NON-COMPETE AND ANTI-SOLICITATION AGREEMENT, WAIVER AND GENERAL RELEASE OF CLAIMS
Exhibit
10.1
WAIVER
AND GENERAL RELEASE OF CLAIMS
This
agreement not to compete or solicit, and waiver and general release of claims
(hereinafter “Agreement”) is made by and between Xxxx X. Gotta and the Lincoln
National Corporation (“LNC”), a corporation having its principal place of
business in Indiana, on
behalf
of itself and its affiliates and subsidiaries, and each of their directors,
officers, representatives, agents, attorneys, employees, successors, and assigns
and any other person acting through, by, under or in concert with any of them
(hereinafter collectively referred to as “LFG”). Once both parties have executed
this Agreement, it shall become effective eight (8) days after the date of
execution (the “Effective Date”).
RECITALS
(1) Mr.
Gotta
was hired by The Lincoln National Life Insurance Company (“LNL”) on January 1,
1998 (with past service at CIGNA to be credited for certain purposes pursuant
to
a separate agreement with LFG, such agreement not to be affected or replaced
by
this Agreement), and is currently the President of The Lincoln National Life
Insurance Company ;
(2) Mr.
Gotta
intends to retire from his employment with LFG on July 31, 2006 (“Termination
Date”), with a work completion date of the earlier of (a) March 31, 2006, or (b)
the date on which LFG informs Mr. Gotta that his services are no longer required
(“Work Completion Date”);
(3) As
a
result of Mr. Gotta’s various positions with The Lincoln National Life Insurance
Company and its affiliates,
and his
service on LFG's Senior Management Committee, Mr. Gotta has been instrumental
in
developing the strategic direction of LFG's annuity business and has been
integral to the success of LFG's overall strategy. LFG wishes to acknowledge
the
significance of Mr. Gotta’s contributions to the integration of multiple life
insurance operations during his initial tenure at LFG, and the success of those
integration efforts. LFG also wishes to reward Mr. Gotta for the substantial
increase in profits and sales gain from life insurance products beginning after
2002, as further acknowledgement of his achievements in this area. As a final
item on this non-exhaustive list of Mr. Gotta’s contributions to LFG, LFG wishes
to acknowledge and reward the role that Mr. Gotta has played in developing
LFG’s
product expertise and clientele in the high-net worth individual
marketplace.
(4) Mr.
Gotta
acknowledges that during the course of his employment with LFG, he has
developed, obtained or learned specific confidential information and trade
secrets which are the property of LFG. Confidential information or trade secrets
shall include, but not be limited to, any and all records, notes, memoranda,
data, ideas, processes, methods, devices, programs, computer software, writings,
research, personnel information, customer information, financial information,
strategies, plans or
any
information of whatever nature, in the possession or control of LFG which has
not or have not been published or disclosed to the general public or which
gives
LFG an opportunity to obtain an advantage over competitors who do not know
or
use it.
In
consideration of the mutual promises and covenants made in this Agreement,
the
undersigned parties agree as follows:
(5) Subject
to Paragraph (25) below, Mr. Gotta warrants and represents that he will remain
an employee of LFG until his Termination Date of July 31, 2006, with a Work
Completion Date of March 31, 2006. Notwithstanding the foregoing, Mr. Gotta
shall not be found to be in breach of this warranty and representation if he
is
involuntarily terminated from employment by LFG on an earlier date, unless
the
reason for such involuntary termination is for "Cause," as defined below. From
the Effective Date of this Agreement through Mr. Gotta’s Work Completion Date,
Mr. Gotta’s duties and responsibilities with LFG and its affiliates will remain
consistent with the status and position of President of The Lincoln Life
Insurance Company. Through his Work Completion Date, Mr. Gotta’s duties and
responsibilities shall continue to be substantially performed out of the
Hartford office of LFG, without requiring him to travel more than was usual
in
the ordinary course of his business prior to the Effective Date of this
Agreement. From his Work Completion Date through his Termination Date, Mr.
