EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT by and between UNUM Corporation, a Delaware corporation
having its principal executive offices in Portland, Maine ("Unum"), Provident
Companies, Inc., a Delaware corporation ("Provident") and Xxxxx X. Xxx III (the
"Executive") dated as of the 25 day of May, 1999.
Unum and Provident have determined that it is in the best interests of
their respective shareholders to assure that Unum will have the continued
dedication of the Executive pending the merger of Provident and Unum (the
"Merger") pursuant to the Agreement and Plan of Merger dated as of November 22,
1998 (the "Merger Agreement") and to provide the surviving company as defined in
the Merger Agreement (the "Company") with continuity of management. Therefore,
in order to accomplish these objectives, the Executive, Unum and the Company
entered into an employment agreement dated as of November 22, 1998, and desire
to amend and restate such agreement by entering into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the effective
date of the Merger, provided the Executive is employed by Unum on that date. As
of the date hereof, the prior Executive Severance Agreement effective August 1,
1991 ("Former Executive Severance Agreement") between the Executive and Unum
shall terminate and become null and void, provided that upon any termination of
the transactions contemplated by the Merger Agreement, this sentence will be
inapplicable.
2. Employment Period. Unum and the Company hereby agree to continue
to employ the Executive, and the Executive hereby agrees to continue in the
employ of Unum and enter into the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date
and ending on June 30, 2005 (the "Employment Period").
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall serve
as Chairman and Chief Executive Officer ("CEO") of the Company through June
30, 2000 or such earlier date upon which the Executive elects to relinquish
such position (the "Initial Period"), and thereafter as Chairman and Chair
of the Executive Committee of the Board of Directors (the "Board") of the
Company with the appropriate authority, duties and responsibilities
attendant to such
positions and with the powers and duties set forth in Exhibit B of the
Merger Agreement (as amended as of May 25, 1999) and will participate
equally through the Initial Period with J. Xxxxxx Xxxxxxxx, while he is
serving as President and Chief Operating Officer, in setting the overall
strategic direction of the Company. During the Employment Period,
Executive's status as an employee may be converted to that of a consultant
by the Executive at any time after June 30, 2000 upon Executive's
resignation as Chairman at which time the Employment Period shall end.
Following any such conversion, Executive shall no longer be an employee but
agrees to provide services as a consultant for a period of at least two
years but not beyond June 30, 2006 (the "Consulting Period"). As
compensation for his services as a consultant, Executive shall be paid a
monthly retainer equal to one twelfth of his Annual Base Salary immediately
preceding his becoming a consultant. As a consultant, Executive shall
provide such consulting services to the Company as the Board may request.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially all of his attention and time
during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve, with prior approval of the Board, on corporate,
civic or charitable boards or committees (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not thereafter be
deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
(i) Annual Base Salary. During the Initial Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of at
least $900,000. Thereafter, the Executive shall receive an amount
determined by the Board, but no less than his final Annual Base Salary as
Chief Executive Officer. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be
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reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased.
(ii) Annual Bonus. Through the period ending June 30, 2001,
the Executive shall be eligible to receive an annual cash bonus ("Annual
Bonus") with a target level of not less than 100% of Annual Base Salary, or
such greater amount as determined by the Compensation Committee of the
Company's Board of Directors (the "Compensation Committee"). Thereafter, no
Annual Bonus will be paid. The annual bonus for the period January 1, 2001
through June 30, 2001 shall be 50% of the annual bonus that would have been
paid with respect to the full calendar year.
(iii) Incentive Awards. Immediately after the Effective Date,
the Company shall grant the Executive options to purchase 500,000 shares of
the Company's common stock (the "Stock Options") pursuant to the terms of
the Company's Stock Plan of 1999 (the "Plan"). Except as otherwise
provided herein, the Stock Options shall vest in four equal installments,
on the first, second, third, and fourth anniversaries of the date of grant.
Subsequent annual equity grants will be made by the Compensation Committee
based upon competitive market analyses and such other factors it may deem
appropriate and Executive shall be ineligible for equity grants thereafter.
In addition, immediately after the Effective Date, the Company shall make
an award of 250,000 shares of restricted stock pursuant to the terms of the
Plan (the "Restricted Stock"). All restrictions on transfer of the
Restricted Stock and all other restrictions on such Stock shall lapse on
July 1, 2005 if the Executive is still employed by the Company or is
rendering consulting services to the Company as contemplated by Section
3(a)(i) of this Agreement on such date; provided, however, that all such
restrictions may lapse at an earlier date as specified in this Agreement or
as otherwise determined by the Compensation Committee.
