Exhibit 10.21
AMENDED AND RESTATED
EMPLOYMENT CONTINUATION AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT between Xxxx Xxxxxxx Life
Insurance Company, a Massachusetts corporation (the "Company"), Xxxx Xxxxxxx
Financial Services, Inc., a Delaware corporation ("JHFS") and Xxxxxxx Xxxx (the
"Executive"), dated as of this 25th day of June, 2001.
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 its 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 itself of the Executive's services during the period in
which it is 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 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, as a result of the demutualization of the Company, the Executive
and the Company have determined that the Agreement should be amended and
restated to provide the Executive with benefits and protection in the event of a
Change of Control or Potential Change of Control that are no less favorable than
the benefits and protection that were provided to the Executive under the
Agreement prior to the demutualization of the Company; and to clarify such
benefits and protection in certain respects;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between 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;
(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 a majority of the Incumbent Company Directors then still in
office shall be deemed to be an Incumbent Company Director for purposes of
this subclause (ii); 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 a majority of the Incumbent JHFS Directors
then still in office shall be deemed to be an Incumbent JHFS Director for
purposes of this subclause (iii); 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 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
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, as the case may be,
immediately prior to such Company Corporate Event hold,
directly or indirectly, a majority of the Voting Power;
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 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,
as the case may be, 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 declares to be a Change
of Control.
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(e) "JHFS" means Xxxx Xxxxxxx Financial Services, Inc.
(f) "JHFS Board" means the Board of Directors of JHFS.
(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.
(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 12(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 his/her full attention during normal business hours to the business
and affairs of the Company, JHFS and the Affiliates and to use his/her best
efforts to perform faithfully and efficiently 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 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
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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 extent applicable, his/her dependents) pension,
retirement, deferred compensation, savings, medical, dental, health, disability,
life and accidental death coverages 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, a split-dollar life insurance arrangement) 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; (ii) an act or acts of dishonesty or gross misconduct on
the Executive's part which result or are
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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.
(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 the 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 promptly after receipt of
notice thereof given by the Executive;
(iii) any requirement that the Executive be based at any office or
location more than 50 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 at the Effective Time) 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
(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 12(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.
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(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
13(e). For purposes of this Agreement, a "Notice of Termination" means a written
notice given, in the case of a termination for Cause, within 10 business days of
the Company's, or JHFS's (or, if applicable, an Affiliate's) having actual
knowledge of the events giving rise to such termination, and in the case of a
termination for Good Reason, within 180 days of the Executive's having actual
knowledge of the events giving rise to such termination, and 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). 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 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").
Any 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) 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.
(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
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(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, provided that, the
amount described in this Section 7(c)(i)(E)(3) shall be
zero if the Effective Date of this Agreement occurs on
or after December 31, 2002. For purposes of this Section
7(c)(i)(E)(3), if the Executive was a member of the
Policy Committee at the time of the grant of such long
term incentive award, such award shall be measured by
the equity rights awarded to the Executive for such
performance period under the terms of the Long-Term
Incentive Plan for Senior Executives; otherwise, the
grant of the long term incentive award referred to above
shall be measured by the aggregate value of (a) the
equity rights granted to such Executive for such
performance cycle under the terms of the Long-Term
Incentive Plan for Senior Executives and (b) the stock
options granted to such Executive in March, 2000 under
the terms of the Xxxx Xxxxxxx Financial Services, Inc.
1999 Long-Term Stock Incentive Plan.
The Earned Salary, Pro-Rated Annual Incentive, Pro-Rated Long Term Incentives,
Retention Bonus and Severance 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 (1) the third
anniversary of the Date of Termination (the "End Date") and (2) 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 group health and group 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
"Group Benefit Plans"). In addition, to the extent that, prior to the Date
of Termination, the Company had been paying the premiums on a 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 Group 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) Enhanced Retirement Benefits. In determining the defined
benefit retirement benefits made available to the Executive, the Executive
shall be entitled to receive the additional benefits that would have been
payable or available to the Executive under any employee benefit plan
based on (x) the service the Executive would have attained or completed
had the Executive continued in the Company's employ until the End Date
and, (y) where compensation is a relevant factor, his/her pensionable
compensation at the Date of Termination. Notwithstanding the foregoing,
the Executive shall not receive any service credit for any period after
the Executive has attained 65.
(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.
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(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 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
8
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 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).
(g) Employment Solely by JHFS. In the event that the Executive is employed
or becomes employed solely by JHFS, the obligations of the Company under this
Section 7 shall be performed by JHFS.
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 or any of its Affiliates may have against the Executive or others
whether by reason of the 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 13(b) or a court of competent
jurisdiction shall find that the Executive did not have a good faith and
reasonable basis to believe that
9
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. 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
would be required to perform if no such succession had taken place.
13. 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 both 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 each of the parties 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 between 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 between 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.
10
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: 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 either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(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 any 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 the
other 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 between the parties hereto or from any failure by
either party hereto to assert its or his/her rights hereunder on any occasion or
series of occasions.
(i) Survival. The provisions of Sections 7(c), 7(d) and 7(f) 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 13(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.
11
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 and Chief
Executive Officer
XXXX XXXXXXX FINANCIAL
SERVICES, INC.
By:_____________________________________
Name: Xxxxx X. X'Xxxxxxxxxx
Title: Chairman and Chief
Executive Officer
EXECUTIVE:
________________________________________
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