EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as of the 24th day of January, 1997, by
and between WACHOVIA CORPORATION (the "Corporation") and MICKEY W. DRY (the
"Executive");
R E C I T A L S:
The Corporation desires to secure the services of the Executive in its
behalf or in behalf of one or more of its subsidiaries for which the Executive
may render services hereunder from time to time, in accordance with the terms
and conditions set forth herein. In addition, the Corporation desires to provide
the Executive with an incentive to remain in the service of the Corporation or
one or more of its subsidiaries by granting to the Executive compensation
security as set forth herein should his employment be terminated by the
Corporation without cause during the term of this Agreement.
NOW, THEREFORE, the Corporation and the Executive hereby mutually agree
as follows:
1. Employment. The Executive shall devote his working time exclusively
to the performance of such services for the Corporation or one or more of its
subsidiaries as may be assigned to him by the Corporation from time to time, and
shall perform such services faithfully and to the best of his ability. Such
services shall be rendered in a senior management or executive capacity and
shall be of a type for which the Executive is suited by background and training.
In no event shall the nature of the services require the Executive to relocate
his residence from Winston-Salem, North Carolina, unless the Executive shall
agree to such relocation. References herein to services rendered for the
Corporation and compensation and benefits payable or provided by the Corporation
shall include services rendered for and compensation and benefits payable or
provided by any subsidiary of the Corporation.
2. Term of Agreement. The term of this Agreement shall commence on the
date hereof and shall continue in effect until December 31, 1999; provided,
however, that commencing on the first anniversary of this Agreement, and each
anniversary thereafter, the term of this Agreement shall automatically be
extended for one additional year unless at least 90 days prior to any such
anniversary date either party shall notify the other in writing that it does not
wish to extend the term of this Agreement beyond the then applicable expiration
date. In no event, however, may the term of this Agreement extend beyond the
Executive's sixtieth birthday. References herein to the "term" of this Agreement
shall mean the original term plus any continuation as provided in this Section
2. The "term" shall not be deemed to refer to the Compensation Period described
in Section 4.
3. Termination of Employment by the Corporation. The Corporation may
terminate the employment of the Executive at any time for any reason; provided,
that except as set forth in Sections 6 and 7, the Corporation will provide the
Executive with Compensation Continuance to the extent described in Section 4 if
the Executive's employment is involuntarily terminated. The Executive's
employment shall be deemed to be involuntarily terminated if he is terminated by
the Corporation for any reason other than for "cause" as defined in Section 6,
or if he voluntarily terminates employment within six months after: (a) his base
salary is reduced below its level in effect on the date hereof wihtout the
Executive's consent, or (b) the Corporation amends the Executive Retirement
Agreement between the Corporation and the Executive dated January 27, 1995 (the
"Retirement Agreement "), without the Executive's consent, and such amendment
reduces benefits to which the Executive would have been entitled had such
amendment not been made, or (c) the duties asssigned to the Executive are not of
the status and type described in Section 1 and the Executive has not consented
thereto. The Executive shall be deemed to have consented to any reduction
described in (a) or (b), or assignment described in (c), unless he shall object
thereto in writing within thirty days after he receives notice thereof.
4. Compensation Continuance. If the Executive's employment hereunder is
involuntarily terminated as described in Section 3, he will be entitled to
receive the cash compensation and benefits described in (a), (b) and (c) below
(herein, "Compensation Continuance") for the period beginning with the date of
such involuntary termination and ending with the earlier of (i) the third
anniversary of the date of such termination, or (ii) the Normal Retirement Date
of the Executive as defined in the Retirement Agreement (such period is referred
to herein as the "Compensation Period"). The duration of the Compensation Period
shall not be affected by the fact that the term of this Agreement otherwise
would end before such Period expires. The cash compensation and benefits are as
follows:
(a) Cash Compensation. The amount of cash compensation to be received
monthly during the Compensation Period shall equal one-twelfth of the sum of (i)
the Executive's highest annual rate of salary from the Corporation in effect
during the 12-month period prior to his involuntary termination, plus (ii) an
amount equal to the average of the annual amounts, if any, awarded to the
Executive under the Corporation's Senior Management Incentive Plan for the three
consecutive calendar years next preceding the year of such termination, plus
(iii) the average of any annual contributions by the Corporation (excluding
participant contributions) in behalf of the Executive under the Retirement
Savings and Profit-Sharing Plan of Wachovia Corporation and the Wachovia
Corporation Retirement Savings and Profit-Sharing Benefit Equalization Plan for
the three consecutive calendar years preceding the year of such termination.
