EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT by and between Provident Companies, Inc., a Delaware
corporation having its principal executive offices in Chattanooga, Tennessee
(the "Company"), and F. Xxxx Xxxxxxxx (the "Executive") dated as of the 30th day
of June, 1999.
The Company and Unum Corporation, a Delaware corporation ("Unum"),
have determined that it is in the best interests of their respective
shareholders to assure that the Company will have the continued dedication of
the Executive pending the merger of the Company and Unum (the "Merger") pursuant
to the Agreement and Plan of Merger dated as of November 22, 1998 as amended as
of May 25, 1999 (the "Merger Agreement") and to provide the Company after the
Merger with continuity of management. Therefore, in order to accomplish these
objectives, the Executive and the Company desire to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the effective
date of the Merger, provided the Executive is employed by the Company on that
date. As of the Effective Date, the prior Severance Agreement effective June
16, 1997 ("Former Severance Agreement") between the Executive and the Company
shall terminate and become null and void, provided that, upon any termination of
the transactions contemplated by the Merger Agreement, this sentence will be
inapplicable.
2. Term of Agreement. 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 the third anniversary of
the Effective Date (the "Initial Term"). Beginning on the third anniversary of
the Effective Date, the Initial Term 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) The Executive shall serve as Executive Vice President,
Legal and Administrative Affairs of the Company with the appropriate authority,
duties and responsibilities attendant to such position, it being understood that
from time to time the scope of such authority, duties and responsibilities will
vary depending upon acquisitions, dispositions and organizational structures of
the Company.
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(ii) Excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially
all of his attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. It shall not be a violation of this Agreement for the
Executive to (A) serve, with prior approval of the Board, on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the Executive prior
to the Effective Date, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) Compensation.
(i) Annual Base Salary. The Executive shall receive an
annual base salary ("Annual Base Salary") of $350,000. 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. The Executive shall be eligible to receive
an annual bonus ("Annual Bonus") with a target level of 75% of Annual Base
Salary (the "Target Bonus Amount").
(iii) Incentive Awards. Immediately after the Effective Date,
the Company shall grant the Executive options to purchase 110,000 shares of the
Company's common stock (the "Stock Options") pursuant to the terms of the
Company's Stock Plan of 1999. Except as otherwise provided herein, the Stock
Options shall vest in four equal installments, on the first, second, third, and
fourth anniversaries of the date of grant. Subsequent annual equity grants will
be made by the Compensation Committee of the Company's Board of Directors (the
"Compensation Committee") based upon competitive market analyses and such other
factors it may deem appropriate.
(iv) Other Employee Benefit Plans. 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
(including relocation programs) (collectively, "Employee Benefit Plans")
applicable to senior executive officers of the Company.
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(v) Retirement Benefit. The Executive shall be entitled to
an annual retirement benefit payable monthly (the "Retirement Benefit") pursuant
to the terms of and under the current formula contained in the UNUM Corporation
Supplemental Executive Retirement Plan (the "Plan"); provided, however, in no
event shall the Executive's accrued Retirement Benefit be retroactively reduced.
In calculating this Retirement Benefit, the Executive shall receive full credit
for all of his years of service with the Company for all purposes.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that the Disability of the Executive has occurred (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 any 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 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 Chief Executive Officer of the Company ("CEO") or the Chief
Operating Officer of the Company ("COO") which specifically identifies the
manner in which the CEO or COO 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
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Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the CEO or COO
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 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 the following events, provided, however, that clauses (i) through (v) shall
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constitute Good Reason only in the absence of the 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 and its accompanying schedule, or any other action by
the Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 3(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(iii) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement, or any
failure to renew this Agreement;
(iv) any failure by the Company to comply with and satisfy
Section 10(c) of this Agreement; or
(v) any required relocation of the Executive, provided that no
required relocation shall be considered to constitute Good Reason unless it
occurs during the CIC Period (as defined in Section 5(a)(i)(A)).
(d) Change in Control. For purposes of this Agreement, "Change of
Control" shall mean the occurrence of any one of the following events:
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(i) during any period of two consecutive years, individuals who,
at the beginning or such period, constitute the Board (the "Incumbent
Directors") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director and whose election or nomination
for election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or nominated
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as a director of the Company as a result of an actual or threatened election
contest (as described in Rule 14a-11 under the Act) ("Election Contest") or
other actual or threatened solicitation of proxies or consents by or on behalf
of any "person" (as such term is defined in Section 3(a)(9) of the Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Act) other than the Board ("Proxy
Contest"), including by reason of any agreement intended to avoid or settle any
Election or Contest or Proxy Contest, shall be deemed an Incumbent Director;
(ii) any person is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of the Board (the
"Company Voting Securities"); provided, however, that the event described in
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this paragraph (ii) shall not be deemed to be a Change in Control of the Company
by virtue of any of the following acquisitions: (A) by the Company of any
subsidiary, (B) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary, (C) by an underwriter temporarily
holding securities pursuant to an offering of such securities, (D) pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii), or (E) a transaction
(other than one described in (iii) below) in which Company Voting Securities are
acquired from the Company, if a majority of the Incumbent Directors approve a
resolution providing expressly that the acquisition pursuant to this clause (E)
does not constitute a Change in Control of the Company under this paragraph
(ii);
(iii) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or any
of its subsidiaries that requires the approval of the Company's stockholders,
whether for such transaction or the issuance of securities in the transaction (a
"Reorganization"), or sale or other disposition of all or substantially all of
the Company's assets to an entity that is not an affiliate of the Company (a
"Sale"), unless immediately following such Reorganization or Sale: (A) more
than 50% of the total voting power of (x) the corporation resulting from such
Reorganization or the corporation which has acquired all or substantially all of
the assets of the Company (in either case, the "Surviving Corporation"), or (y)
if applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent Corporation"), is
represented by the Company Voting Securities that were outstanding immediately
prior to such Reorganization or Sale (or, if applicable, is represented by
shares into which such Company Voting Securities were converted
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pursuant to such Reorganization or Sale), and such voting power among the
holders thereof is in substantially the same proportion as the voting power of
such Company Voting Securities among the holders thereof immediately prior to
the Reorganization or Sale, (B) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation) is or becomes the beneficial owner, directly or indirectly,
of 20% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Reorganization or Sale were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such
Reorganization or Sale (any Reorganization or Sale which satisfies all of the
criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-
Qualifying Transaction"); or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 20% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
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Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company
shall then occur.
