Exhibit 10.2.8
AMENDED AND RESTATED
EMPLOYMENT CONTINUATION AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT by and among Xxxx Xxxxxxx Life
Insurance Company, a Massachusetts corporation (the "Company"), Xxxx Xxxxxxx
Financial Services, Inc., a Delaware corporation ("JHFS") and Xxxxx X. Xxxx (the
"Executive"), dated as of the 1st day of January, 2003.
W I T N E S S E T H :
WHEREAS, the Executive has been employed as an officer of the Company and/or
JHFS, and it has been determined that the Executive holds an important position
with the Company and/or JHFS; WHEREAS, the Company and JHFS believe that, in the
event of a situation that could result in a change in ownership or control of
the Company or JHFS, continuity of management will be essential to their ability
to evaluate and respond to such a situation in the best interests of
shareholders;
WHEREAS, the Company and JHFS understand that any such situation will present
significant concerns for the Executive with respect to his/her financial and job
security;
WHEREAS, to assure themselves of the Executive's services during the period in
which they are confronting such a situation, and to provide the Executive
certain financial assurances to enable the Executive to perform the
responsibilities of his/her position without undue distraction and to exercise
his/her judgment without bias due to his/her personal circumstances, the
Company, JHFS and the Executive previously entered into this Agreement to
provide the Executive with certain rights and obligations upon the occurrence of
a Change of Control or Potential Change of Control (as each such term is defined
in Section 2 hereof);
WHEREAS, the Executive, the Company and JHFS have determined that the Agreement
should be amended and restated to further clarify and refine benefits and
protections provided to the Executive in the event of a Change of Control or
Potential Change of Control;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is hereby agreed by and among the Company, JHFS and the Executive
as follows:
1. Operation of Agreement.
(a) Effective Date. The effective date of this Agreement shall be the date on
which a Change of Control occurs (the "Effective Date"), provided that, except
as provided in Section 1(b), if the Executive is not employed by the Company,
JHFS or an Affiliate on the Effective Date, this Agreement shall be void and
without effect.
(b) Termination of Employment Following a Potential Change of Control.
Notwithstanding Section 1(a), if (i) the Executive's employment with the
Company, JHFS or an Affiliate is terminated without Cause (as defined in Section
6(c)) after the occurrence of a Potential Change of Control and prior to the
occurrence of a Change of Control and (ii) a Change of Control occurs within two
years of such termination, the Executive shall be deemed, solely for purposes of
determining his/her rights under this Agreement, to have remained employed until
the date such Change of Control occurs and to have been terminated by the
Company, JHFS or (if applicable) the Affiliate without Cause immediately after
this Agreement becomes effective, with any amounts payable hereunder reduced by
the amount of any other severance benefits provided to him in connection with
such termination.
2. Definitions.
(a) "Affiliate" shall mean any corporation, partnership, limited liability
company, trust or other entity which directly, or indirectly through one or more
intermediaries, controls, or is controlled by, the Company, or JHFS.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Company" means Xxxx Xxxxxxx Life Insurance Company.
(d) "Change of Control" shall be deemed to have occurred if:
(i) any Person (as defined below) has acquired, "beneficial ownership" (within
the meaning of Rule 13d-3, as promulgated under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), directly or indirectly,
of securities of the Company or JHFS representing 30% or more of the combined
Voting Power (as defined below) of the securities of the Company or JHFS;
provided, however, that the event described in this paragraph (i) shall not be
deemed to be a Change in Control by virtue of an acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company, JHFS or
any Affiliate; or
(ii) within any 24-month period, the persons who, at the beginning of such
period, were members of the Board (the "Incumbent Company Directors") shall
cease to constitute at least a majority of the Board or the board of directors
of any successor to the Company; provided, however, that any director elected to
the Board, or nominated for election to the Board, by at least two-thirds (2/3)
of the Incumbent Company Directors then still in office shall be deemed to be an
Incumbent Company Director for purposes of this subclause (ii); provided,
however, that no
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individual initially elected or nominated for election to the Board as a result
of an actual or threatened election contest with respect to directors or as a
result of any other actual or threatened solicitation of proxies by or on behalf
of any Person other than the Board shall be deemed to be an Incumbent Company
Director; or
(iii) within any 24-month period, the persons who, at the beginning
of such period, were members of the JHFS Board (the "Incumbent JHFS Directors")
shall cease to constitute at least a majority of the JHFS Board or the board of
directors of any successor to JHFS; provided, however, that any director elected
to the JHFS Board, or nominated for election to the JHFS Board, by at least
two-thirds of the Incumbent JHFS Directors then still in office shall be deemed
to be an Incumbent JHFS Director for purposes of this subclause (iii); provided,
however, that no individual initially elected or nominated for election to the
JHFS Board as a result of an actual or threatened election contest with respect
to directors or as a result of any other actual or threatened solicitation of
proxies by or on behalf of any Person other than the JHFS Board shall be deemed
to be an Incumbent JHFS Director; or
(iv) upon the consummation of a merger, consolidation, share exchange,
division, sale or other disposition of all or substantially all of the assets of
the Company (a "Company Corporate Event") and immediately following the
consummation of which the stockholders of the Company, immediately prior to such
Company Corporate Event do not hold, directly or indirectly, a majority of the
Voting Power of
(A) in the case of a merger or consolidation, the surviving or resulting
corporation,
