EXHIBIT 10 (Q)
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT, made and entered into as of this 15th day
of November, 1999, by and between First Union Corporation (the "Company"), a
North Carolina corporation, and X. XXXXXXX XXXXXXXX (the "Executive");
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued service of the Executive. The
Board believes it is imperative to encourage the Executive's full attention and
dedication to the Company, and to provide the Executive with compensation and
benefits arrangements upon a termination of employment with the Company which
ensure that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations.
NOW, THEREFORE, in order to accomplish the objectives set forth above
and in consideration of the mutual covenants herein contained, the parties
hereby agree as follows:
1. Employment Period. (a) The "Effective Date" shall mean the date
hereof.
(b) The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company
upon the terms and conditions set forth in this Agreement, for the period
commencing on the Effective Date and ending on the fifth anniversary thereof
(the "Employment Period"); provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of such date (such
date and each annual anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), unless previously terminated, the Employment Period shall be
automatically extended so as to terminate five years from such Renewal Date,
unless at least 90 days prior to the Renewal Date the Company or the Executive,
respectively, shall give notice to the Executive or the Company, respectively,
that the Employment Period shall not be so extended. Notwithstanding the
foregoing, in the event a "Change in Control" (as defined herein) occurs, the
Employment Period, unless previously terminated, shall be extended immediately
prior to the Change in Control so that the Employment Period shall terminate no
earlier than five years from such Change in Control.
2. Terms of Employment. (a) Positions and Duties. (i) During the
Employment Period, the Company agrees to employ the Executive, and the Executive
agrees to serve as an employee of the Company and as an employee of one or more
of its subsidiaries, in such capacity and with such authority, duties and
responsibilities as the Company's Chairman of the Board of Directors may from
time to time designate. During the
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Employment Period, the Executive also agrees to serve as a Director on the
Company's Board of Directors, as well as a member of any committee of the Board
of Directors to which the Executive may be elected or appointed.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote his full professional attention and time during
normal business hours to the business and affairs of the Company and to perform
the responsibilities assigned to the Executive hereunder. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions, and
(C) manage personal investments, so long as such activities do not interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement and are consistent with the Company's
policies. It is expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not thereafter
be deemed to interfere with the performance of the Executive's responsibilities
to the Company.
(b) Compensation. (i) Salary and Bonus. For all services
rendered by the Executive in any capacity under this Agreement, the Company
shall pay the Executive during the Employment Period as compensation (i) an
annual salary in an amount not less than the amount of the Executive's annual
salary as of the Effective Date (the "Annual Base Salary") and (ii) such annual
cash incentive bonus, if any, as may be awarded to him by the Board of Directors
of the Company or by a Committee designated by the Board (the "Annual Bonus").
Such salary shall be payable in accordance with the Company's customary payroll
practices, and any such bonus shall be payable in cash in accordance with the
Company's incentive bonus plans from which the Annual Bonus is awarded. During
the Employment Period prior to the Date of Termination, the Annual Base Salary
shall be reviewed no more than 12 months after the last salary increase awarded
to the Executive prior to the Effective Date and thereafter at least annually.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. In the event the Executive's
actual Annual Base Salary is increased above the then current Annual Base Salary
during the Employment Period, such increased Annual Base Salary shall constitute
"Annual Base Salary" for purposes of this Agreement.
(ii) Employee Benefits. During the Employment Period
prior to the Date of Termination, the Executive and/or the Executive's family,
as the case may be, shall be eligible to participate in
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employee benefit plans generally available to employees of the Company or its
subsidiaries, including without limitation, employee stock purchase plans,
savings plans, retirement plans, welfare benefit plans (including, without
limitation, medical, prescription, dental, disability, life, accidental death,
and travel accident insurance, but excluding severance plans) and similar plans,
practices, policies and programs. In addition, during the Employment Period, the
Executive shall be eligible to participate in the Company's stock-based
incentive compensation plans then available to other peer executives of the
Company with awards thereunder determined by the Board of Directors of the
Company or by a Committee designated by the Board, in its sole discretion.
