EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), made and entered into as of the 23rd day
of December, 2002 (the "Effective Date"), by and between XXXXX X. XXXXXXXXXXX,
an individual ("Xxxxxxxxxxx"), and JEFFERSON-PILOT CORPORATION, a North Carolina
corporation (the "Company");
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Xxxxxxxxxxx is employed by the Company pursuant to that
certain Employment Agreement, dated September 15, 1997 (the "Prior Agreement");
and
WHEREAS, the Company and Xxxxxxxxxxx wish to enter into this Agreement
to supersede the Prior Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. EMPLOYMENT.
(a) EMPLOYMENT. The Company hereby employs Xxxxxxxxxxx as the
Company's Chief Executive Officer and/or Chairman of the Board, or such other
position as both parties shall mutually agree from time to time. (The Company
and its subsidiaries are referred to herein collectively as "JP.") So long as
Xxxxxxxxxxx is the Company's Chief Executive Officer, he shall be the principal
executive officer of the Company, having responsibility for and authority over
the conduct of the business and operations of JP, subject only to the control of
the Company's Board of Directors and applicable law.
(b) DUTIES. Xxxxxxxxxxx shall render full-time services to the
Company and devote his best efforts to the performance and discharge of his
duties and responsibilities in a manner that promotes the best interests of JP.
Xxxxxxxxxxx represents and warrants to the Company
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(c) that he is not a party to or otherwise bound by any
indenture, agreement, or other instrument, which may in any way restrict or
affect him in the performance of his duties hereunder.
2. TERM. The employment of Xxxxxxxxxxx hereunder shall commence as of
the Effective Date and shall continue until the earlier of (a) March 31, 2005,
or (b) the occurrence of any of the following events:
(i) The death of Xxxxxxxxxxx or the Company's termination of
Xxxxxxxxxxx'x employment hereunder by reason of Xxxxxxxxxxx'x total disability
(total disability meaning (for purposes of this Section 2(b)(i) and Sections
4.1(c) and 5.6 hereof) the inability of Xxxxxxxxxxx (as determined by a
physician proposed by the Company and reasonably acceptable to Xxxxxxxxxxx) to
perform substantially all of his normal daily activities in his then capacity
for the Company for a continuous period of 210 days by reason of Xxxxxxxxxxx'x
mental or physical disability);
(ii) The Company's termination of Xxxxxxxxxxx'x employment
hereunder, upon prior written notice to Xxxxxxxxxxx, for "good cause." For the
purposes of this Agreement, good cause for termination of Xxxxxxxxxxx'x
employment shall exist only (A) if Xxxxxxxxxxx is convicted of or pleads guilty
to any felony or any act of fraud or embezzlement, or (B) if Xxxxxxxxxxx has
engaged in conduct or activities involving moral turpitude materially damaging
to the property, business or reputation of JP, or (C) if Xxxxxxxxxxx breaches
this Agreement in any material respect and fails to cure said breach within ten
(10) days after notice thereof from the Company or any representation or
warranty made by him in this Agreement shall be incorrect in any material
respect, or (D) if Xxxxxxxxxxx persistently fails or refuses to obey any written
direction of the Company's Board of Directors not inconsistent with this
Agreement, or (E) if Xxxxxxxxxxx embezzles
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or knowingly, and with intent, misappropriates, any property of JP or unlawfully
appropriates any corporate opportunity of JP;
(iii) (A) The Company's termination of Xxxxxxxxxxx'x
employment hereunder, effective thirty (30) days after written notice of
termination is given to Xxxxxxxxxxx, in the absence of any circumstance
constituting good cause, or (B) Xxxxxxxxxxx'x termination of his employment
hereunder, effective thirty (30) days after written notice of termination is
given to the Company, in the absence of any circumstance described in Section
2(b)(iv) hereof.
(iv) Xxxxxxxxxxx'x termination of his employment hereunder,
effective thirty (30) days after written notice of termination is given by
Xxxxxxxxxxx to the Company, if, prior to the giving of such notice, (A) a
"Change of Control of the Company" (as hereinafter defined) has occurred, (B)
Xxxxxxxxxxx is not reelected, or is removed, as Chairman of the Board of the
Company, (C) the Company breaches this Agreement in any material respect and
fails to cure such breach within ten (10) days after notice thereof from
Xxxxxxxxxxx or any representation or warranty of the Company in this Agreement
shall be incorrect in any material respect, or (D) the Company fails to obtain
the assumption of this Agreement by any successor to the Company or its business
(whether by merger, consolidation, transfer of assets, or otherwise). For the
purposes hereof, a "Change of Control of the Company" shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act")) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing twenty-five (25%)
percent or more of the combined voting power of the Company's then outstanding
securities; (ii) at any time a majority of the Board of Directors of the Company
consists of individuals whose nominations for election by the Company's
stockholders were reasonably opposed by Xxxxxxxxxxx;
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(iii) the Company or Jefferson-Pilot Life Insurance Company shall sell
substantially all of its assets in a transaction that was opposed by
Xxxxxxxxxxx; (iv) there shall be consummated any consolidation or merger of the
Company that was opposed by Xxxxxxxxxxx and in which the Company is not the
continuing or surviving corporation or as a result of which the holders of the
Company's capital stock immediately prior to the consummation of the transaction
do not have substantially the same proportionate ownership of such capital stock
immediately after consummation of the transaction; or (v) the shareholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company.
