EMPLOYMENT AGREEMENT
by and between
NATIONSBANK CORPORATION
and
XXXXXXX X. XXXX
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 10, 1997, by and between Xxxxxxx X. Xxxx
(the "Executive") and NationsBank Corporation, a North Carolina corporation (the
"Corporation").
The Executive is currently employed by Xxxxxxx Xxxxx, Inc., a Florida
corporation ("Xxxxxxx"), as Chairman and Chief Executive Officer and is a party
to an employment agreement with Xxxxxxx (the "Prior Agreement") dated as of July
1, 1996. Pursuant to the Agreement and Plan of Merger, dated as of August 29,
1997 (the "Merger Agreement"), by and between the Corporation and Xxxxxxx,
Xxxxxxx will merge (the "Merger") with and into the Corporation (or a
wholly-owned subsidiary of the Corporation) as of the "Effective Time" (as
defined in the Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Executive will contribute significantly to the growth and success of the
Corporation following the Effective Time. The Board desires to provide for the
continued employment of the Executive and to encourage the attention and
dedication to the Corporation of the Executive as a member of the Corporation's
management, in the best interests of the Corporation and its shareholders. The
Executive is willing to commit himself to serve the Corporation on the terms and
conditions herein provided.
In order to effect the foregoing, the Corporation and the Executive
wish to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment; Term. The Corporation hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth. The period of employment of the Executive by
the Corporation hereunder (the "Employment Period") shall commence on the date
(the "Effective Date") on which the Effective Time occurs and shall end on the
Executive's Date of Termination (as defined in Section 8(b) hereof). The term of
this Agreement (the "Term") shall begin on the Effective Date and shall end on
the third anniversary thereof.
2. Prior Agreement. As of the Effective Date, the Prior Agreement is
hereby amended and superseded in its entirety by the terms and provisions of
this Agreement.
3. Position and Duties. As of the Effective Date, the Executive shall
serve as a member of the Board and of the Corporation's Executive Committee.
Immediately upon the retirement of the Corporation's current Chairman of the
Board, the Executive shall serve as Chairman of the Board, in which capacity the
Executive shall perform the usual and customary duties of the chairman of the
board of a major United States financial institution. As of the
Effective Date, the Executive shall also represent the Corporation at
appropriate national trade association and industry group meetings, including
but not limited to the International Financial Conference (Golembe Group) and
the Annual CEO Conference. The Corporation agrees to support the Executive's
election and reelection to the Board during the Term. Following termination of
the Executive's employment hereunder for any reason other than for Cause, the
Executive shall continue to serve as a director of the Corporation until the end
of the Term.
4. Place of Performance. In connection with the Executive's employment
by the Corporation, the Executive's principal business address shall be at
Xxxxxxx'x current principal executive offices in Jacksonville, Florida or in
such other place as the Executive and the Corporation may agree.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Corporation
shall pay the Executive an annual base salary ("Base Salary") of $1,000,000 or,
if greater, an amount equal to the annual base salary in effect from time to
time for the Chief Executive Officer of the Corporation. Base Salary shall be
paid in approximately equal installments in accordance with the Corporation's
customary payroll practices. The salary payments (including any increased salary
payments) hereunder shall not in any way limit or reduce any other obligation of
the Corporation hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the Corporation to
pay the Executive's salary hereunder.
(b) Bonuses. During the Employment Period, the Executive shall
receive annual bonuses (each an "Annual Bonus"), each of which shall be at least
equal to 100% of the annual bonus awarded to the Chief Executive Officer of the
Corporation; provided, however, that each Annual Bonus shall be no less than
$2,500,000. The Annual Bonus shall be paid at a time and in a manner consistent
with the time and manner in which the Annual Bonus is paid to the Chief
Executive Officer of the Corporation.
(c) Equity-Based Compensation. The Corporation shall grant to
the Executive (i) as of the Effective Date, 250,000 restricted shares of common
stock of the Corporation and (ii) as of the Effective Date and as of each of the
first two anniversaries of the Effective Date during the Employment Period, an
option to purchase 200,000 shares (subject to equitable adjustment in the event
of a stock split or similar event as provided in the Corporation's Key Employee
Stock Plan) of common stock of the Corporation, all pursuant to the
Corporation's Key Employee Stock Plan. Subject to the provisions hereof, (x) the
restrictions with respect to one-third of the shares subject to the grant
described in clause (i) of the preceding sentence shall lapse on each
anniversary of the Effective Date, (y) the options described in clause (ii) of
the preceding sentence shall become exercisable in three equal annual
installments commencing with the date of grant, provided that any such options
not yet exercisable on the last day of the Term shall become exercisable on such
day, and (z) all previously awarded and outstanding options described in clause
(ii) of the preceding sentence shall remain exercisable for the three-year
period commencing with the date of the Executive's termination of employment or
until the original expiration date of such options, if earlier.
