EXHIBIT (99)(D)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, made and entered into as of this 18th day of
November, 1997, by and between First Union Corporation (the "Company"), a North
Carolina corporation and Xxxxxxxx X. Xxxxxx ("Xx. Xxxxxx");
In consideration of the mutual covenants herein contained, the parties
hereby agree as follows:
ARTICLE I -- EMPLOYMENT
The Company hereby agrees to employ Xx. Xxxxxx, and Xx. Xxxxxx hereby
agrees to be employed by the Company upon the terms and conditions set forth in
this Agreement.
ARTICLE II -- TERM OF EMPLOYMENT
The term of Xx. Xxxxxx'x employment shall commence immediately upon
consummation of the acquisition of CoreStates Financial Corp ("CoreStates") by
the Company (the "Merger") and, subject to the provisions of Article V, shall
terminate on the expiration of five years next following said date unless
extended by mutual agreement (the "Period of Employment").
ARTICLE III -- COMPENSATION AND REIMBURSEMENT OF EXPENSES
Section 3.1 COMPENSATION. For all services rendered by Xx. Xxxxxx in any
capacity under this Agreement, the Company shall pay him during the Period of
Employment as compensation (i) an annual salary of not less than $1,000,000.00
and (ii) such 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 total amount of
Xx. Xxxxxx'x annual salary and cash bonus shall in no event be less than
$2,500,000.00 per year. Such salary shall be payable in accordance with the
Company's customary payroll practices, and any such bonus shall be payable in
the manner specified by the Board of Directors of the Company or by a Committee
designated by the Board. An award to Xx. Xxxxxx under any of the Company's
management incentive plans shall be considered to be a bonus for the purposes of
this Section.
Section 3.2 REIMBURSEMENT OF EXPENSES. The Company shall pay or reimburse
Xx. Xxxxxx for all reasonable travel and other expenses incurred by him in
performing his obligations under this Agreement. Such expenses shall be
appropriately submitted and approved in accordance with the Company's policies
applicable to its senior executives.
ARTICLE IV -- OTHER EMPLOYEE BENEFITS
Section 4.1 VACATION AND SICK LEAVE. Xx. Xxxxxx shall be entitled to the
same paid annual vacation periods and sick leave during the Period of Employment
as the most senior executives of the Company.
Section 4.2 EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS. In addition to the cash
compensation provided for in Article III hereof, Xx. Xxxxxx shall be entitled to
participate in all employee benefit plans and fringe benefits and perquisite
programs of the Company applicable to senior executives during the Period of
Employment, as presently in effect or as they may be modified or added to by the
Company from time to time, including, without limitation, plans providing
retirement benefits, medical insurance, life insurance, disability insurance,
and accidental death or dismemberment insurance, provided that retirement
benefits and disability benefits pursuant to such plans would not be payable
until the Period of Employment has expired, except that death benefits under
such plans shall be payable in accordance with the terms thereof should Xx.
Xxxxxx die during the Period of Employment. Notwithstanding the above, should
Xx. Xxxxxx terminate his employment pursuant to Section 5.1 prior to the
expiration of the Period of Employment, the Company reserves the right to
satisfy its obligation to provide benefits under the Company's employee benefit
plans, through a plan, program or other arrangement outside to its existing
employee benefits plans, provided that such benefits are substantially similar
as those which would be available to Xx. Xxxxxx under such employee benefit
plans.
Section 4.3 COMPANY'S EXECUTIVE COMPENSATION PLANS. In addition to the cash
compensation provided for in Article III hereof and the employee benefits of the
Company provided for in Section 4.2 of this Article, Xx. Xxxxxx, subject to the
provisions of this Agreement, shall be entitled to participate in executive
compensation plans of the Company applicable to senior executives during the
Period of Employment, as presently in effect or as they may be modified or added
to by the Company from time to time, including without limitation, management
incentive plans and deferred compensation plans.