3. COMPENSATION; EXPENSES.
3.1 BASE SALARY. Xxxxxxxxxxx shall be paid a salary (the "Base
Salary") during the term of his employment hereunder at a rate of not less than
his base salary established for calendar year 2002. The Base Salary shall be
paid to Xxxxxxxxxxx in accordance with the Company's usual payroll schedule,
less applicable withholding taxes. The Base Salary shall be reviewed annually in
good faith by the Compensation Committee of the Board of Directors of the
Company, and may be increased by the Company as deemed appropriate after such
review.
3.2 ANNUAL BONUSES. Not later than ten (10) days after the
meeting of the Compensation Committee of the Company's Board of Directors on the
second Monday in February in each of calendar years 2003, 2004, 2005 and 2006,
the Company shall pay Xxxxxxxxxxx additional cash compensation (less applicable
withholding taxes) with respect to the preceding calendar year (a "Bonus Year")
in an amount computed in accordance with Section 3.3 hereof.
3.3 ANNUAL BONUS COMPUTATION. The additional cash compensation
payable under Section 3.2 hereof with respect to a Bonus Year shall be in an
amount equal to a portion of the Base Salary for such Bonus Year determined as
follows:
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(a) JP's income from operations (disregarding
realized capital gains and losses), as reflected in JP's audited financial
statements ("Operating Income"), per share of common stock for the year
immediately preceding the Bonus Year (the "Prior Year's Operating EPS") shall be
subtracted from JP's Operating Income per share of common stock for the Bonus
Year. If the result is negative, no additional compensation shall be payable,
and no further computation will be necessary.
(b) The amount determined in clause (a) above shall
be divided by the Prior Year's Operating EPS. If the result is less than 0.05
(that is, the growth in Operating Income per share is less than 5%), no
additional compensation shall be payable, and no further computation will be
necessary.
(c) If the amount determined in clause (b) above is
..05 or greater, the amount shall be obtained by straight line interpolation
between applicable points shown in the table under (d) below.
(d) The amount determined in clause (c) above shall
be multiplied by the Base Salary for the Bonus Year (or 25% of the Base Salary
in the case of the 2005 Bonus Year), and the result obtained shall be the
additional compensation paid to Xxxxxxxxxxx with respect to such Bonus Year.
In making the foregoing computation, appropriate adjustments shall be made for
any stock splits and dividends, so that the Company's Operating Income per share
of common stock for consecutive years is properly comparable. Without limiting
the foregoing, the following table illustrates the application of the foregoing
provisions:
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Percentage Increase in Percentage of Base
Operating Income Per Share Salary Paid as Bonus
-------------------------- --------------------
less than 5% 0%
5% 50%
10% 100%
15% 200%
more than 15% 200%
Notwithstanding the provisions of this Section 3.3, either Xxxxxxxxxxx or the
Compensation Committee of the Board of Directors of the Company may propose
adjustments to the annual bonus in light of extraordinary transactions or
circumstances that affect materially the Company's income, and any such
adjustment agreed to by both Xxxxxxxxxxx and the Compensation Committee of the
Company's Board of Directors shall be given effect.
3.4 ADJUSTMENT BASED ON AUDITED FINANCIAL STATEMENTS. The
parties acknowledge that the Company's audited financial statements might not be
available when the annual bonuses under Section 3.2 and 3.3 above are to be
calculated and paid. In that event the annual bonus will initially be calculated
and paid on the basis of the Company's internal statements for the Bonus Year.
If the amount of the bonus ultimately determined to be due for any Bonus Year on
the basis of the Company's audited financial statements differs from the bonus
that was initially paid for such Bonus Year, Xxxxxxxxxxx shall promptly refund
the amount of any excess, or the Company shall promptly pay Xxxxxxxxxxx an
additional amount equal to any deficiency.
3.5 DEATH. If Xxxxxxxxxxx dies while employed hereunder, the
amount of the additional compensation that would have been paid to him under the
applicable provisions of Sections 3.2 through 3.4 hereof with respect to the
calendar year during which his death occurred shall be multiplied by a fraction,
the numerator of which is the number of months in such calendar year prior to
the month during which his death occurred, and the denominator of which is 12
(or three if death occurs in 2005). The dollar amount so obtained shall be paid
to Xxxxxxxxxxx'x wife, or to such different person as Xxxxxxxxxxx designates in
writing.
