Ex-10.n Employment Agreement/Wachovia & Kelly



 



EXHIBIT 10(N)


EMPLOYMENT AGREEMENT


     This EMPLOYMENT AGREEMENT, made and entered into as of the 1st day of
November, 2001, by and between Wachovia Corporation (the “Company”), a North
Carolina corporation, and ROBERT P. KELLY (the “Executive”);


     WHEREAS, the Management Resources & Compensation Committee (the
“Committee”) of 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 Committee 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 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.     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. The Executive shall perform such duties and
responsibilities, in such capacity and with such authority, for the Company (or
one or more of its subsidiaries) as the Company may designate from time to
time. Such duties shall be of a type for which the Executive is suited by
background, experience and training, in the Company’s reasonable discretion.


               (ii)     During the Employment Period,
and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to


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 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 or by a Committee
designated by the Board (the “Annual Bonus”); provided, however, the Annual
Bonus paid to the Executive for the fiscal year 2001 shall not be less than
$675,000. 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 in accordance with the Company’s policies
and procedures applicable to the Executive and may be increased from time to
time consistent with such procedures. 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, and may not thereafter be reduced except with the written
consent of the Executive.


               (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 employee benefit plans generally available
to other peer executives 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 or by a Committee designated by the Board, in its sole
discretion, except as provided in this Agreement.


               (iii)     Expenses.
During the Employment Period prior to the Date


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 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 the expense is
incurred.


               (iv)     Fringe Benefits. During the Employment Period prior to the Date of
Termination, the Executive shall be entitled to fringe benefits and perquisite
plans or programs of the Company and its affiliated companies generally
available to executives who are peers of the Executive; provided that the
Company reserves the right to modify, change or terminate such fringe benefits
and perquisite plans or programs from time to time, in its sole discretion.


               (v)     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 by
the Executive 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 by the Executive of the
Executive’s employment upon satisfaction of the requirements for normal
retirement under the terms of the Company’s tax-qualified 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
termination of the Executive’s employment upon satisfaction of the requirements
to receive benefits under the Company’s long-term disability plan.


          (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
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, (III) a change in the
Executive’s responsibilities from line to staff or vice versa, and (IV) placing
the Executive on temporary leave pending an inquiry into whether the Executive
has engaged in conduct that could constitute “Cause” under this Agreement,
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 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)     at any time prior to the Executive reaching age 63, the Company
giving notice to the Executive of its intention not to extend the term of this
Agreement as provided in Section 1(b);


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               (v)     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 Change in Control;


               (vi)     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;


               (vii)     any failure by the Company to comply with and satisfy Section 9(c)
of this Agreement; or


               (viii)     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 after a Change in Control 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
determined pursuant to the procedures set forth in this Agreement that the
Executive’s termination was not for Good Reason, the Executive shall reimburse
the Company the amounts to which it is finally 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 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.
To be effective, a Notice of Termination


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given by the Executive terminating employment with the Company for Good Reason
must be received by the Company no later than 60 days from the event(s) giving
rise to the Good Reason termination.


          (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 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


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 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 or 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)
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;
Company Termination 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:


               (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 (A) the Executive’s
Annual Base Salary through the Date of Termination to the extent not
theretofore paid, and (B) the product of (1) an Annual Bonus of an amount equal
to the greater of (x) the highest annual cash incentive bonus paid by the
Company to the


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 Executive for the three calendar years prior to the Date of Termination
(which may include, if applicable, the bonus for 2001 described in Section
2(b)(i)) or (y) the Executive’s then applicable “target” incentive bonus under
the then applicable cash incentive compensation plan prior to the Date of
Termination (the greater of clauses (x) or (y) is defined as the “Base Bonus”),
and (2) 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”), (C) any unpaid Annual Bonus for the prior year, (D) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and (E) any accrued paid time off, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(A), (B), (C), (D) and (E) shall be hereinafter referred to as the “Accrued
Obligations”).


