Exhibit 10(a)
EMPLOYMENT AGREEMENT
OF
XXXXXX X. XXXXX
As amended through January 1, 1997
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Table of Contents
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Section 1. Term of Employment 2
Section 2. Position and Responsibilities 3
Section 3. Standard of Care 3
Section 4. Compensation 4
Section 5. Expenses 9
Section 6. Employment Terminations 10
Section 7. Change in Control 20
Section 8. Covenants and Remedies 32
Section 9. Assignment 34
Section 10. Dispute Resolution and Notice 35
Section 11. Miscellaneous 36
Section 12. Governing Law 37
Section 13. Parent Guarantee 37
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, originally entered into, and effective as of the 1st
day of March, 1995 (hereinafter referred to as the "Effective Date"), by and
between Guarantee Mutual Life Company, as predecessor in interest to Guarantee
Life Insurance Company (the "Company") and Xxxxxx X. Xxxxx (hereinafter referred
to as the "Executive"), is amended and restated, effective as of the 1st day of
January, 1997, among other things, to add The Guarantee Life Companies, Inc.,
the Company's parent (the "Parent"), as a party hereto.
WHEREAS, the Executive is presently employed by the Company and the Parent in
the capacity of Chairman of the Board, President, and Chief Executive Officer;
and
WHEREAS, the Executive possesses considerable experience and knowledge of the
business and affairs of the Company and the Parent concerning its policies,
methods, personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's contribution has been
substantial and meritorious and, as such, the Executive has demonstrated unique
qualifications to act in an executive capacity for the Company and the Parent;
and
WHEREAS, the Company and the Parent are desirous of assuring the continued
employment of the Executive as Chairman of the Board, President, and Chief
Executive Officer and the Executive is desirous of having such assurances.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements of the parties set forth in this Agreement, and of other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
Section 1 Term of Employment
The Company and the Parent hereby agree to employ the Executive and the
Executive hereby agrees to continue to serve the Company and the Parent in
accordance with the terms and conditions set forth herein, for an initial period
of three (3) years (the "Initial Term"), commencing as of the Effective Date of
this Agreement, as indicated above.
The term of this Agreement shall automatically be extended for one (1)
additional year on the first anniversary date of the Effective Date and on each
subsequent anniversary thereof (regardless of whether such anniversary occurs
during the Initial Term of this Agreement or during an extension thereof),
unless the Company or the Executive gives the other party written notice that it
does not wish to extend the term of this Agreement, delivered prior to the date
as of which the term of the contract would otherwise be extended pursuant to
this paragraph.
In the event such notice of intent not to extend is properly delivered by either
party, this Agreement, along with all corresponding rights, duties, and
covenants shall automatically expire at the end of the Initial Term or such
extended term as is then applicable.
However, regardless of the above, if at any time during the term of this
Agreement, a Change in Control of the Parent occurs, then this Agreement shall
become immediately irrevocable, except as expressly provided in Sections 6 or 7
hereof, and shall in all events continue in effect for the greater of (i)
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twenty-four (24) months from the end of the month in which such Change in
Control becomes effective or (ii) the then remaining term, and subject to
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further extensions pursuant to this Section 1. Further, notwithstanding the
provisions of this Section 1, this Agreement may be terminated earlier, as
expressly provided in Sections 6 and 7 herein.
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Section 2 Position and Responsibilities
During the term of this Agreement the Executive agrees to serve as President and
Chief Executive Officer of the Company and the Parent and, if so elected, as
Chairman of the Board of Directors of the Company and the Parent. In the
capacity of President and Chief Executive Officer, the Executive shall be the
highest ranking officer of the Company and the Parent and shall have full
authority and responsibility, subject to the control of the Board of Directors,
for the overall strategic direction, management, and leadership of the Company
and the Parent.
Section 3 Standard of Care
During the term of this Agreement, the Executive agrees to devote substantially
his full time, attention, and energies to the Company's and the Parent's
business and shall not be engaged in any other business activity, whether or not
such business activity is pursued for gain, profit, or other pecuniary
advantage. However, subject to Section 8 herein, the Executive may serve as a
director of other companies with the prior written approval of the Board and
such approval by the Board shall not be withheld unreasonably. The Executive
covenants, warrants, and represents that he shall:
Devote his full and best efforts to the fulfillment of his employment
obligations; and
Exercise the highest degree of loyalty and the highest standards of conduct
in the performance of his duties.
Subject to the covenants of Section 8 herein, this Section 3 shall not be
construed as preventing the Executive from investing assets in such form or
manner as will not require his services in the daily operations of the affairs
of the companies in which such investments are made, so long as such investments
in any company that competes with the Company constitutes less than one percent
(1%) of the total equity of such company.
Section 4 Compensation
As remuneration for all services to be rendered by the Executive during the term
of this Agreement, and as consideration for complying with the terms of this
Agreement, the Company shall pay and provide to the Executive the following.
4.1 Base Salary. The Company shall pay the Executive a Base Salary in
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an amount which shall be established from time to time by the Board of Directors
or the Board's designee provided, however, that such Base Salary rate shall not
be less than $400,000 each year of this Agreement. This Base Salary shall be
paid to the Executive in substantially equal bimonthly installments throughout
the year, consistent with the normal payroll practices of the Company.
The annual Base Salary shall be reviewed at least annually following the
Effective Date of this Agreement, while this Agreement is in force, to ascertain
whether, in the sole judgment of the Board or the Board's designee, such Base
Salary should be increased, based primarily on the performance of the Executive
during the year. If so increased, the Base Salary as stated above shall,
likewise, be increased for all purposes of this Agreement.
Notwithstanding the foregoing, if at any time during the term of this Agreement
the Company experiences extraordinary business conditions, including but not
limited to reduced profitability and other financial strains, which warrant an
overall reduction in the compensation of the Company's top management employees,
then the
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Company shall have the right to reduce the Executive's Base Salary consistent
with the overall reduction in management compensation (i.e., the Base Salary of
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the Executive will not be singled out for reduction in a manner that is
inconsistent to that provided to other executives of the Company).
4.2 Annual Bonus. The Company shall provide the Executive with the
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opportunity to earn an annual cash bonus, at a level which is commensurate with
the opportunity typically offered to executives having the same or similar
duties and responsibilities as the Executive at companies similar in size and
character to the Company and the Parent, provided that the Executive's annual
cash bonus shall be at a level which is no less than the commensurate level of
annual cash bonus for other executives of the Company.
