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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as of the 13th day of May, 1999, by and
between WACHOVIA CORPORATION (the "Corporation") and Xxxxxx X. Xxxxx (the
"Executive");
RECITALS
WHEREAS, Executive's current employer, OFFITBANK Holdings, Inc., the
parent of OFFITBANK ("OFFITBANK"), has entered into an Agreement and Plan of
Merger with the Corporation (the "Merger Agreement"), the Corporation desires
to secure the services of the Executive in its behalf or in behalf of one or
more of its subsidiaries for which the Executive may render services hereunder
from time to time, following the Effective Time (as such term is defined in the
Merger Agreement), and in accordance with the terms and conditions set forth
herein. In addition, the Corporation desires to provide the Executive with an
incentive to remain in the service of the Corporation or one or more of its
subsidiaries by granting to the Executive compensation security as set forth
herein should his employment be terminated by the Corporation without cause
during the term of this Agreement.
NOW, THEREFORE, the Corporation and the Executive hereby mutually agree as
follows:
1. Employment. The Executive shall devote his working time exclusively to
the performance of such services for the Corporation or one or more of its
subsidiaries as may be assigned to him by the Corporation from time to time;
provided, however, that Executive may engage in other activities, such as (i)
activities involving public interest, charitable, religious and similar types
of organizations, (ii) continuing to serve as a director on the boards of
for-profit businesses listed on Schedule A hereto, (iii) subject in each case
to the prior written consent of the Chairman of the Corporation, which shall
not be unreasonably withheld, serving on new boards and new committees of
for-profit corporations or not-for-profit corporations other than Wachovia
Corporation or OFFITBANK and (iv) managing personal and family investment
activities, to the extent that such other activities do not interfere with the
performance of Executive's duties under this Agreement, or conflict in any
material way with the business of Wachovia Corporation or any of its
affiliates. Executive shall perform such services faithfully and to the best of
his ability. Such services shall be rendered in a senior management or
executive capacity and shall be of a type for which the Executive is suited by
background and training. In no event shall the nature of the services require
the Executive to relocate his residence from New York, New York, unless the
Executive shall agree to such relocation. References herein to services
rendered for the Corporation and compensation and benefits payable or provided
by the Corporation shall refer to services rendered for and compensation and
benefits payable or provided by the subsidiary of the Corporation which employs
Executive hereunder.
2. Term of Agreement. The term of this Agreement shall commence on the
Effective Date, as defined in the Merger Agreement, and shall continue in
effect until December 31, 2001; provided, however, that commencing on the first
anniversary of the Effective Date, and each anniversary thereafter, the term of
this Agreement shall automatically be extended for one additional year unless
at least 90 days prior to any such anniversary date either party shall notify
the other in writing that it does not wish to extend the term of this Agreement
beyond the then applicable expiration date. In no event, however, may the term
of this Agreement extend beyond the first of the month following the month in
which Executive attains age 72. References herein to the "term" of this
Agreement shall mean the original term plus any continuation as provided in
this Section 2. The "term" shall not be deemed to refer to the Compensation
Period described in Section 4.
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3. Termination of Employment by the Corporation. The Corporation may
terminate the employment of the Executive at any time for any reason;
provided, that except as set forth in Sections 6 and 7, the Corporation will
provide the Executive with Compensation Continuance to the extent described in
Section 4 if the Executive's employment is involuntarily terminated. The
Executive's employment shall be deemed to be involuntarily terminated if he is
terminated by the Corporation for any reason other than for "cause" as defined
in Section 6, or if he voluntarily terminates employment within six months
after: (a) his base salary is reduced below its level in effect on the date
hereof without the Executive's consent, or (b) the duties assigned to the
Executive are not of the status and type described in Section 1 and the
Executive has not consented thereto. The Executive shall be deemed to have
consented to any reduction described in (a) or assignment described in (b),
unless he shall object thereto in writing within thirty days after he receives
notice thereof.