Each monthly payment of such cash compensation shall have deducted therefrom all
payroll taxes and withholdings required by law.
(b) Employee Benefits. During the Compensation Period the Executive
shall be carried on the payroll of the Corporation, and shall be deemed to be
continuing in the employment of the Corporation for the purpose of applying and
administering employee benefit plans of the Corporation (other than any tax-
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qualified retirement plans) and individual contracts between the Corporation
and the Executive providing supplemental or equalization payments or benefits
with respect to the Executive. The Executive shall participate in any changes
during the Compensation Period in benefit plans or programs applicable generally
to employees of the Corporation, or to a class of employees which includes
senior executives of the Corporation, but shall not have any right or option to
participate in any such plan or program in which he was not a participant
immediately prior to his involuntary termination of employment. Any individual
contract between the Corporation and the Executive in effect at the time of his
involuntary termination of employment may be terminated or amended by the
Corporation to the extent permitted by the terms of such contract; provided,
that during the Compensation Period the Corporation shall not, without the
written consent of the Executive or except to the extent required by law, make
any amendment to or terminate any one or more of the following individual
contracts or plans as applied to the Executive: (i) the Retirement Agreement;
(ii) the Wachovia Corporation Retirement Savings and Profit-Sharing Benefit
Equalization Plan; and (iii) the Wachovia Corporation Retirement Income Benefit
Enhancement Plan. The Corporation shall have no obligation to the Executive to
make any change or improvement in any such contract during the Compensation
Period even if the Corporation shall make changes or improvements during such
period in similar contracts, if any, with other senior executives of the
Corporation.
(c) Acceleration of Stock Options and Restricted Awards. Immediately
upon termination of the Executive's employment, all options previously granted
to the Executive and outstanding on the date of termination to acquire shares of
common stock of the Corporation shall become fully vested and exercisable (or
subject to surrender) in full and all restricted awards shall be deemed to be
earned in full; provided, that restricted awards based upon performance criteria
or a combination of performance criteria and continued service shall be deemed
to be earned in accordance with the terms, conditions and procedures of the plan
or plans pursuant to which any such restricted awards were granted.
In the event that the Executive shall engage in full-time employment permitted
hereunder for another employer or on a self-employed basis during the
Compensation Period, his employment with the Corporation shall be deemed to have
terminated for purposes of Section 4(b) as of the date he begins such full-time
employment, but the payments in Section 4(a) shall continue for the remainder of
the Compensation Period and the rights under Section 4(c) shall be applicable,
in each case subject to the provisions of Section 7.
5. Voluntary Termination of Employment by the Executive. The Executive
reserves the right to terminate his employment voluntarily at any time for any
reason following at least six months' notice to the Corporation. If such notice
shall be given, this Agreement shall terminate as of the effective date of
termination as set forth in such notice (or the date six months from the date of
receipt by the Corporation of such notice, if no effective date shall be set
forth therein), unless
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sooner terminated as provided in Section 3, 6 or 8. The Executive shall not be
entitled to any force of Compensation Continuance as a result of such voluntary
termination.
6. Termination for Cause. This Agreement shall immediately be terminated
and neither party shall have any obligation hereunder (including but not limited
to any obligation on the part of the Corporation to provide Compensation
Continuance) if the Executive's employment is terminated for "cause."
Termination for cause shall occur when termination results from the Executive's
(a) criminal dishonesty, (b) refusal to perform his duties hereunder on
substantially a full-time basis, (c) refusal to act in accordance with any
specific substantive instructions of the Chief Executive Officer or the Board of
Directors of the Corporation, or (d) engaging in conduct which could be
materially damaging to the Corporation without a reasonable good faith belief
that such conduct was in the best interests of the Corporation. The
determination of whether a termination is for cause shall be made by the
Management Resources and Compensation Committee of the Board of Directors of the
Corporation (the "Committee"), and such determination shall be final and
conclusive on the Executive and all other persons affected thereby.
7. Executive's Obligations: Early Termination of Compensation Period.
(a) During the Compensation Period, the Executive shall provide
consulting services to the Corporation at such time or times as the Corporation
shall reasonably request, subject to appropriate notice and to reimbursement by
the Corporation of all reasonable travel and other expenses incurred and paid by
the Executive. In the event the Executive shall engage in full-time employment
permitted hereunder during the Compensation Period for another employer or on a
self-employed basis, his obligation to provide the consulting services hereunder
shall be limited by the requirements of such employment.