Gotta
agrees to make himself available to consult with LFG personnel regarding
operational and transitional issues upon request. Mr. Gotta will perform
services for LFG in a manner as mutually agreed upon by both
parties.
For
purposes of this Agreement, Cause shall mean: (i) the conviction of a felony,
or
other fraudulent or willful misconduct materially and demonstrably injurious
to
the business or reputation of LFG by Mr. Gotta; or (ii) the willful and
continued failure of Mr. Gotta to substantially perform his duties for LFG
(other than such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to
Mr.
Gotta by the Board or the Chief Executive Officer of the Corporation which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that Mr. Gotta has not substantially performed his duties. No act
or
omission to act, on the part of Mr. Gotta, shall be considered “willful” unless
such act or omission is the result of Mr. Gotta’s bad faith or acting without
reasonable belief that his action or omission was in the best interests of
LFG.
Any act based upon authority given pursuant to a resolution duly adopted by
the
Board or upon the instructions of the Chief Executive Officer or other Senior
Management Committee member at LFG, or based upon the advice of counsel for
LFG
shall be presumed to have been taken by Mr. Gotta in good faith and in the
best
interests of LFG.
(6) Provided
that Mr. Gotta remains employed by LFG until his Termination Date, except as
provided in Paragraph (6)(v) below), LFG will pay to Mr. Gotta as soon as
practicable under applicable law after his Termination Date, but not earlier
than eight (8) days after Mr. Gotta shall have signed this Agreement without
having revoked his acceptance of this Agreement, the following
consideration:
(i) a
lump
sum cash payment equal to $1,400,000, less applicable withholding taxes and
deductions. In addition to securing Mr. Gotta’s promise not to compete or
solicit, and his waiver and release of claims and covenant not to xxx, as
provided below, the purpose of this lump sum cash payment is partially to serve
as a bonus to reward Mr. Gotta for his years of service to LNL and to
acknowledge the significance of his overall contribution to LFG’s success during
that period, and to reflect that his retirement benefit would otherwise be
below
prevailing market rates; and
(ii) his
full
2004-2006 LTIP Performance Cycle Award at target; a pro-rated amount of his
2005-2007 LTIP Performance Cycle Award at target. In addition, as the target
amount for Mr. Gotta’s 2006-2008 LTIP Performance Cycle Award has not yet been
set by the Board of Directors of LNC, Mr. Gotta will be paid an additional
amount calculated as 8/36 X $2,100,000, or $466,667--this represents Mr. Gotta’s
2006-2008 LTIP Performance Cycle Award, as if the target for such Award was
equal to the target set for the 2005-2007 LTIP Cycle Award, pro-rated for 8
months of employment out of a total 36 month (3 year) cycle.. Each LTIP Award
shall be paid in the form that Mr. Gotta previously elected, and otherwise
pursuant to the relevant terms and provisions of the Lincoln National
Corporation Incentive Compensation Plan, the LTIP Award Agreements, and
framework documents; and
(iii) an
additional amount calculated as 8/12 X $900,000, or $600,000—this represents Mr.
Gotta’s 2006 EVSP (annual incentive bonus), as if the target for his 2006 EVSP
was equal to the target set for his 2005 EVSP, pro-rated for 8 months of
employment out of a total 12 month (one year) cycle.
(iv) In
addition to the consideration set forth in Paragraphs 6(i), (ii) and (iii)
above, LFG warrants and represents that Mr. Gotta’s base salary shall not be
decreased below the level set for 2005 ($600,000 annually) for the remainder
of
his term of employment with LFG.
(v)
LFG
shall not refuse to pay the consideration described in Paragraphs 6(i), 6(ii),
and 6(iii) above in cases where Mr. Gotta is not employed on his Termination
Date because he has been involuntarily terminated by LFG for reasons other
than
for Cause.
It
is the
intent of the parties to this Agreement that in the case where Mr. Gotta is
terminated for Cause, as defined in Paragraph 5 above, or in the case where
Mr.