(iii) Expenses. During the Employment Period prior to
the Date of Termination, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at the time immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
(iv) Fringe Benefits. During the Employment Period
prior to the Date of Termination, the Executive shall be entitled to fringe
benefits including, without limitation, tax and financial planning services,
payment of club dues, and if applicable, use of an automobile and payment of
related expenses, in accordance with the plans, practices, programs and policies
of the Company and its affiliated companies in effect for the Executive at the
time immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(v) Office and Support Staff. During the Employment
Period prior to the Date of Termination, the Executive shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal to those
provided to the Executive by the Company and its affiliated companies at the
time immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(vi) Paid Time Off. During the Employment Period
prior to the Date of Termination, the Executive shall be entitled to paid time
off in accordance with the plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at the time
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and
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its affiliated companies.
(vii) Indemnification/D&O Insurance. During the
Employment Period for acts prior to the Date of Termination, the Executive shall
be entitled to indemnification with respect to the performance of his duties
hereunder, and directors' and officers' liability insurance, on the same terms
and conditions as generally available to other peer executives of the Company
and its affiliated companies.
3. Termination of Employment.(a) Retirement, Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
or Retirement (as defined herein) during the Employment Period. For purposes of
this Agreement, "Retirement" shall mean either (i) voluntary termination of the
Executive's employment upon satisfaction of the requirements for early
retirement under the Company's tax-qualified defined benefit pension plan or
(ii) voluntary termination of the Executive's employment upon satisfaction of
the requirements for normal retirement under the terms of the Company's
tax-qualified defined benefit pension plan. If the Company determines in good
faith that Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) the continued and willful failure of the
Executive to perform substantially the Executive's duties with the Company or
one of its affiliates (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Company which specifically
identifies the manner in which the Company believes that the Executive has not
substantially performed the Executive's duties and a reasonable time for such
substantial performance has elapsed since delivery of such demand, or
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(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chairman of the Board of
Directors or a senior executive officer of the Company or based upon the advice
of counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best interests of the
Company. Following a Change in Control (as defined herein), the Company's
termination of the Executive's employment shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than three-fourths
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
such Board), finding that, in the good faith opinion of such Board, the
Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, in the absence of a written consent of the Executive which expressly
refers to a provision of this Section 3(c):
(i) prior to a Change in Control, the substantial
diminution in the overall importance of the Executive's role, as determined by
balancing (A) any increase or decrease in the scope of the Executive's
management responsibilities against (B) any increase or decrease in the relative
sizes of the businesses, activities or functions (or portions thereof) for which
the Executive has responsibility; provided, however, that none of (I) a change
in the Executive's title, (II) a change in the hierarchy, and (III) a change in
the Executive's responsibilities from line to staff or vice versa, either
individually or in the aggregate shall be considered Good Reason;
(ii) any failure by the Company to comply with any
material provision of this Agreement (including, without limitation, any
provision of Section 2 of this Agreement), other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and
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which is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
(iv) following a Change in Control, the relocation of
the principal place of the Executive's employment to a location that is more
than 35 miles from such principal place of employment immediately prior to the
date the proposed Change in Control is publicly announced, or the Company's
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;
(v) following a Change in Control, the Company's
requiring the Executive or all or substantially all of the employees of the
Company who report directly to the Executive immediately prior to the date the
proposed Change in Control is publicly announced to be based at any office or
location other than such person's office or location on such date;
(vi) any failure by the Company to comply with and
satisfy Section 9(c) of this Agreement; or
(vii) following a Change in Control, assignment to
the Executive of any duties inconsistent in any respect with the Executive's
position as in effect immediately prior to the public announcement of the
proposed Change in Control (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, or any other action by the
Company which results in any diminution in such position, authority, duties or
responsibilities.
