EXHIBIT 10.15
EMPLOYMENT AGREEMENT
(As Amended and Restated)
AGREEMENT by and between UnumProvident Corporation, a Delaware
corporation having its principal executive offices in Chattanooga, Tennessee,
and Portland, Maine, (the "Company") and J. Xxxxxx Xxxxxxxx (the "Executive")
dated as of the 10th day of November, 2000 (the "Agreement").
The Company has determined that it is in the best interests of its
shareholders to assure that the Company will have the continued dedication of
the Executive. Therefore, in order to accomplish this objective, the Executive
and the Company entered into an employment agreement dated November 22, 1998,
which was amended on May 25, 1999, and the parties 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 June 30, 1999 and
as of such date the prior Employment Agreement effective November 8, 1993
("Former Employment Agreement") between the Executive and Provident Companies,
Inc. was terminated and became null and void.
2. Employment Period. The Company hereby agrees to continue to
employ the Executive, and the Executive hereby agrees to continue in 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"). Beginning on June 30, 2005, the Employment Period shall be
automatically extended for one year terms unless either the Company or the
Executive shall give the other party not less than ninety (90) days prior
written notice of the intention to terminate this Agreement.
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall
serve as Chairman, President and Chief Executive Officer of the
Company with the appropriate authority, duties and responsibilities
attendant to such positions
-1-
including, when requested, serving in a comparable position with
respect to any subsidiary of the Company. The Executive shall serve
on the Company's Board of Directors (the "Board") during the
Employment Period and shall be a member of committees as he shall be
appointed to by the Board.
(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 its subsidiaries 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) Stock Ownership Goal.
It is intended that the Executive have the opportunity to attain an
ownership goal of approximately 1.25% of the outstanding voting
common stock of the Company. The Executive currently owns .42% of
outstanding voting common stock of the Company. The Board of
Directors is supportive of the Executive's stock ownership goal as
being an appropriate alignment of commitment and interest to that of
the Company's stockholders in increasing stockholder value. In
furtherance of this goal, the Compensation Committee of the
Company's Board of Directors ("Compensation Committee") shall
consider as a guideline for long-term incentive awards the granting
of options annually over a ten- year period following 2000 which
when added to the Executive's existing ownership, would facilitate
the Executive's attaining the stock ownership goal. The Committee's
consideration of any such award would take into account strategic
performance objectives which will have been established for the
Company and approved by the Board of Directors and progress toward
meeting such objectives at the time an award is considered. It is
understood that in any given year, the performance of the Executive
in the context of the Company's performance shall be the principal
consideration in determining the number of options to be granted. It
is also
-2-
understood that performance may warrant a lower or higher long-term
incentive award than suggested by the guideline referenced above and
may warrant a different form of award payment, including other
equity instruments or cash. Similarly, other incentive programs
available to the Executive, such as the annual incentive plan, may
enable him to make an election as to the form of award payment that
will facilitate the Executive's attaining his stock ownership goal.
(c) Compensation
(i) Annual Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual
Base Salary") of at least $900,000. 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
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. During the Employment Period,
the Executive shall be eligible to receive an annual 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. The Annual Bonus shall be paid in cash or in such other
form of consideration as agreed to by Executive and the Compensation
Committee from time to time.
(iii) Incentive Awards. Immediately after the
Effective Date, the Company granted the Executive options to
purchase 500,000 shares of the Company's common stock (the "Initial
Option Grant") pursuant to the terms of the Company's Stock Plan of
1999. Except as otherwise provided herein, the Initial Option Grant
shall vest in four equal installments, on the first, second, third,
and fourth anniversaries of the date of grant. Subsequent to the
Initial Option Grant annual long-term incentive awards, generally in
the form of equity grants but also using other forms of payment on
occasion, will be made by the Compensation Committee based upon
competitive market analyses and such other factors it may deem
appropriate, including taking into account the stock ownership goal
set forth in Section 3 (b).
(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.
-3-
The Executive shall also be reimbursed for all reasonable costs
associated with the purchase or rental of an additional residence in
Portland, Maine, and all reasonable expenses for the Executive and
his family in connection with locating and occupying such additional
residence, but such reimbursement shall not include the principal
costs of purchase or furnishing. Except for excluding principal
costs of purchase and furnishing, these residence expenses shall
include, but not be limited to: all costs of the physical move; use
by Executive of Company owned or leased accommodations in Portland
until a residence is located and occupied but no longer than
December 31, 2001; closing costs and real estate commissions
incurred in the purchase of a replacement residence in Chattanooga,
Tennessee and in the purchase of a residence in the Portland, Maine
area; an additional amount to cover federal, state and local income
taxes incurred as a result of the relocation expenses paid
hereunder; and any other expenses covered pursuant to the Company's
normal relocation policy. During the period that Executive is
seeking a replacement residence in Chattanooga, Tennessee, the
Company agrees to rent to Executive his former Chattanooga residence
on fair market terms established by a third party appraiser.
(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, subject to the conditions set
forth in Section 5(c) of this Agreement in the event of termination
for Cause, 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 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%. 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
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 provided that
if such benefit commences before the Executive's 55th birthday, it
shall be actuarially reduced.
-4-
4. Termination of Employment.
(a) Death or Disability. The Executive's employment
shall terminate automatically upon the Executive's death or
Disability 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.
(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
-5-
act, based upon authority given pursuant to a resolution duly
adopted by the Board 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 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(c) 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.
-6-
(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 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;
-7-
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 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
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 substantially
the same basis as such benefits are provided other senior executive
officers 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 Initial Option Grant shall vest and
remain exercisable for the remainder of its term and all other stock
options, restricted stock awards and other equity-based awards shall
vest (and such other options shall remain exercisable for a period
of, at least 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
-8-
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 Initial Option Grant 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.
(i) If the Executive's employment shall be
terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (x) his Annual Base
Salary through the Date of Termination to the extent theretofore
unpaid, (y) the Other Benefits through the Date of Termination, and
(z) if the Date of Termination is after June 30, 2001, the
Retirement Benefit; provided, however, if the reason for the Cause
termination is the circumstances covered under either Section 4(b)
(ii) or (iii), the Retirement Benefit in Section 3(c)(v) shall not
be applicable.
(ii) If the Executive terminates his employment
other than for Good Reason during the Employment Term, this
Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to Executive (x) his
Annual Base Salary through the Date of Termination to the extent
theretofore unpaid, (y) the Other Benefits through the Date of
Termination, and (z) if the Date of Termination is after June 30,
2001, the Retirement Benefit; provided, however that the Medical
Benefits shall be paid if the Executive's employment is terminated
other than for Cause after he attains age 55.
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
-9-
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 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
-10-
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 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:
-11-
(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 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
-12-
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, 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
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
-13-
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.
-14-
(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:
J. Xxxxxx Xxxxxxxx
UnumProvident Corporation
0 Xxxxxxxx Xxxxxx 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxxx, Xxxxx 00000
If to the Company:
UnumProvident Corporation
0 Xxxxxxxx Xxxxxx 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000 Xxxxxxxx, Xxxxx 00000
Telecopy Number: (000) 000-0000 or (000) 000-0000
Attention: F. Xxxx Xxxxxxxx, EVP- Legal and Administrative
Affairs
-15-
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.
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/ J. Xxxxxx Xxxxxxxx
-------------------------------
J. Xxxxxx Xxxxxxxx
UnumProvident Corporation
By /s/ F. Xxxx Xxxxxxxx
-------------------------------
F. Xxxx Xxxxxxxx
EVP, Legal and Administrative Affairs
58587
-16-
