EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), made and entered into
as of the 15th day of September, 1997 (the "Effective Date"), by and
between XXXXX X. XXXXXXXXXXX, an individual resident of the
State of North Carolina ("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 August 11,
1992 (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:
Section 1. Employment.
(a) Employment. The Company hereby
employs Xxxxxxxxxxx as the Company's President and Chief
Executive Officer. (The Company and its subsidiaries are referred to
herein collectively as "JP.") Xxxxxxxxxxx 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 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.
Section 2. Term. The employment of Xxxxxxxxxxx hereunder
shall commence as of the Effective Date and shall continue until the
earlier of (a) December 31, 2002, 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), 4.2 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 activities as the Company's
Chief Executive Officer 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 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 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 the President and Chief Executive Officer of the Company, (C)
Xxxxxxxxxxx is not reelected or is removed as a Director of the
Company, (D) any action is taken by the Company or the Board of
Directors of the Company that has the effect of divesting Xxxxxxxxxxx,
or materially interfering with the exercise by Xxxxxxxxxxx, of
authority as the principal executive officer of the Company to
supervise and control the management of JP (subject only to the
control of the Board of Directors of the Company and applicable law,
it being acknowledged by Xxxxxxxxxxx that as President and Chief
Executive Officer he shall at all times be subject only to the control
of the Company's Board of Directors and applicable law and that the
exercise of such control by the Board of Directors shall not be
considered as action that is proscribed by this Section 2(iv)(D)), (E)
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 (F) 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; (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.
Section 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 Nine Hundred Thousand Dollars ($900,000)
per calendar year. The Base Salary shall be paid to Xxxxxxxxxxx in
equal monthly installments, 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 1998, 1999, 2000, 2001, 2002, and 2003, 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:
(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, 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:
Percentage Increase in Percentage of Base
Operating Income Per Share Salary Paid as Bonus
less than 5% 0%
5% 30%
10% 55%
15% 110%
more than 15% 110%
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. The dollar amount so obtained shall be paid to
Xxxxxxxxxxx'x wife, or to such different person as Xxxxxxxxxxx
designates in writing.
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.
Section 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 from the date of his termination
of employment with his prior employer 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) payment of any COBRA premiums required to provide coverage
during any waiting period under the Company's existing group health
plan, (iii) payment of any expenses incurred for medical treatment
that is not covered under the Company's group health plan because
of a pre-existing condition clause, (iv) waiver of any service
requirements for eligibility for post-retirement coverage, and (v)
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 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 insurance plans and
arrangements maintained by JP for its senior executives as a group.
4.2 Stock Options. Simultaneously with the
execution and delivery of this Agreement, the Company shall xxxxx
Xxxxxxxxxxx non-qualified options to purchase 100,000 shares of the
Company's common stock, and on a mutually agreeable date in
January 1998 the Company shall xxxxx Xxxxxxxxxxx non-qualified
options to purchase 100,000 shares of the Company's common stock.
Such options shall be granted under the Jefferson-Pilot Corporation
Stock Option 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,
and shall become exercisable (a) on December 31, 1998, as to options
to purchase 33,333 shares (if Xxxxxxxxxxx'x employment has not
previously terminated under Section 2(b)(ii) or Section 2(b)(iii)(B)
hereof), (b) on December 31, 1999, as to options to purchase 33,333
shares (if Xxxxxxxxxxx'x employment has not previously terminated
under Section 2(b)(ii) or Section 2(b)(iii)(B) hereof), (c) on
December 31, 2000, as to options to purchase 33,334 shares (if
Xxxxxxxxxxx'x employment has not previously terminated under
Section 2(b)(ii) or Section 2(b)(iii)(B) hereof), and (d) on December
31, 2002 (or, if earlier, Xxxxxxxxxxx'x death or total disability or a
Change of Control of the Company), as to options to purchase
100,000 shares, if (x) Xxxxxxxxxxx'x employment has not previously
terminated under Section 2(b)(ii) or Section 2(b)(iii)(B) hereof and
(y) unless (A) this condition is waived by the Company, or (B)
Xxxxxxxxxxx previously dies or becomes totally disabled, or (C) there
previously has been a Change of Control of the Company,
Xxxxxxxxxxx has served through December 30, 2002 as the Company's
chief executive officer. The exercise period for each such option
shall expire ten years from date of grant (whether or not Xxxxxxxxxxx
is employed). Such documentation also shall provide that
Xxxxxxxxxxx may, but shall not be required to, establish and maintain
a Stock Purchase Savings Account under the plan. The Company
agrees that (and agrees, to the extent necessary, to execute and