For purposes of this Section 3(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive (including any such determination when
the Executive is then eligible for Retirement). In the event the Company
challenges the Executive's determination of Good Reason, the Company shall
continue to make the payments and provide the benefits to the Executive as set
forth in Section 4(a). If it is finally judicially determined that the
Executive's termination was not for Good Reason, the Executive shall reimburse
the Company the amounts to which it is finally judicially determined to be
entitled.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific
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termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 30 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, the date of
receipt of the Notice of Termination, unless the Company agrees to a later date
no more than 30 days after such notice, as the case may be, (ii) if the
Executive's employment is terminated by the Executive for Good Reason or
Retirement, the date of receipt of the Notice of Termination or any later date
specified therein within 30 days of such notice, as the case may be, (iii) if
the Executive's employment is terminated by the Company other than for Cause or
Disability, the date on which the Company notifies the Executive of such
termination or any later date specified therein within 30 days of such notice,
as the case may be, (iv) if the Executive's employment is terminated by reason
of death or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be, and (v) if the Executive's employment is
terminated by the Executive for other than Good Reason, death, Disability or
Retirement, the date that is 60 days after the date of receipt of the Notice of
Termination by the Company, provided, however, the Company may elect to waive
such notice or place the Executive on paid leave for all or any part of such
60-day period during which the Executive will be entitled to continue to receive
the Annual Base Salary but shall not receive any Annual Bonus or any other
payment from the Company other than reimbursement for expenses as contemplated
in Section 2(b)(iii) and continued participation in the employee benefit plans
as contemplated in Section 2(b)(ii).
(f) Change in Control. For purpose of this Agreement, a
"Change in Control" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power
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of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"; provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control: (1) any
acquisition directly from the Company, (2) any acquisition by the Company, (3)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (4)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of subsection (iii) of this Section 3(f); or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written objection to such
nomination) shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or contests by or on behalf of a
Person other than the Board; or
(iii) Consummation of a reorganization, merger, share
exchange or consolidation or sale of other disposition of all or substantially
all of the assets of the Company (a "Business Combination"), in each case,
unless, following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from the Business Combination)
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beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board immediately prior to the time of
the execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(iv) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
4. Obligations of the Company upon Termination. (a) Good Reason; other
than for Cause, Death, Disability or Retirement. If, during the Employment
Period, the Company shall terminate the Executive's employment other than for
Cause, Death, Disability or Retirement or the Executive shall terminate
employment for Good Reason, then in consideration for past services and in
consideration for the undertakings set forth in Section 7 hereof:
(i) the Company shall pay to the Executive in a lump
sum in cash within 30 days after the Date of Termination the aggregate of the
following amounts:
(A) the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent not theretofore paid,
and (2) the product of (x) an Annual Bonus of an amount equal to the greater of
(I) the highest annual cash incentive bonus paid by the Company to the Executive
for the three calendar years prior to the Date of Termination or (II) the
highest annual cash incentive bonus paid by the Company to the Executive for the
three calendar years prior to the date of this Employment Agreement (the "Base
Bonus"), and (y) a fraction, the numerator of which is the number of days in the
fiscal year in which the Date of Termination occurs through the Date of
Termination, and the denominator of which is 365, to the extent not theretofore
paid (the "Pro Rata Bonus"), (3) any unpaid Annual Bonus for the prior year, (4)
any compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and (5) any accrued paid time off, in each case to
the extent not theretofore paid (the sum of the amounts described in clauses
(1), (2), (3), (4) and (5) shall be hereinafter referred to as the "Accrued
Obligations"); and
(B) the amount equal to the product of (1)
five and (2) the sum of the Executive's Annual Base Salary immediately prior to
the Date of Termination and the Base Bonus.
For purposes of determining the Base Bonus hereunder, the Company
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shall exclude any special or one-time bonuses and any premium enhancements to
bonuses but shall include any portions of bonuses (other than the excluded
bonuses) which have been deferred by the Executive;
(ii) the Company shall pay to the Executive, in the
manner in which the Executive elects (which may be in a lump sum in cash), an
amount equal to the actuarial equivalent (calculated using the actuarial
assumptions and/or methodology utilized by the Company as of the Effective Date)
of the Executive's actual benefit (paid or payable), if any, under the Company's
Supplemental Retirement Plan (the "SERP") as of the Date of Termination;
provided, however, if the Executive is not then vested in his retirement benefit
pursuant to the terms of the SERP, the Company will accelerate the Executive's
vesting and pay the Executive his retirement benefit accrued as of the Date of
Termination as if the Executive had been fully vested on the Date of
Termination;
(iii) for five years after the Executive's Date of
Termination (or for the remainder of the Executive's life if such Date of
Termination is after a Change in Control), or such longer period as may be
provided by the terms of the appropriate plan, program, practice or policy, the
Company shall continue medical, dental and life insurance benefits to the
Executive and/or the Executive's family on a substantially equivalent basis to
those which would have been provided to them in accordance with the medical,
dental and life insurance plans, programs, practices and policies described in
Section 2(b)(iv) of this Agreement if the Executive's employment had not been
terminated, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical, dental and/or life
insurance benefits under another employer provided plan, the medical, dental
and/or life insurance benefits described herein shall terminate. For purposes of
determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have terminated employment with
the Company on the Date of Termination; and
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies (excluding any severance plan, program,
policy or practice) through the Date of Termination (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the
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Executive's legal representatives under this Agreement, other than for payment
of Accrued Obligations, Other Benefits, the payment pursuant to Section
4(a)(ii), and the payment of an amount equal to the Executive's Annual Base
Salary. Accrued Obligations and cash payments pursuant to the preceding sentence
shall be paid to the Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
4(b) shall include, without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, death benefits then applicable to
the Executive.
