Contents:

Employment Agreement with G. Kennedy Thompson

Amendment No. 1 to Employment Agreement

 

 

 

                               EMPLOYMENT AGREEMENT

                         

 

         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 G. KENNEDY THOMPSON (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.

 

                                       12

<PAGE>

                  (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

 

                                       13

<PAGE>

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

                                       14

<PAGE>

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

<PAGE>

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 Company shall

determine; provided, however, that if the Company directs the Executive to pay

such claim and sue 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.

 

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<PAGE>

                  (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

<PAGE>

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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<PAGE>

         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: Edward E. Crutchfield                          _________________________

Title: Chairman and Chief                            Mark C. Treanor

       Executive Officer                             Secretary

 

 

 

 

__________________________ (SEAL)

G. Kennedy Thompson

 

 

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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

 

 

 

                               AMENDMENT NO. 1 TO

                              EMPLOYMENT AGREEMENT

 

         This Amendment No. 1 dated February 19, 2002 (the "Amendment"), to the

Employment Agreement dated November 15, 1999 (the "Employment Agreement"), by

and between Wachovia Corporation (formerly named First Union Corporation, the

"Company") and G. Kennedy Thompson (the "Executive").

 

         WHEREAS, the Company and the Executive desire to change certain

provisions of the Employment Agreement;

 

         WHEREAS, the Executive recommends that certain provisions of the

Employment Agreement be amended to more closely align such provisions in the

Executive's Employment Agreement with similar provisions in the employment

agreement between the Corporation and the Corporation's Chairman; and

 

         NOW, THEREFORE, for good and valuable consideration, the receipt of

which is acknowledged hereto, the parties agree as follows:

 

1.       Section 1(b) of the Employment Agreement is deleted in its entirety

and the following inserted in its place as new Section 1(b).

 

         "1(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 third

         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 three 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 three years from such Change in Control."

 

2.       Section 4(a)(i)(B) of the Employment Agreement is deleted in its

entirety and the following inserted in its place as new Section 4(a)(i)(B).

 

         "4(a)(i)(B) the amount equal to the product of (1) three and (2) the

         sum of the Executive's Annual Base Salary immediately prior to the

         Date of Termination and the Base Bonus."

 

3.       Section 4(a)(iii) of the Employment Agreement is deleted in its

entirety and the following inserted in its place as new Section 4(a)(iii).

 

         "4(a)(iii) for three 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"

 

4. This Amendment constitutes an amendment to the Employment Agreement pursuant

to Section 11(a) of the Employment Agreement. All provisions of the Employment

Agreement not affected by this Amendment shall remain in full force and effect

and shall continue to be binding obligations of both parties hereto.

Capitalized terms used in this Amendment but not defined herein shall have the

meanings assigned thereto in the Employment Agreement.

 

 

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<PAGE>

 

 

         IN WITNESS WHEREOF, the Company has caused this Amendment to be

executed by its officers thereunto duly authorized, and the Executive has

signed this Amendment under seal, all as of the date and year first above

written.

 

 

WACHOVIA CORPORATION                                                     [SEAL]

                                             ATTEST:

 

 

By:

   -----------------------------------       ----------------------------------

Name: Paul G. George                         Mark C. Treanor

Title: Senior Executive Vice President       Secretary

 

 

 

------------------------------  (SEAL)

G. Kennedy Thompson

 

 

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