For purposes of determining the Base Bonus hereunder, the Company 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)     for each of the three years after the Executive’s Date of Termination
(the “Compensation Continuance Period”), the Company shall pay to the Executive
a cash benefit equal to the sum of (A) the Executive’s highest Annual Base
Salary during the twelve months immediately prior to the Date of Termination,
(B), the Base Bonus, and (C) the amount equal to the highest matching
contribution by the Company to the Executive’s account in the Company’s 401(k)
plan for the five years immediately prior to the Date of Termination (the
payments described in clauses (A), (B) and (C) shall be hereinafter referred to
as the “Compensation Continuance Payments” and, together with the benefits
referred to in Sections 4(a)(iii), (iv), (v), (vi) and (vii), shall be
hereinafter referred to as the “Compensation Continuance Benefits”). The
Company shall make the Compensation Continuance Payments no more frequently
than semi-monthly (and may make the Compensation Continuance Payments in
accordance with the Company’s normal payroll policies and practices), and shall
withhold from the Compensation Continuance Payments all applicable federal,
state and local taxes. Notwithstanding anything contained in this Agreement to
the contrary, in the event a Change of Control has occurred on or prior to the
Date of Termination, the Company shall pay the Compensation Continuance
Payments to the Executive in a lump sum in cash within 30 days after the Date
of Termination.


               (iii)     during the Compensation Continuance Period (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. Notwithstanding the foregoing,
in the event the Executive becomes reemployed with another employer and becomes
eligible to receive medical, dental and/or life insurance benefits from such
employer, the medical, dental and/or life insurance benefits described herein
shall be secondary to such benefits during the


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 period of the Executive’s eligibility, but only to the extent that the
Company reimburses the Executive for any increased cost and provides any
additional benefits necessary to give the Executive the benefits provided
hereunder. 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.
Notwithstanding the foregoing, if the Company reasonably determines that
providing continued coverage under one or more of its welfare benefit plans
contemplated herein could adversely affect the tax treatment of other
participants covered under such plans, or would otherwise have adverse legal
ramifications, the Company may, in its discretion, either (A) provide other
coverage at least as valuable as the continued coverage through insurance or
otherwise, or (B) pay the Executive a lump sum cash amount that reasonably
approximates the after-tax value to the Executive of the premiums for continued
coverage, in lieu of providing such continued coverage;


               (iv)     during the Compensation Continuance Period, to the extent not
otherwise vested in accordance with the Company’s stock compensation plans, all
unvested options to purchase shares of Company common stock and restricted
stock awards will continue to vest in accordance with the applicable terms of
such stock option or restricted stock grants as if the Executive’s employment
with the Company had not been terminated. At the end of the Compensation
Continuance Period, to the extent not otherwise vested in accordance with the
preceding sentence, all unvested stock options and restricted stock awards will
vest. Notwithstanding the termination of the Executive’s employment with the
Company, all stock options granted to the Executive as of the date of this
Agreement and during the Employment Period will be exercisable until the
scheduled expiration date of such stock options; provided, however, in the
event any such stock options are designated as “incentive stock options”
pursuant to section 422 of the Code (as defined herein), such stock options
shall be treated as non-qualified stock options for purposes of this sentence
to the extent that they are exercised after the period specified in section
422(a)(2) of the Code (to the extent such provision applies);


               (v)     during the Compensation Continuance Period, the Executive shall be
entitled to continue to participate in the Company’s fringe benefit and
perquisite plans or programs in which the Executive participated immediately
prior to the Date of Termination, in each case in accordance with the Company’s
plans, programs, practices and policies;


               (vi)     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”); and


               (vii)     the Company will provide outplacement services to the Executive in
accordance with the Company’s policies generally applicable to


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 involuntarily terminated employees.


          (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 Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations, Other Benefits, 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.


          (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, 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 (other than for Retirement) 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 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


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 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. Except as specifically provided in this Agreement,
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 Executive acknowledges and
agrees that subject to the payment by the Company of the benefits provided in
this Agreement to the Executive, in no event will the Company or its
subsidiaries or affiliates be liable to the Executive for damages under any
claim of breach of contract as a result of the termination of the Executive’s
employment. In the event of such termination, the Company shall be liable only
to provide the benefits specified in this Agreement. 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, non-public 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. In addition to the foregoing, the
Executive will refrain from taking any action or making any statements, written
or oral, which are intended to or which disparage the business, goodwill or
reputation of the Company or any of its affiliated companies, or their
respective directors, officers, executives or other employees, or which could
adversely affect the morale of employees of the Company or any of its
affiliated companies.