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(d) Expenses. The Corporation shall promptly reimburse the
Executive for all reasonable business expenses incurred during the Employment
Period by the Executive in performing services hereunder, including all expenses
of travel and living expenses while away from home on business or at the request
of and in the service of the Corporation (including expenses incurred in
connection with Executive's attendance at the trade association and industry
group meetings referred to in Section 3 hereof), provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Corporation.
(e) Other Benefits.
(i) During the Employment Period, the
Executive shall be entitled to participate in all of the
employee benefit plans and arrangements made available by the
Corporation to its executive officers, subject to and on a
basis consistent with the terms, conditions and overall
administration of such plans and arrangements, and shall be
entitled to all perquisites and special benefits provided to
senior executives of the Corporation.
(ii) Notwithstanding clause (i) above: (1)
the Corporation shall provide to the Executive and his spouse,
at the Corporation's expense, lifetime retiree medical
benefits equal to the medical benefits provided to retired
employees of the Corporation at the Effective Date or as the
same may be increased thereafter; and (2) during the
Employment Period and thereafter the Corporation shall provide
to the Executive, at the Corporation's expense, a home
security system and related security measures for the
Executive and his family, payment of club dues, unlimited use
of the Corporation's private planes (with all taxes associated
therewith paid by the Corporation on a grossed-up basis), use
of the Corporation's apartments, use of a Corporation
automobile (which shall be transferred to the Executive at his
request during the Term), an annual executive physical and
financial planning and tax preparation services, in each case
on a basis no less favorable than as provided by Xxxxxxx as of
the date hereof.
(iii) During the Employment Period and for a
reasonable period thereafter, the Executive shall be entitled
to remove from his office any and all items of personal
importance to him, including but not limited to furnishings
and any items of an ornamental or decorative nature. The
Corporation shall, at the Executive's request, transfer
ownership of any such items to the Executive.
(iv) Notwithstanding clause (i) above, as of
the Effective Date the Executive shall be designated a
participant in the NationsBank Corporation and Designated
Subsidiaries Supplemental Executive Retirement Plan ("SERP I")
which shall provide the Executive with a target annual
retirement benefit equal to sixty percent (60%) of the
Executive's final five-year average earnings, offset by the
Executive's annual retirement benefits from the Corporation's
tax-qualified defined benefit plan, the Corporation's ERISA
restoration plan, Xxxxxxx'x tax-qualified defined benefit
plan, the Supplemental Executive Retirement Plan of Xxxxxxx
Xxxxx, Inc. and its Affiliates (the "Xxxxxxx SERP"), any plan
maintained
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by any previous employer of the Executive (which previous
employer plan offset will be calculated in accordance with
Section 3.1(b)(1)(B) of the Xxxxxxx SERP as in effect on the
date hereof) and social security. The Executive shall be
credited with the Executive's service with, and compensation
from, Xxxxxxx prior to the Effective Date for purposes of
determining the Executive's SERP I target benefit. In no event
shall the annual retirement benefit payable to the Executive
from SERP I after the offsets listed above (the "Net SERP I
Benefit") be less than $1,825,000, and the Executive shall be
eligible to commence the Executive's Net SERP I Benefit upon
the Executive's attainment of age sixty-five (65). Upon the
Executive's death, his beneficiary shall be entitled to
receive until such beneficiary's death an annual benefit equal
to seventy-five percent (75%) of the Executive's Net SERP I
Benefit. Notwithstanding the foregoing provisions of this
clause, the Executive shall be entitled to receive the lump
sum value of the Executive's Net SERP I Benefit within thirty
(30) days following the Executive's Date of Termination (as
defined in Section 8(b) below) calculated using a discount
rate of five percent (5%) and the 1983 Group Annuity Mortality
Table and assuming a three year age difference between the
Executive and the Executive's spouse. Any such election to
receive a lump sum benefit may be made by the Executive's
delivery of a written election to the Corporation on, or at
any time after, the Effective Date. Such election may be made
by the Executive without the consent of the Corporation or any
administrative committee under SERP I, and no financial
penalty or other reduction in the lump sum value calculated
above shall be imposed as the result of such lump sum
election. In the event the Executive elects a lump sum payment
of the Executive's Net SERP I Benefit and dies prior to
receiving such payment, the lump sum value of the Executive's
Net SERP I Benefit (calculated as if the Executive had
terminated employment on the date prior to his death) shall be
paid to the Executive's estate or other designated
beneficiary. See Section 14(d) for special provisions related
to an income tax gross-up related to the Executive's Net SERP
I Benefit.
