EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as of the 24th day of July, 1998, by
and between WACHOVIA CORPORATION (the "Corporation") and XXXXXX X. XxXXX, XX.
(the "Executive");
RECITALS:
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, 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, and 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. References herein to services rendered for the Corporation and
compensation and benefits payable or provided by the Corporation shall include
services rendered for and compensation and benefits payable or prcvided by any
subsidiary of the Corporation.
2. Term of Agreement. The term ofthis Agreement shall commence on the
date hereof and shall continue in effect until December 31, 2000; provided,
however, that commencing on the first anniversary of this Agreement, 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 ofthis Agreement extend beyond the
Executive's sixty-second birthday. 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.
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 Corporation amends the Senior Executive
Retirement Agreement between the Corporation and the Executive dated July 24,
1998 (the "Retirement Agreement"), without the Executive's consent, and such
amendment reduces benefits to which the Executive would have been entitled had
such amendment not been made, or (c) the duties assigned to the Executive are
not of the status and type described in Section l and the Executive has not
consented thereto. The Executive shall be deemed to have consented to any
reduction described in (a) or (b), or assignment described in (c), 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 ofthe date of such termination, or (ii) the Normal Retirement Date
of the Executive as defined in the Retirement Agreement (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 annual amounts, if any,
awarded to the Executive under the Corporation's Senior Management
Incentive Plan for the three consecutive calendar years next preceding the
year of such termination, plus (iii) the average of any annual
contributions by the Corporation (excluding participant contributions) in
behalf of the Executive under the Retirement Savings and Profit-Sharing
Plan of Wachovia Corporation and the Wachovia Corporation Retirement
Savings and Profit-Sharing Benefit Equalization Plan 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.
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(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 (other
than any tax-qualified retirement plans) and individual contracts between
the Corporation and the Executive providing supplemental or equalization
payments or benefits with respect to the Executive. 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; provided, that
during the Compensation Period the Corporation shall not, without the
written consent of the Executive or except to the extent required by law,
make any amendment to or terminate any one or more of the following
individual contracts or plans as applied to the Executive: (i) the
Retirement Agreement; and (ii) the Wachovia Corporation Retirement Savings
and Profit-Sharing Benefit Equalization Plan. 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 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
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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 ofthe Chief Executive Of ficer or the Board of
Directors ofthe Corporation, or (d) engaging in conduct which could be
materially damaging to the Corporation without a reasonable good faith belief
that such conduct was in the best interests of the Corporation. 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 the
Corporation (the "Committee"), and such determination shall be final and
conclusive on the Executive and ali 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
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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.
(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).
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
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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 1O(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 ofthe outstanding Common Stock ofthe
Corporation;
(ii) The date the shareholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation with
or into another corporation, in which the Corporation is not the
continuing or surviving corporation or pursuant to which any shares of
Common Stock of the Corporation would be converted into cash,
securities or other property of another corporation, other than a
merger of the 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 the Corporation; or
(iii) The date there shall have been a change in a majority of
the Board of Directors of the 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 twothirds 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 ofthe Corporation or any employee benefit
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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 lO(c)(iii), all
determinations required to be made under this Section 10, including
whether and 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
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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 ("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 to 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 wth 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;
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(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 cr 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 ofthe 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.
(iv) If, after the receipt by the Executive of an amount advanced by
the Corporation pursuant to Section l0(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 l0(c)(iii)) promptly pay to the
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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
l0(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 repaid 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 consideration of the obligations of the
Corporation hereunder, the Executive unconditionally releases 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, 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 that he has been advised to consult with an attorney
prior to signing this Agreement, that he has had no less than twenty-one days to
consider this Agreement prior to the execution hereof, and that he may revoke
this Agreement at any time within seven days following the execution hereof.
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 the Corporation with a copy directed to the Chief Executive Of
ficer. Notices to the Executive shall be directed to his fast known address.
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, hypothecation or set offin
respect of any claim, debt or obligation, or similar process.
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(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 the 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 predecessor Employment Agreement between the parties hereto.
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:[SIGNATURE APPEARS HERE]
--------------------------
Chief Executive Officer
Attest:
[SIGNATURE APPEARS HERE]
---------------------------
Secretary
[Corporate Seal]
[SIGNATURE APPEARS HERE] (Seal)
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Xxxxxx X. XxXxx Xx.