Nothing in this paragraph shall be construed as preventing the Company from
changing and/or amending the annual bonus/incentive plan, including the amount
of the annual target bonus, so long as such changes applicable to the Executive
are equally applicable to other executives of the Company (i.e., the annual
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bonus opportunity of the Executive will not be singled out for reduction or
modification in a manner inconsistent to that provided to other executives of
the Company).
4.3 Long-Term Incentives. The Company shall provide the Executive the
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opportunity to earn a long-term incentive award, at a level which is
commensurate with the opportunity typically offered to executives having the
same or similar duties and responsibilities as the Executive at companies
similar in size and in character to the Company and the Parent, provided that
the Executive's long-term incentives shall be at a level which is no less than
the commensurate level of long-term incentives for other executives of the
Company (provided that, for purposes of this Agreement, the option grant being
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made pursuant to this Paragraph 4.3 shall be deemed to be commensurate with the
awards being made to other employees contemporaneously with the grant of such
option).
Nothing in this paragraph shall be construed as preventing the Company from
changing, and/or amending any of the Company's long-term incentive plans,
including the amount of the target long-term incentive, so long as such changes
applicable to the Executive are equally applicable to other executives of the
Company (i.e., the long-term incentive award opportunity of the Executive will
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not be singled out for reduction or modification in a manner inconsistent to
that provided to other executives of the Company) and so long as such changes do
not apply with respect to any long-term incentives previously granted and
outstanding.
On or as soon as practicable after December 26, 1995 (the "Demutualization
Date"), the Executive shall receive options under the 1994 Long Term Incentive
Term Plan (the "LTIP") to purchase a number of shares equal to one and
sixth-tenths percent of the number of shares outstanding immediately following
the underwritten public offering of the common stock occurring as soon as
practicable following the Demutualization Date (the "IPO"), which would be one
hundred sixty thousand (160,000) shares of the Parent's common stock (assuming
for this purpose that there are 10 million shares outstanding immediately
following the IPO). The options with respect to twenty-five percent (25%) of the
number of shares granted shall become exercisable on each of the second, third,
fourth and fifth anniversaries of the date the option is granted (so long as the
Executive is employed by the Company on each such anniversary date). The per
share exercise price with respect to such option shall be equal to the
Conversion Value, as defined in the LTIP.
4.4 Retirement Benefits. Subject to Paragraph 4.7, the Company shall
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provide the Executive with participation in all existing qualified defined
benefit and defined contribution retirement plans including the pension plan and
the 401(k) savings plan, subject to the eligibility and participation
requirements of each plan.
Such retirement benefits shall further include the Executive's participation in:
(i) The Supplemental Retirement. The purpose of this nonqualified
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retirement arrangement is to replace benefits lost by the
Executive under the Company's Home Office Retirement Plan, due
to limitations imposed by Internal Revenue Code Sections 415
and
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401(a)(17), and by the Executive's deferral of pay under the
Company's Deferred Compensation Plan. The terms and conditions
of this nonqualified retirement arrangement are described in
and controlled by the Company's Supplemental Retirement Plan
document. However, this Agreement provides additional vesting
of the Supplemental Retirement Plan benefits in the event of
the Executive's employment termination due to death (see
Paragraph 6.2 herein), Disability (see Paragraph 6.3 herein),
in the event of an involuntary termination by the Company (see
Paragraph 6.5), or in the event of a Qualifying Termination
(see Paragraphs 7.2 and 7.3(h)).
(ii) The Money Purchase Special Deferred Compensation Plan.
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The purpose of this nonqualified money purchase retirement
arrangement is to supplement the Executives' benefits under the
Company's Home Office Retirement Plan, since the benefit
formula thereunder was reduced subsequent to the Executive's
recruitment to the Company. Under the Money Purchase Plan, the
Company makes annual, tax-deferred contributions to the
Executive's account of not less than nine percent (9%) or more
than twelve percent (12%) of the Executive's annual salary and
incentive compensation. Deposits are credited with an eight
percent (8%) rate of return. Notwithstanding any other
provision hereof, except as expressly provided otherwise in the
Money Purchase Special Deferred Compensation Plan document,
deposits and interest so credited shall be paid to the
Executive upon employment termination for any cause whatsoever.
The terms and conditions of the Money Purchase Plan are further
described in and controlled by the provisions of the Money
Purchase Special Deferred Compensation Plan document.
4.5 Employee Benefits. Subject to Paragraph 4.7, during the term of
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this Agreement, and as otherwise provided within the provisions of each of the
respective plans, the Company shall provide to the Executive all benefits which
other employees of the Company are entitled to receive, in accordance with the
terms and conditions of any policies or plans applicable to such benefits.
The Executive shall likewise participate in any additional benefit as may be
established during the term of this Agreement, by standard written policy of the
Company.
Such Benefits shall include, but not be limited to, short- and long-term
disability insurance. The short-term disability coverage shall provide the
Executive one hundred percent (100%) of his basic monthly earnings (i.e., Base
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Salary) for the first six (6) months of total disability (as such items and
benefits are further described within the provisions of the Company's Short-Term
Disability Plan). The long-term disability coverage shall provide the Executive
seventy percent (70%) of his basic monthly earnings (i.e., Base Salary), reduced
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by other income benefits such as Workers Compensation, retirement benefits from
the Company, and Social Security benefits (as such terms and benefits are
further described within the provisions of the Company's Long-Term Disability
Plan). For purposes of these short- and long-term disability benefits, the
definition of "disability" shall be based upon the Executive's occupation as
Chairman of the Board, President, and Chief Executive Officer.
4.6 Perquisites. Subject to Paragraph 4.7 and Board approval, the
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Company shall provide to the Executive all perquisites to which other executives
of the Company are entitled to receive, and such other perquisites which are
suitable to the character of the Executive's position with the Company and
adequate for the performance of his duties hereunder.
4.7 Right to Change Plans. By reason of Paragraphs 4.4, 4.5, and 4.6
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herein, the Company shall not be obligated to institute, maintain, or refrain
from changing, amending, or discontinuing any benefit plan, program, or
perquisite, so long as such changes applicable to the Executive are equally
applicable to other executives of the Company (i.e., the benefits of the
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Executive will not be singled out for reduction or modification in a manner
inconsistent to that provided to other executives of the Company).
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Section 5 Expenses
The Company shall pay, or reimburse the Executive, for all ordinary and
necessary expenses in a reasonable amount which the Executive incurs in
performing his duties under this Agreement including, but not limited to,
travel, entertainment, professional dues and subscriptions, and all dues, fees,
and expenses associated with membership in various professional, business, and
civic associations and societies of which the Executive's participation is in
the best interest of the Company. The expenses will be accounted for and
reimbursed through the Company's normal expense reporting and approval process.