However, except as provided below, participation in any of the Company's stock
compensation plans shall be at the sole discretion of the Company's Board of
Directors or an appropriate Committee thereof.
With respect to any stock options granted pursuant to this Section 4.3 or
elsewhere pursuant to this Agreement or pursuant to employee stock purchase
plans that are intended to qualify for special income tax treatment under
Section 421 through 424 of the Internal Revenue Code (the "Code"), should Xx.
Xxxxxx'x employment with the Company be terminated pursuant to Section 5.1, Xx.
Xxxxxx'x status as an "employee" for purposes of such Code sections will cease
effective with such date of termination.
The Company agrees to grant Xx. Xxxxxx a restricted stock award of 100,000
shares of the Company's common stock during the calendar year in which the
Merger is consummated and a restricted stock award of an additional 100,000
shares during the following calendar year. The first such award would vest
immediately, provided that the transfer restrictions on such shares shall lapse
25% per year over a four-year period and the second such award would vest
33 1/3% per year over a three-year period. In addition, the Company agrees to
grant Xx. Xxxxxx a 200,000 share option for the Company's common stock during
the calendar year in which the Merger is consummated and to grant a further
200,000 share option for the Company's common stock during the following
calendar year. Such options shall be granted at fair market value on the date of
grant, shall be immediately vested but shall not be exercisable until the first
anniversary of such grant, and shall contain other terms normally used by the
Company on its grants to senior executives, except as otherwise specified
herein.
Section 4.4 PRIOR SERVICE. For all purposes under this Agreement, Xx.
Xxxxxx'x service and compensation with CoreStates shall be treated as service
and compensation with the Company except to the extent that such treatment would
be impermissible under applicable law.
ARTICLE V -- TERMINATION BENEFITS; RETIREMENT AND DEATH BENEFITS
Section 5.1 TERMINATION OF PERIOD OF EMPLOYMENT. If Xx. Xxxxxx'x employment
with the Company terminates for any reason, prior to expiration of the Period of
Employment, the Company (i) shall thereafter pay Xx. Xxxxxx, or in the event of
his death, either the beneficiary previously designated by him in writing to the
Company or his estate, at an annual rate of $2,500,000.00, payable in the manner
provided in Article III above for the payment of Xx. Xxxxxx'x salary, for any
unexpired portion of the Period of Employment, and after any such unexpired
portion shall have elapsed the Company shall thereafter guarantee the annual
retirement income set forth in Section 5.2 below: (ii) shall honor its
commitments under Section 5.3; and (iii) shall continue to make all grants set
forth in Section 4.3 to Xx. Xxxxxx or his estate, and in addition shall cause
any options granted under Section 4.3 to remain exercisable for their entire
original term.
Section 5.2 RETIREMENT. Upon the expiration of the Period of Employment,
the Company shall thereafter and for the life of the second to die of Xx. Xxxxxx
and his current spouse, Xxxxxxx Xxxxxx ("Spouse"), guarantee Xx. Xxxxxx or such
Spouse, as applicable, an annual retirement income of $1,000,000.00. The monthly
amount of this benefit ("Monthly Benefit") will be calculated as the excess of
$83,333.00 over the sum of (i) the monthly Social Security primary insurance
amount to which Xx. Xxxxxx and such Spouse would be entitled at the later of age
62 or Xx. Xxxxxx'x and such Spouse's age on the date of Xx. Xxxxxx'x retirement,
(ii) the monthly amount of any non-qualified retirement benefit payable to Xx.
Xxxxxx and, if applicable, to such Spouse, assumed by the Company through the
Merger or payable by the Company, (iii) the monthly amount of the qualified
pension benefit to which Xx. Xxxxxx and, if applicable, such Spouse are entitled
under the Company's Pension Plan, and (iv) the monthly amount of any qualified
or non-qualified retirement benefit payable to Xx. Xxxxxx and, if applicable,
such Spouse from any predecessor employer other than CoreStates. For purposes of
determining the Monthly benefit, the benefits described in (ii), (iii) and (iv)
shall be stated in the form of a single life annuity commencing on the date upon
which Xx. Xxxxxx or his Spouse, as applicable, is first entitled to receive the
retirement benefits described in this Section 5.2, regardless of whether Xx.