(f) Vacation. The Executive shall be entitled to (i) the
number of vacation days in each calendar year, (ii) compensation in respect of
earned but unused vacation days, and (iii) all paid holidays, in each case as
the same may be provided by the Corporation to its similarly situated executive
officers.
(g) Services Furnished. During the Employment Period, the
Corporation shall furnish the Executive with office space, stenographic
assistance and such other facilities and services as are provided to the
Executive by Xxxxxxx as of the date hereof. Following termination of the
Executive's employment hereunder for any reason, the Executive shall continue to
be provided with office space, stenographic assistance and such other facilities
and services that are commensurate with his former position.
6. Offices. Subject to Sections 3 and 4, the Executive agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of any of the Corporation's subsidiaries and as a member of any committees of
the board of directors of any such corporations, and in one or more executive
positions of any of the Corporation's subsidiaries,
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provided that the Executive is indemnified for serving in any and all such
capacities on a basis no less favorable than is currently or may be provided to
any other director of the Corporation, any of its subsidiaries, or in connection
with any such executive position, as the case may be.
7. Termination. The Employment Period shall end in the event of a
termination of the Executive's employment in accordance with any of the
provisions of this Section 7, and the Term shall end in the event of a
termination of Executive's employment in accordance with the provisions of
subsection (c) of this Section 7, in each case, on the Executive's Date of
Termination (as defined in Section 8(b) below).
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for the entire period of six
consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of his duties hereunder on a full-time basis, the Corporation may
terminate the Executive's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Corporation
shall have "Cause" to terminate the Executive's employment hereunder upon the
occurrence of any of the following events:
(i) the conviction of the Executive
for the commission of a felony involving dishonesty with
respect to the Corporation; or
(ii) gross and willful misconduct by
the Executive that is demonstrably and materially injurious to
the Corporation or its subsidiaries, whether monetarily or
otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds (2/3) of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Executive's part shall be considered "willful"
unless done or failed to be done by the Executive in bad faith and without
reasonable belief that the Executive's action or omission was in the best
interest of the Corporation.
(d) Good Reason. The Executive may terminate his employment
hereunder for "Good Reason." The Executive shall be deemed to have terminated
his employment for
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Good Reason if his employment terminates for any reason other than by the
Corporation for Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's
employment by the Corporation or by the Executive (other than termination
pursuant to Section 7(a) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice that
shall indicate the specific termination provision in this Agreement relied upon
and shall set 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.
(b) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated pursuant to Section 7(a) above, the
date of the Executive's death, (ii) if the Executive's employment is terminated
pursuant to section 7(b) above, thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the performance of
his duties on a full-time basis during such thirty (30) day-period), (iii) if
the Executive's employment is terminated pursuant to Section 7(c) above, the
date specified in the Notice of Termination, and (iv) if the Executive's
employment is terminated pursuant to Section 7(d) above, the date on which a
Notice of Termination is given or any later date (within 30 days) set forth in
such Notice of Termination; provided, however, that, if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
(c) Compensation During Dispute. If a purported termination
occurs during the Term and such termination is disputed in accordance with
subsection (b) of this Section 8, the Corporation shall continue to pay the
Executive the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the Date of Termination, determined in accordance with
subsection (b) of this Section 8. Amounts paid under this Section 8(c) are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to physical
or mental illness ("Disability Period"), the Executive shall continue to receive
the Base Salary at the rate in effect at the beginning of such period as well as
all other payments and benefits set forth in Section 5 hereof, reduced by any
payments made to the Executive during the disability period under the disability
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benefit plans of the Corporation then in effect or under the Social Security
disability insurance program ("Disability Payments"). Subsequent to the
termination of the Executive's employment pursuant to Section 7(b), or in the
event the Executive's employment is terminated by reason of his death, the
Corporation shall pay to the Executive, his legal representative or his
successors (as described in Section 12(b)) the payments and benefits set forth
in subsection (b) of this Section 9.