Section 6 Employment Terminations
6.1 Termination Due to Retirement. In the event the Executive's
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employment is terminated, while this Agreement is in force, by reason of
voluntary Normal Retirement by the Executive (as defined under the then
established rules of the Company's tax-qualified retirement plan), the
Executive's benefits shall be determined in accordance with the Company's
retirement, survivor's benefits, insurance, and other applicable programs then
in effect.
Upon the effective date of such termination, the Company shall pay to the
Executive his full Base Salary (at the rate then in effect as provided in
Paragraph 4.1 herein), accrued vacation pay, unreimbursed business expenses, and
all other items earned by and owed to the Executive through and including the
Effective Date of Termination. The Executive also shall receive a pro rata bonus
payment under both the annual and the long-term incentive plans, based upon the
level of achievement of the preestablished performance goals up through and
including the Effective Date of Termination as determined in good faith by the
Board, plus all other benefits to which the Executive has a vested right to at
that time. The Company's obligation to pay and provide to the Executive Base
Salary, annual bonus, and long-term incentives (as provided in Paragraphs 4.1,
4.2, and 4.3 herein, respectively), shall immediately thereafter expire and,
with the exception of the covenants contained in Section 8 herein (which shall
survive such termination), the Company, the Parent and the Executive thereafter
shall have no further obligations under this Agreement.
6.2 Termination Due to Death. In the event of the death of the
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Executive during the term of this Agreement, or during any period of Disability
during which the Executive is receiving compensation pursuant to Paragraph 6.3
herein, the Company shall pay to the Executive's surviving spouse, or other
beneficiary as so designated by the Executive during his lifetime, or to the
Executive's estate, as appropriate, all benefits to which the Executive had a
vested right to pursuant to this Agreement. This shall include Base Salary (at
the rate then in effect as provided in Paragraph 4.1 herein), accrued vacation
pay, unreimbursed business expenses, and all other items earned by and owed to
the Executive through and including the date of death. The Executive also shall
receive a bonus equal to the product (the "Bonus Payment Amount") of (i) the
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Executive's annual Base Salary at the highest rate in effect at any time prior
to or upon the Effective Date of Termination times (ii) the greater of (A) the
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average of the rate of annual bonus paid to the Executive in respect of the
three calendar years ended immediately prior to the Effective Date of
Termination and (B) 75%. The Executive shall also receive a cashout of
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previously vested long-term incentives.
The Executive's unvested outstanding (i) stock options, (ii) phantom shares and
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(iii) other incentives or awards (including, without limitation, any outstanding
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award of restricted stock or performance shares) will be vested and cashed out
upon the Executive's death. The Executive's benefits accrued to date under the
Guarantee Life Insurance Company Supplemental Retirement Plan also shall become
immediately fully vested upon the death of the Executive and payable in
accordance with the terms of such Plan in a single lump sum payment.
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The Company's obligation to pay and provide to the Executive Base Salary, annual
bonus, and long-term incentives (as provided in Paragraphs 4.1, 4.2, and 4.3
herein, respectively), shall immediately thereafter expire and, the Company and
the Parent shall have no further obligations under this Agreement.
6.3 Termination Due to Disability. In the event that the Executive
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becomes Disabled during the term of this Agreement and is, therefore, unable to
perform his duties herein for a period of more than one hundred eighty (180)
calendar days in the aggregate, whether or not consecutive, during any period of
twelve (12) consecutive months, or in the event of the Board's reasonable
expectation that the Executive's Disability will exist for more than a period of
one hundred eighty (180) calendar days, the Company shall have the right to
terminate this Agreement and the Executive's employment hereunder. However, the
Board shall deliver written notice to the Executive of the Company's intent to
terminate for Disability at least thirty (30) calendar days prior to the
effective date of such termination.
A termination for Disability shall become effective upon the end of the thirty
(30) day notice period. Upon such effective date, the Company shall pay to the
Executive all benefits to which the Executive has a vested right to at that
time. This shall include Base Salary (at the rate then in effect as provided in
Paragraph 4.1 herein) accrued vacation pay, unreimbursed business expenses, and
all other items earned and owed to the Executive through and including the
Effective Date of Termination. The Executive also shall receive a bonus equal to
the Bonus Payment Amount, and a cashout of previously vested long-term
incentives.
The Executive's unvested outstanding (i) stock options, (ii) phantom shares and
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(iii) other incentives or awards (including, without limitation, any outstanding
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award of restricted stock or performance shares) will be vested and cashed out
upon the Executive's Disability.
The Executive's benefits accrued to date under the Guarantee Life Insurance
Company Retirement Plan also shall become immediately vested upon the effective
date of the Executive's Disability and payable in accordance with the terms of
such Plan in a single lump sum payment.
Further, subject to the fulfillment of the definition of "disability" (which
shall be defined based upon the Executive's occupation as Chairman of the Board,
President, and Chief Executive Officer, similar to the definition required below
in this Paragraph 6.3) as provided under the terms of the Company's short- and
long-term disability insurance plans, the Executive shall participate in these
benefits to the extent provided within the provisions of the respective plan.
Thereafter, the Company's obligation to pay and provide to the Executive Base
Salary, annual bonus, and long-term incentives (as provided in Paragraphs 4.1,
4.2, and 4.3, respectively), shall immediately expire and, with the exception of
the covenants contained in Section 8 herein (which shall survive such
termination), the Company, the Parent and the Executive thereafter shall have no
further obligations under this Agreement.
The term "Disability" shall mean, for all purposes of this Agreement, the
incapacity of the Executive, due to injury, illness, disease, or bodily or
mental infirmity, to engage in the performance of substantially all of the usual
duties of employment as Chairman of the Board, President and Chief Executive
Officer, as contemplated by Section 2 herein, such Disability to be determined
by the Board of Directors upon receipt and in reliance on competent medical
advice from one or more individuals, selected by the Board and acceptable to the
Executive, who are qualified to give such professional medical advice.
Notwithstanding the above, no Disability of the Executive shall exist under this
Agreement unless a Disability is found to exist under the Company's Long-Term
Disability Plan.
It is expressly understood that the Disability of the Executive for a period of
one hundred eighty (180) calendar days or less in the aggregate during any
period of twelve (12) consecutive months, in the absence of any reasonable
expectation that his Disability will exist for more than such a period of time,
shall not constitute a failure by him to perform his duties hereunder and shall
not be deemed a breach or default and the Executive
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shall receive full compensation for any such period of Disability or for any
other temporary illness or incapacity during the term of this Agreement.