Xxxxxx or such Spouse, as applicable, elects to receive such benefits in such
form. In the event of a written request made by Xx. Xxxxxx prior to the
beginning of the calendar year preceding the calendar year in which the benefits
under this Section would otherwise commence, in the sole discretion of the
Company's Board of Directors or an appropriate Committee thereof, consistent
with its treatment of other senior executives such benefits may be paid in a
lump sum distribution. Such a lump sum shall be the actuarial equivalent present
value, determined as of the date of the Monthly Benefit is scheduled to
commence, of the Monthly Benefit payable as a monthly annuity until the date of
death of the last to die of Xx. Xxxxxx and Spouse, with annuity payments
guaranteed until both Xx. Xxxxxx and Spouse attain age 80. For purposes of this
lump sum calculation, the discount rate shall be seven percent and mortality
(after age 80) determined under the 1996 Group Annuity Mortality Table. In the
event Spouse remarries following Xx. Xxxxxx'x death. Spouse shall receive no
remaining payments under this Section 5.2 and all such remaining payments shall
be divided equally among the surviving children of Xx. Xxxxxx.
Section 5.3 SPLIT DOLLAR LIFE INSURANCE. Commencing on inception of Xx.
Xxxxxx'x employment under this Agreement, and for Xx. Xxxxxx'x lifetime, to the
extent Xx. Xxxxxx is insurable at standard rates when the policy is initially
purchased, the Company shall provide a split dollar life insurance policy with
an insurance company reasonably acceptable to Xx. Xxxxxx and with a total death
benefit of $20,000,000, $15,000,000 of which would be payable to the designated
beneficiary of Xx. Xxxxxx (or his assignee) and the remaining $5,000,000 of
which would be payable to the Company. The Company shall pay all premiums
related to such policy. Xx. Xxxxxx shall have the right to the cash value under
the policy at any time. Such policy shall have a sufficient cash surrender value
so that Xx. Xxxxxx (or his assignee) may borrow up to $750,000 per year after
attaining age 65 without reducing the otherwise payable death benefit under the
policy.
ARTICLE VI -- INCOME AND EXCISE TAX WITHHOLDING
The Company shall have the right to effect income and/or excise tax
withholding on any payments made under or pursuant to this Agreement to the
extent required under applicable law. In the event that any excise taxes
("Excise Taxes") that may be imposed by Section 4999 of the Code become payable
by Xx. Xxxxxx due to any of the payments to Xx. Xxxxxx set forth above or from
any other plans, agreements or arrangements of the Company, CoreStates or their
affiliates for any reason, the Company will pay to Xx. Xxxxxx an additional
amount ("Gross-up Payment") at least 60 days prior to the due date for payment
of such Excise Taxes in an amount such that after payment by Xx. Xxxxxx of all
taxes (including, without limitation, all income and employment tax and Excise
Tax and treating as a tax the disallowance of any deduction of Xx. Xxxxxx by
virtue of the inclusion of the Gross-up Payment in his adjusted gross income),
and interest and penalties with respect to such taxes imposed upon the Gross-up
Payment, Xx. Xxxxxx retains an amount of the Gross-up Payment equal to the
Excise Taxes. The Company shall notify Xx. Xxxxxx of its determination of the
amount of such payment subject to the Excise Tax (which determination shall be
made by a "big six" accounting firm acceptable to Xx. Xxxxxx if he so requests)
and shall provide Xx. Xxxxxx with a receipt for the Excise Tax paid. Xx. Xxxxxx
shall report the amount indicated in the Company's notice as the amount subject
to Excise Tax on his federal income tax return.
