Execution Copy
Executive Retention Agreement
THIS AGREEMENT is entered into as of this 22nd day of May,
1998 ("Effective Date"), by and between PENNCORP FINANCIAL GROUP, INC., a
Delaware corporation ("Company") and Xxxxx X. XxXxxxxxx ("Executive").
A. The Board of Directors of the Company desires to assure
that key executives will devote their undivided time and attention to the
Company without regard to concerns about an involuntary loss of employment
without cause, and to assure the continuity and cooperation of management in the
event of a change in ownership and the continued attention of Executive to his
duties without any distraction arising out of the circumstances surrounding a
change or potential change in ownership.
B. The Company and Executive desire to enter into an executive
retention arrangement to protect Executive against an involuntary termination of
employment without cause, to recognize the additional efforts of Executive that
may be necessary to assist in and prepare for any potential change in ownership,
and to encourage Executive to diligently perform his duties and responsibilities
to ensure a smooth transition for any such change in ownership.
C. The Company and Executive have entered an Executive
Employment Agreement dated to be effective as of the Effective Date (the
"Employment Agreement"), which refers to and otherwise contemplates this
Agreement.
For good and valuable consideration, including the mutual
covenants herein, the parties hereto agree as follows:
1. Definitions. The following terms shall have
the following meanings for purposes of this Agreement.
"Annual Pay" means:
(1) for any termination of employment on or prior to the first
anniversary of Executive's employment with the Company pursuant to the terms of
the Employment Agreement, $1,000,000; and
(2) for any termination of employment after the first
anniversary of Executive's employment with the Company pursuant to the terms of
the Employment Agreement and prior to the expiration of the Agreement Term (as
defined in the Employment Agreement), the sum of:
(i) the annual rate of Base Salary (as defined in the
Employment Agreement) payable to the Executive immediately before the
termination, plus
(ii) an amount equal to the product of the annual rate of Base
Salary times a percentage determined as follows -
(A) for a termination occurring during the 1999 calendar year
and after the first anniversary of Executive's employment
under the Employment Agreement, the percentage equal to the
percentage of the annual rate of Base Salary that was paid (or
payable) to Executive as the Incentive Bonuses (as defined in
the Employment Agreement) for the Bonus Period (as defined in
the Employment Agreement) ended on December 31, 1998, and
(B) for a termination occurring during the 2000 calendar year,
the percentage equal to the percentage of the annual rate of
Base Salary that
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is the average of the Incentive Bonuses for the Bonus Period
ended on December 31, 1998, and the Incentive Bonuses for
the Bonus Period ended December 31, 1999.
"Cause" means:
(1) for any termination prior to the earlier of a Change in
Control or a Potential Change in Control, (i) a material and demonstrable
adverse change after the Effective Date in the Executive's performance of his
duties and responsibilities in effect as of the Effective Date, other than any
changes in performance by reason of sickness or disability of the Executive and
any changes in Executive's duties and responsibilities made after the Effective
Date, (ii) willful misconduct or gross negligence in the performance of, or
willful neglect of, the Executive's duties, which has caused demonstrable and
serious injury (monetary or otherwise) to the Company, (iii) conviction (after
exhaustion or expiration of all rights of appeal) of
the Executive of a criminal violation involving fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the Company,
(iv) conviction (after exhaustion or expiration of all rights of appeal) of, or
plea of nolo contendere to, a felony (excluding a traffic violation) by the
Executive or (v) Executive's willful inattention to or willful lack of diligence
in attempting to achieve, as part of the performance of his duties under the
Employment Agreement, his performance goals set forth in Exhibit I and Exhibit
II to the Employment Agreement; and
(2) for any termination on or after a Change in Control or
Potential Change in Control, the Executive's (i) conviction (after exhaustion or
expiration of all rights of appeal) of a criminal violation involving fraud,
embezzlement or theft in connection with his duties or in the course of his
employment with the Company, (ii)
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conviction (after exhaustion or expiration of all rights of appeal) of, or plea
of nolo contendere to, a felony (excluding a traffic violation).