(B) in the case of a statutory share exchange, the acquiring corporation,
(C) in the case of a division or a sale or other disposition of assets, each
surviving, resulting or acquiring corporation which, immediately following the
relevant Company Corporate Event, holds more than 25% of the consolidated assets
of the Company immediately prior to such Company Corporate Event, provided that
no Change of Control shall be deemed to have occurred if the Executive is
employed, immediately following such Company Corporate Event, by any entity in
which the stockholders of the Company immediately prior to such Company
Corporate Event hold, directly or indirectly, a majority of the Voting Power;
Provided that in each case such majority of the Voting Power is represented by
securities of the Company that were outstanding immediately prior to such
Company Corporate Event (or, if applicable, is represented by shares into which
such securities of the Company were converted pursuant to such Company Corporate
Event); or
(v) upon the consummation of a merger, consolidation, share exchange,
division, sale or other disposition of all or substantially all of the assets of
JHFS which has been approved by the stockholders of JHFS (a "JHFS Corporate
Event"), and immediately following the consummation of which the stockholders of
JHFS immediately prior to such JHFS Corporate Event do not hold, directly or
indirectly, a majority of the Voting Power of
(A) in the case of a merger or consolidation, the surviving or resulting
corporation,
(B) in the case of a statutory share exchange, the acquiring corporation, or
(C) in the case of a division or a sale or other disposition of assets, each
surviving, resulting or acquiring corporation which, immediately following the
relevant JHFS Corporate Event, holds more than 25% of the consolidated assets of
JHFS immediately prior to such JHFS Corporate Event, provided that no Change of
Control shall be deemed to have occurred if the Executive is employed,
immediately following such JHFS Corporate Event, by any entity in which the
stockholders of JHFS, immediately prior to such JHFS Corporate Event hold,
directly or indirectly, a majority of the Voting Power; or
(vi) any other event occurs which the Board or the JHFS Board declares to be a
Change of Control.
(e) "JHFS" means Xxxx Xxxxxxx Financial Services, Inc.
(f) "JHFS Board" means the Board of Directors of JHFS and, after a Change in
Control that constitutes a Company Corporate Event or a JHFS Corporate Event,
the Board Directors of the Parent.
(g) "Parent" shall mean any corporation, partnership, limited liability
company, business trust or other entity which owns, directly or indirectly, more
than 50% of the Voting Power in the Company or JHFS.
(h) "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act;
provided, however, that Person shall not include (i) the Company, JHFS, or any
Affiliate or (ii) any employee benefit plan sponsored by the entities described
in clause (i) of this definition.
(i) "Potential Change of Control" shall be deemed to have occurred if:
(i) a Person commences a tender offer (with adequate financing) for securities
representing at least 10% of the Voting Power of the JHFS's securities;
(ii) the Company or JHFS enters into an agreement the consummation of which
would constitute a Change of Control;
(iii) proxies for the election of directors of JHFS are solicited by anyone
other than JHFS; or
(iv) any other event occurs which is deemed to be a Potential Change of
Control by the JHFS Board.
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(j) "Voting Power" shall mean such number of the Voting Securities as shall
enable the holders thereof to cast such percentage of all the votes which could
be cast in an annual election of directors.
(k) "Voting Securities" shall mean all securities of a company entitling the
holders thereof to vote in an annual election of directors.
3. Employment Period. Subject to Section 6 of this Agreement, the Company (or
if applicable, JHFS) agrees to continue the Executive in its employ, and the
Executive agrees to remain in the employ of the Company or, if applicable, JHFS
for the period (the "Employment Period") commencing on the Effective Date and
ending on the third anniversary of the Effective Date. Notwithstanding the
foregoing, if, prior to the Effective Date, the Executive is demoted to a lower
position than the position held on the date first set forth above, the Board (or
if applicable, the JHFS Board) may declare that this Agreement shall be without
force and effect by written notice delivered to the Executive (i) within 30 days
following such demotion and (ii) prior to the occurrence of a Potential Change
of Control or a Change of Control.
4. Position and Duties.
(a) No Reduction in Position. During the Employment Period, the Executive's
position (including titles), authority and responsibilities with the Company,
JHFS and each of the Affiliates shall be, both individually and in the
aggregate, at least commensurate with those held, exercised and assigned
immediately prior to the Effective Date. It is understood that, for purposes of
this Agreement, such position, authority and responsibilities shall not be
regarded as not commensurate merely by virtue of the fact that a successor shall
have acquired all or substantially all of the business and/or assets of the
Company as contemplated by Section 13(b) of this Agreement. The Executive's
services shall be performed at the location where the Executive was employed
immediately preceding the Effective Date.
(b) Business Time. From and after the Effective Date, the Executive agrees to
devote substantially all of his/her attention during normal business hours to
the business and affairs of the Company, JHFS and the Affiliates and to use
his/her reasonable best efforts to perform the responsibilities assigned to him
hereunder, to the extent necessary to discharge such responsibilities, except
for (i) time spent in managing his/her personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each case
only if and to the extent not substantially interfering with the performance of
such responsibilities, and (ii) periods of vacation and sick leave to which
he/she is entitled. It is expressly understood and agreed that the Executive's
continuing to serve on any boards and committees on which he/she is serving or
with which he/she is otherwise associated immediately preceding the Effective
Date shall not be deemed to interfere with the performance of the Executive's
services for the Company, JHFS or the Affiliates.