6.4 Voluntary Termination by the Executive. Following the end of the
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Initial Term, the Executive may terminate this Agreement at any time by giving
the Board of Directors written notice of his intent to terminate, delivered at
least ninety (90) calendar days prior to the effective date of such termination
(such period not to include vacation). Any termination by the Executive pursuant
to this Paragraph 6.4 automatically shall become effective upon the expiration
of the notice period related thereto.
Upon the effective date of any such voluntary termination, the Company shall pay
to the Executive his full Base Salary (at the rate then in effect as provided in
Paragraph 4.1 herein), accrued vacation pay, unreimbursed business expenses, and
all other items earned by and owed to the Executive through and including the
Effective Date of Termination. The Executive also shall receive all other
benefits to which he has a vested right to at that time. However, no pro rata
payment will be made under the annual bonus or long-term incentive plans for
performance years or periods then in progress which are not yet vested, and the
Company's obligation to pay and provide the Executive Base Salary, annual bonus,
and long-term incentives (as provided in Paragraphs 4.1, 4.2, and 4.3 herein,
respectively) shall immediately expire. With the exception of the covenants
contained in Section 8 herein (which shall survive such termination), the
Company, the Parent and the Executive thereafter shall have no further
obligations under this Agreement.
6.5 Involuntary Termination by the Company. The Company may terminate
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the Executive's employment, as provided under this Agreement, at will, at any
time, by notifying the Executive in writing of its intent to terminate at least
thirty (30) calendar days prior to the effective date of such termination. The
termination automatically shall become effective upon the expiration of the
notice period, and the Executive shall receive the benefits provided below in
this Paragraph 6.5.
The failure to reelect the Executive to any one or more of the positions of
Chairman of the Board, President, or Chief Executive Officer of the Company or
the Parent shall be treated as an involuntary termination of the Executive's
employment. Such termination shall become effective upon the earliest expiration
of the Executive's term as Chairman of the Board, President, or Chief Executive
Officer of the Company or the Parent, and the Executive shall receive the
benefits provided below in this Paragraph 6.5. Additionally, if (i) either the
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Company or the Parent materially breaches any obligation to the Executive
hereunder and does not cure such breach within 30 days of receipt of notice form
the Executive or (ii) the Company delivers a notice to the Executive pursuant to
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Section 1 stating that the Company does not wish to have the term of the
Agreement automatically extended (a "Nonrenewal Notice"), then, in either case,
the Executive may elect, by written notice to the Company within 90 days
thereafter (the "Elective Termination Notice"), to treat the Nonrenewal Notice
as an involuntary termination of his employment with the Company effective as of
the date the Elective Termination Notice is sent by the Executive in accordance
with the provision of Section 10.2 hereof. In any such event, the Executive
shall receive the benefits provided below in this Paragraph 6.5.
Upon the effective date of any such termination described in this Paragraph 6.5,
the Company shall pay to the Executive all benefits which the Executive has a
vested right to at that time. This shall include Base Salary (at the rate then
in effect as provided in Paragraph 4.1 herein), accrued vacation pay,
unreimbursed business expenses, and all other items earned by and owed to the
Executive through and including the Effective Date of Termination. The Executive
also shall receive a bonus for that year equal to the product of (i) the Bonus
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Payment Amount and (ii) a fraction, the numerator of which is the number of full
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completed months in the bonus plan year through the Effective Date of
Termination, and the denominator of which is twelve (12). The Executive shall
also receive a cashout of previously vested long-term incentives. Unvested
long-term incentives, including all outstanding stock options, phantom stock and
other unvested incentives or awards (including, without limitation, any
outstanding award of restricted stock or performance shares) also shall be fully
vested and cashed out upon an involuntary termination.
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The Executive's benefits accrued through the Effective Date of Termination under
the Guarantee Life Insurance Company Supplemental Retirement Plan also shall
become immediately vested upon Executive's Effective Date of Termination and
payable in accordance with the terms of such Plan in a single lump sum payment.
Also, as severance pay, the Company shall continue to pay the Executive an
amount equal to the product of two times his annual Base Salary at the highest
rate in effect at any time prior to or upon the Effective Date of Termination,
with such amount to be paid to the Executive in substantially equal bimonthly
installments over the twenty-four (24) month period from the date of
termination. The Company shall also pay the Executive in substantially equal
bimonthly installments over the twenty-four (24) month period from the Effective
Date of Termination an amount equal to the product of two times the Executive's
then current annual maximum bonus opportunity under the annual bonus plan (as
provided in Paragraph 4.2 herein).
As soon as practicable after the Effective Date of Termination, the Company
shall also pay the Executive a lump sum amount equal to the present value of the
additional retirement benefits that the Executive would have accrued (including
the benefits which would have accrued under the terms of the Guarantee Life
Insurance Company Supplemental Retirement Plan) had he continued to perform
services for the Company for two additional years at the same rate of
compensation (including for this purpose an annual bonus equal to the Bonus
Payment Amount) as was in effect immediately prior to the Effective Date of
Termination. The present value payable hereunder shall be calculated using the
discount rate and such other assumptions as are currently used for purposes of
funding amounts credited under the Guarantee Life Insurance Company Supplemental
Retirement Plan.
The Company shall also continue for a twenty-four (24) month period from the
Effective Date of Termination, the Executive's medical, group term life, and
disability insurance coverages. These benefits shall be provided by the Company
at the same premium to the Executive, and at the same coverage levels in effect
at the time of termination. During the first eighteen (18) months of this
twenty-four (24) month period, the benefits set forth herein shall be provided
to the Executive in compliance with the terms of the Consolidated Omnibus Budget
Reconciliation Act ("COBRA"). These insurance benefits will be discontinued
prior to the end of the twenty-four (24) month period in the event the Executive
receives substantially similar benefits from a subsequent employer, as
determined in good faith by the Board of Directors. For purposes of enforcing
this paragraph, to the extent necessary for the Company to make an off-set
decision, the Executive shall have a duty to keep the Company informed as to the
terms and conditions of any subsequent employment and the corresponding benefits
from employment and shall provide or cause to provide to the Company, in
writing, correct, complete and timely information concerning the same.
With the exception of the covenants contained in Section 8 herein (which shall
survive such termination), and with the exception of the payments and benefits
described in this Paragraph 6.5, the Company, the Parent and the Executive
thereafter shall have no further obligations under this Agreement. Further,
benefits provided under this Paragraph 6.5 shall be in lieu of all other
benefits provided to the Executive under the provisions of this Agreement
including, but not limited to, those benefits provided under Section 7 herein.