No act or omission shall be considered "willful" if the Executive believed in
good faith that such acts or omissions were in, or at least not opposed to, the
best interests of the Company.
No act or omission shall constitute Cause unless the Board of Directors of the
Company provides to the Executive (a) written notice clearly and fully
describing the particular acts or omissions which the Board reasonably believes
in good faith constitutes Cause and (b) an opportunity, within 30 days following
his receipt of such notice, to meet in person with the Board of Directors to
explain or defend the alleged acts or omissions relied upon by the Board and, to
the extent practicable, to cure such acts or omissions. Executive shall further
have the right to contest a determination of Cause by the Company by requesting
arbitration on an expedited basis in accordance with the terms of Section 5.1
hereof.
"Change in Control" means (1) any "person" (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) becomes the "beneficial owner" (as determined pursuant to Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities; or (2) during any period of
two (2) consecutive years (not including any period prior to the execution of
this Agreement), individuals who at the beginning of such period constitute the
members of the Company's Board of Directors (the "Board") and any new director,
whose election to the Board or nomination for election to the Board by the
Company's stockholders was approved by a vote of at least two-thirds
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(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board; or (3) the Company shall merge with or consolidate into any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto holding immediately thereafter securities representing more than sixty
percent (60%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or (4) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets or such a plan is
commenced.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Good Reason" means any of the following events occurring,
without Executive's prior written consent specifically referring to this
Agreement:
(1) (A) any reduction in the amount of Executive's annual
salary, guaranteed incentive compensation or aggregate
incentive compensation opportunities (which reduction may also
occur pursuant to any assignment of performance goals and
corresponding awards which are inconsistent with prior
performance goals and awards), (B) any significant reduction
in the aggregate value of Executive's benefits as such
benefits may be increased from time to time (unless such
reduction is pursuant to a general change in benefits
applicable to all similarly situated employees of the Company
and its affiliates) or (C) any
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material and willful breach by the Company of any provision
of this agreement or any written employment agreement with
Executive;
(2) (A) assignment to Executive of any duties inconsistent
with his status as Chief Financial Officer of the Company
and as a member of the Company's Operating Committee, (B)
the removal of Executive from his position as Chief
Financial Officer of the Company or as a member of the
Company's Operating Committee, (C) the failure to retain
Executive as the Chief Financial Officer and as a member of
the Operating Committee of any successor to the Company
(whether by merger, consolidation or sale or disposition of
all or substantially all of the assets of the Company) or
any entity which directly or indirectly owns twenty five
percent (25%) or more of any class of securities of the
Company or any successor to the Company (whether by merger,
consolidation or sale or disposition of all or substantially
all of the assets of the Company) or (D) any significant
change in the nature or status of Executive's duties or
responsibilities;
(3) a significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or
duties attached to the Executive's positions with the
Company;
(4) (A) transfer of Executive's principal place of
employment to a location more than 18 miles away from
Bethesda, Maryland or (B) Executive is required to travel
outside of the continental United States more than four
times during any calendar year or for more than 10 days in
the aggregate in any calendar year;
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(5) failure by the Company to obtain the assumption agreement
referred to in Section 12 of the Employment Agreement or
Section 8 of this Agreement prior to the effectiveness of any
succession referred to therein, unless the purchaser,
successor or assignee referred to therein is bound to perform
this Agreement by operation of law; or
(6) the Executive receives notice from any party to an
agreement (or its representative) which contemplates a Change
in Control that, on or after
such Change in Control, an event will occur that will
constitute Good Reason as described in (1) through (5) above.