4. Compensation Continuance. If the Executive's employment hereunder is
involuntarily terminated as described in Section 3, he will be entitled to
receive the cash compensation and benefits described in (a), (b) and (c) below
(herein, "Compensation Continuance") for the period beginning with the date of
such involuntary termination and ending with the earlier of (i) the third
anniversary of the date of such termination, or (ii) the first of the month
following the month in which Executive attains age 72 (such period is referred
to herein as the "Compensation Period"). The duration of the Compensation Period
shall not be affected by the fact that the term of this Agreement otherwise
would end before such Period expires. The cash compensation and benefits are as
follows:
(a) Cash Compensation. The amount of cash compensation to be
received monthly during the Compensation Period shall equal one-twelfth of the
sum of (i) the Executive's highest annual rate of salary from the Corporation
in effect during the 12-month period prior to his involuntary termination, plus
(ii) an amount equal to the average of the incentive Compensation paid to the
Executive by the Corporation, if any, for the three consecutive calendar years
next preceding the year of such termination; provided, that the incentive
Compensation to be recognized for this purpose shall be approved by the
Management Resources and Compensation Committee, plus (iii) the average of any
annual contributions by the Corporation under the tax-qualified defined
contribution retirement plan applicable to the Executive as of the date of
termination (excluding participant contributions) for the three consecutive
calendar years preceding the year of such termination. Each monthly payment of
such cash compensation shall have deducted therefrom all payroll taxes and
withholdings required by law.
(b) Employee Benefits. During the Compensation Period, the Executive
shall be carried on the payroll of the Corporation, and shall be deemed to be
continuing in the employment of the Corporation for the purpose of applying and
administering employee benefit plans of the Corporation which applied to
Executive immediately prior to his involuntary termination of employment (other
than any tax-qualified retirement plans). The Executive shall participate in any
changes during the Compensation Period in benefit plans or programs applicable
generally to employees of the Corporation, or to a class of employees which
includes senior executives of the Corporation, but shall not have any right or
option to participate in any such plan or program in which he was not a
participant immediately prior to his involuntary termination of employment. Any
individual contract between the Corporation and the Executive in effect at the
time of his involuntary termination of employment may be terminated or amended
by the Corporation to the extent permitted by the terms of such contract. The
Corporation shall have no obligation to the Executive to make any change or
improvement in any such contract during the Compensation Period even if the
Corporation shall make changes or improvements during such period in similar
contracts, if any, with other senior executives of the Corporation.
(c) Acceleration of Stock Options and Restricted Awards. Immediately
upon termination of the Executive's employment, all options previously granted
to the Executive and outstanding on the date of termination to acquire shares
of common stock of the Corporation shall become fully vested and
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exercisable (or subject to surrender) in full and all restricted awards shall
be deemed to be earned in full; provided, that restricted awards based upon
performance criteria or a combination of performance criteria and continued
service shall be deemed to be earned in accordance with the terms, conditions
and procedures of the plan or plans pursuant to which any such restricted
awards were granted.
In the event that the Executive shall engage in full-time employment permitted
hereunder for another employer or on a self-employed basis during the
Compensation Period, his employment with the Corporation shall be deemed to
have terminated for purposes of Section 4(b) as of the date he begins such
full-time employment, but the payments in Section 4(a) shall continue for the
remainder of the Compensation Period and the rights under Section 4(c) shall be
applicable, in each case subject to the provisions of Section 7.
5. Voluntary Termination of Employment by the Executive. The Executive
reserves the right to terminate his employment voluntarily at any time for any
reason following at least six months' notice to the Corporation. If such notice
shall be given, this Agreement shall terminate as of the effective date of
termination as set forth in such notice (or the date six months from the date
of receipt by the Corporation of such notice, if no effective date shall be set
forth therein), unless sooner terminated as provided in Section 3, 6 or 8. The
Executive shall not be entitled to any form of Compensation Continuance as a
result of such voluntary termination.
6. Termination for Cause. This Agreement shall immediately be terminated
and neither party shall have any obligation hereunder (including but not
limited to any obligation on the part of the Corporation to provide
Compensation Continuance) if the Executive's employment is terminated for
"cause". Termination for cause shall occur when termination results from the
Executive's (a) criminal dishonesty, (b) refusal to perform his duties
hereunder on substantially a full-time basis, (c) refusal to act in accordance
with any specific substantive instructions of the Chief Executive Officer or
the Board of Directors of Wachovia Corporation, or (d) engaging in conduct
which could be materially damaging to the Corporation and its affiliates
without a reasonable good faith belief that such conduct was in the best
interests of the Corporation or its affiliates. The determination of whether a
termination is for cause shall be made by the Management Resources and
Compensation Committee of the Board of Directors of Wachovia Corporation (the
"Committee"), and such determination shall be final and conclusive on the
Executive and all other persons affected thereby.
7. Executive's Obligations; Early Termination of Compensation Period.
(a) During the Compensation Period, the Executive shall provide
consulting services to the Corporation at such time or times as the Corporation
shall reasonably request, subject to appropriate notice and to reimbursement by
the Corporation of all reasonable travel and other expenses incurred and paid
by the Executive. In the event the Executive shall engage in full-time
employment permitted hereunder during the Compensation Period for another
employer or on a self-employed basis, his obligation to provide the consulting
services hereunder shall be limited by the requirements of such employment.