Gotta is in material breach of Paragraphs 5, 7, 8 or 9 of this Agreement, that
the consideration described in Paragraphs 6(i), 6(ii) and 6(iii) above shall
not
be paid to Mr. Gotta.
It
is the
intent of the parties that the consideration payable to Mr. Gotta under this
Agreement be paid as soon as practicable after his Termination Date, and in
no
event later than March 15, 2007. The consideration payable to Mr. Gotta is
therefore not “deferred compensation” as that term is defined by the relevant
provisions of Section
409A
of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
(7) Mr.
Gotta
hereby covenants and agrees to use his best efforts and utmost diligence to
guard and protect such confidential information and trade secrets as described
in Paragraph (4) above, and to not disclose or permit to be disclosed to any
third party by any method whatsoever any such confidential information or trade
secrets.
(8) Mr.
Gotta
agrees that, for a period of twelve (12) months following his Termination Date,
Mr. Gotta will not act as a director, officer, employee, agent, consultant
or
advisor to, nor directly or indirectly become associated with any person, firm,
company or corporation whose principal activity is competitive with LFG’s
annuities businesses. Mr. Gotta specifically acknowledges that the geographic
region to which this restriction applies is national in scope since that is
the
region in which Mr. Gotta performed services for LFG during the past five (5)
years. This restriction does not prohibit Mr. Gotta from buying, selling, or
otherwise trading in the securities of any corporation which is listed on any
recognized securities exchange, and he may engage in any other business
activities not competitive with the LFG Annuities businesses. LFG will not
object to Mr. Gotta’s service on the boards of other companies as a director so
long as there is no conflict with the terms of this Paragraph.
(9) Mr.
Gotta
agrees that, for a period of twelve (12) months following his Termination Date,
Mr. Gotta will not directly or indirectly hire, manage, solicit or recruit
financial planners, agents, salespeople, financial advisors, or employees of
LFG
with whom Mr. Gotta became familiar as a result of his employment with LFG,
who
is involved in selling or distributing, or providing services with respect
to
the sale or distribution of LFG’s annuity products.
(10) Mr.
Gotta
may request a waiver of any of the obligations he has agreed to in Paragraphs
(8) and (9) of this Agreement by written request made to the Chief Executive
Officer of LFG for each potential engagement contemplated by Mr. Gotta. The
request for a waiver may be granted or not granted, in the sole and unfettered
discretion of the Chief Executive Officer.
(11) Mr.
Gotta, for, and in consideration of receiving the consideration described in
Paragraph (6) above, waives any right to personal recovery and hereby
irrevocably, unconditionally and generally releases, acquits, and forever
discharges to the fullest extent permitted by law, LFG from all charges,
complaints, actions, causes of actions, suits, rights, grievances, costs,
losses, debts, expenses, sums of money, accounts, covenants, contracts,
agreements, claims, damages, liabilities, obligations, and demands of any nature
whatsoever, known or unknown, in law or in equity ("Claim" or "Claims"), which
against them Mr. Gotta at any time heretofore ever had, owned, or held or
claimed to have had, owned, or held, or which Mr. Gotta now has, owns, or holds,
or claims to have, own, or hold, or which Mr. Gotta can, shall or may have,
or
which Mr. Gotta's heirs, executors, administrators, personal representatives,
successors,
or assigns hereinafter can, shall or may have, in any way connected with or
relating to Mr. Gotta’s employment and/or the termination of his employment with
LFG. This Release of all Claims by Mr. Gotta shall not apply, however, to any
of
LFG’s obligations arising under this Agreement, or to LFG’s continuing
obligation to indemnify Mr. Gotta pursuant to the terms and conditions of the
corporate By-Laws, or to claims for benefits owed to Mr. Gotta pursuant to
the
terms and provisions of any of LFG’s qualified or non-qualified retirement
plans, annual or long term incentive programs, health and welfare plans or
arrangements, including but not limited to rights to elect continuation of
certain health insurance coverage under COBRA, or to any claims arising after
Mr. Gotta signs this Agreement.
