EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as of the 23th day of April, 1999,
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 January 31, 2001.
References herein to the "term" of this Agreement shall mean the term
described in the preceding sentence. The "term" shall not be deemed to
refer to the Compensation Period described in Section 4.
3. Termination of Employment by the Corporation. The Corporation may
terminate the employment of the Executive at any time for any reason;
provided, that except as set forth in Sections 6 and 7, the Corporation
will provide the Executive with Compensation Continuance to the extent
described in Section 4 if the Executive's employment is involuntarily
terminated. The Executive's employment shall be deemed to be involuntarily
terminated if he is terminated by the Corporation for any reason other
than for "cause" as defined in Section 6, or if he voluntarily terminates
employment within six months after: (a) his base salary is reduced below
its level in effect on the date hereof without the Executive's
consent, or (b) the Corporation amends the Senior Executive Retirement
Agreement between the Corporation and the Executive dated April 23, 1999
(the "Retirement Agreement"), without the Executive's consent, and such
amendment reduces benefits to which the Executive would have been entitled
had such amendment not been made, or (c) the duties assigned to the
Executive are not of the status and type described in Section 1 and the
Executive has not consented thereto. The Executive shall be deemed to have
consented to any reduction described in (a) or (b), or assignment
described in (c), unless he shall object thereto in writing within thirty
days after he receives notice thereof.
4. Compensation Continuance. If the Executive's employment hereunder
is involuntarily terminated as described in Section 3, he will be entitled
to receive the cash compensation and benefits described in (a), (b) and
(c) below (herein, "Compensation Continuance") for the period beginning
with the date of such involuntary termination and ending with the earlier
of (i) the third anniversary of the date of such termination, or (ii) the
Normal Retirement Date of the Executive as defined in the Retirement
Agreement (such period is referred to herein as the "Compensation
Period"). The duration of the Compensation Period shall not be affected by
the fact that the term of this Agreement otherwise would end before such
Period expires. The cash compensation and benefits are as follows:
(a) Cash Compensation. The amount of cash compensation to be
received monthly during the Compensation Period shall equal one-twelfth of
the sum of (i) the Executive's highest annual rate of salary from the
Corporation in effect during the 12-month period prior to his involuntary
termination, plus (ii) an amount equal to the average of the incentive
compensation paid to the Executive by the Corporation, if any, for the
three consecutive calendar years next preceding the year of such
termination; provided, that the incentive compensation to be recognized
for this purpose shall be approved by the Management Resources and
Compensation Committee of the Board of Directors of the Corporation (the
"Committee"), 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-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
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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 sooner
terminated as provided in Section 3, 6 or 8. The Executive shall not be
entitled to any form of Compensation Continuance as a result of such
voluntary termination.
6. Termination for Cause. This Agreement shall immediately be
terminated and neither party shall have any obligation hereunder
(including but
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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 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.
(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
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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 10(b) herein) and ending on the third
anniversary of such date.
(b) For the purposes herein, a "Change of Control" shall be
deemed to have occurred on the earliest of the following dates:
(i) The date any entity or person shall have become the
beneficial owner of, or shall have obtained voting control over,
twenty-five percent or more of the outstanding Common Stock of the
Corporation;
(ii) The date the shareholders of the Corporation
approve a definitive agreement (A) to merge or consolidate the
Corporation with or into another corporation, in which the
Corporation is not the continuing or surviving corporation or
pursuant to which any shares of Common Stock of the Corporation
would be converted into cash,
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securities or other property of another corporation, other than a
merger of the Corporation in which holders of Common Stock
immediately prior to the merger have the same proportionate
ownership of Common Stock of the surviving corporation immediately
after the merger as immediately before, or (B) to sell or otherwise
dispose of substantially all the assets of the Corporation; or
(iii) The date there shall have been a change in a
majority of the Board of Directors of the Corporation within a
twelve month period unless the nomination for election by the
Corporation's shareholders of each new director was approved by the
vote of two-thirds of the directors then still in office who were in
office at the beginning of the twelve month period.