Notwithstanding the above, (i) the occurrence of any of the events described in
(1) through (5) above will not constitute Good Reason unless the Executive gives
the Company written notice, within 90 calendar days after the Executive knew or
should have known of the occurrence of any of the events described in (1)
through (5) above, that such event constitutes Good Reason, and the Company
thereafter fails to cure the event within the earlier of (x) the closing for a
Change in Control or (y) thirty (30) days after receipt of such notice, and (ii)
the receipt of notice described in (6) above will not constitute Good Reason
until a Change in Control actually occurs and will otherwise not constitute Good
Reason if the Executive is provided reasonable assurances by the Company prior
to such Change in Control that an event described in (1) through (5) above is
not contemplated on or after a Change in Control; provided, however, that any
such assurances shall not impair or otherwise affect any of Executive's rights
upon the occurrence of any Change in Control described in (1) through (5) above
or if there is any termination of Executive's employment by Company other than
for Cause or by Executive with Good Reason.
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"Potential Change in Control" means the occurrence of active
discussions between the Company and a potential purchaser of the Company that
contemplates a transaction which would result in a Change in Control, but only
if a Change in Control results within twelve months following such occurrence.
2. Term. The term of this Agreement commences on
the Effective Date and expires upon the earliest to occur of
the following:
(a) the expiration of the Agreement Term,
(b) the Executive's death, or
(c) the Executive's disability (within the meaning of the
long-term disability plan in effect for and
applicable to the Executive).
Any obligations of the Company under this Agreement or the Employment Agreement
that arise, become effective, or accrue on, as of or before the expiration of
the Agreement Term or that arise, become effective, or accrue upon the death or
disability of the Executive (even if, in any case, they are performable after
the end of the Agreement or the death or disability of the Executive), however,
shall survive the expiration or termination of this Agreement.
3. Involuntary Termination Payment and Benefits
3.1 Involuntary Termination. In the event either (i)
Executive's employment with the Company or its successor is terminated by
Executive for Good Reason, (ii) the Executive's employment with the Company or
its successor is terminated by the Company or its successor without Cause, or
(iii) Executive's employment with the Company or its successor is terminated by
reason of his death
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or disability, Executive shall be entitled to the following payments and other
benefits:
a. An amount equal to the sum of (i) Executive's accrued and
unpaid Base Salary and earned but unused vacation and personal
days as of the date of termination of employment and any
expenses that have not yet been reimbursed by Company under
the Employment Agreement; plus (ii) his accrued and unpaid
Incentive Bonuses, if any, for the prior Bonus Period, plus
(iii) a pro rated portion of the annual Incentive Bonuses for
the Special Bonus Period (as defined below) in which the
Executive's termination occurs. For purpose of clause (iii),
(A) the proration shall be calculated by applying the Pro Rata
Factor (as defined in the Employment Agreement); (B) the
"Special Bonus Period" shall mean (1) the Effective Date
through the first anniversary of Executive's employment under
the Employment Agreement, (2) the date following the first
anniversary of Executive's employment under the Employment
Agreement through December 31, 1999, and (3) January 1, 2000
through the last day of the Agreement Term; and (C) the annual
Incentive Bonuses for each Special Bonus Period shall be (1)
for the first Special Bonus period, an amount equal to
$600,000 less any amount already paid to Executive as the
Incentive Bonus(es) for the 1998 calendar year, (2) for the
second Special Bonus period, an amount equal to the amount of
the Incentive Bonus(es) paid (or payable) to Executive for the
1998 calendar year, and (3)for the third Special Bonus Period,
an amount equal to the average of the Incentive Bonus(es)
paid (or payable) to Executive for the 1998 calendar year and
the 1999 calendar year.
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The amount described in clause (i) above shall be paid on the
date of the termination of Executive's employment, and the
amount or amounts described in clauses (ii) and (iii) above
shall be paid on the earlier of the date of the Executive's
termination of employment or the respective date that
Incentive Bonuses are otherwise payable under the Employment
Agreement.
b. Subject to Section 3.2 below, (i) in the case of
termination by Executive for Good Reason or by Company without
Cause, an amount equal to three times Executive's Annual Pay
or (ii) in the case of a termination for death or disability,
an amount equal to one and one-half times Executive's Annual
Pay (as the case may be, "Termination Pay"). Termination Pay
shall be paid on the earlier of (i) within ten (10) days after
the Company's delivery of written notice to the Executive of
termination of his employment without Cause or because of his
disability, (ii) within thirty (30) days after the Executive's
delivery of written notice to the Company of his resignation
for Good Reason (unless cured), (iii) the date on which a
Change in Control occurs or (iv) within thirty (30) days after
the Executive's death (the "Payment Date").
c. Notwithstanding the language of any other agreement or
document to the contrary, all unexercisable options to
purchase shares of stock of the Company or of any entity
affiliated with the Company that are held by the Executive
shall become fully vested and immediately exercisable (and
shall remain exercisable until the expiration of the full term
of those options).