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3.6 EXPENSES. The Company shall reimburse Xxxxxxxxxxx for all
reasonable business expenses (including costs associated with Xxxxxxxxxxx'x
obtaining and maintaining membership in business and social clubs reasonably
acceptable to the Company) incurred by Xxxxxxxxxxx in the course of performing
his duties hereunder, provided that such expenses are itemized and presented to
the Company in writing in a form then prescribed by the Company in its general
policies relating to reimbursement of employee business expenses.
4. ADDITIONAL EMPLOYMENT BENEFITS.
4.1 INSURANCE COVERAGE
(a) HEALTH. The Company shall provide Xxxxxxxxxxx
with the same health insurance coverage as is provided to other senior
executives as a group through the later of age 65 or the date such coverage
ordinarily terminates for senior executives as a group. The Company's obligation
to provide such coverage shall include (i) payment of the cost (excluding
premiums and copayments in the amount ordinarily paid by senior executives) of
Xxxxxxxxxxx'x participation in the group health plan maintained by the Company,
(ii) waiver of any service requirements for eligibility for post-retirement
coverage, and (iii) payment of the cost to age 65 of a conversion policy
providing coverage substantially similar to the coverage under the Company's
group health plan, in the event that coverage under the Company's group health
plan terminates before age 65.
(b) LIFE. The Company shall provide Xxxxxxxxxxx with
group life insurance coverage in an amount equal to at least one and one-half
times the amount of the Base Salary in effect from time to time during
employment, plus life insurance coverage after termination of his employment in
an amount that is in keeping with the Company's customary plan for senior
executives and is equal to at least one-half of the amount of Xxxxxxxxxxx'x
Company provided coverage on the date his employment terminates. In addition,
Xxxxxxxxxxx shall have the option to
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purchase additional coverage during his employment equal to one-half of the Base
Salary in effect from time to time at the employee group rate.
(c) LONG TERM DISABILITY. The Company shall provide
Xxxxxxxxxxx with an annual long term disability benefit equal to at least 60% of
his Base Salary in effect on the date Xxxxxxxxxxx'x employment terminates
because of a total disability. Such benefit shall be paid in substantially equal
monthly installments starting with the first day of the month following the
month in which his employment terminates and ending with the payment made for
the month immediately preceding the date that retirement benefit payments
commence pursuant to Section 5 hereof. Such benefit shall be provided in
addition to the coverage provided under subsections (a) and (b) of this Section
4.1.
(d) OTHER. The Company shall provide Xxxxxxxxxxx with
coverage under any and all other insurance plans and arrangements maintained by
JP for its senior executives as a group.
4.2 STOCK OPTIONS. At its first meeting in each of 2003, 2004
and 2005, the Compensation Committee of the Board of Directors of the Company
shall in good faith consider Xxxxxxxxxxx for a xxxxx of options to purchase
shares of the Company's common stock, based on his performance during the prior
calendar year, in keeping with the Company's past practices, and using options
granted to Xxxxxxxxxxx in February 2002 as a reference point. Such options shall
be granted under the Jefferson-Pilot Corporation Long Term Stock Incentive Plan
and shall be granted pursuant to documentation reasonably satisfactory to
Xxxxxxxxxxx and the Company, but in any event shall have an exercise price per
share equal to the fair market value of a share of the Company's common stock on
the date of grant, shall be fully vested upon grant, and shall have an exercise
period that
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shall expire at the earlier of ten years from date of grant or five years from
the date of Xxxxxxxxxxx'x termination of employment.
4.3 AUTOMOBILE. The Company shall, at no cost to Xxxxxxxxxxx,
provide to Xxxxxxxxxxx a company-owned automobile (or shall pay the costs
associated with Xxxxxxxxxxx'x acquiring an automobile) of a quality reasonably
acceptable to the Company. The Company shall pay, or reimburse Xxxxxxxxxxx for,
all costs associated with operating, maintaining and insuring such automobile,
provided that such expenses are itemized and presented to the Company in writing
in a form then prescribed by the Company in its general policies relating to
reimbursement of employee business expenses.
4.4 INDEMNIFICATION. With respect to any liability or expense
in any proceeding arising out of Xxxxxxxxxxx'x (a) status as a director,
officer, employee or agent of the Company, or (b) service, at the request of the
Company, as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise or as a
trustee, committee member or administrator of an employee benefit plan, the
Company shall indemnify Xxxxxxxxxxx to the maximum extent that the Company
offers indemnification to its directors generally, as the Company's policy
regarding indemnification of directors may be modified from time to time. Such
indemnification shall be provided regardless of the capacity in which
Xxxxxxxxxxx was named in the proceeding (i.e. whether as director, officer,
employee, agent or other capacity described in the preceding sentence). Expenses
incurred by Xxxxxxxxxxx in connection with any proceeding subject hereto shall
be paid by the Company upon submission of statements therefore, upon receipt of
an undertaking by or on behalf of Xxxxxxxxxxx to repay such amounts if it
ultimately is determined that he is not entitled to be indemnified by the
Company against such expenses.