5. Compensation.
(a) Base Salary. During the Employment Period, the Executive shall receive a
base salary at a monthly rate at least equal to the monthly salary paid to the
Executive by the Company, JHFS and any Affiliate immediately prior to the
Effective Date. The base salary shall be reviewed at least once each year after
the Effective Date, and may be increased (but not decreased) at any time and
from time to time by action of the Board or JHFS Board, as the case may be, or
any committee thereof or any individual having authority to take such action in
accordance with the Company's (or if applicable, JHFS's) regular practices. The
Executive's base salary, as it may be increased from time to time, shall
hereafter be referred to as "Base Salary". Neither the Base Salary nor any
increase in Base Salary after the Effective Date shall serve to limit or reduce
any other obligation of the Company or JHFS hereunder.
(b) Annual Bonus. During the Employment Period, in addition to the Base
Salary, for each fiscal year of the Company ending during the Employment Period,
the Executive shall be afforded the opportunity to receive an annual bonus on
terms and conditions no less favorable to the Executive (taking into account
reasonable changes in the applicable corporate goals and objectives and taking
into account actual performance) than the annual bonus opportunity that had been
made available to the Executive for the fiscal year ended immediately prior to
the Effective Date (the "Annual Bonus Opportunity"). Any amount payable in
respect of the Annual Bonus Opportunity shall be paid as soon as practicable
following the year for which the amount (or prorated portion) is earned or
awarded, unless electively deferred by the Executive pursuant to any deferral
programs or arrangements that the Company, JHFS or any of its Affiliates may
make available to the Executive.
(c) Long-term Incentive Compensation Programs. During the Employment Period,
the Executive shall participate in all long-term incentive compensation programs
(including, without limitation, programs providing for the grant of stock
options and other equity-based awards) for key executives at a level that is
commensurate with the Executive's participation in such plans immediately prior
to the Effective Date, or, if more favorable to the Executive, at the level made
available to the Executive or other similarly situated officers at any time
thereafter.
(d) Benefit Plans. During the Employment Period, the Company shall provide to
the Executive (and to the
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extent applicable, his/her dependents) pension, retirement, deferred
compensation, savings, medical, dental, health, disability, life and accidental
death coverages, both individual and group, at a level that is commensurate with
the coverage to which the Executive was entitled under plans sponsored by the
Company, JHFS or any affiliate immediately prior to the Effective Date, or, if
more favorable to the Executive, at the level made available to the Executive or
other similarly situated officers at any time thereafter. The Executive shall be
entitled to such benefits subject to the same terms and conditions (including,
without limitation, any requirement that the Executive make contributions toward
the cost of such coverage) that applied immediately prior to the Effective Date,
or, if more favorable to the Executive, as are made applicable to the Executive
or other similarly situated officers at any time thereafter. To the extent such
benefits cannot be provided under the terms of a benefit plan, policy or program
sponsored by the Company, JHFS or any affiliate, as the case may be, the Company
shall provide a comparable benefit under another plan or from the Company's
general assets.
(e) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies and procedures of the Company as in
effect immediately prior to the Effective Date. Notwithstanding the foregoing,
the Company may apply the policies and procedures in effect after the Effective
Date to the Executive, if such policies and procedures are not less favorable to
the Executive than those in effect immediately prior to the Effective Date.
(f) Vacation and Fringe Benefits. During the Employment Period, the Executive
shall be entitled to paid vacation and fringe benefits (including, without
limitation, any split-dollar life insurance arrangements) at a level that is
commensurate with the paid vacation and fringe benefits available to the
Executive immediately prior to the Effective Date, or, if more favorable to the
Executive, at the level made available from time to time to the Executive or
other similarly situated officers at any time thereafter.
(g) Indemnification. During and after the Employment Period, the Company and
JHFS shall indemnify the Executive and hold the Executive harmless from and
against any claim, loss or cause of action arising from or out of the
Executive's performance as an officer, director or employee of JHFS, the Company
or any of their Affiliates or in any other capacity, including any fiduciary
capacity, in which the Executive serves at the request of the Company to the
maximum extent permitted by applicable law and the Certificate of Incorporation
and By-Laws of JHFS or the Company, as the case may be (the "Governing
Documents"), provided that in no event shall the protection afforded to the
Executive hereunder be less than that afforded under the Governing Documents as
in effect immediately prior to the Effective Date.
(h) Office and Support Staff. The Executive shall be entitled to an office
with furnishings and other appointments, and to secretarial and other
assistance, at a level that is at least commensurate with the foregoing provided
to the Executive immediately prior to the Change of Control.
6. Termination.
(a) Death, Disability or Retirement. Subject to the provisions of Section 1
hereof, this Agreement shall terminate automatically upon the Executive's death,
termination due to "Disability" (as defined below) or voluntary retirement under
any of the retirement plans of the Company or JHFS (or, if applicable, an
Affiliates) has in effect from time to time. For purposes of this Agreement,
Disability shall mean the Executive has met the conditions to qualify for
long-term disability benefits under the long term disability plan or policy the
Company or JHFS (or, if applicable, an Affiliate), has in effect immediately
prior to the Effective Date.