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d. All restricted stock of the Company and any other
equity-based rights (including, without limitation, phantom
stock) held by the Executive shall become fully vested and all
restrictions thereon shall lapse.
e. A lump sum payment on the Payment Date equal to the
Executive's unvested accrued benefit under any tax-qualified
retirement plan sponsored by the Company.
f. Executive and his eligible dependents shall be entitled,
for a period of three (3) years following the date of
termination of employment, to continued coverage, at the cost
of the Company, under the Company's group health, dental and
life insurance plans as in effect from time to time (but not
any other welfare benefit plans or any retirement plans);
provided that coverage under any particular benefit plan shall
expire with respect to the period after Executive becomes
covered under another employer's plan providing for a similar
type of benefit. In the event the Company is unable to provide
such coverage on account of any limitations under the terms of
any applicable contract with an insurance carrier or third
party administrator, the Company shall pay Executive an amount
equal to the cost of such coverage.
Except as provided in Section 3.2 below, the foregoing
payments and benefits shall be in addition to and not in lieu of any payments or
benefits to which Executive and his dependents may otherwise be entitled to
under the Company's compensation and employee benefit plans, policies or
practices. Nothing herein shall be deemed to restrict the right of the Company
from amending or terminating any such plan in a manner generally applicable to
similarly
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situated active employees of the Company and its affiliates, in which event
Executive shall be entitled to participate on the same basis (but at the cost of
the Company) as similarly situated active executives of the Company and its
affiliates; provided, however, that no such amendment or termination shall
impair or otherwise affect the Executive's rights or remedies under this
Agreement or the Employment Agreement.
3.2 Offset for Other Severance Pay. There shall be no
duplication of severance pay in any manner, in that Executive shall not be
entitled to Termination Pay hereunder for more than one position with the
Company. Further, Termination Pay shall be in lieu of any other payments in the
nature of severance pay which Executive has received or will receive from the
Company (excluding phantom stock awards payable under the Employment Agreement
or any other amounts payable under Section 3.1 hereof). If Executive is entitled
to Termination Pay, any other arrangement providing severance payments (except
for phantom stock awards under the Employment Agreement and amounts under
Section 3.1 hereof) shall be deemed to be amended to eliminate any obligation
for such payments to be provided thereunder to Executive. If Executive is
entitled to any payment in lieu of notice of termination of employment under
Federal, state or local law, including but not limited to the Worker Adjustment
and Retraining Notification Act, the Termination Pay to which the Executive
would otherwise be entitled under this Agreement shall be reduced by the amount
of any such payment in lieu of notice.
3.3 Transition Services. If Executive's employment is
terminated by the Company without Cause or by the Executive for Good Reason in
connection with or at the time of a Purchase (as defined below) and the
purchaser under the Purchase specifically requests the continued services of
Executive after the closing of the Purchase, then, notwithstanding the
termination without Cause or for
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Good Reason -- which shall be deemed to have occurred for all purposes of the
Employment Agreement and this Agreement -- Executive will perform the requested
transition services to the extent set forth below in this Section. In this
Section, "Purchase" means a purchase of all or substantially all of the equity
securities or assets of the Company that is negotiated with the Board of
Directors of the Company by or on behalf of a purchaser. Executive will perform
those transition services for up to (i) six months following the closing of the
Purchase, or (ii) the expiration of the Agreement Term as defined in the
Employment Agreement, whichever is earlier (the "Transition Period").