(12) Paragraph
(11) above includes, but is not limited to, claims, disputes or causes of action
or right to personal recovery under tort, contract, or other laws of any state,
(including, but by no means limited to, claims for unemployment compensation
and
claims arising out of or alleging breach of contract, wrongful termination,
breach of implied employment, breach of good faith and fair dealing, impairment
of economic opportunity, intentional infliction of emotional harm or emotional
distress, fraud (actual or constructive), defamation (libel or slander), under
the Age Discrimination in Employment Act of 1967, 29 U.S.C. §621, et seq., as
amended by the Older Worker's Benefit Protection Act ("OWBPA"), under Title
VII
of the Civil Rights Act of 1964, 42 U.S.C. §2000e, et seq., as amended, by the
Civil Rights Act of 1991, under the Americans with Disabilities Act of 1990,
42
U.S.C. §12101, et seq., as amended, under the Family and Medical Leave Act of
1993, 29 X.X.X. §0000, et seq., under 42 U.S.C. §1981, under the Fair Labor
Standards Act, 29 U.S.C. §201, et seq., under any theory of retaliation, under
any federal or state law or municipal ordinance relating to discrimination
in
employment, or under any other laws, ordinances, executive orders, rules,
regulations or administrative or judicial case law arising under the statutory
or common laws of the United States, and any State thereof.
(13) Mr.
Gotta
knowingly, voluntarily, and specifically waives any rights or claims arising
under 29 U.S.C. 621 et seq., as amended by the OWBPA and, more specifically,
any
right or claim under 29 U.S.C. 626. Mr. Gotta specifically states and
acknowledges that:
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A.
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This
waiver is part of an Agreement written in a manner calculated
to be
understood by him.
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B.
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He
does not waive rights or claims that may arise after the date
that this
Agreement is executed.
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C.
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He
is receiving consideration under this Agreement that is in addition
to
anything of value that he would otherwise have been entitled
to without
executing this Agreement.
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D.
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He
has been and is hereby advised, in writing, to consult with
an attorney
prior to executing this Agreement.
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E.
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He
further acknowledges that he has been given a period of at
least
twenty-one (21) days within which to consider this
Agreement.
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F.
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This
Agreement has been individually negotiated with Mr. Gotta and
it is not
part of a group exit
incentive.
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(14) Mr.
Gotta
warrants and represents that in executing this document he does so with full
knowledge of any and all rights which he may have with respect to all matters
released. Mr. Gotta represents and acknowledges that he is not relying and
has
not relied on any representation or statement made by LFG, with respect to
any
of the matters released or with regard to his rights or asserted rights in
connection therewith. Mr. Gotta hereby assumes the risk of any mistake of fact
with regard to any of the matters released or with regard to any of the facts
which are now unknown to him relating thereto.
(15) Mr.
Gotta
represents and agrees that he shall not communicate the terms of this Agreement
and that he will not hereafter disclose any information concerning this
Agreement, or any information discussed by the parties in negotiation of this
Agreement to any person, corporation, or other entity for any purpose whatsoever
without prior written permission from LFG, except to the extent necessary to
Mr.
Gotta' spouse, attorney, tax preparer, accountant, or other financial advisor,
or as required by law, subpoena or court order, or except to the extent the
information is publicly available.
(16) Mr.