deliver amendments to the documentation granting such stock
options, to provide that) (i) with respect to all stock options held by
Xxxxxxxxxxx at the Effective Date, Xxxxxxxxxxx shall be deemed to
have completed his employment contract upon the execution of this
Agreement, so that all such options shall be fully vested on the
Effective Date, (ii) with respect to all stock options granted to
Xxxxxxxxxxx in February 1998 for 1997 performance, Xxxxxxxxxxx
shall be deemed to have completed his employment contract upon the
execution of this Agreement, so that all such options shall be fully
vested at the time they are granted, and (iii) with respect to stock
options granted to Xxxxxxxxxxx after February 1998 that by their terms
fully vest upon the completion of the option holder's employment
contract, Xxxxxxxxxxx shall be deemed to have completed his
employment contract on December 31, 2000 (unless Xxxxxxxxxxx'x
employment has previously terminated under Section 2(b)(ii) or
Section 2(b)(iii)(B) hereof).
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 therefor,
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.
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.
Section 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 five 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; 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 such amount in the Standard and Poors 500 Index
mutual fund managed by The Vanguard Group, assuming
reinvestment of all distributions that would have been made by such
fund. 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 each such
anniversary date thereafter until all installments have been paid, with
subsequent installments being paid to Xxxxxxxxxxx'x estate 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 thirty-five percent (35%) of the present value
of his single life annuity in a lump sum payment and thirty-five
percent (35%) of the present value of his single life annuity in ten
installments, 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 after the later of the date he reaches age 56
or 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. If the payment of
Xxxxxxxxxxx'x retirement benefit begins before age 60 pursuant to
such an election, such benefit shall be reduced by three (3%) percent
for each full year that the benefit commencement date precedes
Xxxxxxxxxxx'x 60th birthday. In the event that benefits commence as
of a date other than Xxxxxxxxxxx'x birthday, the three (3%) percent
reduction factor shall be prorated on a monthly basis. For example,
if Xxxxxxxxxxx terminates employment on his 58th birthday and has
elected to have his benefit payments commence on the first day of the
month thereafter, his retirement benefit will be calculated by
multiplying 94% (a 6% reduction based on benefit commencement
two years before age 60 and the 3% per year reduction factor) by the
retirement benefit calculated under Section 5.1 hereof.
(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 Life Insurance
Company 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 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.
5.5 Death Benefit. 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 to
Xxxxxxxxxxx'x estate 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 Sonecipher had elected under Section 5.2 hereof to
receive his entire retirement benefit in the form of a single life
annuity.
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.
Section 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 the earlier of December 31, 2002, or the third anniversary of
such termination of employment (based on the assumption that the
Base Salary as in effect immediately prior to the date of termination
was the Base Salary through the earlier of such dates).
(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 the
earlier of December 31, 2002, or the third anniversary of such
termination of employment.
(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 December 31, 2002, 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 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.
(v) Any stock options previously
granted under Section 4.2 hereof (other than those referred to in
Section 4.2(d)) shall remain outstanding and shall become
immediately exercisable in full and shall continue to be exercisable
for ten (10) years after date of grant.
(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, and if
such termination is pursuant to Section 2(b)(iv)(A) all of the options
granted pursuant to Section 4.2(d) shall immediately vest; provided,
however, that if Xxxxxxxxxxx terminates his employment pursuant to
Section 2(b)(iv)(B), (C) or (D), and the event described in the
applicable Section 2(b)(iv)(B), (C) or (D) 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 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.
Section 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.
Section 8. Long-Term Incentive Compensation. The
Company has established a long-term incentive compensation
arrangement for Xxxxxxxxxxx (in addition to the annual 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.
Section 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.
Section 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 therefor, 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.
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:
00 Xxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
(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 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:__________________________
Name: _______________________
Title:_______________________
By:__________________________
Name:________________________
Title:_______________________
_____________________________(SEAL)
XXXXX X. XXXXXXXXXXX