(b) Voluntary Termination. Notwithstanding anything in this Agreement to the
contrary, following a Change of Control the Executive may, upon not less than 60
days' written notice to the Company (or, if applicable, JHFS), voluntarily
terminate employment for any reason (including early retirement under the terms
of any retirement plans maintained by the Company, JHFS or an Affiliate, as in
effect from time to time), provided that any termination by the Executive
pursuant to Section 6(d) on account of Good Reason (as defined therein) shall
not be treated as a voluntary termination under this Section 6(b).
(c) Cause. The Company, JHFS or an Affiliate that employs the Executive may
terminate the Executive's employment for Cause. For purposes of this Agreement,
"Cause" means (i) the Executive's conviction or plea of nolo contendere to a
felony related to fraud or dishonesty; (ii) an act or acts of dishonesty or
gross misconduct on the Executive's part which result or are intended to result
in material damage to the Company's, JHFS's or an Affiliate's business or
reputation; or (iii) repeated material violations by the Executive of his/her
obligations under Section 4 of this Agreement, which violations are demonstrably
willful and deliberate on the Executive's part and which result in material
damage to the Company's, JHFS's or an Affiliate's business or reputation. Cause
shall not exist unless and until JHFS has delivered to Executive a copy of a
resolution duly adopted by three-quarters (3/4) of the entire JHFS Board
(excluding the Executive if the Executive is a JHFS Board member) at a meeting
of the JHFS Board called and held for such purpose (after reasonable notice to
the Executive and an opportunity for the Executive, together with counsel, to be
heard before the JHFS Board), finding that in the good faith opinion of the JHFS
Board an event
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set forth in subclauses (i), (ii), or (iii) has occurred and specifying the
particulars thereof in detail. The Company, JHFS or an Affiliate must notify the
Executive of any event that it alleges constitutes Cause within ten (10)
business days following the Company's, JHFS's or an Affiliate's knowledge, as
the case may be, of its existence, and notify the Executive at least ten (10)
business days prior to the board proceedings described above, or such event
shall not constitute Cause under this Agreement.
(d) Good Reason. Following the occurrence of a Change of Control, the
Executive may terminate his/her employment for Good Reason. For purposes of this
Agreement, "Good Reason" means the occurrence of any of the following, without
the express written consent of the Executive, after the occurrence of a Change
of Control:
(i) the assignment to the Executive of any duties inconsistent in any material
adverse respect with the Executive's position, authority or responsibilities, as
contemplated by Section 4 of this Agreement, or any other material adverse
change in position, titles, authority or responsibilities, including and without
limiting the generality of the foregoing, the elimination or substantial
reduction of the Executive's duties with the Company, JHFS or any Affiliate
resulting in a significant reduction in his position, titles, authority or
responsibilities as in effect prior to the Change of Control;
(ii) any failure by the Company or JHFS to comply with any of the provisions of
Section 5 of this Agreement, other than an insubstantial or inadvertent failure
remedied by the Company or JHFS promptly after receipt of notice thereof given
by the Executive;
(iii) any requirement that the Executive (A) be based at any office or location
more than 35 miles (or any such shorter distance as shall be set forth in the
Company's (or if applicable, JHFS's) relocation policy as in effect on the
Effective Date) from that location at which he/she performed his/her services
specified under the provisions of Section 4 immediately prior to the Change of
Control, except for travel reasonably required in the performance of the
Executive's responsibilities or (B) travel on business on behalf of the Company,
JHFS or any Affiliate, as the case may be, to an extent substantially greater
than the travel obligations of the Executive immediately prior to the Change in
Control;
(iv) any failure by the Company or JHFS to obtain the assumption and agreement
to perform this Agreement by a successor as contemplated by Section 13(b).
In no event shall the mere occurrence of a Change of Control, absent any further
impact on the Executive, be deemed to constitute Good Reason.
Notwithstanding anything herein to the contrary, termination of employment by
the Executive for any reason during the 30-day period commencing one hundred and
eighty (180) days after the date of a Change in Control shall be deemed to
constitute Good Reason.
(e) Notice of Termination. Any termination by the Company, JHFS or an
Affiliate for Cause or by the Executive for Good Reason shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
14(e). 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) sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date of this Agreement
(which date shall be not more than 15 days after the giving of such notice). In
the case of a termination for Good Reason, the Notice of Termination shall be
given within 180 days of the Executive's having actual knowledge of the events
giving rise to such termination which actual knowledge shall in no event be
deemed to have occurred any earlier than the Effective Date. The failure by the
Executive to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his/her rights hereunder.
(f) Date of Termination. For the purpose of this Agreement, the term "Date of
Termination" means (i) in the case of a termination for which a Notice of
Termination is required, the date of receipt of such Notice of Termination or,
if later, the date specified therein, as the case may be, and (ii) in all other
cases, the actual date on which the Executive's employment terminates during the
Employment Period.