6.6 Termination for Cause. Nothing in this Agreement shall be
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construed to prevent the Board of the Parent from terminating the Executive's
employment under this Agreement for "Cause." In the event the Board of the
Parent determines that Cause exists, the Board shall deliver written notice to
the Executive. Upon receipt of this written notification, all provisions of this
Agreement shall terminate, except for the provisions of Section 8 herein (which
shall survive such termination).
The Company shall pay the Executive his full Base Salary (at the rate then in
effect as provided in Paragraph 4.1 herein), accrued vacation pay, unreimbursed
business expenses, and all other items earned by and owed to the Executive
through and including the date notice of a "for Cause" termination is delivered
to the Executive. The Executive also shall receive all other benefits to which
he has a vested right at that time. However, no pro rata payment will be made
under the annual bonus or long-term incentive plans for performance years or
periods then
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in progress, and the Company's obligation to pay and provide the Executive Base
Salary, annual bonus, and long-term incentives (as provided in Paragraphs 4.1,
4.2, and 4.3 herein, respectively) after the Effective Date of the "For Cause"
Termination shall immediately expire. The Company, the Parent and the Executive
thereafter shall have no further obligations under this Agreement.
For purposes of this Agreement, "Cause" shall mean the occurrence of any one or
more of the following:
(i) The Executive is convicted of or pleads guilty to any felony or
any act of fraud or embezzlement; or
(ii) The Executive engages in conduct or activities involving moral
turpitude and such conduct or activities are materially
damaging to the property, business or reputation of the Company
or the Parent; or
(iii) The Executive breaches this Agreement in any material respect
and fails to cure the breach within ten (10) calendar days
after notice thereof from the Company; or
(iv) The Executive persistently fails or refuses to comply with any
written direction of the Board of Directors of the Company or
the Parent (such direction not being inconsistent with this
Agreement); or
(v) The Executive embezzles or knowingly, and with intent,
misappropriates any property of the Company or the Parent, or
unlawfully appropriates any corporate opportunity of the
Company or the Parent; or
(vi) The Executive is removed as an officer or director by the
Company or its shareholders either because, after notice and
hearing by the Director of the Nebraska Department of
Insurance, the failure to do so would be grounds for
delinquency proceedings pursuant to The Nebraska Insurers
Supervision, Rehabilitation, and, Liquidation Act (S)44-4801,
et.seq. or the Executive is determined not to qualify as a
-------
director pursuant to Nebraska Insurance Laws, (S)44-211.
6.7 Stock Cashout Alternative. If an event occurs under this Agreement
-------------------------
which, by the terms of this Agreement, otherwise calls for the cashout of Parent
shares held by the Executive, the Executive, or the Executive's beneficiaries as
appropriate, shall have the right to elect to receive/maintain the shares rather
than being cashed out.
Section 7 Change in Control
7.1 Right to Severance Benefits. The Executive shall be entitled to
---------------------------
receive from the Company Severance Benefits as described in Paragraph 7.3
herein, if there has been a Change in Control of the Parent (as defined in
Paragraph 7.4 herein) and if, within twenty-four (24) calendar months
thereafter, the Executive's employment with the Company shall end for any reason
specified in Paragraph 7.2 herein as being a Qualifying Termination. In addition
to such Severance Benefits, the Executive also shall receive all other benefits
to which he has a vested right at that time.
7.2 Qualifying Termination. The occurrence of any one or more of the
----------------------
following events within twenty-four (24) calendar months after a Change in
Control of the Parent shall constitute a "Qualifying Termination," and the
Company shall pay the Severance Benefits to the Executive under this Agreement:
21
(a) The Company's or the Parent's involuntary termination of the
Executive's employment without Cause;
(b) The Executive's voluntary employment termination for Good
Reason (as defined in Paragraph 7.5);
(c) A successor company fails or refuses to assume the Company's
and the Parent's obligations under this Agreement in their
entirety, as required by Paragraph 9.1 herein; or
(d) The Company or the Parent, or any successor company, commits a
material breach of any of the provisions of this Agreement.
A Qualifying Termination also shall include an involuntary termination of the
Executive, without Cause, "in contemplation of," but prior to, a Change in
Control of the Parent. To be "in contemplation of" a Change in Control shall
mean an involuntary termination that occurs at any time subsequent to (but in no
event after an actual Change in Control):
(i) The Board of Directors accepts, or recommends to the Parent's
shareholders the acceptance, of an offer from any "Person"
(other than (w) those Persons in control of the Parent as of
-
the Effective Date, (x) any Person or Persons acting on
-
behalf of the Parent in a distribution of stock to the public,
or (y) a trustee or other fiduciary holding securities under
-
an employee benefit plan of the Parent or the Company, or (z) a
-
corporation owned directly or indirectly by the stockholders
(immediately prior to such transaction) of the Parent in
substantially the same proportions as their ownership of stock
of the Parent) to become the Beneficial Owner, directly or
indirectly, of securities of the Parent representing thirty
percent (30%) or more of the combined voting power of the
Parent's then outstanding securities; or
(ii) The Board of Directors approves or recommends to the Parent's
shareholders: (A) a plan of complete or substantial liquidation
-
of the Parent; or (B) an agreement for the sale or disposition
-
of all or substantially all the Parent's assets; or (C) a
-
merger, consolidation, or reorganization of the Parent with or
involving any other corporation or entity, other than a merger,
consolidation, or reorganization that would result in the
voting securities of the Parent outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity), at least eighty-five percent (85%) of the
combined voting power of the voting securities of the Parent
(or such surviving entity) outstanding immediately after such
merger, consolidation, or reorganization.
A "Qualifying Termination" shall also include any voluntary termination of
employment by the Executive notice as to which has been given by Executive at
any time within the 30-day period which commences on the first anniversary of
the Change of Control and which is effected by written notice to the Company
given not less than 10 business days prior to the effective date of such
voluntary termination.
Except as provided in the immediately preceding paragraph, a Qualifying
Termination shall not include a termination of employment by reason of death,
Disability, or voluntary Normal Retirement (as such term is defined under the
then-established rules of the Company's tax-qualified retirement plan), the
Executive's voluntary termination without Good Reason (as defined in Paragraph
7.5 herein), or the Company's involuntary termination of the Executive's
employment for Cause.
22
7.3 Description of Severance Benefits. In the event that the Executive
---------------------------------
becomes entitled to receive Severance Benefits, as provided in Paragraphs 7.1
and 7.2 herein, the Company shall pay to the Executive and provide him with
total Severance Benefits equal to the following:
(a) A lump-sum amount equal to the Executive's unpaid Base Salary,
accrued vacation pay, unreimbursed business expenses, and all
other items earned by and owed to the Executive through and
including the Effective Date of employment Termination.