For purposes of determining the amount of the Gross-up Payment, Xx. Xxxxxx
shall initially be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year for which the Gross-up
Payment is to be made and any applicable state income taxes at the highest
marginal rate of taxation for such calendar year, net of the reduction in
federal income taxes at such highest marginal rate which could be obtained from
deduction of such state income taxes. If reasonably requested by the Company,
such amounts shall be recalculated based on the actual marginal tax rates of Xx.
Xxxxxx (as certified by Xx. Xxxxxx'x accountants) at the time he files his
return for the calendar year in which such Gross-up Payment is made. If Xx.
Xxxxxx'x actual marginal tax rates are less than the highest marginal tax rates
used in calculating the additional amounts paid by the Company, Xx. Xxxxxx'shall
refund to the Company, on or before June 1 of the calendar year following the
year of the Gross-up Payment, the excess of the amount paid over the amount that
would have been paid by the Company had the actual marginal tax rates been paid.
If, for any reason, the Internal Revenue Service or any other taxing
authority proposes an adjustment to the amount of Excise Tax due with respect to
any payments or with respect to any additional amounts received by Xx. Xxxxxx
pursuant to this Agreement, Xx. Xxxxxx will notify the Company within 15
business days after his receipt of any written notice of such proposed
adjustment and shall give the Company the right to contest such proposed
adjustment on his behalf: provided, however, that Xx. Xxxxxx may pay such claim
if the Company does not take any action prior to the time such payment is due.
The Company shall bear and pay directly all costs related to or associated with
any contest and shall have complete control over such contest as it relates to
the Excise Tax, including whether such contest shall be by the way of resisting
payment of the Excise Tax, not paying the Excise Tax except under protest, or
making payment of the Excise Tax and claiming a refund thereof. The Company
shall (a) pay to Xx. Xxxxxx an amount equal to the Excise Tax due to the
Internal Revenue Service by Xx. Xxxxxx as a result of the outcome of any
contest, including any penalties or interest thereon, and (b) a Gross-up Payment
computed in the same manner and subject to the same adjustments as other
Gross-up Payments described above.
In the event that the amount of any additional payments made pursuant to
this Article VI or amounts withheld by the Company related to any payments under
the Agreement exceed the amount subsequently determined to have been due, and
Xx. Xxxxxx receives a refund in respect of any such excess, the excess
additional amounts shall constitute a loan by the Company to Xx. Xxxxxx payable
within 30 days after receipt by Xx. Xxxxxx of the refund from the Internal
Revenue Service together with any interest received thereon.
The Company's obligation to make such additional payments pursuant to this
Agreement shall continue until the statute of limitations (including any
extension thereof) applicable to Xx. Xxxxxx'x receipt of any payment has
expired.
For purposes of this Article Vl any reference to Xx. Xxxxxx'shall be deemed
to include his Spouse with respect to payments made to such Spouse after Xx.
Xxxxxx'x death and shall also be deemed to include Xx. Xxxxxx'x estate and/or
beneficiaries with respect to payments or adjustments provided for in this
Article VI.
ARTICLE VII -- TERMINATION OF PRIOR AGREEMENTS
This Agreement contains the entire understanding between the parties hereto
relating to the employment of Xx. Xxxxxx by the Company and describes the
coordination of prior, existing and future compensation, retirement and death
benefits payable to Xx. Xxxxxx and his Spouse by the Company or any predecessor
or other employer and supersedes any and all prior employment agreements between
CoreStates or any of its affiliates or predecessors and Xx. Xxxxxx.
ARTICLE VIII -- CONSOLIDATION, MERGER OR SALE OF ASSETS
Nothing in this Agreement shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger or
transfer of assets, the term "Company" as used herein, shall mean such other
corporation, this Agreement shall continue in full force and effect and the
Company shall cause such successor "Company" hereunder expressly to assume this
Agreement.
