment. Notwithstanding anything to the contrary contained herein, this
Section 7(b)(ii) shall not apply if the Executive terminates employment with
the Company pursuant to Retirement or the Executive terminates employment with
the Company for any reason following a Change in Control or the Company
terminates the Executive's employment for any reason following a Change in
Control. Upon the Executive's request to the Company's Chief Executive Officer,
the Company will provide an advance opinion as to whether a proposed activity
would violate the provisions of this Section 7(b)(ii).
(iii) During the Compensation Continuance Period,
the Executive shall provide consulting services to the Company at such time or
times as the Company shall reasonably request, subject to
8
appropriate notice and to reimbursement by the Company of all reasonable travel
and other expenses incurred and paid by the Executive in accordance with the
Company's then-current policy for expense reimbursement. In the event the
Executive shall engage in any employment permitted hereunder during the
Compensation Continuance Period for another employer or on a self-employed
basis, the Executive's obligation to provide the consulting services hereunder
shall be adjusted in accordance with the requirements of such employment.
(c) In the event of a breach or threatened breach of
this Section 7, the Executive agrees that the Company shall be entitled to
injunctive relief in a court of appropriate jurisdiction to remedy any such
breach or threatened breach and, prior to a Change in Control, the Company may
terminate the Compensation Continuance Period and the Compensation Continuance
Benefits, if applicable, in its sole discretion. The Executive acknowledges
that monetary damages would be inadequate and insufficient remedy for a breach
or threatened breach of Section 7. Following the occurrence of a Change in
Control, in no event shall an asserted violation of the provisions of this
Section 7 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement. If it is finally determined
pursuant to the procedures set forth in this Agreement that the Executive did
not breach this Section 7, the Company shall reimburse the Executive the
amounts to which it is finally determined to be entitled.
(d) Any termination of the Executive's employment or of
this Agreement shall have no effect on the continuing operation of this Section
7; provided, however, upon termination of this Agreement due to the Company's
or the Executive's failure to extend the term of this Agreement pursuant to
Section 1(b), Section 7(b)(ii) shall no longer apply to the Executive if the
Executive's employment shall terminate after the term of this Agreement
expires; and provided, further, Section 7(b)(ii) shall not apply if the
Executive terminates employment with the Company pursuant to Retirement or the
Executive terminates employment with the Company for any reason following a
Change in Control or the Company terminates the Executive's employment for any
reason following a Change in Control.
(e) The Executive hereby agrees that prior to accepting
employment with any other person or entity during the Employment Period or
during the three years following the Date of Termination (which may include the
Compensation Continuance Period), the Executive will provide such prospective
employer with written notice of the existence of this Agreement and the
provisions of Section 3(e) and this Section 7, with a copy of such notice
delivered simultaneously to the Company in accordance with Section 11(c). The
foregoing provision shall not apply if the Company terminates the Executive's
employment without Cause following a Change in Control, or if the Executive
terminates his employment for Good Reason following a Change in Control.
8. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive following a Change in Control
(whether paid or payable or distributed or distributable pursuant to the terms
of the Agreement or otherwise, but determined without regard to any additional
payments required under this Section 8) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code (or any successor statute) 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.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, 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 KPMG LLP or such other certified public accounting firm reasonably
acceptable to the Company (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 30
business days of the receipt of notice from the Company that there has been a
Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by
the Company to the Executive by the due date for the payment of any Excise Tax,
or, if earlier, 30 days after the receipt of the Accounting Firm's
determination. 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"), consistent with the calculations required to be made
hereunder. In the
9
event that the Company exhausts its remedies pursuant to Section 8(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.
(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 is informed in writing 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 effectively contest such claim, 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 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 8(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego 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 xxx 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 xxx 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 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 further provided 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 of an amount advanced by the
Company pursuant to Section 8(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 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto) upon receipt thereof. If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 8(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 or refund prior to
the expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
(e) For purposes of this Section 8, any reference to the
Executive shall be deemed to include the Executive's surviving spouse, estate
and/or beneficiaries with respect to payments or adjustments provided by this
Section 8.
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9. Successors. (a) This Agreement is personal to the Executive
and without the prior consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.