(b) By the Corporation without Cause or by the Executive for
Good Reason. If during the Term the Executive's employment is terminated by the
Corporation other than for Cause or by the Executive for Good Reason, then:
(i) the Corporation shall pay the Executive
his Base Salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given; any bonus
payable hereunder in respect of a period which ended prior to
the Date of Termination and which had not yet been paid; and
an amount equal to the minimum bonus referred to in Section
5(b) hereof, multiplied by a fraction, the numerator of which
shall be the number of days from the beginning of the
applicable period to and including the Date of Termination and
the denominator of which shall be 365;
(ii) in lieu of any further salary or bonus
payments to the Executive for periods subsequent to the Date
of Termination, the Corporation shall pay as liquidated
damages to the Executive an aggregate amount equal to the
product of (A) the number of years (including fractions
thereof) remaining in the Term as of the Date of Termination
and (B) the sum of (1) the Executive's Base Salary rate in
effect as of the Date of Termination, and (2) the minimum
annual bonus referred to in Section 5(b) hereof, such amount
to be paid in a cash lump sum within five (5) days following
the Date of Termination;
(iii) all equity based awards described in
Section 5(c) hereof shall become fully vested and exercisable,
as applicable, and all options described in Section 5(c) that
are then outstanding shall remain exercisable for the
three-year period commencing with the Date of Termination;
(iv) the Corporation shall continue to
provide to the Executive the benefits described in Section
5(e)(i) hereof for the remainder of the Term. Welfare and
other insurance benefits otherwise receivable by the Executive
pursuant to this Section 9(b)(iv) shall be reduced to the
extent comparable benefits are actually received by the
Executive from a subsequent employer during the period during
which the Corporation is required to provide such benefits,
and the Executive shall report any such benefits actually
received to the Corporation; and
(v) if the Executive's employment is
terminated by the Corporation other than for Cause (and not by
the Executive for Good Reason), the Corporation shall grant to
the Executive an immediately exercisable option to
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purchase that number of shares of common stock of the
Corporation that he would have been granted pursuant to
Section 5(c) hereof during the remainder of the Term had his
employment not been terminated.
(c) By Corporation for Cause. If the Executive's employment
shall be terminated by the Corporation for Cause, then the Corporation shall pay
the Executive his Base Salary (at the rate in effect at the time Notice of
Termination is given) through the Date of Termination.
(d) Compensation Plans. Following any termination of the
Executive's employment, the Corporation shall pay the Executive all unpaid
amounts, if any, to which the Executive is entitled as of the Date of
Termination under any compensation plan or program of the Corporation, including
but not limited to any deferred compensation plan or program, at the time such
payments are due in accordance with and subject to the provisions of such plans
or programs.
(e) Mitigation. Except as is specifically provided in
subsection (b) (iv) of this Section 9, the Executive shall not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided hereunder
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Corporation, or otherwise.
10. Confidential Information; Non-Competition.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Corporation all trade secrets,
confidential information, and knowledge or data relating to the Corporation and
its businesses, which shall have been obtained by the Executive during the
Executive's employment by the Corporation and which shall not have been or
hereafter become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). The Executive
shall not, without the prior written consent of the Corporation or as may
otherwise be required by law or legal process, communicate or divulge any such
trade secrets, information, knowledge or data to anyone other than the
Corporation and those designated by the Corporation. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 10(a). The Executive agrees to return all
confidential information, including all photocopies, extracts and summaries
thereof, and any such information stored electronically on tapes, computer disks
or in any other manner to the Corporation at any time upon request by the
Corporation and upon the termination of his employment hereunder for any reason.
(b) Non-Competition. During the Employment Period and for a
period of two (2) years thereafter, the Executive shall not engage in
Competition, as defined below, with the Corporation in any locality or region of
the United States in which the Corporation had operations at the time of, or
within six (6) months prior to, the termination of the Executive's employment
hereunder; provided, that it shall not be a violation of this Section 10(b) for
the Executive to become the registered or beneficial owner of up to five percent
(5%) of any class of
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the capital stock of a competing corporation registered under the Securities
Exchange Act of 1934, as amended, provided that the Executive does not actively
participate in the business of such corporation until such time as this covenant
expires.
For purposes of this Agreement, Competition by the Executive
shall mean the Executive's engaging in, or otherwise directly or indirectly
being employed by or acting as a consultant (for the purposes of this Section
10, the Executive shall be a "consultant" if the Executive works forty (40) or
more hours for any one such entity in any ninety-day period) or lender to, or
being a director, officer, employee, principal, agent, stockholder (other than
as specifically provided for herein), member, owner or partner of, or permitting
his name to be used in connection with the activities of any other business or
organization anywhere in the United States which competes, directly or
indirectly, with the business of the Corporation as the same shall be
constituted at any time during the Employment Period.