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4.5 VACATION. Xxxxxxxxxxx shall be entitled to five (5) weeks
paid vacation annually in accordance with the Company's normal vacation policy
applicable to senior executive employees.
5. RETIREMENT BENEFITS.
5.1 AMOUNT. The Company shall pay Xxxxxxxxxxx an annual
retirement benefit that is equal to a percentage of the "Average Total
Compensation." The "Average Total Compensation" shall be the quotient obtained
by dividing three (3) into the sum of the Base Salary plus the additional
compensation paid pursuant to Sections 3.2 through 3.4 hereof with respect to
each of the "Three Highest Years." The "Three Highest Years" are those three
calendar years of the six calendar years most recently preceding the date of
Xxxxxxxxxxx'x termination of employment (which shall include the calendar year
in which Xxxxxxxxxxx'x employment terminates if his employment terminates on the
last day of a calendar year) for which such sum is greatest. Such percentage
shall equal 67% in the event Xxxxxxxxxxx continues to work until he reaches age
65 and, if Xxxxxxxxxxx'x employment terminates before he reaches age 65, such
percentage shall be reduced by two (2) percentage points for each full year that
his termination of employment precedes the date he reaches age 65. If
Xxxxxxxxxxx'x termination of employment occurs on a date other than his
birthday, the two (2) percentage point reduction shall be prorated on a monthly
basis.
5.2 FORM.
(a) Such retirement benefit shall commence as of the
date elected pursuant to Section 5.3 hereof and shall be paid monthly in the
form of a single life annuity over Xxxxxxxxxxx'x life or, at Xxxxxxxxxxx'x
option, an actuarially equivalent joint and survivor annuity or actuarially
equivalent life annuity over Xxxxxxxxxxx'x life and the life of his designated
beneficiary or beneficiaries with a ten-year period certain benefit for his
designated beneficiary or beneficiaries;
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provided, however, that Xxxxxxxxxxx shall have the right to receive all or part
of the present value of his single life annuity (i) in a single lump sum
payment, or (ii) in five to ten annual installments, or (iii) in any combination
thereof, as elected by Xxxxxxxxxxx in Section 5.2(b) hereof or, if he desires to
change such election, as thereafter elected by Xxxxxxxxxxx, provided he files
the election in writing with the Company at least one (1) year before the date
as of which his benefit is otherwise scheduled to commence pursuant to Section
5.3 hereof. If Xxxxxxxxxxx chooses the installment payment option in the
foregoing clause (ii), then, as of the date his single life annuity benefit
otherwise was scheduled to commence pursuant to Section 5.3 hereof, the Company
shall credit the present value of his single life annuity which he has elected
to receive in installments to a bookkeeping account maintained by the Company.
The balance in such account shall be increased or reduced by the Company from
time to time (but no less often than the date as of which each installment is to
be paid) to reflect the changes that would have occurred in the balance in such
account if the Company had invested part of the amount initially credited to
such account in the Vanguard 500 Index Fund managed by The Vanguard Group (the
"Vanguard 500 Fund"), and part of the amount initially credited to such account
in The Vanguard Windsor II Fund managed by The Vanguard Group (the "Vanguard
Windsor Fund"), assuming reinvestment of all distributions that would have been
made by each such fund. The part of the amount initially credited to such
account that is assumed to be invested in each such fund shall be as elected by
Xxxxxxxxxxx in Section 5.2(b) hereof or, if he desires to change such election,
as hereafter elected by Xxxxxxxxxxx, provided he files the election in writing
with the Company at least one (1) year before the date as of which his benefit
is otherwise scheduled to commence pursuant to Section 5.3 hereof. The first
installment payment shall be made as of the first anniversary of the date on
which Xxxxxxxxxxx'x single life annuity benefit otherwise was scheduled to
commence pursuant to Section 5.3 hereof and payments thereafter shall be made as
of
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each such anniversary date thereafter until all installments have been paid,
with subsequent installments being paid to Xxxxxxxxxxx'x estate (or as
Xxxxxxxxxxx may otherwise designate in Section 5.2(b) or any subsequent election
filed as provided above or in any subsequent written designation of beneficiary
filed with the Company prior to his death), if he dies before all installments
are paid. The amount of each installment payment shall be equal to the then
balance in such account, multiplied by a fraction, the numerator of which is one
(1), and the denominator of which is one plus the number of subsequent
installment payments to be made. For purposes of this Agreement, (i) the present
value shall be determined by using the insurance industry's standard 1983 Group
Annuity Mortality Table (the "Table") and an interest rate (the "Rate") equal to
the average (for the 365 days prior to payment) yield of ten-year U. S. Treasury
Notes (as reported over such period in The Wall Street Journal or any successor
to such publication) (or, if more favorable to Xxxxxxxxxxx, the group annuity
mortality table and interest rate (before expenses) then in general use by the
Company for the public sale of individual annuities shall be the "Table" and the
"Rate" for purposes hereof), and (ii) the term "joint and survivor annuity"
shall mean an annuity payable for Xxxxxxxxxxx'x life and, if he dies before his
survivor annuitant, a 50%, 75% or 100% survivor annuity payable to such survivor
for such person's life, (iii) the term "life annuity with a ten-year period
certain" shall mean an annuity payable for the life of Xxxxxxxxxxx and, if
Xxxxxxxxxxx dies before payments have been made for ten years, with continued
payments to his designated beneficiary for the balance of such ten-year period,
and (iv) an actuarially equivalent benefit shall be determined using the Table
and the Rate.