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          (b)     (i) While employed by the Company and for three years after the Date
of Termination (which may include the Compensation Continuance Period), the
Executive shall not, directly or indirectly, on behalf of the Executive or any
other person, (A) solicit for employment by other than the Company, (B)
encourage to leave the employ of the Company, or (C) interfere with the
Company’s or its affiliated companies’ relationship with, any person employed
by the Company or its affiliated companies.


               (ii)     While employed by the Company and for three years after the Date of
Termination (which may include the Compensation Continuance Period), the
Executive will not become a director, officer, employee 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 (including predecessors
thereof) 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 (or
successors thereto, 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 the Executive terminates employment with
the Company pursuant to Retirement or the Executive terminates employment with
the Company for any reason following a Change in Control or the Company
terminates the Executive’s employment for any reason following a Change in
Control. Upon the Executive’s request to the Company’s Chief Executive
Officer, the Company will provide an advance opinion as to whether a proposed
activity would violate the provisions of this Section 7(b)(ii).


               (iii)     During the Compensation Continuance Period, the Executive shall
provide consulting services to the Company at such time or times as the Company
shall reasonably request, subject to appropriate notice and to reimbursement by
the Company of all reasonable travel and other expenses incurred and paid by
the Executive in accordance with the Company’s then-current policy for expense
reimbursement. In the event the Executive shall engage in any employment
permitted hereunder during the Compensation Continuance Period for another
employer or on a self-employed basis, the Executive’s obligation to provide the
consulting services hereunder shall be adjusted in accordance with the
requirements of such employment.


          (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 and, prior to a Change in Control, the Company may terminate the
Compensation Continuance


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 Period and the Compensation Continuance Benefits, if applicable, in its
sole discretion. The Executive acknowledges that monetary damages would be
inadequate and insufficient remedy for a breach or threatened breach of Section
7. 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. If it is finally determined pursuant to the procedures set
forth in this Agreement that the Executive did not breach this Section 7, the
Company shall reimburse the Executive the amounts to which it is finally
determined to be entitled.


          (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 terminate after the term of this Agreement
expires; and provided, further, Section 7(b)(ii) shall not apply if the
Executive terminates employment with the Company pursuant to Retirement or the
Executive terminates employment with the Company for any reason following a
Change in Control or the Company terminates the Executive’s employment for any
reason following a Change in Control.


          (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 (which may include the Compensation
Continuance Period), 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.


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          (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 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;


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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
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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          (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 the Company’s rights to
injunctive relief for 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; provided, however, that
the Company may invoke the American Arbitration Association’s Optional Rules
for Emergency Measures of Protection. 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 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.


16






 


          (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. 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.


          (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, including without limitation, the Employment
Agreement between the Company and the Executive dated as of February 23, 2001.


          (g)     Conflicts with Plans. To the extent any plan, policy, practice or
program of or contract or agreement with the Company attempts to cap, restrict,
limit or reduce payments to the Executive hereunder, 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, restrictions,
limitations or reductions.


          (h)     Release and Waiver of Claims. In consideration of any Compensation
Continuance Benefits the Company provides to the Executive under this
Agreement, the Executive upon termination of employment with the Company shall
execute a separate general release and waiver of claims in favor of the
Company, its affiliates and personnel in a form acceptable to the Company. The
Executive shall not be eligible for any Compensation Continuance Benefits until
the Executive has executed such release and waiver of claims.


          (i)     Creditor Status. No benefit or promise hereunder shall be secured by
any specific assets of the Company. The Executive shall have only the rights
of an unsecured general creditor of the Company in seeking satisfaction of such
benefits or promises.


          (j)     No Assignment of Benefits. 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.


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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its officers thereunto duly authorized, and the Executive has signed this
Agreement under seal, all as of the date and year first above written.



	 	 	 	 	 	 	 
	WACHOVIA CORPORATION	 	 	 	ATTEST:
	 	[SEAL]
	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 
	
	 	 	 	
	 	 
	Name: G. Kennedy Thompson

Title: Chief Executive Officer	 	 	 	Mark C. Treanor

Secretary	 	 
	 	 	 	 	 	 	 
	

Robert P. Kelly	 	
(SEAL)	 	 	 	 




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