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Executive to the fullest extent permitted by the laws of the Corporation's state
of incorporation in effect at that time, or certificate of incorporation and
by-laws of the Corporation, whichever affords the greater protection to the
Executive. The Executive will be entitled to any insurance policies the
Corporation may elect to maintain generally for the benefit of its officers and
directors against all costs, charges and expenses incurred in connection with
any action, suit or proceeding to which he may be made a party by reason of
being a director or officer of the Corporation. The Corporation shall reimburse
the Executive for any legal fees and expenses incurred by the Executive
(including but not limited to the legal fees and expenses incurred pursuant to
Section 16 hereof) in contesting or disputing any termination of the Executive's
employment or in seeking to obtain or enforce any right or benefit provided by
this Agreement (or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), to any payment or benefit provided hereunder)
other than for any such expenses, costs, liabilities or legal fees incurred as a
result of the Executive's bad faith. Such payments shall be made within five (5)
days after the Executive's request for payment accompanied with such evidence of
fees and expenses incurred as the Corporation reasonably may require. Any
termination of the Executive's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation 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
Corporation to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession had taken place. Failure of the Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Corporation in the same amount and on the same terms as he
would be entitled to hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore
defined
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and any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 12 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) The Executive's Successors. This Agreement and all rights
of the Executive hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxxxx X. Xxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to the Corporation: NationsBank Corporation
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the
"Contract Payments") or any portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by section 4999 of the
Code, the Corporation shall pay to the Executive, no later than the fifth day
following the earlier of the date on which such payment is made and the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state and
local income, employment and other taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments and
such other Total Payments.
(b) For purposes of determining whether any payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be
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received by the Executive in connection with an event described in section
280(G)(b)(2)(A)(i) of the Code (hereinafter, a "change in control"), or the
Executive's termination of employment pursuant to the terms of any plan,
arrangement or agreement with Xxxxxxx, the Corporation, its successors, any
person whose actions result in a change in control or any person affiliated with
the Corporation or such person (together with the Contract Payments, the "Total
Payments"), shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code except to the extent that, in the opinion of tax
counsel selected by the Corporation's independent auditors and acceptable to the
Executive, the Total Payments do not constitute parachute payments, (ii) all
"excess parachute payments" within the meaning of section 280G(b)(1) shall be
treated as subject to the Excise Tax except to the extent that, in the opinion
of such tax counsel, such excess parachute payments represent reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4)(B) of the Code in excess of the base amount within the meaning of
section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax,
and (iii) the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Corporation's independent auditors in accordance with
the principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from
deductions of such state and local taxes.
(c) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Executive's employment, the Executive shall repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-up Payment
being repaid by the Executive if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time of the termination of the Executive's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Corporation shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(d) Notwithstanding any provision of this Agreement to the
contrary, in addition to the payment of the Executive's Net SERP I Benefit as
provided in Section 5(e)(iv), the Corporation shall pay the Executive from time
to time additional amounts such that after all applicable federal and state and
local income, employment and other taxes on the Executive's Net SERP I Benefit
and on any additional amount payable under this Section 14(d), the Executive has
received the Executive's entire Net SERP I Benefit on an after-tax basis. Any
additional amount due under this Section 14(d) shall be due and payable to the
Executive at the time the income, employment or other tax is assessed against
the Executive's Net SERP I Benefit whether or not the Executive's Net SERP I
Benefit is then payable. The federal and state and
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local income tax rates for purposes of calculating the additional amount
hereunder shall be determined in accordance with the last sentence of Section
14(b).
15. Amendment or Modification; Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such officer of
the Corporation as may be specifically designated by the Board or its
compensation committee. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision to this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Jacksonville, Florida, in
accordance with the rules of the American Arbitration Association then in effect
or of such similar organization as the parties hereto may mutually agree.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The expense of such arbitration shall be borne by the Corporation.
17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles.
18. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the parties under Sections 9, 10 and 11 hereof and Section 5(e)
hereof (except for clause (i) thereof) shall survive the expiration of the Term.
The compensation and benefits payable to the Executive under Section 9 of this
Agreement shall be in lieu of any other severance benefits to which the
Executive may otherwise be entitled upon his termination of employment under any
severance plan, program, policy or arrangement of the Corporation.
19. Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
20. 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 instrument.
21. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and, as of
the Effective Date, supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
NATIONSBANK CORPORATION
By: /s/ Xxxxx X. Xxxxx, Xx.
--------------------------
Xxxxx X. Xxxxx, Xx., Vice
Chairman and Chief Financial
Officer
/s/ Xxxxxxx X. Xxxx
--------------------------------
Xxxxxxx X. Xxxx
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