ARTICLE IX -- GENERAL PROVISIONS
Section 9.1 NONASSIGNABILITY. Neither this Agreement nor any right or
interest hereunder shall be assignable by Xx. Xxxxxx, his beneficiaries, or
legal representatives without the Company's prior written consent: provided,
however, that nothing shall preclude (i) Xx. Xxxxxx from designating a
beneficiary to receive any benefit payable hereunder upon his death, or (ii) the
executors, administrators, or other legal representatives of Xx. Xxxxxx or his
estate from assigning any rights hereunder to the person or persons entitled
thereunto.
Section 9.2 BINDING AGREEMENT. This Agreement shall be binding upon, and
inure to the benefit of Xx. Xxxxxx and the Company and their respective
successors and permitted assigns.
Section 9.3 AMENDMENT OR MODIFICATION OF AGREEMENT. This Agreement may not
be modified or amended except by an instrument in writing signed by the parties
hereto. In the event the staff of the Securities and Exchange Commission advises
the Company that any provision of this Agreement will preclude the Merger from
being accounted for as a pooling of interests, the Company and Xx. Xxxxxx'shall
negotiate alternative compensation or other provisions of equivalent value
acceptable to the staff of the Securities and Exchange Commission with respect
to pooling.
Section 9.4 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.
Section 9.5 INSURANCE. Except as otherwise provided herein, Company at its
discretion may apply for and procure in its own name and for its own benefit,
life insurance on Xx. Xxxxxx and his Spouse in any amount or amounts considered
advisable, and Xx. Xxxxxx and his Spouse shall have no right, title or interest
therein, and further, Xx. Xxxxxx agrees to submit, and to request his Spouse to
submit, to any medical or other examination and to execute and deliver any
applications or other instruments in writing, reasonably necessary to effectuate
such insurance.
Section 9.6 COMPETITION. Prior to expiration of five years from the
effective date of Xx. Xxxxxx'x employment pursuant to Article II hereof, Xx.
Xxxxxx will not become an employee, in the states where CoreStates or any of its
bank subsidiaries has a branch office on the date of this Agreement, of any
financial services company, bank, savings and loan association, savings bank,
whether federally or state chartered, or a subsidiary thereof. Xx. Xxxxxx
expressly acknowledges the reasonableness of such restrictions and such
geographic area. Further, Xx. Xxxxxx will not enter into or become interested in
such an organization on 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.
Section 9.7 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 twenty four (24) hours after deposit thereof in the U.S.
mail, postage prepaid, for delivery as registered or certified mail --
addressed, in the case of Xx. Xxxxxx, to him at this residential address, and in
the case of the Company, to its corporate headquarters, attention of the
Secretary, or to such other address as
Xx. Xxxxxx or the Company may designate in writing at any time or from time to
time to the other party. In lieu of notice by deposit in the U.S. mail, a party
may give notice by telegram, facsimile or telex.
Section 9.8 LEGAL AND ACCOUNTING FEES. The Company shall reimburse Xx.
Xxxxxx for (i) all reasonable legal and accounting fees and disbursements
incurred by Xx. Xxxxxx in connection with the negotiation and preparation of
this Agreement and (ii) all reasonable legal and accounting fees and
disbursements incurred by Xx. Xxxxxx in connection with any dispute over the
enforcement of Xx. Xxxxxx'x rights under this Agreement, unless Xx. Xxxxxx is
adjudicated to have brought such action not in good faith.
ARTICLE X -- APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the laws
of the State of North Carolina.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal affixed hereunto by its officers thereunto duly authorized, and Xx.
Xxxxxx has signed this Agreement under seal, all as of the date and year first
above written.
FIRST UNION CORPORATION IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed and its seal affixed hereunto by its officers thereunto
duly authorized, and Xx. Xxxxxx has signed this Agreement under seal, all as of
the date and year first above written.
FIRST UNION CORPORATION
By: /s/ _____EDWARD E. CRUTCHFIELD______
Xxxxxx X. Xxxxxxxxxxx
Attest:
/s/______MARION X. XXXXXX, XX.________
Secretary
(Corporate Seal)
/s/_______TERRENCE A. LARSEN______(SEAL)
Xxxxxxxx X. Xxxxxx