7. Obligations of the Company upon Termination.
(a) Death or Disability. If the Executive's employment is terminated during the
Employment Period by reason of the Executive's death or Disability, this
Agreement shall terminate without further obligations to the Executive or the
Executive's legal representatives under this Agreement other than those
obligations accrued hereunder at the Date of Termination, and the Company shall
pay to the Executive (or his/her beneficiary or estate) (i) the Executive's full
Base Salary through the Date of Termination (the "Earned Salary"), (ii) any
vested amounts or benefits owing to the Executive under the otherwise applicable
employee benefit plans and programs of the Company, JHFS and the Affiliates,
including any compensation
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previously deferred by the Executive (together with any accrued earnings
thereon) and not yet paid by the Company, JHFS or an Affiliate and any accrued
vacation pay not yet paid by the Company, JHFS or an Affiliate (the "Accrued
Obligations"), and (iii) any other benefits payable due to the Executive's death
or Disability under the plans, policies or programs of the Company, JHFS and the
Affiliates (the "Additional Benefits").
The Earned Salary shall be paid in cash in a single lump sum as soon as
practicable, but in no event more than 10 days (or at such earlier date required
by law), following the Date of Termination. Accrued Obligations and Additional
Benefits shall be paid in accordance with the terms of the applicable plan,
program or arrangement.
(b-1) Cause and Voluntary Termination. If, during the Employment Period, the
Executive's employment shall be terminated for Cause or voluntarily terminated
by the Executive (other than on account of Good Reason following a Change of
Control), the Company shall pay the Executive (i) the Earned Salary in cash in a
single lump sum as soon as practicable, but in no event more than 10 days,
following the Date of Termination, and (ii) the Accrued Obligations in
accordance with the terms of the applicable plan, program or arrangement.
(b-2) Retirement Benefits Upon Termination. If the Executive's employment is
terminated for any reason other than for Cause or due to death, notwithstanding
anything else contained in this Agreement to the contrary, the following
provisions shall apply: Regardless of the Executive's age or completed service
with the Company on his date of termination, the Executive shall (1) for
purposes of retiree medical and retiree life insurance benefits be deemed to
have completed 15 years of service on such termination date and commence to
receive benefits from the Company or JHFS accordingly and (2) receive from the
Company or JHFS a benefit as though a special contribution to his cash balance
pension account had been made in an amount equal to (x) the contributions that
the Company made to such account in the most recent calendar year, multiplied by
(y) a number equal to 15 minus the number of years of service completed by the
Executive as of such termination date, and the Executive shall, at his option,
have the right to immediately commence receiving pension benefit payments or to
withdraw or transfer such amount; provided that, regardless of the Executive's
age or completed service with the Company on his date of termination, he shall,
if it is of greater value, receive in lieu of item (2) above the pension
benefits that would be payable for a grandfathered participant under the terms
of the Xxxx Xxxxxxx Financial Services, Inc. Pension Plan (the "Plan") who had
completed the years of service necessary to qualify for retirement benefits on
an actuarially unreduced basis under the Plan as in effect prior to the Plan's
conversion to a cash balance formula. Further, the benefits described in this
Section 7(b-2) shall be made available to the Executive upon any termination of
employment, other than for Cause or due to death, regardless of whether
occurring during or after the Employment Period (i.e. the Executive shall be
entitled to receive these benefits due to termination, other than for Cause or
due to death, even if occurring more than three years after the Effective Date).
(c) Termination by the Company other than for Cause. If, during the
Employment Period, the Company or JHFS, terminates the Executive's employment
other than for Cause, the Company shall provide the Executive with the following
benefits:
(i) Severance and Other Termination Payments. The Company shall pay the
Executive the following:
(A) the Executive's Earned Salary; and
(B) notwithstanding any plan provisions to the contrary, an amount (the
"Pro-Rated Annual Incentive") equal to the target annual bonus applicable to the
Executive for the fiscal year in which the Date of Termination occurs,
multiplied by a fraction, the numerator of which is the number of completed
months in such fiscal year which have elapsed on or before (and including) the
Date of Termination and the denominator of which is 12; and
(C) notwithstanding any plan provisions to the contrary, an aggregate amount
(the "Pro-Rated Long Term Incentives") equal to the sum of the amounts awarded
to the Executive in respect of each performance cycle, whether or not vested,
then in progress (i.e., each performance cycle, which includes as part of the
performance period the fiscal year in which the Date of Termination occurs), as
accrued on the books of the Company as of the end of the month preceding the
Date of Termination; and
(D) the Accrued Obligations; and
(E) a cash amount (the "Severance Amount") equal to three times the sum of
(1) the Executive's annual Base Salary; and
(2) an amount equal to the target annual bonus applicable to the Executive
for the fiscal year in which the Change of Control occurs;
(3) an amount equal to the long term incentive award granted to the
Executive with respect to the performance period commencing in the calendar year
2000. For purposes of this Section 7(c)(i)(E)(3), such award shall be measured
by the equity rights awarded to the Executive for such performance period under
the Long-Term Incentive Plan for Senior Executives.
The Earned Salary, Pro-Rated Annual Incentive, Pro-Rated Long Term Incentives,
Retention Bonus and Severance
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Amount shall be paid in cash in a single lump sum as soon as practicable, but in
no event more than 10 days (or at such earlier date required by law), following
the Date of Termination. Accrued Obligations shall be paid in accordance with
the terms of the applicable plan, program or arrangement.