(b) A lump-sum amount equal to the Executive's then current annual
maximum bonus opportunity, established under the annual bonus
plan for the bonus plan year in which the Executive's Effective
Date of Termination occurs, or, if greater, the annual maximum
bonus opportunity established for the Executive during any of
the prior three (3) years, multiplied by a fraction, the
numerator of which is the number of full completed months in
the bonus plan year through the Effective Date of Termination,
and the denominator of which is twelve (12). This payment will
be in lieu of any other payment to be made to the Executive
under the annual bonus plan for that plan year.
(c) A lump-sum amount equal to three (3) multiplied by the
Executive's highest annual rate of Base Salary in effect at any
time prior to or upon the Effective Date of Termination.
(d) A lump-sum amount equal to three (3) multiplied by (i)
-
Executive's then current annual maximum bonus opportunity
established under the annual bonus plan for the bonus plan year
in which the Executive's Effective Date of Termination occurs,
or, if greater, the annual maximum bonus opportunity
established for the Executive during any of the prior three (3)
years.
(e) An immediate vesting and cashout of any and all outstanding
long-term incentive awards held by the Executive, as granted to
the Executive by the Parent, whether or not such long-term
incentive awards were previously vested. This shall include
outstanding stock options, restricted stock, performance
shares, and phantom stock awards. The cashout shall be in a
lump-sum amount equal to the Executive's accrued value of these
long-term incentive grants, as of the Executive's Effective
Date of Termination. This payment will be in lieu of any other
payment to be made to the Executive under these long-term
incentive plans.
(f) A lump sum amount equal to the present value of the additional
retirement benefits that the Executive would have accrued
(including the benefits which would have accrued under the
terms of the Guarantee Life Insurance Company Supplemental
Retirement Plan) had he continued to perform services for the
Company for three additional years at the same rate of
compensation (including for this purpose an annual bonus equal
to the Bonus Payment Amount) as was in effect immediately prior
to the Effective Date of Termination. The present value payable
hereunder shall be calculated using the discount rate and such
other assumptions as are currently used for purposes of funding
amounts credited under the Guarantee Life Insurance Company
Supplemental Retirement Plan.
(g) A continuation for a thirty-six month period of the Executive's
medical, group term life, and disability insurance coverages.
These benefits shall be provided by the Company to the
Executive beginning immediately upon the Effective Date of
Termination. Such benefits shall be provided to the Executive
at the same premium cost to the Executive, if any, and at the
same coverage level, as in effect as of the Executive's
Effective Date of Termination. Further, during the first
eighteen (18) months of the stated continuation period, the
medical insurance benefits set forth herein shall be provided
to the Executive
23
in compliance with the terms of the Consolidated Omnibus
Reconciliation Act ("COBRA").
However notwithstanding the above, these insurance benefits
shall be discontinued prior to the end of the stated
continuation period in the event the Executive receives
substantially similar benefits from a subsequent employer, as
determined solely by the Board in good faith. For purposes of
enforcing this offset provision, the Executive shall be deemed
to have a duty to keep the Company informed as to the terms and
conditions of any subsequent employment and the corresponding
benefits earned from such employment and shall provide, or
cause to provide, to the Company in writing correct, complete,
and timely information concerning the same.
(h) The Executive shall be entitled, at the expense of the Company,
to receive standard outplacement services from a nationally
recognized outplacement firm of the Executive's selection, for
a period of up to two (2) years from the Effective Date of
Termination. However, such services shall be at the Company's
expense to a maximum amount not to exceed twenty-five percent
(25%) of the Executive's annual rate of Base Salary as of the
Effective Date of Termination.
(i) The Executive's benefits accrued to date under the Guarantee
Life Insurance Company Supplemental Retirement Plan also shall
become immediately fully vested upon the Effective Date of
Termination. These benefits shall be paid to the Executive as
provided under the terms and provisions of the Supplemental
Retirement Plan document.
With the exception of the covenants contained in Section 8 herein (which shall
survive such termination), and with the exception of the payments and benefits
described in this Paragraph 7.3, and all other then-vested benefits of the
Executive which have not been cashed out, the Company, the Parent and the
Executive thereafter shall have no further obligations under this Agreement.
7.4 Definition of "Change in Control". "Change in Control" shall be deemed
--------------------------------
to have occurred as of the first day that any one or more of the following
conditions shall have been satisfied.
(i) Any "Person" (other than (w) those Persons in control of the
-
Parent as of the Effective Date, (x) any Person or Persons
-
acting on behalf of the Parent in a distribution of stock to
the public, (y) a trustee or other fiduciary holding securities
-
under an employee benefit plan of the Parent, or (z) a
-
corporation owned directly or indirectly by the stockholders
(immediately prior to such transaction) of the Parent in
substantially the same proportions as their ownership of stock
of the Parent) becomes the Beneficial Owner, directly or
indirectly, of securities of the Parent representing thirty
percent (30%) or more of the combined voting power of the
Parent's then outstanding securities; or
(ii) The Board of Directors or the Parent's shareholders and, where
required under applicable law, the Nebraska Department of
Insurance, approve: (A) a plan of complete or substantial
-
liquidation of the Parent; or (B) an agreement for the sale
-
or disposition of all or substantially all the Parent's assets;
or (C) a merger, consolidation, or reorganization of the
-
Parent with or involving any other corporation or entity, other
than a merger, consolidation, or reorganization that would
result in the voting securities of the Parent outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), at least eighty-five
percent (85%) of the combined voting power of the voting
securities of the
24
Parent (or such surviving entity) outstanding immediately after
such merger, consolidation, or reorganization; or
(iii) During any period of eighteen (18) consecutive months
commencing after the date of the first annual meeting of
shareholders following the Demutualization Date at which
directors are elected, individuals who at the beginning of such
period constitute the Board, and any new directors whose
election by the Board or nomination for election by the
Parent's stockholders was approved by a vote of at least two-
thirds of directors then still in office who either (x) were
-
elected as directors by a vote of the shareholders and were
directors at the beginning of the period or (y) whose
-
election or nomination for election was previously approved by
two-thirds of the directors then in office who were elected
as directors by a vote of the shareholders, cease for any
reason to constitute a majority thereof.
However, in no event shall a Change in Control be deemed to have occurred, with
respect to the Executive, if the Executive is part of a purchasing group which
consummates the Change-in-Control transaction. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if the
Executive is an equity participant in the purchasing company or group (except
for: (i) passive ownership of less than one percent (1%) of the stock of the
-
purchasing company; or (ii) ownership of equity participation in the purchasing
--
company or group which is otherwise not significant, as determined in good faith
prior to the Change in Control by a majority of the nonemployee continuing
directors of the Parent).