Gotta
acknowledges that the consideration described in Paragraph (6) above of this
Agreement is intended to be paid to him in consideration for his covenants
and
agreements contained in Paragraphs 5, 7, 8, 9, 11, 12, 13 and 15 of
this
Agreement. Mr. Gotta acknowledges, understands and agrees that all amounts
that
have not been paid will be immediately forfeited if he breaches any provision
specified in Paragraphs 5, 7, 8, 9, 11, 12, 13 and 15 during
the term specified in each Paragraph, in any. Mr. Gotta acknowledges that the
restrictions contained in such Paragraphs are reasonable and necessary to
protect the legitimate interests of LFG; and that, therefore, LFG shall be
entitled to seek preliminary and permanent injunctive and other equitable relief
(including, without limitation, an equitable accounting of all earnings, profits
and other benefits arising from such violation) in any court of competent
jurisdiction, which rights shall be cumulative and in addition to any other
rights or remedies to which LFG may be entitled. Mr. Gotta hereby irrevocably
consents to the personal jurisdiction over him of the courts of the State of
Connecticut and of any Federal court located in such state in connection with
any action or proceeding arising out of or relating to this Agreement involved
in such action or proceeding and further agrees, and shall not contest, that
the
proper places for filing and maintaining any such action or proceeding shall
be
in the State of Connecticut.
(17) In
addition to Mr. Gotta’s acknowledgement and consent to personal jurisdiction as
described in Paragraph (16) above, upon any breach of this Agreement by Mr.
Gotta, Mr. Gotta agrees that LFG may either refuse to pay all or some portion
of
the consideration due to Mr. Gotta under the Agreement, or, if full payment
has
already been made by LFG, LFG shall be entitled to liquidated damages in the
amount of
$100,000.
Mr. Gotta also acknowledges that LFG may seek an injunction restraining
violations or threatened violations of this Agreement; as well as an award
of
any attorney’s fees which LFG may incur in enforcing, to any extent, the
provisions of this Agreement, whether or not litigation is actually commenced
and including any appeal. Both Mr. Gotta and LFG acknowledge that in the event
of a breach, proof of actual damages will be difficult and $100,000 represents
a
reasonable estimate of the damages that may be incurred.
(18) Mr.
Gotta
represents that he has not filed any complaints or claims relating to his
employment or the termination of his employment against LFG with any local,
state or federal court. Mr. Gotta understands that nothing in this Agreement
shall prevent him from filing a complaint or charge with any state, local,
or
federal agency or commission, but Mr. Gotta understands and acknowledges that
by
signing this Agreement he waives the right to recover any monetary compensation
in any action brought by or through any such federal, state, or local agency
or
commission. Mr. Gotta acknowledges that if any court takes jurisdiction of
any
complaint or claim by Mr. Gotta against LFG which arose prior to the execution
of this Agreement, he will immediately request such court to dismiss the matter
and take all such additional steps necessary to facilitate such dismissal with
prejudice. As a further material inducement to LFG to enter into this Agreement,
Mr. Gotta covenants and agrees not to xxx, or join with others in suing, LFG
on
any of the released Claims.
(19) Mr.
Gotta
agrees to return all LFG property and all documents related to LFG upon
termination of employment. Such property includes client information, pricing
lists and information, marketing strategies, and any other LFG
property, including but not limited to issued keys, equipment, client lists,
files, documents, computer printouts or software, electronic communications
and/or files, unpublished advertisements, brochures, plans, records, drawings,
materials, papers and copies thereof. It is specifically agreed that any
documents, card files, notebooks, rolodex’s, computer discs or other electronic
files, etc. containing customer information, financial information or marketing
strategies and tools are the property of LFG regardless of by whom they were
compiled.
(20) Mr.
Gotta
warrants and represents that no other person or entity has any interest in
the
matters released and that he has not assigned or transferred or purported to
assign or transfer to any person or entity all or any portion of the matters
released.
MISCELLANEOUS
PROVISIONS
(21) It
is
provided that for a period of eight (8) days following the execution by Mr.
Gotta of this Agreement, Mr. Gotta may revoke said Agreement by notice to LFG.
Further, this Agreement shall not become effective or enforceable until such
revocation period has expired.
(22) This
Agreement may not be introduced into evidence or relied on by either party
in
subsequent legal proceedings, with the exception of proceedings alleging or
arising out of, and seeking redress for breach of the terms hereof.
(23) This
Agreement shall be binding upon Mr. Gotta and upon his heirs, executors,
administrators, personal representatives, successors and assigns, and shall
inure to the benefit of LFG, and to their respective heirs, administrators,
representatives, executors, successors and assigns, as the case may be.