(b) The Executive shall not disclose to any other person any
material information or trade secrets concerning the Corporation or any of its
subsidiaries at any time during or after the Compensation Period. The Executive
will at all times refrain from taking any action or making any statements,
written or oral, which are intended to and do disparage the business, goodwill
or reputation of the Corporation or any of its subsidiaries, or their
respective directors, officers, executives or other employees, or which could
adversely affect the morale of employees of the Corporation or any subsidiaries.
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(c) The Executive shall not, without the Corporation's written
consent, engage in competitive employment at any time during the Compensation
Period. The Executive shall be deemed to engage in competitive employment if he
shall render services as an employee, officer, director, consultant or
otherwise, for any employer which conducts a principal business or enterprise
that competes directly with the Corporation or affiliate of the Corporation.
(d) In the event that the Executive shall refuse to provide
consulting services in accordance with paragraph (a), or shall materially
violate the terms and conditions of paragraph (b) or (c), the Corporation may,
at its election, terminate the Compensation Period and Compensation Continuance
to the Executive. The Corporation may also initiate any form of legal action it
may deem appropriate seeking damages or injunctive relief with respect to any
material violations of paragraph (a), (b) or (c).
(e) The Committee shall be responsible for determining whether the
Executive shall have violated this Section 7, and all such determinations shall
be final and conclusive. Upon the request of the Executive, the Committee will
provide an advance opinion as to whether a proposed activity would violate the
provisions of paragraph (c).
(f) Executive acknowledges that paragraphs (b), (c) and (d) above
are in addition to, and do not supercede, the provisions of the Non-Competition
Agreement between the Executive and the Corporation dated as of the date hereof.
8. Death and Disability. In the event that, during the term of this
Agreement or during the Compensation Period, the Executive shall die or shall
become entitled to benefits under the Corporation's Long-Term Disability Plan,
this Agreement shall thereupon terminate and neither the Executive nor any
other person shall have any further rights or benefits hereunder (including any
rights to Compensation Continuance).
9. Other Severance Benefits. Except as otherwise provided in this
Agreement, the Executive shall not be entitled to any form of severance
benefits, including benefits otherwise payable under any of the Corporation's
regular severance plans or policies, irrespective of the circumstances of his
termination of employment. The Executive agrees that the payments and benefit
provided hereunder, subject to the terms and conditions hereof, shall be in full
satisfaction of any rights which he might otherwise have or claim by operation
of law, by implied contract or otherwise, except for rights which he may have
under employee benefit plans of the Corporation or individual written contracts
with the Corporation.
10. Change of Control.
(a) Notwithstanding any other provision of this Agreement, the
Executive will be entitled to receive the Compensation Continuance
described in Section 4 in the event the Executive voluntarily terminates
his employment during the period beginning on the date of a Change of
Control (as defined in Section 10(b) herein) and ending on the third
anniversary of such date.
(b) For the purposes herein, a "Change of Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) The date any entity or person shall have become the
beneficial owner of, or shall have obtained voting control over,
twenty-five percent or more of the outstanding Common Stock of
Wachovia Corporation;
(ii) The date the shareholders of Wachovia Corporation approve a
definitive agreement (A) to merge or consolidate Wachovia Corporation
with or into another corporation, in
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which Wachovia Corporation is not the continuing or surviving corporation
or pursuant to which any shares of Common Stock of Wachovia Corporation
would be converted into cash, securities or other property of another
corporation, other than a merger of Wachovia Corporation in which holders
of Common Stock immediately prior to the merger have the same proportionate
ownership of Common Stock of the surviving corporation immediately after
the merger as immediately before, or (B) to sell or otherwise dispose of
substantially all the assets of Wachovia Corporation; or
(iii) The date there shall have been a change in a majority of
the Board of Directors of Wachovia Corporation within a twelve month period
unless the nomination for election by the Corporation's shareholders of
each new director was approved by the vote of two-thirds of the directors
then still in office who were in office at the beginning of the twelve
month period.
For the purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such term is
defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than
the Corporation, a subsidiary of the Corporation or any employee benefit
plan(s) sponsored or maintained by the Corporation or any subsidiary thereof,
and the term "beneficial owner" shall have the meaning given the term in
Rule 13d-3 under the Exchange Act.
(c)(i) In the event it shall be determined that any payment, benefit
or distribution (or combination thereof) by the Corporation or one or more
trusts established by the Corporation for the benefit of its employees, to
or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or
otherwise) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1996, as amended (the
"Code"), or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, hereinafter collectively referred to as the
"Excise Tax"), 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 the
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.
