EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as of the 24th day of January,
1997, by and between WACHOVIA CORPORATION (the "Corporation") and
______________________ (the "Executive");
R E C I T A L S:
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. In
no event shall the nature of the services require the Executive to
relocate his residence from Winston-Salem, North Carolina, unless the
Executive shall agree to such relocation. References herein to services
rendered for the Corporation and compensation and benefits payable or
provided by the Corporation shall include services rendered for and
compensation and benefits payable or provided by any subsidiary of the
Corporation.
2. Term of Agreement. The term of this Agreement shall
commence on the date hereof and shall continue in effect until December
31, 1999; 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 of this Agreement extend beyond the
Executive's sixtieth 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 Executive Retirement Agreement between the Corporation and
the Executive dated January 27, 1995 (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 1 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 of the 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.
-2-
(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; (ii) the Wachovia Corporation
Retirement Savings and Profit-Sharing Benefit Equalization Plan; and
(iii) the Wachovia Corporation Retirement Income Benefit Enhancement
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
Period and the rights under Section 4(c) shall be applicable, in each
case subject to the provisions of Section 7.
-3-
5. Voluntary Termination of Employment by the Executive. The
Executive reserves the right to terminate his employment voluntarily at
any time for any reason following at least six months' notice to the
Corporation. If such notice shall be given, this Agreement shall
terminate as of the effective date of termination as set forth in such
notice (or the date six months from the date of receipt by the
Corporation of such notice, if no effective date shall be set forth
therein), unless sooner terminated as provided in Section 3, 6 or 8.
The Executive shall not be entitled to any form of Compensation
Continuance as a result of such voluntary termination.
6. Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder
(including but not limited to any obligation on the part of the
Corporation to provide Compensation Continuance) if the Executive's
employment is terminated for "cause." Termination for cause shall occur
when termination results from the Executive's (a) criminal dishonesty,
(b) refusal to perform his duties hereunder on substantially a
full-time basis, (c) refusal to act in accordance with any specific
substantive instructions of the Board of Directors of the 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 all other persons affected thereby.
7. Executive's Obligations; Early Termination of Compensation
Period.
(a) During the Compensation Period, the Executive
shall provide consulting services to the Corporation at such time or
times as the Corporation shall reasonably request, subject to
appropriate notice and to reimbursement by the Corporation of all
reasonable travel and other expenses incurred and paid by the
Executive. In the event the Executive shall engage in full-time
employment permitted hereunder during the Compensation Period for
another employer or on a self-employed basis, his obligation to provide
the consulting services hereunder shall be limited by the requirements
of such employment.
(b) The Executive shall not disclose to any other
person any material information or trade secrets concerning the
Corporation or any of its subsidiaries at any time during or after the
Compensation Period. The Executive will at all times refrain from
taking any action or making any statements, written or oral, which are
intended to and do disparage the business, goodwill or reputation of
the Corporation or any of its subsidiaries, or their respective
directors, officers, executives or other employees, or which could
adversely affect the morale of employees of the Corporation or any
subsidiaries.
-4-
(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 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
-5-
the period beginning on the date of a Change of Control (as defined in
Section 10(b) herein) and ending on the third anniversary of such date.
(b) For the purposes herein, a "Change of Control" shall be
deemed to have occurred on the earliest of the following dates:
(i) The date any entity or person shall have
become the beneficial owner of, or shall have obtained voting
control over, twenty-five percent or more of the outstanding
Common Stock of the 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 two-thirds of the
directors then still in office who were in office at the
beginning of the twelve month period.
For the purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such
term is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, other than the Corporation, a subsidiary of the Corporation or any
employee benefit plan(s) sponsored or maintained by the Corporation or
any subsidiary thereof, and the term "beneficial owner" shall have the
meaning given the term in Rule 13d-3 under the Exchange Act.
(c) (i) In the event it shall be determined that any
payment, benefit or distribution (or combination thereof) by
the Corporation or one or more trusts established by the
Corporation for the benefit of its employees, to or for the
benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue
Code of 1996, as amended (the "Code"), or any interest or
penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest
and penalties, hereinafter collectively referred to as the
"Excise Tax"), the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such
-6-
that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and the
Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
(ii) Subject to the provisions of Section
10(c)(iii), all determinations required to be made under this
Section 10, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination,
shall be made by a nationally recognized certified public
accounting firm designated by the Executive (the "Accounting
Firm") which shall provide detailed supporting calculations
both to the Corporation and the Executive within fifteen
business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested
by the Corporation. In the event that the Accounting Firm is
serving as accountant or auditor for an individual, entity or
group effecting the change in ownership or effective control
(within the meaning of Section 280G of the Code), the
Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Corporation. Any
Gross-Up Payment, as determined pursuant to this Section 10,
shall be paid by the Corporation to the Executive within five
days after the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall so indicate to the
Executive in writing. Any determination by the Accounting Firm
shall be binding upon the Corporation and the Executive. As a
result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation
should have been made ("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
-7-
business days after the Executive is informed in writing of
such claim and shall apprise the Corporation of the nature of
such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it
gives such notice to the Corporation (or such shorter period
ending on the date that any payment of taxes with respect to
such claim is due). If the Corporation notifies the Executive
in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(A) give the Corporation any
information reasonably requested by the Corporation relating
to such claim;
(B) take such action in connection
with contesting such claim as the Corporation shall reasonably
request in writing from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the
Corporation;
(C) cooperate with the Corporation
in good faith in order to effectively contest such claim; and
(D) permit the Corporation to
participate in any proceedings relating to such claim;
provided, however, that the Corporation shall bear
and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 10(c)(iii), the Corporation shall
control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax
claimed and sue 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 sue for a refund, the
Corporation shall advance the amount of such payment to the
Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance;
-8-
and provided, further, that if the Executive is required to
extend the statute of limitations to enable the Corporation to
contest such claim, the Executive may limit this extension
solely to such contested amount. The Corporation's control of
the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any
other taxing authority.
(iv) If, after the receipt by the
Executive of an amount advanced by the Corporation pursuant to
Section 10(c)(iii), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements
of Section 10(c)(iii)) promptly pay to the Corporation the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by Company
pursuant to Section 10(c)(iii), a determination is made that
the Executive shall not be entitled to any refund with respect
to such claim and the Corporation does not notify the
Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall
not be required to be 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 Chairman of the Board of Directors of the
Corporation. Notices to the Executive shall be directed to his last
known address.
-9-
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 off in respect of any claim, debt or obligation, or similar
process.
(c) This Agreement may not be amended, modified or
canceled except by written agreement of the parties.
(d) In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions of this Agreement shall remain in
full force and effect to the fullest extent permitted by law.
(e) This Agreement shall be binding upon and inure to
the benefit of the Executive and the Corporation, and their respective
heirs, successors and assigns.
(f) No benefit or promise hereunder shall be secured
by any specific assets of the Corporation. The Executive shall have
only the rights of an unsecured general creditor of the Corporation in
seeking satisfaction of such benefits or promises.
(g) This Agreement shall be governed by 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.
-10
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:
Donald R. Hughes
Chairman, Management Resources and
Compensation Committee
Attest:
Secretary
[Corporate Seal]
EXECUTIVE
(Seal)
-11-