(b) Effective as of the Effective Date, Xxxxxxxxxxx
hereby elects to receive twenty percent (20%) of the present value of his single
life annuity in a lump sum payment and forty percent (40%) of the present value
of his single life annuity in ten installments (with fifty percent (50%) being
assumed invested in the Vanguard 500 Fund and fifty percent (50%) being assumed
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invested in the Vanguard Windsor Fund for purposes of such installment payment
election), with the balance payable as a single life annuity, subject to offset
pursuant to Section 5.4. Such election is subject to change by Xxxxxxxxxxx as
provided in Section 5.2(a).
5.3 TIMING.
(a) Such retirement benefit shall be paid, or benefit
payments shall commence, in the form elected pursuant to Section 5.2 hereof, as
of the first day of the month immediately following Xxxxxxxxxxx'x 65th birthday;
provided, however, that Xxxxxxxxxxx shall have the right at any age to elect
that the payment of his benefit commence when his employment terminates, under
Section 5.3(b) hereof or, if he desires to change such election, as thereafter
elected by Xxxxxxxxxxx, provided such election is filed in writing with the
Company at least one (1) year before his employment terminates.
(b) Effective as of the Effective Date, Xxxxxxxxxxx
hereby elects that the payment of his benefits shall commence on the day his
employment terminates. Such election is subject to change by Xxxxxxxxxxx as
provided in Section 5.3(a).
5.4 OFFSET FOR OTHER RETIREMENT BENEFITS. In the event that
the retirement benefits payable to Xxxxxxxxxxx under the Retirement Plan of Life
Insurance Company of Georgia or other "defined benefit plans," as defined in
Section 3(35) of the Employee Retirement Income Security Act of 1974, as amended
from time to time ("Defined Benefit Plans"), of Life Insurance Company of
Georgia ("LOG Plans"), and the Jefferson-Pilot Corporation Employees' Retirement
Plan or other Defined Benefit Plans of JP ("J-P Plans"), are paid in the same
form and at the same time as the retirement benefits under this Section 5, then
the annual benefit payable under Section 5 hereof each year shall be offset by
the dollar amount paid to Xxxxxxxxxxx under the LOG Plans and the J-P Plans in
such year. In the event that the retirement benefits payable under the LOG Plans
and
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the J-P Plans are not paid in the same form or are not paid at the same time,
then the retirement benefits under this Section 5 shall be offset by the
actuarial equivalent of the benefit expected to be paid to Xxxxxxxxxxx under the
LOG Plans and the J-P Plans. The actuarial equivalent benefit shall be
determined by using the Table and the Rate. Xxxxxxxxxxx hereby elects to receive
payments under the Company's Supplemental Benefit Plan (including the Executive
Special Supplemental Benefit thereunder) and other non-qualified Defined Benefit
Plans of the Company as a part of the total benefit provided by this Agreement,
and the form and timing of such payments shall be as set forth in this
Agreement.