(ii) Continuation of Benefits. If, during the Employment Period, the
Executive's employment is terminated other than for Cause, the Executive (and,
to the extent applicable, his/her dependents) shall be entitled, after the Date
of Termination until the earlier of (A) the third anniversary of the Date of
Termination (the "End Date") and (B) the date the Executive becomes eligible for
comparable benefits under a similar plan, policy or program of a subsequent
employer, to continue participation in all of the individual and group health
(including without limitation medical, dental and disability) and life employee
benefits plans maintained by the Company, JHFS or an Affiliate and in which the
Executive had been participating prior to the Date of Termination (the "Benefit
Plans"). In addition, to the extent that, prior to the Date of Termination, the
Company had been paying the premiums on any split-dollar life insurance policy
with respect to the Executive, the Company shall, as to any such policy,
continue the payment of such premiums until the later of the End Date or the
date through which the Company otherwise would have paid premiums on such policy
in the absence of a Change of Control. To the extent any such benefits cannot be
provided under the terms of the applicable plan, policy or program, the Company
shall provide a comparable benefit under another plan or from the Company's
general assets. The Executive's participation in the Benefit Plans will be on
the same terms and conditions (including, without limitation, any condition that
the Executive make contributions toward the cost of such coverage on the same
terms and conditions generally applicable to similarly situated employees) that
would have applied had the Executive continued to be employed by the Company
through the End Date.
(iii) Retirement Benefits. The Executive shall be entitled to the retirement
benefits described in Section 7(b-2).
(iv) Payment of Mandatorily Deferred Incentive Compensation Payments. To the
extent not earlier paid in accordance with the terms and conditions of the
governing plan documents, all amounts, if any, that had been determined to be
payable to the Executive under any long term incentive compensation program, but
the payment of which was mandatorily deferred under the terms and conditions of
such governing documents, shall be paid (plus all earnings credited with respect
thereto) in a single lump sum payment, as soon as practicable after the next
succeeding valuation date under the applicable plans, but in no event later than
the first March 15 following the Executive's Date of Termination.
(v) Outplacement Services. The Executive shall be provided at the Company's
expense with outplacement services customary for executives at his/her level
(including, without limitation, office space and telephone support services)
provided by a qualified and experienced third party provider selected by the
Company.
(d) Termination by the Executive for Good Reason. If, during the Employment
Period, the Executive terminates his/her employment for Good Reason, the Company
shall pay to the Executive the same amounts as would be payable to the Executive
under Section 7(c) if such termination were a termination by the Company or JHFS
without Cause.
(e) Discharge of the Company's and JHFS's Obligations. Except as expressly
provided in the last sentence of this Section 7(e), the amounts payable to the
Executive pursuant to this Section 7 following termination of his/her employment
shall be in full and complete satisfaction of the Executive's rights under this
Agreement and any other claims he/she may have in respect of his/her employment
by the Company, JHFS or the Affiliates. Such amounts shall constitute liquidated
damages with respect to any and all such rights and claims and, upon the
Executive's receipt of such amounts, the Company, JHFS and each of their
Affiliates shall be released and discharged from any and all liability to the
Executive in connection with this Agreement or otherwise in connection with the
Executive's employment with the Company, JHFS and their Affiliates. Nothing in
this Section 7(e) shall be construed to release the Company or JHFS, as
applicable, from its commitment to indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of action arising
from or out of the Executive's performance as an officer, director or employee
of the Company, JHFS or any of their Affiliates or in any other capacity,
including any fiduciary capacity, in which the Executive served at the request
of the Company or JHFS to the maximum extent permitted by applicable law and the
Governing Documents.
(f) Certain Further Payments by the Company.
(i) In the event that any amount or benefit paid or distributed to the
Executive pursuant to this Agreement and/or any amounts or benefits otherwise
paid or distributed (whether or not paid or distributed pursuant to a plan or
program maintained by the Company or JHFS) to the Executive by the Company, JHFS
or any Affiliate, including without limitation, the present value of any amounts
or benefits that otherwise become payable to the Executive by the Company, JHFS
or any Affiliate or otherwise become nonforfeitable because of the lapse or
termination of any restrictions thereon as a result of a Change of Control
(collectively, the "Covered Payments"), are or become subject
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to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be
imposed, the Company shall pay to the Executive at the time specified in Section
7(f)(v) below an additional amount ("Tax Reimbursement Payment") such that the
net amount retained by the Executive with respect to such Covered Payments,
after deduction of any Excise Tax on the Covered Payments and any Federal, state
and local income or employment tax and Excise Tax on the Tax Reimbursement
Payment provided for by this Section 7(f), but before deduction for any Federal,
state or local income or employment tax withholding on such Covered Payments,
shall be equal to the amount of the Covered Payments.
(ii) For purposes of determining whether any of the Covered Payments will be
subject to the Excise Tax and the amount of such Excise Tax,
(A) such Covered Payments will be treated as "parachute payments" within the
meaning of Section 280G of the Code, and all "parachute payments" in excess of
the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be
treated as subject to the Excise Tax, unless, and except to the extent that, in
the good faith judgment of the Company's independent certified public
accountants appointed prior to the Change of Control Date or tax counsel
selected by such accountants (the "Accountants"), the Company has a reasonable
basis to conclude that such Covered Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable compensation for
personal services actually rendered (within the meaning of Section 280G(b)(4)(B)
of the Code) in excess of the "base amount," or such "parachute payments" are
otherwise not subject to such Excise Tax, and
(B) the value of any non cash benefits or any deferred payment or benefit
shall be determined by the Accountants in accordance with the principles of
Section 280G of the Code.