(b) The Executive shall not disclose to any other person any material
information or trade secrets concerning the Corporation or any of its
subsidiaries at any time during or after the Compensation Period. The Executive
will at all times refrain from taking any action or making any statements,
written or oral, which are intended to and do disparage the business, goodwill
or reputation of the Corporation or any of its subsidiaries, or their respective
directors, officers, executives or other employees, or which could adversely
affect the morale of employees of the Corporation or any subsidiaries.
(c) The Executive shall not, without the Corporation's written consent,
engage in competitive employment at any time during the Compensation Period. The
Executive shall be deemed to engage in competitive employment if he shall render
services as an employee, officer, director, consultant or otherwise, for any
employer which conducts a principal business or enterprise that competes
directly with the Corporation or affiliate of the Corporation.
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(d) In the event that the Executive shall refuse to provide consulting
services in accordance with paragraph (a), or shall materially violate the terms
and conditions of paragraph (b) or (c), the Corporation may, at its election,
terminate the Compensation Period and Compensation Continuance to the Executive.
The Corporation may also initiate any form of legal action it may deem
appropriate seeking damages or injunctive relief with respect to any material
violations of paragraph (a), (b) or (c).
(e) The Committee shall be responsible for determining whether the
Executive shall have violated this Section 7, and all such determinations shall
be final and conclusive. Upon the request of the Executive, the Committee will
provide an advance opinion as to whether a proposed activity would violate the
provisions of paragraph (c).
8. Death and Disability. In the event that, during the term of this
Agreement or during the Compensation Period, the Executive shall die or shall
become entitled to benefits under the Corporation's Long-Term Disability Plan,
this Agreement shall thereupon terminate and neither the Executive nor any other
person shall have any further rights or benefits hereunder (including any rights
to Compensation Continuance).
9. Other Severance Benefits. Except as otherwise provided in this
Agreement, the Executive shall not be entitled to any form of severance
benefits, including benefits otherwise payable under any of the Corporation's
regular severance plans or policies, irrespective of the circumstances of his
termination of employment. The Executive agrees that the payments and benefit
provided hereunder, subject to the terms and conditions hereof, shall be in full
satisfaction of any rights which he might otherwise have or claim by operation
of law, by implied contract or otherwise, except for rights which he may have
under employee benefit plans of the Corporation or individual written contracts
with the Corporation.
10. Change of Control.
(a) Notwithstanding any other provision of this Agreement, the Executive
will be entitled to receive the Compensation Continuance described in Section
4 in the event the Executive voluntarily terminates his employment during the
period beginning on the date of a Change of Control (as defined in Section
1O(b) herein) and ending on the third anniversary of such date.
(b) For the purposes herein, a "Change of Control" shall be deemed to
have occurred on the earliest of the following dates:
(i) The date any entity or person shall have become the beneficial
owner of, or shall have obtained voting control over, twenty-five
percent or more of the outstanding Common Stock of the Corporation;
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(ii) The date the shareholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation
with or into another corporation, in which the Corporation is not
the continuing or surviving corporation or pursuant to which any
shares of Common Stock of the Corporation would be converted into
cash, securities or other property of another corporation, other
than a merger of the Corporation in which holders of Common Stock
immediately prior to the merger have the same proportionate
ownership of Common Stock of the surviving corporation immediately
after the merger as immediately before, or (B) to sell or otherwise
dispose of substantially all the assets of the Corporation; or
(iii) The date there shall have been a change in a majority of the
Board of Directors of the Corporation within a twelve month period
unless the nomination for election by the Corporation's shareholders
of each new director was approved by the vote of two-thirds of the
directors then still in offfice who were in office at the beginning
of the twelve month period.
For the purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such term is
defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than
the Corporation, a subsidiary of the Corporation or any employee benefit plan(s)
sponsored or maintained by the Corporation or any subsidiary thereof, and the
term "beneficial owner" shall have the meaning given the term in Rule 13d-3
under the Exchange Act.