(iv) Other Employee Benefit Plans. During the Employment
Period, except as otherwise expressly provided herein, the Executive shall
be entitled to participate in all employee benefit, welfare and other
plans, practices, policies and programs, (collectively, "Employee Benefit
Plans") applicable to senior executive officers of the Company.
(v) Retirement Benefit. Upon the Executive's termination of
employment before June 30, 2001, without Cause (as hereinafter defined) or
for Good Reason (as hereinafter defined) or for any reason after June 30,
2001, the Executive shall be entitled to an annual retirement benefit
payable monthly (the "Retirement Benefit") equal to (a) 50% (the
"Replacement Percentage") of the average of his Base Salary and Annual
Bonus for the five years
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in which such amounts were highest within the last ten years of employment,
less (b) any benefit payable pursuant to the Company's or any of its
affiliated company's tax-qualified defined benefit retirement plan and any
benefit to which he might be entitled under any nonqualified defined
benefit retirement plan maintained by the Company or its affiliated
companies. In calculating the Retirement Benefit, the Replacement
Percentage shall increase by 1% for each full year the Executive is
employed by the Company after his 55th birthday up to a maximum Replacement
Percentage of 60%. In addition, for the portion of the Employment Period
after the Initial Period, the Executive shall be deemed to have received an
Annual Bonus which is the same, as a percentage of Annual Base Salary, as
the Annual Bonus received by the then acting CEO. As used in this
Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company. The
Retirement Benefit shall be payable for the life of the Executive
commencing the first of the month following the later of Executive's fifty-
fifth birthday and Executive's termination of employment. Upon commencement
of the Retirement Benefit, any amounts owed under the Executive's current
split dollar life policy will be forgiven and the amount forgiven will be
grossed up for applicable federal, state and local taxes. Upon the
Executive's death (whether prior to or after commencement of the Retirement
Benefit), his surviving spouse shall be paid an annual benefit of 75% of
the Retirement Benefit for her life.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 business days during any
consecutive twelve month period as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.
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(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the Executive has
not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious
to the Company, or
(iii) conviction of a felony or guilty or nolo contendere
plea by the Executive with respect thereto.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer
(while the Executive does not serve as such) or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than 75% through
2001, and thereafter two thirds of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board) finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean in the absence of a written consent of the Executive:
(i) the assignment to the Executive of any duties
inconsistent with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities
as contemplated by
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Section 3(a)(i) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement, or any failure to renew this Agreement;
(iv) any failure by the Company to comply with and satisfy
Section 10(c) of this Agreement; or
(v) failure of the Company to appoint the Executive to any
of the positions as specified in Section 3(a)(i) as of the date specified
therein.
(d) Notice of Termination. Any termination by the Company or by the
Executive shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 11(b) of this Agreement. For purposes
of this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means if the
Executive's employment is terminated by the Company other than for Disability,
or by the Executive, the date of receipt of the Notice of Termination or any
later date specified therein within 30 days of such notice, and if the
Executive's employment is terminated by
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reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.
5. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination:
A. the greater of the following amounts: (x) the product
of three (3) times the sum of (1) the highest annual bonus paid to the
Executive for any of the three years prior to the Date of Termination
(the "Recent Annual Bonus") and (2) the Executive's Annual Base
Salary; and (y) the amount equal to the product of (1) the number of
months and portions thereof from the Date of Termination until the end
of the Employment Period divided by twelve and (2) the sum of the
Executive's Annual Base Salary and the Recent Annual Bonus;
B. the sum of (x) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid,
and (y) the product of (1) the Recent Annual Bonus and (2) a fraction,
the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination
and the denominator of which is 365, to the extent not theretofore
paid (the sum of the amounts described in clauses (x) and (y) shall be
hereinafter referred to as the "Accrued Obligations"); and
C. the actuarial present value of the Retirement Benefit
determined using the actuarial assumptions prescribed under the
Company's tax-qualified defined benefit plan under which the Executive
was eligible for participation at the time of termination of
employment, assuming the Executive had accumulated the greater of (x)
three additional years of employment and (y) the number of years and
portions thereof of employment from the Date of Termination until the
end of the Employment Period. If any portion of the Retirement
Benefit in excess of the amount payable under any tax qualified
defined benefit plan maintained by the Company or its affiliated
companies is not payable in one lump sum, then the Executive shall not
receive a benefit under such plan but shall instead
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receive payment pursuant to this paragraph C. The intent of this
provision is to preclude any duplication of benefits.