5.5 DEATH BENEFIT.
(a) In the event of Xxxxxxxxxxx'x death prior to the
commencement of the retirement benefit described in Section 5.1, the Company
hereby agrees to pay a death benefit that is equal to the present value of the
single life annuity benefit Xxxxxxxxxxx would have received under Section 5.1
through 5.4 if he had retired on the date of his death, based on the assumption
that Xxxxxxxxxxx had elected under Section 5.2 hereof to receive his entire
retirement benefit in the form of a single life annuity. Such death benefit
shall be paid in a lump sum to Xxxxxxxxxxx'x estate; provided, however, that
Xxxxxxxxxxx shall have the right to elect that all or part of the death benefit
shall be paid to a designated beneficiary or beneficiaries, if living at the
time of his death, other than his estate, and be paid (i) in a single lump sum
payment, or (ii) in five to ten annual installments, or (iii) in an actuarially
equivalent life annuity to the designated beneficiary or beneficiaries with a
ten-year period certain benefit for each designated beneficiary, or (iv) in any
combination thereof, as elected by Xxxxxxxxxxx as provided in Section 5.5(b)
hereof or, if he desires to change such election, as hereafter elected by
Xxxxxxxxxxx, provided he files the election in writing with the Company prior to
his death. If Xxxxxxxxxxx chooses the installment payment option in the
foregoing clause (ii), then,
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as of the date of his death, the Company shall credit the portion of the death
benefit, which he has elected to be paid in installments to a bookkeeping
account maintained by the Company. The balance in such account shall be
increased or reduced by the Company from time to time (but no less often than
the date as of which each installment is to be paid) to reflect the changes that
would have occurred in the balance in such account if the Company had invested
part of the amount initially credited to such account in the Vanguard 500 Fund
and part of the amount initially credited to such account in the Vanguard
Windsor Fund, assuming reinvestment of all distributions that would have been
made by each such fund. The part of the amount initially credited to such
account that is assumed to be invested in each such fund shall be as elected by
Xxxxxxxxxxx in Section 5.5(b) hereof or, if he desires to change such election,
as hereafter elected by Xxxxxxxxxxx, provided he files the election in writing
with the Company prior to his death. The first installment payment shall be made
as of the first anniversary of his death and payments thereafter shall be made
as of each such anniversary date thereafter until all installments have been
paid. The amount of each installment payment shall be equal to the then balance
in such account, multiplied by a fraction, the numerator of which is one (1),
and the denominator of which is one plus the number of subsequent installment
payments to be made. For purposes of this Section 5.5, and notwithstanding the
definition of this phrase in Section 5.2(a), the term "life annuity with a
ten-year period certain" shall mean an annuity payable for the life of a
designated beneficiary, and if the designated beneficiary dies before payments
have been made for ten years, with continued payments to the estate of such
designated beneficiary for the balance of such ten-year period.
(b) Effective as of the date of this Agreement,
Xxxxxxxxxxx hereby elects that the death benefit shall be paid to his spouse,
Xxxxx Xxxxxx Xxxxxxxxxxx, as his designated beneficiary if living at the time of
his death, in the following form: twenty percent (20%) of the death
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benefit in a lump sum payment, forty percent (40%) of the death benefit in ten
installments (with fifty percent (50%) being assumed invested in the Vanguard
500 Fund and fifty percent (50%) being assumed invested in the Vanguard Windsor
Fund for purposes of such installment payment election), with the balance
payable as a single life annuity with a ten-year period certain. Such election
is subject to change by Xxxxxxxxxxx as provided in Section 5.5(a).
5.6 DISABILITY BENEFIT. In the event of Xxxxxxxxxxx'x
termination of employment as a result of total disability, his retirement
benefit under Section 5 hereof shall be calculated under Section 5.1, shall be
paid in the form elected pursuant to Section 5.2, and shall be paid at the time
elected pursuant to Section 5.3, except that Xxxxxxxxxxx shall have the right to
make an election under Section 5.3 no later than six (6) months before his
employment terminates, instead of one (1) year before his employment terminates.
5.7 SOURCE OF BENEFITS. The retirement benefits payable under
this Agreement shall be paid by the Company from its general assets. Xxxxxxxxxxx
shall have no right, interest, or claim whatsoever to the payment of a benefit
from any person other than the Company, and shall have no right or interest
whatsoever that is superior in any manner to the right of any other general and
unsecured creditor of the Company. Xxxxxxxxxxx shall have no right to assign,
alienate, pledge or otherwise encumber the retirement benefits payable under
this Agreement, and any attempt to do so shall be void.
5.8 PARTICIPATION IN OTHER PLANS. Xxxxxxxxxxx shall
participate in all retirement plans (qualified or non-qualified) and all
deferred compensation arrangements maintained by the Company in which other
senior executives participate as a group.
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6. PAYMENTS AND OTHER ACTIONS IN CERTAIN EVENTS.
(a) If the Company terminates Xxxxxxxxxxx'x employment
hereunder pursuant to Section 2(b)(iii) in the absence of any circumstance
constituting "good cause" (as defined in Section 2(b)(ii)), then the following
provisions shall govern:
(i) Immediately upon the effectiveness of such
termination of employment, the Company shall make a lump sum cash payment to
Xxxxxxxxxxx in an amount equal to the aggregate Base Salary that would have been
paid to Xxxxxxxxxxx under the terms hereof after the date of termination of
employment through March 31, 2005 (based on the assumption that the Base Salary
as in effect immediately prior to the date of termination was the Base Salary
through such date).