(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 in writing 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.
10. Arbitration. Except with respect to the Company's rights to
injunctive relief for matters arising under Section 7 of this Agreement, any
disputes or controversies arising under or in connection with this Agreement
(including, without limitation, whether any such disputes or controversies have
been brought in bad faith) shall be settled exclusively by arbitration in
Charlotte, North Carolina in accordance with the commercial arbitration rules
of the American Arbitration Association then in effect; provided, however, that
the Company may invoke the American Arbitration Association's Optional Rules
for Emergency Measures of Protection. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
11. General Provisions. (a) Governing Law; Amendment;
Modification. This Agreement shall be governed and construed in accordance with
the laws of the State of North Carolina, without reference to principles of
conflict of laws. This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) Severability. If, for any reason, any provision of
this Agreement is held invalid, such invalidity shall not affect any other
provision of this Agreement not held so invalid, and each such other provision
shall to the full extent consistent with law continue in full force and effect.
If any provision of this Agreement shall be held invalid in part, such
invalidity shall in no way affect the rest of such provision not held so
invalid and the rest of such provision, together with all other provisions of
this Agreement, shall to the full extent consistent with law continue in full
force and effect.
(c) Notices. All notices under this Agreement shall be
in writing and shall be deemed effective when delivered in person (in the
Company's case, to its Secretary) or forty-eight (48) hours after deposit
thereof in the U.S. mail, postage prepaid, for delivery as registered or
certified mail -- addressed, in the case of the Executive, to such Executive at
his residential address, and in the case of the Company, to its corporate
headquarters, attention of the Secretary, or to such other address as the
Executive or the Company may designate in writing at any time or from time to
time to the other party. In lieu of notice by deposit in the U.S. mail, a party
may give notice by telegram or telex.
(d) Tax Withholding. The Company may withhold from any
amounts payable under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any applicable law or
regulation.
(e) Strict Compliance. The Executive's or the Company's
failure to insist upon strict compliance with any provision of this Agreement
or the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3(c) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement. The waiver, whether express or
implied, by either party of a violation of any of the provisions of this
Agreement shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
(f) Entire Understanding. From and after the Effective
Date this Agreement shall supersede any other agreement between the parties
with respect to the subject matter hereof, including without limitation, the
Employment Agreement between the Company and the Executive dated as of
___________, 19__[, but excluding, except as provided herein, the SERP
Agreement].
(g) Conflicts with Plans. To the extent any plan,
policy, practice or program of or contract or agreement with the Company
attempts to cap, restrict, limit or reduce payments to the Executive hereunder,
such
11
caps, restrictions, limitations or reductions are expressly modified to permit
the payments contemplated hereby and the parties intend that the terms of this
Agreement shall be construed as having precedence over any such caps,
restrictions, limitations or reductions.
(h) Release and Waiver of Claims. In consideration of
any Compensation Continuance Benefits the Company provides to the Executive
under this Agreement, the Executive upon termination of employment with the
Company shall execute a separate general release and waiver of claims in favor
of the Company, its affiliates and personnel in a form acceptable to the
Company. The Executive shall not be eligible for any Compensation Continuance
Benefits until the Executive has executed such release and waiver of claims.
(i) Creditor Status. No benefit or promise hereunder
shall be secured by any specific assets of the Company. The Executive shall
have only the rights of an unsecured general creditor of the Company in seeking
satisfaction of such benefits or promises.
(j) No Assignment of Benefits. No right, benefit or
interest hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or set off in respect of any claim, debt or obligation, or
similar process.
[(k) SERP Agreement. Sections 2(b)(vi) and 4(a)(viii) of
this Agreement constitute an amendment to the SERP Agreement. All provisions in
the SERP Agreement not affected by such amendment shall remain in full force
and effect.]
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officers thereunto duly authorized, and the Executive has
signed this Agreement under seal, all as of the date and year first above
written.
WACHOVIA CORPORATION ATTEST: [SEAL]
By:
-------------------------------- ----------------------------------
Name: X. Xxxxxxx Xxxxxxxx Xxxx X. Xxxxxxx
Title: Chief Executive Officer Secretary
---------------------------- (SEAL)
[Executive]
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