(ii) Subject to the provisions of Section 10(c)(iii), all
determinations required to be made under this Section 10, 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 a nationally recognized certified public
accounting firm designated by the Executive (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Corporation and
the Executive within fifteen business days of the receipt of notice from
the Executive that there has been a Payment, or such earlier time as is
requested by the Corporation. In the event that the Accounting Firm is
serving as accountant or auditor for an individual, entity or group
effecting the change in ownership or effective control (within the meaning
of Section 280G of the Code), the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Corporation. Any Gross-Up Payment, as
determined pursuant to this Section 10, shall be paid by the Corporation
to the Executive within five days after the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall so indicate to the Executive in
writing. Any determination by the Accounting Firm shall be binding upon
the Corporation 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 Corporation should
have been made
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("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts its remedies
pursuant to Section 10(c)(iii) 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 Corporation or for the benefit of the
Executive.
(iii) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Corporation 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 Corporation 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 Corporation (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Corporation notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:
(A) give the Corporation any information reasonably requested by
the Corporation relating to such claim;
(B) take such action in connection with contesting such claim as
the Corporation 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 Corporation;
(C) cooperate with the Corporation in good faith in order to
effectively contest such claim; and
(D) permit the Corporation to participate in any proceedings
relating to such claim;
provided, however, that the Corporation 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 10(c)(iii), the
Corporation 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 Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and xxx for a refund,
the Corporation 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 provided, further, that if the Executive is required
to extend the statute of limitations to enable the Corporation to contest
such claim, the Executive may limit this extension solely to such
contested amount. The Corporation'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.
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(iv) If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 10(c)(iii), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
10(c)(iii)) promptly pay to the Corporation the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by Company pursuant to Section 10(c)(iii), a determination is
made that the Executive shall not be entitled to any refund with respect
to such claim and the Corporation does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of
30 days after such determination, then such advance shall be forgiven and
shall not be required to be prepaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
11. Waiver of Claims. In the event of the termination of Executive's
employment, in consideration of the obligations of the Corporation hereunder,
the Executive shall, and does hereby, unconditionally release the Corporation,
its directors, officers, employees and shareholders, from any and all claims,
liabilities and obligations of any nature pertaining to termination of the
Executive's employment by the Corporation or otherwise, including but not
limited to (a) any claims under federal, state or local laws prohibiting
discrimination, including without limitation the Age Discrimination in
Employment Act of 1967, as amended, or (b) any claims growing out of any alleged
legal restrictions on the Corporation's right to terminate the Executive's
employment, such as any alleged implied contract of employment or termination
contrary to public policy. The Executive acknowledges, and shall acknowledge in
such release, that he has been advised to consult with an attorney prior to
signing the release, that he has had no less than twenty-one days to consider
the release prior to its execution, and that he may revoke the release at any
time within seven days following the execution thereof.
12. Notices. All Notices hereunder shall be in writing and deemed properly
given if delivered by hand and receipted or if mailed by registered mail, return
receipt requested. Notices to the Corporation shall be directed to the Secretary
of Wachovia Corporation with a copy directed to the Chairman of the Board of
Directors of Wachovia Corporation. Notices to the Executive shall be directed to
his last known address.
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13. Miscellaneous.
(a) 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.
(b) No right, benefit or interest hereunder shall be subject to
assignment, encumbrance, charge, pledge, hypothetical or set off in respect of
any claim, debt or obligation, or similar process.
(c) This Agreement may not be amended, modified or canceled except
by written agreement of the parties.
(d) In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall remain in full force and effect to
the fullest extent permitted by law.
(e) This Agreement shall be binding upon and inure to the benefit of
the Executive and the Corporation, and their respective heirs, successors and
assigns.
(f) No benefit or promise hereunder shall be secured by any specific
assets of the Corporation. The Executive shall have only the rights of an
unsecured general creditor of the Corporation in seeking satisfaction of such
benefits or promises.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of North Carolina.
(h) This Agreement sets forth the entire agreement and understanding
of the parties hereto with respect to the matters covered hereby, and amends
and supersedes any prior arrangements regarding the employment of the Executive
by the parties hereto.
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IN WITNESS WHEREOF, this Agreement has been executed by or in behalf of
the parties hereto as of the date first above written.
WACHOVIA CORPORATION
By: /s/ X.X. Xxxxx, Xx.
-----------------------
Chief Executive Officer
Attest:
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Secretary
[Corporate Seal]
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx (Seal)
-------------------
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Schedule A
1. Hasbro, Inc.
2. Any mutual fund boards with respect to funds managed by OFFITBANK
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