For purposes of this Paragraph 7.4, the term "Person" shall have the meaning
ascribed to such term under Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Further, the term "Beneficial
Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act.
7.5 Definition of "Good Reason". "Good Reason" means, without the
---------------------------
Executive's express written consent, the occurrence after a Change in Control of
the Parent of any one or more of the following:
(i) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, titles, and
reporting requirements) as an executive and/or officer of the
Company or the Parent, or a material reduction or alteration in
the nature or status of the Executive's authorities, duties, or
responsibilities from those in effect as of ninety (90) days
prior to the Change in Control, unless such act is remedied by
the Company or the Parent within 10 business days after receipt
of written notice thereof given by the Executive.
(ii) A reduction by the Company of the Executive's Base Salary in
effect on the Effective Date hereof, or as the same shall be
increased from time to time, unless such reduction is less than
ten percent (10%) and is either (a) replaced by an incentive
-
opportunity equal in value; or is (b) consistent and
-
proportional with an overall reduction in management
compensation due to extraordinary conditions, as further
provided in Paragraph 4.1 herein (i.e., the Base Salary of the
----
Executive will not be singled out for reduction in a manner
inconsistent to a reduction imposed on other executives of the
Company);
(iii) The failure of the Company to continue in effect any of the
Company's annual and long-term incentive compensation plans, or
employee benefit or retirement plans, policies, practices, or
other compensation arrangements in which the Executive
participates unless such failure to continue the plan, policy,
practice, or arrangement pertains to all plan participants
generally and the lost value is being replaced by a new plan,
policy, practice, or arrangement of reasonably equivalent
value; or the failure by the Company to
25
continue the Executive's participation therein on substantially
the same basis, both in terms of the amount of benefits
provided and the level of the Executive's participation
relative to other participants, as existed immediately prior to
the Change in Control of the Parent, unless such act is
remedied by the Company within 10 business days after receipt
of written notice thereof given by the Executive; and
(iv) The failure of the Company and the Parent to obtain an
agreement, in form and substance that is reasonably
satisfactory to the Executive, from any successor to the Parent
to assume and agree to perform the obligations of the Company
and the Parent under this Agreement, as contemplated in
Paragraph 9.1 herein.
The Executive's right to terminate employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason herein.
7.6 Excise Tax.
-----------
(a) Prior to December 27, 1997. In the event that a Qualifying
--------------------------
Termination occurs prior to December 27, 1997 and the
independent public accountants for the Company (the
"Accountants") determine that, if the benefits to be provided
under Paragraph 7.3 were paid to Executive, Executive would
incur an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Company would be
denied a deduction under Section 280G of the Code for all or
some of the amounts to be paid to Executive, the amounts
payable to Executive pursuant to Paragraph 7.3 shall be reduced
so that the amount payable to Executive hereunder is the
greatest amount (as determined by the Accountants) that may be
paid by the Company to Executive without any such amount being
subject to an excise tax under Section 4999 or being
nondeductible for the Company pursuant to Section 280G. If the
amounts to be paid to Executive are to be so reduced, Executive
shall be given the opportunity to designate which benefits
shall be reduced and in what order of priority.
If Executive receives payments under Section 7.3 or reduced
payments and benefits under this Paragraph 7.6 and if it is
established pursuant to a final determination of a court or an
Internal Revenue Service proceeding that, notwithstanding the
good faith of the Executive and the Company in applying the
terms of this Agreement, the aggregate amount paid to Executive
or for his benefit would result in any amount being treated as
an "excess parachute payment" for purposes of Sections 280G and
4999 of the Code, then an amount equal to the amount that would
be an "excess parachute payment" shall be deemed for all
purposes a loan to Executive made on the date of receipt of
such excess amount, which Executive shall have an obligation to
repay to the Company on demand, together with interest on such
amount at the applicable Federal rate (as defined in Section
1274(d) of the Code) from the date of Executive's receipt of
such excess until the date of such repayment. In the event that
it is determined for any reason that the amount of "excess
parachute payments" is less than originally calculated, the
Company shall promptly pay to Executive the amount necessary so
that, after such adjustment, Executive will have received or be
entitled to receive the maximum payments payable under this
Paragraph 7.6 without any of such payments constituting an
"excess parachute payment," together with interest on such
amount at the applicable Federal rate (as defined in Section
1274(d) of the Code). Notwithstanding anything else contained
herein to the contrary, this Paragraph 7.6 shall be deemed
included herein pursuant to Section 5 of the Executive
Severance Plan and the Company may not amend this Paragraph 7.6
at any time earlier than the time at which it may amend such
Section 5.
26
(b) Change in Control After December 26, 1997. In the event that a
-----------------------------------------
Qualifying Termination occurs after December 26, 1997 and the
Accountants determine that, if the benefits to be provided
under Paragraph 7.3 were paid to the Executive, the Executive
would incur an excise tax under Section 4999, the aggregate of
all payments or benefits made or provided to the Executive
under Paragraph 7.3 and under all other plans and programs of
the Company (the "Aggregate Payment") would constitute a
Parachute Payment, as such term is defined in Section
28OG(b)(2) of the Code, the Company shall pay to the Executive,
prior to the time any excise tax imposed by Section 4999 of the
Internal Revenue Code ("Excise Tax") is payable with respect to
such Aggregate Payment, an additional payment in an amount
which is sufficient to cover the full cost of the Excise Tax
and the Executive's city, state and federal taxes (including
any additional Excise Taxes imposed on such payment) with
respect to the payment made hereunder. The determination of the
amount to be paid to the Executive and the time of payment
pursuant to this Paragraph 7.6(b) shall also be made by the
Accountants.
7.7 Timing of Payouts. All amounts due to the Executive under Paragraph
-----------------
7.3(a), (b), (c), (d) and (e) herein shall be paid to the Executive as soon as
practicable following the effective date of the Qualifying Termination, but in
no event beyond thirty (30) calendar days.
Section 8 Covenants and Remedies
8.1 Covenants. Without the prior written consent of the Company, the
---------
Executive shall not, directly or indirectly:
(a) Disclose Information. Use, attempt to use, disclose, or
--------------------
otherwise make known to any person or entity (other than the
employees, agents, officers, and/or the Board of Directors of
the Company):
(i) Any confidential or proprietary knowledge or information,
including without limitation, lists of customers or
suppliers, trade secrets, know-how, inventions,
discoveries, processes, products, and systems, as well as
any data and records pertaining thereto, which the
Executive may acquire in the course of his employment.