For the purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such term
is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
other than the Corporation, a subsidiary of the Corporation or any
employee benefit plan(s) sponsored or maintained by the Corporation or any
subsidiary thereof, and the term "beneficial owner" shall have the meaning
given the term in Rule 13d-3 under the Exchange Act.
(c) (i) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the Corporation
or one or more trusts established by the Corporation for the benefit
of its employees, to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the
terms of this Agreement, or otherwise) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1996, as amended (the "Code"), or any interest or
penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties,
hereinafter collectively referred to as the "Excise Tax"), the
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect
thereto) and the Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(ii) Subject to the provisions of Section 10(c)(iii),
all determinations required to be made under this Section 10,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the
Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Corporation and the Executive
within fifteen business days of the receipt
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of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Corporation. In the event that
the Accounting Firm is serving as accountant or auditor for an
individual, entity or group effecting the change in ownership or
effective control (within the meaning of Section 280G of the Code),
the Executive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne solely
by the Corporation. Any Gross-Up Payment, as determined pursuant to
this Section 10, shall be paid by the Corporation to the Executive
within five days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall so indicate to the Executive
in writing. Any determination by the Accounting Firm shall be
binding upon the Corporation and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made
by the Corporation should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In
the event that the Corporation exhausts its remedies pursuant to
Section 10(c)(iii) and the Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the
benefit of the Executive.
(iii) The Executive shall notify the Corporation in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Corporation of the
Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the
Corporation of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the
date on which it gives such notice to the Corporation (or such
shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Corporation notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(A) give the Corporation any information
reasonably requested by the Corporation relating to such claim;
(B) take such action in connection with contesting
such claim as the Corporation shall reasonably request in writing
from time to time, including, without limitation,
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accepting legal representation with respect to such claim by an
attorney reasonably selected by the Corporation;
(C) cooperate with the Corporation in good faith
in order to effectively contest such claim; and
(D) permit the Corporation to participate in any
proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 10(c)(iii), the Corporation shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Corporation shall determine; provided,
however, that if the Corporation directs the Executive to pay such
claim and sue for a refund, the Corporation shall advance the amount
of such payment to the Executive, on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance;
and provided, further, that if the Executive is required to extend
the statute of limitations to enable the Corporation to contest such
claim, the Executive may limit this extension solely to such
contested amount. The Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount
advanced by the Corporation pursuant to Section 10(c)(iii), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Corporation's
complying with the requirements of Section 10(c)(iii)) promptly
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pay to the Corporation the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by
Company pursuant to Section 10(c)(iii), a determination is made that
the Executive shall not be entitled to any refund with respect to
such claim and the Corporation does not notify the Executive in
writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
11. Waiver of Claims. In consideration of the obligations of the
Corporation hereunder, the Executive unconditionally releases the
Corporation, its directors, officers, employees and shareholders, from any
and all claims, liabilities and obligations of any nature pertaining to
termination of the Executive's employment by the Corporation, including
but not limited to (a) any claims under federal, state or local laws
prohibiting discrimination, including without limitation the Age
Discrimination in Employment Act of 1967, as amended, or (b) any claims
growing out of any alleged legal restrictions on the Corporation's right
to terminate the Executive's employment, such as any alleged implied
contract of employment or termination contrary to public policy. The
Executive acknowledges that he has been advised to consult with an
attorney prior to signing this Agreement, that he has had no less than
twenty-one days to consider this Agreement prior to the execution hereof,
and that he may revoke this Agreement at any time within seven days
following the execution hereof.
12. Notices. All notices hereunder shall be in writing and deemed
properly given if delivered by hand and receipted or if mailed by
registered mail, return receipt requested. Notices to the Corporation
shall be directed to the Secretary of the Corporation with a copy directed
to the 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:
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Chief Executive Officer
Attest:
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Secretary
[Corporate Seal]
--------------------------------------(Seal)
Mickey W. Dry
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