(iii) For purposes of determining the amount of the Tax Reimbursement Payment,
the Executive shall be deemed to pay:
(A) Federal income taxes at the highest applicable marginal rate of Federal
income taxation for the calendar year in which the Tax Reimbursement Payment is
to be made, and
(B) any applicable state and local income taxes at the highest applicable
marginal rate of taxation for the calendar year in which the Tax Reimbursement
Payment is to be made, net of the maximum reduction in Federal income taxes
which could be obtained from the deduction of such state or local taxes if paid
in such year.
(iv) In the event that the Excise Tax is subsequently determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to be less than the amount taken into account hereunder in
calculating the Tax Reimbursement Payment made, the Executive shall repay to the
Company, at the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Tax Reimbursement Payment that
would not have been paid if such Excise Tax had been applied in initially
calculating such Tax Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement
Payment to be refunded to the Company has been paid to any Federal, state or
local tax authority, repayment thereof shall not be required until actual refund
or credit of such portion has been made to the Executive, and interest payable
to the Company shall not exceed interest received or credited to the Executive
by such tax authority for the period it held such portion. The Executive and the
Company shall mutually agree upon the course of action to be pursued (and the
method of allocating the expenses thereof) if the Executive's good faith claim
for refund or credit is denied.
In the event that the Excise Tax is later determined by the Accountants or
pursuant to any proceeding or negotiations with the Internal Revenue Service to
exceed the amount taken into account hereunder at the time the Tax Reimbursement
Payment is made (including, but not limited to, by reason of any payment the
existence or amount of which cannot be determined at the time of the Tax
Reimbursement Payment), the Company shall make an additional Tax Reimbursement
Payment in respect of such excess (plus any interest or penalty payable with
respect to such excess) at the time that the amount of such excess is finally
determined.
(v) Any Tax Reimbursement Payment (or portion thereof) payable in accordance
with Section 7(f)(i) above shall be paid to the Executive as of the date of the
payment (or acceleration of vesting or lapse of restrictions as a result of a
Change of Control, as the case may be) of the Covered Payments; provided,
however, that if the amount of such Tax Reimbursement Payment (or portion
thereof) cannot be finally determined on or before the date on which payment is
due, the Company shall pay to the Executive by such date an amount estimated in
good faith by the Accountants to be the minimum amount of such Tax Reimbursement
Payment and shall pay the remainder of such Tax Reimbursement Payment (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined, but in no event later than 45 calendar
days after payment of the related Covered Payment. In the event that the amount
of the estimated Tax Reimbursement Payment exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to the
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Executive, payable on the fifth business day after written demand by the Company
for payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
8. Non exclusivity of Rights. Except as expressly provided herein, nothing in
this Agreement shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
by the Company, JHFS or any of its Affiliates and for which the Executive may
qualify, nor shall anything herein limit or otherwise prejudice such rights as
the Executive may have under any other agreements with the Company, JHFS or any
of its Affiliates, including employment agreements or stock option agreements.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Company, JHFS or any of its
Affiliates at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
9. No Offset. The Company's or JHFS's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any set
off, counterclaim, recoupment, defense or other right which the Company, JHFS or
any of their Affiliates may have against the Executive or others whether by
reason of the Executive's breach of this Agreement, subsequent employment of the
Executive, or otherwise.
10. Legal Fees and Expenses. If the Executive asserts any claim in any contest
(whether initiated by the Executive or by the Company) as to the validity,
enforceability or interpretation of any provision of this Agreement, the Company
shall pay the Executive's legal expenses (or cause such expenses to be paid)
including, without limitation, his/her reasonable attorney's fees, on a
quarterly basis, upon presentation of proof of such expenses in a form
acceptable to the Company, provided that the Executive shall reimburse the
Company for such amounts, plus simple interest thereon at the 90-day United
States Treasury Xxxx rate as in effect from time to time, compounded annually,
if the arbitrator referred to in Section 14(b) or a court of competent
jurisdiction shall find that the Executive did not have a good faith and
reasonable basis to believe that he/she would prevail as to at least one
material issue presented to such arbitrator or court.
11. Confidential Information; Company Property. By and in consideration of the
salary and benefits to be provided by the Company, JHFS or an Affiliate
hereunder, including the severance arrangements set forth herein, the Executive
agrees that:
(a) Confidential Information. The Executive shall hold in a fiduciary capacity
for the benefit of the Company, JHFS and the Affiliates, all secret or
confidential information, knowledge or data relating to the Company, JHFS or the
Affiliates, and their respective businesses, (i) obtained by the Executive
during his/her employment by the Company, JHFS or the Affiliates and (ii) not
otherwise public knowledge (other than by reason of an unauthorized act by the
Executive). After termination of the Executive's employment, the Executive shall
not, without the prior written consent of the Company, unless compelled pursuant
to an order of a court or other body having jurisdiction over such matter,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.