(ii) Immediately upon the effectiveness of such
termination of employment, the Company shall make a lump sum cash payment to
Xxxxxxxxxxx in an amount equal to one-half of the maximum additional
compensation that could have been paid to Xxxxxxxxxxx, pursuant to Sections 3.2
through 3.4, and pursuant to any long-term incentive compensation plan of the
Company otherwise applicable to Xxxxxxxxxxx immediately prior to such
termination of employment, after the date of termination of employment had his
employment hereunder continued through March 31, 2005.
(iii) The retirement benefits provided for in Section
5 hereof shall become payable, and for purposes of computing Xxxxxxxxxxx'x
benefits under Section 5.1 hereof, Xxxxxxxxxxx shall be treated as if his
employment continued through March 31, 2005, and such benefits shall be paid to
him at such time and in such form as elected by Xxxxxxxxxxx pursuant to Sections
5.2 and 5.3 hereof; unless Xxxxxxxxxxx elects during the ten-day period
immediately following the date his employment terminates to receive the present
value (as determined in
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accordance with Section 5.2 hereof) of such retirement benefit in a single lump
sum payment, which payment shall be made on the first anniversary of the last
day of such ten-day election period.
(iv) The provisions of Section 4.1 that by their
terms apply after termination of Xxxxxxxxxxx'x employment shall apply in
accordance with their terms after a termination or other event to which this
Section 6(a) applies.
(b) If Xxxxxxxxxxx terminates his employment hereunder
pursuant to Section 2(b)(iv), he shall receive all the payments and benefits
described in Section 6(a) above; provided, however, that if Xxxxxxxxxxx
terminates his employment pursuant to Section 2(b)(iv)(B), and the event
described in Section 2(b)(iv)(B) occurred as a result of circumstances
constituting "good cause" (as defined in Section 2(b) (ii)), then Xxxxxxxxxxx
shall be entitled to all the payments and benefits described in Section 6(a)
above other than the payment described in Section 6(a)(ii).
(c) If Xxxxxxxxxxx'x employment is terminated by the Company
pursuant to Section 2(b)(ii) for good cause, Xxxxxxxxxxx shall be entitled to
all the payments and benefits described in Section 6(a) above other than the
payment described in Section 6(a)(ii).
(d) If Xxxxxxxxxxx'x employment terminates pursuant to Section
2(b)(i) as a result of death or total disability, Xxxxxxxxxxx shall be entitled
to no further payments hereunder other than any unpaid Base Salary (prorated)
with respect to services rendered prior to the effective date of termination,
and other than the benefits described in Sections 3.5 and 5.5 and payments under
the life insurance maintained pursuant to Section 4.1(b) (in the event of
death), or the benefits and payments described in 4.1(a), 4.1(b), 4.1(c), and
5.6 (in the event of total disability). In addition, following termination of
his employment as a result of death or total disability, Xxxxxxxxxxx shall
continue to receive benefits under all insurance plans and arrangements for
which he receives coverage under Section 4.1(d), but only to the extent that the
terms of those plans and arrangements provide for
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continuation of coverage following termination of a senior executive's
employment as a result of death or total disability.
(e) Xxxxxxxxxxx shall have no obligation to seek other
employment in the event of termination of his employment, and no compensation or
other benefits received by Xxxxxxxxxxx from any other employment shall reduce or
limit the Company's obligation to make payments under this Section 6 except to
the extent set forth in Section 5.4.
7. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants
to Xxxxxxxxxxx that (a) this Agreement has been duly executed and delivered by
the Company, (b) the execution, delivery and performance of this Agreement by
the Company has been duly authorized by all necessary corporate action on the
part of the Company, (c) this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, and (d) the execution, delivery and performance of this Agreement by
the Company do not and will not conflict with, violate, or constitute a breach
of or default under, (i) the Articles of Incorporation or Bylaws of the Company
or any of its subsidiaries, (ii) any provision of law or regulations applicable
to the Company or any of its subsidiaries, (iii) any provision of any indenture,
agreement or other instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or affected,
with respect to which any such conflict, violation, breach or default would
render this Agreement unenforceable or would have a material adverse effect on
the financial condition of the Company or any of its subsidiaries, and (e) the
Company has not received any legal advice contrary to the representations and
warranties set forth in this Section 7.
8. LONG-TERM INCENTIVE COMPENSATION. The Company has established and
shall maintain a long-term incentive compensation arrangement for Xxxxxxxxxxx
(in addition to the annual
20
bonus arrangements in Section 3 hereof) that provides for annual incentive
compensation equal to a percentage of Base Salary equal to four (4) times the
compounded annual growth rate in JP's Operating Income per share over a trailing
three-year period, that requires a minimum compounded annual growth rate of five
(5%) percent in order for any bonus to be paid, and that provides a maximum
bonus in the event of a compounded annual growth rate of fifteen (15%) percent.