(c) Retirement. If the Executive's employment is terminated by
reason of the Executive's Retirement during the Employment Period, this
Agreement shall terminate without further obligations to the Executive under
this Agreement, other than for payment of Accrued Obligations and Other
Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 4(c) shall
include, without limitation, and the Executive shall be entitled to receive, all
retirement benefits then applicable to the Executive, including but not limited
to any SERP benefits then applcable to the Executive.
(d) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations, Other Benefits, the payment pursuant to
Section 4(a)(ii), and the payment of an amount equal to the Executive's Annual
Base Salary. Accrued Obligations and the cash payments pursuant to the preceding
sentence shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 4(d) shall include, and the
Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits then applicable to the Executive.
(e) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated by the Company for Cause or by the Executive
without Good Reason during the Employment Period, this Agreement shall terminate
without further obligations of the Company to the Executive other than the
obligation to pay to the Executive (x) his Annual Base Salary through the Date
of Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case only to the extent owing and
theretofore unpaid.
5. Non-exclusivity of Rights. Nothing in this Agreement shall
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prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify (excluding any severance plan
or program of the Company), nor subject to Section 11(f), shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
6. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"). Notwithstanding the foregoing, if it is finally judicially
determined that the Executive brought any claims contemplated in the previous
sentence in bad faith, the Executive shall reimburse the Company for such fees
and expenses which are reasonably related to such bad faith claim.
7. Covenants. (a) The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or
data relating to the Company or any of its affiliated companies, and their
related businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies (or
predecessors thereto). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
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(b) (i) While employed by the Company and for three years
after the Date of Termination, the Executive shall not, directly or indirectly,
on behalf of the Executive or any other person, solicit for employment by other
than the Company or encourage to leave the employ of the Company, any person
employed by the Company or its affiliated companies at any time prior to the
Date of Termination.
(ii) While employed by the Company and for two years
after the Date of Termination, the Executive will not become a director or
officer or consultant engaging in activities similar to those performed by a
senior officer for any business which is in competition with any line of
business of the Company or its affiliates and in which the Executive
participated in a direct capacity while he was employed by the Company or its
affiliates at any time within the one year period preceding the Effective Date
and which has offices in any location in which the Executive had supervisory
responsibility in the geographic footprint of First Union National Bank
(including but not limited to, Florida, Georgia, South Carolina, Tennessee,
North Carolina, Virginia, Maryland, Pennsylvania, New Jersey, Delaware, New
York, Connecticut, and Washington, D.C. plus any other state or states added
during the Employment Period) during that one year period. The Executive
expressly acknowledges the reasonableness of such restrictions and such
geographic area. Further, during such period, the Executive will not acquire an
equity or equity-like interest in such an organization for his own account,
except that he may acquire equity interests of not more than 5% of any such
organization from time to time as an investment. Notwithstanding anything to the
contrary contained herein, this Section 7(b)(ii) shall not apply if (A) the
Executive terminates employment with the Company pursuant to Retirement, (B) the
Company terminates the Executive's employment without Cause following a Change
in Control, or (C) the Executive terminates his employment for Good Reason
following a Change in Control.