Executive's rendering those services will be conditioned, however, upon his
receipt of (A) all payments and benefits due to Executive under the Employment
Agreement and this Agreement, including (without limitation) all amounts due
because of the termination without Cause or for Good Reason, and (B)
compensation and benefits for his services during the Transition Period that are
no less than the compensation and benefits to which he was entitled from the
Company under the Employment Agreement and this Agreement before the Transition
Period. Neither Executive's performance of the transition services described in
this Section nor any other provisions of this Section shall be deemed to impair
or affect any of the rights or remedies of Executive under the Employment
Agreement or this Agreement as a result of a Change in Control or a termination
without Cause or for Good Reason.
3.4. No Mitigation. The Executive shall not be obligated to
seek or secure new employment or to become self-employed after termination of
his employment with Company, but shall be obligated to report promptly to the
Company any actual employment obtained during the period for which employee
benefits continue pursuant to Section 3.1. Except as expressly stated in Section
3.1.f of this Agreement, there shall be no offset against any amounts due to
Executive under this Agreement on account of any
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remuneration or benefits attributable to any subsequent employment (including,
without limitation, any self- employment) that he may obtain.
4. Excise Taxes.
a. Anything in this Agreement to the contrary
notwithstanding and except as set forth below, if it is determined that any
payment or distribution by the Company to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 4) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by 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 Executive shall be entitled to receive an additional
payment ("Gross-Up Payment") in an amount such that after payment by 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, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this
paragraph "a", if it is determined that Executive is entitled to a Gross-Up
Payment, but that Executive, after taking into account the Payments and Gross-Up
Payment, would not receive a net after-tax benefit of at least $25,000 (taking
into account both income taxes and any Excise Tax) as compared to the net
after-tax proceeds to Executive resulting from an elimination of the Gross-Up
Payment and a reduction of the Payments, in the aggregate, to an amount (the
"Reduced Amount") such that the receipt of Payments would not give rise to any
Excise Tax, then no Gross-Up Payment shall be made to Executive and the
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Payments, in the aggregate, shall be reduced to the Reduced Amount.
b. Subject to the provisions of paragraph "c" of this Section
4, all determinations required to be made under this Section 4, including
(without limitation) whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be used in arriving at
such determination, shall be made by a certified public accounting firm selected
by the Company and reasonably acceptable to Executive (the "Accounting Firm"),
which shall be retained to provide detailed supporting calculations both to the
Company and Executive within 15 business days of the receipt of notice from
Executive 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 paid solely
by the Company. Any Gross-Up Payment, as determined pursuant to this Section 4,
shall be paid by the Company to Executive within five (5) days of the receipt of
the Accounting Firm's determination. Any determination by the Accounting Firm
shall be binding upon the Company and 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. If the Company exhausts its remedies pursuant to paragraph "c" of
this Section 4 and 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 Executive.
c. 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
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as practicable but no later than ten (10) business days after 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 or appealed.
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 Executive in writing prior to the expiration of
such period that it desires to contest such claim, Executive shall:
(a) give the Company any information reasonably
requested by the Company relating to such
claim,
(b) 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 selected by the
Company and reasonably acceptable to
Executive,
(c) cooperate with the Company in good faith in order to
effectively contest such claim, and
(d) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, without limitation, additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including,
without limitation, interest and penalties with respect thereto) imposed as a
result of
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such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this paragraph "c", the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo 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 Executive to pay the tax claimed and xxx for a refund
or to contest the claim in any permissible manner, and 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
Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis, and shall
indemnify and hold Executive harmless, on an after-tax basis, from any Excise
Tax or income tax (including, without limitation, 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 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 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 by Executive of an amount advanced by
the Company pursuant to paragraph "c" of this Section 4, Executive becomes
entitled to receive any refund with respect to such claim, Executive shall
(subject to the Company's complying with the requirements of paragraph "c" of
this Section 4) promptly pay to the Company
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the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If after the receipt by Executive of an amount
advanced by the Company pursuant to paragraph "c" of this Section 4, a
determination is made that Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify 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.