(c) (i) In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Corporation or one or more
trusts established by the Corporation for the benefit of its employees, to
or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement, or otherwise) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1996, as amended (the "Code"), or any interest or
penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
(ii) Subject to the provisions of Section lO(c)(iii), all
determinations required to be made under this Section 10, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up
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Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized certified
public accounting firm designated by the Executive (the "Accounting
Firm") which shall provide detailed supporting calculations both to
the Corporation and the Executive within fifteen business days of
the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Corporation. In
the event that the Accounting Firm is serving as accountant or
auditor for an individual, entity or group effecting the change in
ownership or effective control (within the meaning of Section 280G
of the Code), the Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Corporation. Any Gross-Up Payment,
as determined pursuant to this Section 10, shall be paid by the
Corporation to the Executive within five days after the receipt of
the Accounting Firm's determination. If the Accounting Firm
detemines that no Excise Tax is payable by the Executive, it shall
so indicate to the Executive in writing. Any determination by the
Accounting Firm shall be binding upon the Corporation and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments
which will not have been made by the Corporation should have been
made ("Underpayment"), consistent with the calculations required to
be made hereunder. In the event that the Corporation exhausts its
remedies pursuant to Section lO(c)(iii) and the Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Corporation to
or for the benefit of the Executive.
(iii) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Corporation of the nature of such claim
and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to
the Corporation (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the
Corporation notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall:
(A) give the Corporation any information reasonably
requested by the Corporation relating to such claim;
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(B) take such action in connection with contesting
such claim as the Corporation shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Corporation;
(C) cooperate with the Corporation in good faith in
order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claim;
Provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section lO(c)(iii), the Corporation shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Corporation shall determine; PROVIDED, HOWEVER, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the
Corporation shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and PROVIDED,
FURTHER, that if the Executive is required to extend the statute of limitations
to enable the Corporation to contest such claim, the Executive may limit this
extension solely to such contested amount. The Corporation's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount advanced by
the Corporation pursuant to Section lO(c)(iii), the Executive
becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Corporation's complying with the
requirements of Section lO(c)(iii)) promptly pay to the Corporation
the amount of such refund (together with any interest paid or
credited thereon
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after taxes applicable thereto). If, after the receipt by the Executive of
an amount advanced by Company pursuant to Section 10(c)(iii), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Corporation does not notify the Executive
in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
ll. Waiver of Claims. In consideration of the obligations of the
Corporation hereunder, the Executive unconditionally releases the Corporation,
its directors, officers, employees and shareholders, from any and all claims,
liabilities and obligations of any nature pertaining to termination of the
Executive's employment by the Corporation, including but not limited to (a) any
claims under federal, state or local laws prohibiting discrimination, including
without limitation the Age Discrimination in Employment Act of 1967, as amended,
or (b) any claims growing out of any alleged legal restrictions on the
Corporation's right to terminate the Executive's employment, such as any alleged
implied contract of employment or termination contrary to public policy. The
Executive acknowledges that he has been advised to consult with an attorney
prior to signing this Agreement, that he has had no less than twenty-one days to
consider this Agreement prior to the execution hereof, and that he may revoke
this Agreement at any time within seven days following the execution hereof.
12. Notices. All notices hereunder shall be in writing and deemed
properly given if delivered by hand and receipted or if mailed by registered
mail, return receipt requested. Notices to the Corporation shall be directed to
the Secretary of the Corporation with a copy directed to the Chief Executive
Officer. Notices to the Executive shall be directed to his last known address.
13. Miscellaneous.
(a) The waiver, whether express or implied, by either party of a
violation of any of the provisions of this Agreement shall not operate or be
construed as a waiver of any subsequent violation of any such provision.
(b) No right, benefit or interest hereunder shall be subject to
assignment, encumbrance, charge, pledge, hypothecation or set off in respect of
any claim, debt or obligation, or similar process.
(c) This Agreement may not be amended, modified or canceled except
by written agreement of the parties.
(d) In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
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provisions of this Agreement shall remain in full force and effect to the
fullest extent permitted by law.
(e) This Agreement shall be binding upon and inure to the benefit of
the Executive and the Corporation, and their respective heirs, successors and
assigns.
(f) No benefit or promise hereunder shall be secured by any specific
assets of the Corporation. The Executive shall have only the rights of an
unsecured general creditor of the Corporation in seeking satisfaction of such
benefits or promises.
(g) This Agreement shall be governed by the construed in accordance
with the laws of the State of North Carolina.
(h) This Agreement sets forth the entire agreement and understanding
of the parties hereto with respect to the matters covered hereby, and amends and
supersedes any predecessor Employment Agreement between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by or in behalf of
the parties hereto as of the date first above written.
WACHOVIA CORPORATION
By: L.M. BAKER JR.
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Chief Executive Officer
Attest:
ALICE WASHINGTON JOYCE
- -------------------------
Secretary
[Corporate Seal]
MICKEY W. DRY (Seal)
--------------------------------
Executive
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