(e) 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) specifies the Date of
Termination (as defined below). 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.
(f) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company other than for Disability,
the date of receipt of the Notice of Termination or any later date specified
therein within 30 days of such notice, (ii) 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
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case may be, and (iii) if the Executive's employment is terminated by the
Executive the Date of Termination shall be thirty days after the giving of such
notice by the Executive provided that the Company may elect to place the
Executive on paid leave for all or any part of such 30-day period.
5. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If, 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 product of three (3), if such termination occurs
during the Initial Term or the three (3) year period after a Change in Control
(such Initial Term and three year period being hereafter referred to as the "CIC
Period"), otherwise, two (2) 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;
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. if such termination occurs during the CIC Period, a
lump sum cash payment equal to the difference between (x) 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 three additional years of
employment, and (y) 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.
(ii) the Company shall continue to provide, for a period of
three (3), if such termination occurs during the CIC Period, otherwise two (2),
years following the Executive's Date of Termination, the Executive (and the
Executive's dependents, if applicable) with the same level of medical, dental,
accident, disability and life insurance benefits upon substantially the same
terms and conditions (including contributions required by the Executive for such
benefits) as existed immediately prior to the Executive's Date of Termination
(or, if more favorable to the Executive, as such benefits and terms and
conditions existed immediately prior to
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the Change in Control); provided that, if the Executive cannot continue to
participate in the Company plans providing such benefits, the Company shall
otherwise provide such benefits on the same after-tax basis as if continued
participation had been permitted. Notwithstanding the foregoing, in the event
the Executive becomes reemployed with another employer and becomes eligible to
receive welfare benefits from such employer, the welfare benefits described
herein shall be secondary to such benefits during the period of the Executive's
eligibility, but only to the extent that the Company reimburses the Executive
for any increased cost and provides any additional benefits necessary to give
the Executive the benefits provided hereunder.
(iii) the Stock Options shall vest and shall remain exercisable
for a period of two years or the earlier expiration of their initial term, and
if such termination occurs during the CIC Period, all other stock options,
restricted stock awards and other equity based awards granted after the date of
this Agreement (the "Equity Awards") shall vest (and such options shall remain
exercisable for a period of two years or the earlier expiration of their initial
term), otherwise, the Equity Awards will expire as provided under the terms of
their applicable agreements; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies through the Date of Termination (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death, 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 the
Retirement Benefit. In addition, the Stock Options shall vest immediately and
remain exercisable for a period of at least three years or the earlier
expiration of their initial term. Accrued Obligations shall be paid to the
Executive, the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
(i) his Annual Base Salary through the Date of Termination to the extent
theretofore unpaid and, (ii) the Other Benefits.
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 Sections 1 and 11(f), shall anything herein limit
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or otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement with
the Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement; provided that the Executive shall not be eligible for severance
benefits under any other program or policy of the Company.
7. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) pursued or defended against in
good faith by the Executive regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this Section 8(a), if it shall be determined that the
Executive is entitled to a Gross-Up Payment, but that the Payments do not exceed
110% of the greatest amount (the "Reduced Amount") that could be paid to the
Executive such that the
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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:
(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,
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(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 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.
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9. Covenant Not to Compete; Confidential Information.
(a) During the term of this Agreement, and for a six month 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. Notwithstanding the preceding
sentence, the Executive shall not be prohibited from owning less than one (1%)
percent of any publicly traded corporation, whether or not such corporation is
deemed to be a competing business. 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 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
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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.
(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.
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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:
000 Xxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
If to the Company:
0 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Chief Executive Officer
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.
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(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.
12. General Release. All payments under this Agreement to be made in
connection with the Executive's termination of employment will be conditioned on
the Executive signing a general form of release.
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.
EXECUTIVE
/s/ F. Xxxx Xxxxxxxx
-----------------------------------------
PROVIDENT COMPANIES, INC.
By: /s/ J. Xxxxxx Xxxxxxxx
------------------------------------
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