(ii) for the remainder of the Executive's life and that of his
spouse, the Company shall continue to provide medical and dental benefits
to the Executive and his spouse on the same basis as such benefits are
provided to the Chief Executive Officer of the Company from time to time
("Medical Benefits"); provided that such Medical Benefits shall be
secondary to any other coverage obtained by the Executive and further
provided that the aggregate amount of premium payments for such coverage
shall not exceed $1,000,000;
(iii) the Restricted Stock shall vest if such termination occurs
after June 30, 2001, the Stock Options shall vest and remain exercisable
for the remainder of their term and all other stock options, restricted
stock awards and other equity-based awards shall vest and options shall
remain exercisable for a period of three years or the earlier expiration of
their initial term; and
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies through the Date of
Termination (such other amounts and benefits shall be hereinafter referred
to as the "Other Benefits").
(b) Death or Disability. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives or to the Executive, as the case may be, under this Agreement,
other than for payment of Accrued Obligations, the timely payment or provision
of Other Benefits and Medical Benefits, and the Retirement Benefit. In
addition, the Stock Options shall vest immediately and remain exercisable for a
period of at least three years or the earlier expiration of their initial term.
Accrued Obligations shall be paid to the Executive, the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination.
(c) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (i) his Annual Base Salary through the Date of Termination to the
extent theretofore unpaid, (ii) the Medical Benefits, (iii) the Other Benefits,
and (iv) if the Date of Termination is after June 30, 2001, the Retirement
Benefit.
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6. Non-exclusivity of Rights. Except as specifically provided,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor, subject to Section 11(f), shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with the Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement provided,
that the Executive shall not be eligible for severance benefits under any other
program or policy of the Company.
7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) pursued or defended against in
good faith by the Executive regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (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 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of 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, are hereinafter
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collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it
shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Payments do not exceed 110% of the greatest amount (the "Reduced
Amount") that could be paid to the Executive such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Executive and the Payments, in the aggregate, shall be reduced to the
Reduced Amount.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the Company's
independent auditors or such other certified public accounting firm reasonably
acceptable to the Executive as may be designated by the Company (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Executive within 15 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 Company. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive within five days of the later of
(i) the due date for the payment of any Excise Tax, and (ii) the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 8(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to
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the expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 8(c), the Company shall control all proceedings taken in
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 the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable
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hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 8(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall promptly pay
to the Company 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 the Company pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial 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.
9. Covenant Not to Compete; Confidential Information.
(a) During the term of this Agreement, and for a one year period
after the Date of Termination or after the end of the Consulting Period, the
Executive shall not directly or indirectly, own, manage, operate, join, control,
or participate in the ownership, management, operation or control of, or be
employed by or connected in any manner with, any competing business, whether for
compensation or otherwise, without the prior written consent of the Company.
For the purposes of this Agreement, a "competing business" shall be any business
which is a significant competitor of the Company, or which the Company
reasonably determines may become a significant competitor, unless the
Executive's primary duties and responsibilities with respect to such business
are not related to the management or operation of disability insurance or
complementary special risk products and services in any country where the
Company is conducting business. Should the Executive, directly or indirectly,
own, manage, operate, join, control or participate in the ownership, management,
operation or control of, or be employed by or connected in any manner with, any
competing business, all payments under this Agreement shall cease.
(b) The Executive hereby acknowledges that, as an employee of the
Company, he will be making use of, acquiring and adding to confidential
information of a special and unique nature and value relating to the Company and
its strategic plan and financial operations. The Executive further recognizes
and acknowledges that all confidential information is the exclusive property of
the Company, is material and confidential, and is critical to the successful
conduct of the business of the Company. Accordingly, the Executive hereby
covenants and agrees that he will use confidential information for the benefit
of the Company only and shall not at any time, directly or indirectly, during
the term of this Agreement, and thereafter for all periods during which
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severance or other amount is paid, divulge, reveal or communicate any
confidential information to any person, firm, corporation or entity whatsoever,
or use any confidential information for his own benefit or for the benefit of
others. In no event shall an asserted violation of the provisions of this
Section 9(b) constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
(c) Any termination of the Executive's employment or of this
Agreement shall have no effect on the continuing operation of this Section 9.