(ii) Any confidential or proprietary knowledge or information
of a confidential nature (including but not limited to
all unpublished matters) relating to, without limitation,
the business, properties, accounting, books and records,
computer systems and programs, trade secrets, products,
or memoranda of the Company.
(b) Employment. The Executive is permanently prohibited from
----------
soliciting for employment, or arranging to have any other
person, firm, or other entity soliciting for employment, any
person who is then a current employee of the Company, based on
a promise of a job following the employee's resignation from
the Company.
8.2 Remedies. The Executive hereby acknowledges and agrees that, in the
--------
event of any breach or anticipated breach of the covenants contained in this
Section 8, the Company shall be authorized and entitled to obtain from any court
of competent jurisdiction, preliminary and permanent injunctive relief as well
as an equitable accounting of all profits and benefits arising out of such
violation. These rights and remedies shall be cumulative, and in addition to any
other rights and remedies to which the Company may be entitled, including the
right to damages, directly or indirectly, sustained by the Company due to the
potential irreparable injury to the Company as a result of such breach.
27
In the event that the Board of Directors, acting in good faith, determines that
a material breach exists of any or all of these covenants, and the Executive
does not cure such breach, if susceptible of cure, to the satisfaction of the
Board of Directors within 10 days of notice of such breach from the Company, the
Executive will immediately forfeit all unpaid awards and severance benefits
otherwise payable hereunder, and will be further subject to additional
injunctive and pecuniary judgments as described above.
If any court determines that the foregoing covenant, or any part thereof, is
unenforceable for any reason, the duration or scope or other element of such
provision, as the case may be, shall be reduced so that such provision becomes
enforceable and, in its reduced form, such provision shall then be enforceable
and shall be enforced.
Section 9 Assignment
9.1 Assignment by the Company and the Parent. This Agreement may and shall
----------------------------------------
be assigned or transferred to, and shall be binding upon and shall inure to the
benefit of, any successor of the Company or the Parent, and any such successor
shall be deemed substituted for all purposes for the "Company" and the "Parent"
under the terms of this Agreement. As used in this Agreement, the term
"successor" shall mean any person, firm, corporation, or business entity which
at any time, whether by merger, purchase, or otherwise, acquires all or
essentially all of the assets of business of the Company and the Parent.
Notwithstanding such assignment, the Company and the Parent shall remain, with
such successor, jointly and severally liable for all its obligations hereunder.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall immediately
entitle the Executive to compensation from the Company in the same amount and on
the same terms as the Executive would be entitled in the event of a Qualifying
Termination, as provided in Section 7 herein.
Except as herein provided, this Agreement may not otherwise be assigned by the
Company or the Parent.
9.2 Assignment by Executive. This Agreement shall inure to the benefit of
-----------------------
and be enforceable by the Executive's personal or legal representatives,
executors, and administrators, successors, heirs, distributees, devisees, and
legatees. If the Executive should die while any amounts payable to the Executive
hereunder remain outstanding, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, in the absence of such
designee, to the Executive's estate.
Executive shall not assign any obligations or responsibilities he has under this
Agreement.
Section 10 Dispute Resolution and Notice
10.1 Dispute Resolutions. Any good faith dispute or controversy arising
-------------------
under or in connection with this Agreement shall be settled by binding
arbitration. Such proceeding shall be conducted by final and binding arbitration
before a single arbitrator mutually acceptable to both the Company and the
Executive, in accordance with the then applicable rules for arbitration of the
Center for Public Resources, in New York.
All reasonable costs and expenses arising out of such arbitration proceedings
shall be borne by the Company. The Company shall in all events also pay its own
costs (including its attorneys' fees) incurred in connection with such
arbitration and, unless the arbitrator determines that Executive's position with
respect to the dispute in question was frivolous, the Company shall also pay or
reimburse Executive for his expenses incurred in connection with the arbitration
(including, without limitation, his reasonable attorneys' fees).
28
10.2 Notice. Any notices, requests, demands, or other communications
------
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company or, in the case of the Company, at its principal
offices.
Section 11 Miscellaneous
11.1 Entire Agreement. This Agreement supersedes any prior agreements or
----------------
understandings, oral or written, between the parties hereto and contains the
entire understanding of the Company and the Executive with respect to the
subject matter hereof.
11.2 Modification. This Agreement shall not be varied, altered, modified,
------------
canceled, changed, or in any way amended except by mutual agreement of the
parties in a written instrument executed by the parties hereto or their legal
representatives. Notwithstanding anything else contained in this Agreement to
the contrary, no amendment to this Agreement which (i) increases in any material
fashion the benefits or compensation payable to the Executive hereunder or (ii)
reduces the obligations of the Executive hereunder shall take effect prior to
the first anniversary of the Demutualization Date, unless such the terms of such
amendment are approved in writing by the Nebraska Department of Insurance.
11.3 Severability. If any provision of this Agreement or the application
------------
thereof is held invalid, such invalidity shall not affect other provisions or
applications of the Agreement that can be given effect without the invalid
provision or application and, to such end, the provisions of this Agreement are
declared to be severable.
11.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
11.5 Tax Withholding. The Company may withhold from any benefits payable
---------------
under this Agreement all Federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
11.6 Beneficiaries. The Executive may designate one or more persons or
-------------
entities as the primary and/or contingent beneficiaries of any amounts to be
received under this Agreement. Such designation must be in the form of a signed
writing acceptable to the Board or the Board's designee. The Executive may make
or change such designation at any time.
11.7 Construction. The Section and Paragraph headings contained herein are
------------
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.8 Recitals. The recitals contained herein are specifically remade,
--------
restated, and fully incorporated into the terms and conditions of this
Agreement.
Section 12 Governing Law
To the extent not preempted by Federal law, the provisions of this Agreement
shall be construed and enforced in accordance with the laws of the state of
Nebraska.
Section 13 Parent Guarantee
Notwithstanding anything else contained herein to the contrary, the Parent shall
guarantee the performance by the Company of each of its obligations hereunder,
and shall have the power to enforce any right of the Company
29
hereunder in the event that the Company shall fail to exercise such right and
such failure would materially affect the rights of the Parent hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as amended
and restated, as of January 1, 1997.
Guarantee Life Insurance Company
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------
Senior Vice President, General Counsel & Secretary
ATTEST:
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Corporate Secretary
The Guarantee Life Companies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------
Senior Vice President, General Counsel & Secretary
ATTEST:
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Corporate Secretary
/s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
30