5. Claims.
5.1 Arbitration of Claims. Company and Executive agree to
settle by arbitration any dispute or controversy arising in connection with this
Agreement, whether or not such dispute involves a plan subject to the Employee
Retirement Income Security of 1974, as amended ("ERISA"). Such arbitration shall
be conducted on an expedited basis in accordance with the Commercial Arbitration
Rules of the American Arbitration Association before a panel of three
arbitrators, selected by the American Arbitration Association, sitting in
Bethesda, Maryland. The award of the arbitrators shall be final and
nonappealable, and judgment may be entered on the award of the arbitrators in
any court having proper jurisdiction. All expenses of such arbitration shall be
borne by the Company in accordance with Section 5.2 hereof.
5.2 Payment of Legal Fees and Costs. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, Executive or others of any action taken
pursuant to the terms of this Agreement or the Employment Agreement, or of
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the validity or enforceability of, or liability under, any provision of this
Agreement or the Employment Agreement, or any guarantee of performance thereof
(including, without limitation, as a result of any contest by Executive about
the amount of 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 Code.
5.3 Agent for Service of Legal Process. Service of legal
process with respect to a claim under this Agreement or the Employment Agreement
shall be made upon the General Counsel of the Company.
6. Tax Withholding. All payments to the Executive under this
Agreement will be subject to the withholding of all applicable employment and
income taxes.
7. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect.
8. Assignability; Successors. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, heirs (in the case of Executive) and permitted assigns. No rights or
obligations of Company under this Agreement may be assigned or transferred by
Company (including, without limitation, by merger, consolidation or other
operation of law), except that such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which Company is not the
continuing or surviving entity, or the sale or liquidation of all or
substantially all of the assets of Company, to one or more entities that have
the financial and other ability to perform Company's obligations under this
Agreement; provided, however, that the assignee
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or transferee is the successor to all or substantially all of the assets of
Company and such assignee or transferee assumes the liabilities, obligations,
and duties of Company under this Agreement, either contractually or as a manner
of law. The Company will require any successor to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no succession had taken place.
9. Entire Agreement. Except for compensation and employee
benefit plans or programs maintained by the Company from time to time and the
Employment Agreement, this Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes any
prior Executive Retention Agreement between the Company and Executive. Nothing
in this Agreement impairs or otherwise adversely affects any of Executive's
rights to or under any stock option or restricted stock agreements with the
Company (or any of its subsidiaries or affiliates) in effect on the Effective
Date.
10. Notices. Any notice given to a party shall be in writing
and shall be deemed to have been given when delivered personally or by courier,
or upon receipt if sent by certified or registered mail, postage prepaid, return
receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
such notice of:
If to Company: PennCorp Financial Group, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
If to Executive: Xxxxx X. XxXxxxxxx
0 Xxxxxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
20
11. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by Executive and an authorized
officer of Company (other than Executive). No waiver by either party of any
breach by the other party of any condition or provision contained in this
Agreement to be performed by such other Party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed by Executive or an
authorized officer of Company (other than Executive), as the case may be.
12. Survivorship.
The respective rights and obligations of the parties hereunder
shall survive any termination of the Executive's employment or the expiration of
the Agreement Term or any expiration or termination of this Agreement, in each
case to the extent necessary to the intended preservation of such rights and
obligations.
13. Beneficiaries/References.
Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following Executive's death or
incompetence by giving Company written notice thereof. In the event of
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
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14. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Maryland without reference to
principles of conflict of laws. Jurisdiction and venue of any action or
proceeding relating to this Agreement (to the extent permitted) shall be
exclusively in state or federal courts in Xxxxxxxxxx County, Maryland.
15. Headings.
The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
16. Counterparts.
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the Executive and the Company have
executed this Agreement as of the date and year first above written.
PENNCORP FINANCIAL GROUP, INC.
/s/Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Chairman, President and CEO
/s/Xxxxx X. XxXxxxxxx
-------------------------------------
Xxxxx X. XxXxxxxxx
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