9. CONFIDENTIALITY. All reports, recommendations, advice, records,
documents and other materials, whether written or in any other media, and all
copies thereof prepared or obtained by Xxxxxxxxxxx or coming into his possession
during the course of his employment with the Company, which relate to JP, shall
be the sole and exclusive property of JP, and Xxxxxxxxxxx shall, at the end of
his employment with the Company use his reasonable best efforts to deliver
promptly all such materials to JP. Such reports and the information contained
therein shall be and remain the sole property of the Company. Following the
termination of his employment with the Company, Xxxxxxxxxxx shall not use for
his own benefit or for the benefit of others, nor divulge, furnish or make
accessible to anyone other than JP, its directors and officers, any knowledge or
information coming into Xxxxxxxxxxx'x possession during the course of his
employment with JP with respect to the business of JP that is reasonably
considered by the Company's Board of Directors or senior executives as
confidential or secret. It is understood that information that is publicly known
or reported through no breach of this Paragraph 9 shall not be considered
confidential or secret. Xxxxxxxxxxx expressly agrees that JP shall be entitled
to injunctive and/or other equitable relief to prevent an anticipatory or
continuing breach of this Section 9, or any part of this Section 9, and to
secure its enforcement. Nothing herein shall be construed as a waiver by JP of
any right it may now have or hereafter acquire to monetary damages by reason of
any injury to its property, business or reputation or otherwise arising out of
any wrongful act or omission of Xxxxxxxxxxx hereunder.
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10. MISCELLANEOUS.
10.1 BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding upon Xxxxxxxxxxx and his executor, administrator, heirs,
personal representative and assigns, and the Company and its successors and
assigns; provided, however, that (except as expressly provided herein or in any
applicable employee benefit plans of the Company) neither party hereto may
assign any of its or his rights, or delegate any of its or his duties (except,
in the case of Xxxxxxxxxxx, customary delegation of executive authority not
inconsistent with this Agreement), hereunder without the prior written consent
of the other party.
10.2 GOVERNING LAW. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by and in
accordance with the laws of' the State of North Carolina.
10.3 CERTAIN FEES AND EXPENSES. The Company shall pay,
following submission of statements therefore, the reasonable fees and expenses
of counsel incurred by Xxxxxxxxxxx in connection with the negotiation and
preparation of this Agreement and the arrangements contemplated hereby. In the
event of any litigation or dispute arising from a claim brought by Xxxxxxxxxxx
under Section 6 of this Agreement, if Xxxxxxxxxxx prevails the Company shall
pay, or reimburse Xxxxxxxxxxx for, all reasonable legal fees and expenses
incurred by Xxxxxxxxxxx in connection with such litigation or dispute.
10.4 HEADINGS. The Section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
22
10.5 NOTICES. Unless otherwise agreed to in writing by the
parties hereto, all communications provided for hereunder shall be in writing
and shall be deemed to be given when delivered in person or five (5) business
days after being sent by first-class mail and addressed as follows:
(a) If to Xxxxxxxxxxx, addressed to such home
address for Xxxxxxxxxxx as is then shown on
the Company's records.
(b) If to the Company, addressed to:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Corporate Secretary
or to such other person or address as shall be furnished in writing by any party
to the other prior to the giving of the applicable notice or communication.
10.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
10.7 COORDINATION WITH EXECUTIVE CHANGE IN CONTROL SEVERANCE
PLAN. This Agreement does not amend, or affect Xxxxxxxxxxx'x rights as a
participant in, the Company's Executive Change in Control Severance Plan (the
"Change in Control Plan"), which rights shall continue in accordance with, and
subject to the terms of, the Change in Control Plan. The parties agree both (i)
that Xxxxxxxxxxx shall not receive duplicative payments under this Agreement and
the Change in Control Plan, and (ii) that if a payment is required to be
provided both under this Agreement and under the Change in Control Plan,
Xxxxxxxxxxx shall receive the payment more favorable to him.
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10.8 ENTIRE AGREEMENT. This Agreement supersedes the Prior
Agreement in its entirety as of the Effective Date. This Agreement is intended
by the parties hereto to be the final expression of their agreement with respect
to the subject matter hereof and is the complete and exclusive statement of the
terms thereof, notwithstanding any representations, statements or agreements to
the contrary heretofore made. This Agreement may be modified only by a written
instrument signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
JEFFERSON-PILOT CORPORATION
[CORPORATE SEAL]
By: /S/ X. X. XXXXXX
------------------------------------
Name: X.X. Xxxxxx
----------------------------------
Title: Chairman-Compensation Committee
---------------------------------
By: /S/ XXXXXX X. XXXX
------------------------------------
Name: Xxxxxx X. Xxxx
----------------------------------
Title: Vice President
---------------------------------
/S/ XXXXX X. XXXXXXXXXXX (SEAL)
--------------------------------------
XXXXX X. XXXXXXXXXXX
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