(c) In the event of a breach or threatened breach of this
Section 7, the Executive agrees that the Company shall be entitled to injunctive
relief in a court of appropriate jurisdiction to remedy any such breach or
threatened breach, the Executive acknowledges that damages would be inadequate
and insufficient. Following the occurrence of a Change in Control, in no event
shall an asserted violation of the provisions of this Section 7 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
(d) Any termination of the Executive's employment or of this
Agreement shall have no effect on the continuing operation of this Section 7;
provided, however, upon termination of this Agreement due to the Company's or
the Executive's failure to extend the term of this Agreement pursuant to Section
1(b), Section 7(b)(ii) shall no longer apply to the Executive if the Executive's
employment shall
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terminate after the term of this Agreement expires.
(e) The Executive hereby agrees that prior to accepting
employment with any other person or entity during the Employment Period or
during the three years following the Date of Termination, the Executive will
provide such prospective employer with written notice of the existence of this
Agreement and the provisions of Section 3(e) and this Section 7, with a copy of
such notice delivered simultaneously to the Company in accordance with Section
11(c). The foregoing provision shall not apply if the Company terminates the
Executive's employment without Cause following a Change in Control, or if the
Executive terminates his employment for Good Reason following a Change in
Control.
8. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive following a Change in Control (whether paid
or payable or distributed or distributable pursuant to the terms of the
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code (or any successor statute) or any interest
or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by KPMG LLP or such other certified public accounting firm reasonably acceptable
to the Company (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 30 business days of
the receipt of notice from the Company that there has been a Payment, or such
earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to the
Executive by the due date for the payment of any Excise Tax, or, if earlier, 30
days after the receipt of the Accounting Firm's determination. Any determination
by
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the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order to effectively contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in
15
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt of an amount advanced by the Company
pursuant to Section 8(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto) upon receipt thereof. If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial or refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) For purposes of this Section 8, any reference to the
Executive shall be deemed to include the Executive's surviving spouse, estate
and/or beneficiaries with respect to payments or adjustments provided by this
Section 8.
9. Successors. (a) This Agreement is personal to the Executive and
without the prior consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.
16
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly in writing and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
10. Arbitration. Except with respect to matters arising under Section 7
of this Agreement, any disputes or controversies arising under or in connection
with this Agreement (including, without limitation, whether any such disputes or
controversies have been brought in bad faith) shall be settled exclusively by
arbitration in Charlotte, North Carolina in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
11. General Provisions. (a) Governing Law; Amendment; Modification.
This Agreement shall be governed and construed in accordance with the laws of
the State of North Carolina, without reference to principles of conflict of
laws. This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
(b) Severability. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity shall
in no way affect the rest of such provision not held so invalid and the rest of
such provision, together with all other provisions of this Agreement, shall to
the full extent consistent with law continue in full force and effect.
(c) Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in the Company's
case, to its Secretary) or forty-eight (48) hours after deposit thereof in the
U.S. mail, postage prepaid, for delivery as registered or certified mail --
addressed, in the case of the Executive, to such Executive at his residential
address, and in the case of the Company, to its corporate headquarters,
attention of the Secretary, or to such other address as the Executive or the
Company
17
may designate in writing at any time or from time to time to the other party. In
lieu of notice by deposit in the U.S. mail, a party may give notice by telegram
or telex.
(d) Tax Withholding. The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
(e) Strict Compliance. The Executive's or the Company's
failure to insist upon strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 3(c) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
(f) Entire Understanding. From and after the Effective Date
this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof.
(g) Conflicts with Plans. To the extent any plan, policy,
practice or program of or contract or agreement with the Company (including,
without limitation, the SERP) attempts to cap, restrict, limit or reduce
payments to the Executive hereunder (including, without limitation, Section 4.7
of the SERP), such caps, restrictions, limitations or reductions are expressly
modified to permit the payments contemplated hereby and the parties intend that
the terms of this Agreement shall be construed as having precedence over any
such caps, restricitions, limitations or reductions.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officers thereunto duly authorized, and the Executive has signed
this Agreement under seal, all as of the date and year first above written.
FIRST UNION CORPORATION [SEAL]
ATTEST:
By:______________________
Name: Xxxxxx X. Xxxxxxxxxxx _________________________
Title: Chairman and Chief Xxxx X. Xxxxxxx
Executive Officer Secretary
__________________________ (SEAL)
X. Xxxxxxx Xxxxxxxx
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