(d) In addition to the cessation of payments set forth in Section
9(a), the Executive acknowledges and agrees that the Company will have no
adequate remedy at law, and could be irreparably harmed, if the Executive
breaches or threatens to breach any of the provisions of this Section 9. The
Executive agrees that the Company shall be entitled to equitable and/or
injunctive relief to prevent any breach or threatened breach of this Section 9,
and to specific performance of each of the terms hereof in addition to any other
legal or equitable remedies that the Company may have. The Executive further
agrees that he shall not, in any equity proceeding relating to the enforcement
of the terms of this Section 9, raise the defense that the Company has an
adequate remedy at law.
(e) The terms and provisions of this Section 9 are intended to be
separate and divisible provisions and if, for any reason, any one or more of
them is held to be invalid or unenforceable, neither the validity nor the
enforceability of any other provision of this Agreement shall thereby be
affected. The parties hereto acknowledge that the potential restrictions on the
Executive's future employment imposed by this Section 9 are reasonable in both
duration and geographic scope and in all other respects. If for any reason any
court of competent jurisdiction shall find any provisions of this Section 9
unreasonable in duration or geographic scope or otherwise, the Executive and the
Company agree that the restrictions and prohibitions contained herein shall be
effective to the fullest extent allowed under applicable law in such
jurisdiction.
(f) The parties acknowledge that this Agreement would not have
been entered into and the benefits described in Sections 3 or 5 would not have
been promised in the absence of the Executive's promises under this Section 9.
10. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
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(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
If to the Company:
UNUM Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
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or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(iv) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) From and after the Effective Date this Agreement shall
supersede any other employment, severance or change of control agreement between
the parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Xxxxx X. Xxx III
-----------------------------------
Executive
UNUM Corporation
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Provident agrees that as of the Effective Date it will honor this
Agreement and treat the Agreement as its own.
Provident Companies, Inc.
By /s/ Xxxx Xxxxxxxx
-----------------------------------
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EXHIBIT 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
AGREEMENT by and between UNUM Corporation, a Delaware corporation
having its principal executive offices in Portland, Maine ("Unum"), Provident
Companies, Inc., a Delaware corporation ("Provident") and Xxxxx X. Xxx III (the
"Executive") dated as of the 29 day of June, 1999.
The Executive, Unum and Provident entered into an employment agreement
dated as of November 22, 1998, which was amended and restated as of May 25, 1999
(the "Agreement"), and desire to further amend such Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Section 3(b)(iii) of the Agreement is amended to provide as
follows:
(iii) Incentive Awards. Immediately after the Effective Date, the Company
shall grant the Executive options to purchase 500,000 shares of the
Company's common stock (the "Stock Options") pursuant to the terms of the
Company's Stock Plan of 1999 (the "Plan"). Except as otherwise provided
herein, the Stock Options shall vest in four equal installments, on the
first, second, third, and fourth anniversaries of the date of grant.
Subsequent annual equity grants will be made by the Compensation Committee
based upon competitive market analyses and such other factors it may deem
appropriate and Executive shall be ineligible for equity grants thereafter.
In addition, immediately after the Effective Date, the Company shall make
an award of 250,000 shares of restricted stock pursuant to the terms of the
Plan or such other stock-based incentive plan as the Company maintains (the
"Restricted Stock"). All restrictions on transfer of the Restricted Stock
and all other restrictions on such Stock shall lapse on July 1, 2005 if the
Executive is still employed by the Company or is rendering consulting
services to the Company as contemplated by Section 3(a)(i) of this
Agreement on such date; provided, however, that all such restrictions may
lapse at an earlier date as specified in this Agreement or as otherwise
determined by the Compensation Committee.
2. This amendment is effective as of the initial date of the
Agreement.
IN WITNESS WHEREOF, the Executive, Unum and Provident have caused
these presents to be executed, all as of the day and year first above written.
/s/ Xxxxx X. Xxx III
------------------------------
Executive
UNUM Corporation
By /s/ Xxxxx X. Xxxxxxx
--------------------------
Provident Companies, Inc.
By /s/ Xxxx Xxxxxxxx
----------------------------