(b) Nonsolicitation of Employees. The Executive agrees that for two years after
the Date of Termination, he/she will not attempt, directly or indirectly, to
induce any employee of the Company, JHFS or an Affiliate to be employed or
perform services elsewhere or otherwise to cease providing services to the
Company, JHFS or the Affiliates.
(c) Return of Property. Except as expressly provided herein, promptly following
the Executive's termination of employment, the Executive shall return to the
Company, JHFS and the Affiliates all property of the Company, JHFS and the
Affiliates (as the case may be) and all copies thereof in the Executive's
possession or under his/her control.
(d) Injunctive Relief and Other Remedies with Respect to Covenants. The
Executive acknowledges and agrees that the covenants and obligations of the
Executive with respect to confidentiality and the return of property relate to
special, unique and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company, JHFS and/or
their Affiliates irreparable injury for which adequate remedies are not
available at law. Therefore, the Executive agrees that the Company, JHFS and the
Affiliates shall be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond) restraining Executive
from committing any violation of the covenants and obligations contained in this
Section 11. These remedies are cumulative and are in addition to any other
rights and remedies the Company, JHFS and/or the Affiliates may have at law or
in equity. In no event shall an asserted violation of the provisions of this
Section 11 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
12. Obligations of the Company and JHFS. The obligations of the Company and
JHFS are intended to be joint
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and several. If for any reason, either the Company or JHFS does not, or is
unable to, honor its obligations under this Agreement, the other party shall
satisfy all obligations not honored by the other party.
13. Successors.
(a) This Agreement is personal to the Executive and, without the prior written
consent of the Company and JHFS, 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 JHFS, the
Company and each of its successors. The Company and JHFS, as applicable, shall
require any successor to all or substantially all of the business and/or assets
of the Company or JHFS, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Company
and JHFS would be required to perform if no such succession had taken place.
14. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the States of Delaware, applied without reference to
principles of conflict of laws.
(b) Arbitration. Except to the extent provided in Section 11(d), any dispute or
controversy arising under or in connection with this Agreement shall be resolved
by binding arbitration. The arbitration shall be held in the city of Boston,
Massachusetts and, except to the extent inconsistent with this Agreement, shall
be conducted in accordance with the Expedited Employment Arbitration Rules of
the American Arbitration Association then in effect at the time of the
arbitration (or such other rules as the parties may agree to in writing), and
otherwise in accordance with principles which would be applied by a court of law
or equity. The arbitrator shall be acceptable to all of the Company, JHFS and
the Executive. If the parties cannot agree on an acceptable arbitrator, the
dispute shall be heard by a panel of three arbitrators, one appointed by the
Company and JHFS, one appointed by the Executive, and the third appointed by the
other two arbitrators.
(c) Amendments. 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.
(d) Entire Agreement. Subject to Section 8 herein, this Agreement constitutes
the entire agreement between the parties hereto with respect to the matters
referred to herein. No other agreement relating to the terms of the Executive's
employment by the Company, JHFS or any Affiliate, oral or otherwise, shall be
binding among the parties unless it is in writing and signed by the party
against whom enforcement is sought. There are no promises, representations,
inducements or statements among the parties other than those that are expressly
contained herein. The Executive acknowledges that he/she is entering into this
Agreement of his/her own free will and accord, and with no duress, that he/she
has read this Agreement and that he/she understands it and its legal
consequences.
(e) Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other parties or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: at the home address of the Executive noted on the records
of the Company
If to the Company: 000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
Attn.: Secretary
If to JHFS: 000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
Attn.: Secretary
or to such other address as any party shall have furnished to the others in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(f) Tax Withholding. The Company shall withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(g) Severability; Reformation. In the event that one or more of the provisions
of this Agreement shall become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby. In the event that any of the provisions of
Section 11(a) are not enforceable in accordance with its terms, the Executive
and the Company and JHFS agree that such Section shall be reformed to make such
Section enforceable in a manner which provides the Company and JHFS the maximum
rights permitted at law.
(h) Waiver. Waiver by any party hereto of any breach or default by any party of
any of the terms of this Agreement shall not operate as a waiver of any other
breach or default, whether similar to or different from the breach or default
waived. No waiver of any provision of this Agreement shall be implied from any
course of dealing
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among the parties hereto or from any failure by any party hereto to assert its
or his/her rights hereunder on any occasion or series of occasions.
(i) Survival. The provisions of Section 5(g), 7(b-2), 7(c), 7(d), 7(f), 12 and
13 shall survive the termination of the Employment Period hereunder and shall be
binding upon and enforceable against the Company and JHFS in accordance with
their terms. The dispute resolutions provisions contained in Section 14(b) and
the legal fees provision contained in Section 10 shall also survive the end of
the Employment Period and shall be applied as though the dispute arose within
the Employment Period.
(j) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
(k) Captions. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and the
Company and JHFS have caused this Agreement to be executed in their respective
names and on their behalf, all as of the day and year first above written.
XXXX XXXXXXX LIFE INSURANCE COMPANY
By:
Name: Xxxxx X. X'Xxxxxxxxxx
Title: Chairman, President and Chief
Executive Officer
XXXX XXXXXXX FINANCIAL SERVICES, INC.
By:
Name: Xxxxx X. X'Xxxxxxxxxx
Title: Chairman, President and Chief
Executive Officer
EXECUTIVE:
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