(24) As
used
in this Agreement, the singular or plural number shall be deemed to include
the
other whenever the context so indicates or requires. The language of all parts
of this Agreement shall in all cases be construed as a whole, according to
its
fair meaning, and not strictly for or against any of the parties.
(25) In
the
event of the death of Mr. Gotta prior to July 31, 2006, or in the event of
a
disability that prevents Mr. Gotta from working until July 31, 2006, Mr. Gotta
shall for purposes of this Agreement be deemed to have terminated employment
on
July 31, 2006, and the payments due pursuant to this Agreement shall be paid
to
his spouse, if living, otherwise to his estate, unless the terms of any of
the
applicable LFG employee benefit plans or any outstanding beneficiary elections
made by Mr. Gotta under any of the applicable LFG employee benefit plans provide
otherwise.
(26) During
his Employment with LFG, Mr. Gotta was entitled to indemnification, including
reimbursement of legal expenses, by LFG to the extent permitted by its bylaws
and in accordance with the terms and provisions of its Directors and Officers
insurance policy, and Errors and Omissions insurance policy (“Policies”). It is
understood and agreed that Mr. Gotta will continue to be entitled to
indemnification and liability coverage for any actions, or omissions to act,
while employed by LFG, in accord with LNC’s bylaws and Policies after his
Termination Date.
(27) It
is the
intent of the parties that this Agreement, and the January 12, 2006 cover letter
to Mr. Gotta enclosing this Agreement (the “Side Letter”), set forth the entire
agreement between the parties hereto, and fully supersedes any and all prior
negotiations, agreements or understandings between the parties hereto pertaining
to the subject matter hereof. This Agreement and Side Letter may not be modified
or amended except by a written agreement signed by the parties
hereto.
(28) It
is the
intent of the parties that this Agreement shall be considered severable in
part
and in whole, and that if any covenant shall be determined to be unenforceable
in any part, that portion of the Agreement shall be severed or modified by
a
court of competent jurisdiction so as to permit enforcement of the Agreement
to
the extent reasonable. It is agreed by the parties that the obligations set
forth herein shall be considered to be independent of any other obligations
between the parties, and the existence of any other claim or defense shall
not
affect the enforceability of this Agreement or the remedies
thereunder.
(29) Mr.
Gotta
certifies that he received a copy of this Agreement for review and study before
being asked to sign it; that he read this Agreement carefully; that he had
sufficient opportunity before the Agreement was signed to ask questions about
the provisions of the Agreement and received satisfactory answers; and that
he
fully understands his rights and obligations under the
Agreement.
PLEASE
READ CAREFULLY. THIS AGREEMENT, WAIVER
AND
GENERAL RELEASE INCLUDES A GENERAL
RELEASE
OF ALL KNOWN AND UNKNOWN CLAIMS
AFFIRMATION
OF RELEASOR
I
warrant
that this Agreement reflects the entire understanding between LFG and me. I
have
read this Agreement carefully, and I have been given the opportunity to consult
with private counsel concerning its terms and effect and concerning my rights.
I
fully understand that this Agreement generally releases all of my claims, both
known and unknown, arising prior to the execution hereof, against LFG, except
as
specifically otherwise provided herein. I execute this Agreement voluntarily
and
of my own choice with full and complete knowledge and understanding of its
significance and effect.
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Dated:
January
12,
2006
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/s/
Xxxx X. Gotta
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Xxxx
X. Gotta
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Witness:
/s/
Xxxxx X. Xxxxxxx
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ACCEPTANCE
OF LINCOLN NATIONAL CORPORATION
The
undersigned accepts the foregoing Agreement on behalf of LNC.
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/s/
Xxx X. Xxxxxx
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Authorized
to execute this Agreement
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on
behalf of:
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LINCOLN
NATIONAL CORPORATION
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Sworn
to
and subscribed
before
me
this 19th day
of
January, 2006
/s/
Notary
Public
My
commission expires:
