EXHIBIT 10(xi)
EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN
Jefferson-Pilot Corporation ("Corporation") has established
this Executive Change in Control Severance Plan ("Plan") to assist
in retaining executives in the face of a consolidating industry, and
to provide key management stability in the event that the
Corporation becomes subject to a tender offer, proxy contest or
other transaction that could result in a change of control of the
Corporation or its Board of Directors ("Board").
The Compensation Committee of the Board is authorized to
designate those executives of the Corporation and/or its
subsidiaries who from time to time are participants in the Plan
(each an "Executive"), and to specify the Tier of participation for
each Executive. No Executive shall have any rights under the Plan
unless advised in a letter from the Chief Executive Officer of the
Corporation that he or she has been designated as a participant by
the Compensation Committee in a specified Tier.
The Plan states certain terms and conditions related to the
impact of any Change in Control (as defined below) on each
participating Executive's employment, without affecting in any other
way the terms and conditions of any Executive's employment.
NOTE: certain capitalized terms are defined later, principally
in Section 5.
1. Payments for Termination Following Change in Control. If, upon
or following a Change in Control, Executive's employment with the
Corporation is terminated by the Corporation, other than for Cause
or Disability, or is terminated by Executive for Good Reason, in
either case on or before two years following the date of a Change in
Control, then:
(a) Executive shall be entitled to all compensation and
benefits of every kind accrued through the date of termination of
employment including any unpaid amount accrued (including for the
partial year of termination) under the Annual Incentive Plan and
LTIP if applicable.
(b) Executive shall be entitled to a lump sum payment equal to
the applicable Tier times covered pay, except as provided in
paragraph (e) below. "Covered pay" means the sum of
(i) Executive's annual base salary in effect on the date
of a termination of employment (or, if higher, the Executive's
annual base salary established at the beginning of the year in which
the Change in Control occurred), plus
(ii) the higher of (A) the average annual incentive
compensation accrued or (B) the average annual target incentive
compensation, for service by Executive under the Annual Incentive
Plan in the three full plan years immediately preceding the year in
which the termination of employment occurs, plus
(iii) if Executive participates in LTIP, the higher of
(A) the average annual LTIP award accrued, or (B) the average target
LTIP, for service by Executive in the three plan years immediately
preceding the year in which the termination of employment occurs.
(c) Executive shall be entitled to continued coverage for
Executive and eligible dependents under all of the Corporation's
Benefit Plans for a period of years equal to the applicable Tier
(except as provided in paragraph (e) below) following termination of
employment.
(d) The payments described in (a) and (b) above shall be made
within five business days after termination of Executive's
employment, or if later, ten business days after notice to the
Corporation of termination for Good Reason. Any payments not timely
made will accrue interest at 10% per annum until made.
(e) The applicable Tier (years) in (b) and (c) above shall
be reduced and prorated on months for full months eliminated, so it
will not exceed the period between termination of employment and the
first day of the month following Executive's 65th birthday.
(f) Vesting of Options upon Change in Control. In the event
of a Change in Control, whether or not Executive's employment
continues with the Corporation, all outstanding options under the
Option Plan not otherwise vested under the terms of the Option Plan
and/or the applicable option agreements or notices shall immediately
vest on the date of the Change in Control, unless Executive
voluntarily terminated employment or employment terminated for Cause
such that the options expired prior to the Change in Control.
2. Related Termination. If Executive's employment is terminated
by the Corporation without Cause within 6 months prior to a public
announcement of a potential transaction, proxy contest or other
event or condition which then results in a Change in Control of the
Corporation, and if it can be shown that Executive's termination was
at the direction or request of a third party that had taken steps
reasonably calculated to effect the Change in Control of the
Corporation thereafter, then Executive shall have the rights
described in Section (1) above, as if a Change in Control of the
Corporation had occurred on the date immediately preceding such
termination.
3. Certain Supplemental Payments by the Corporation.
(a) If Executive is entitled to compensation under Section 1
or 2, and if in connection therewith it is determined that
(i) part or all of the compensation and benefits to be
paid to Executive related to the Change in Control constitute
"parachute payments" under Section 28OG of the Internal Revenue Code
of 1986 as amended ("Code"), and
(ii) the payment thereof will cause Executive to incur
excise tax under Section 4999 of the Code, the Corporation, on or
before the date for payment of such excise tax, shall pay Executive,
in a lump sum, an amount (the "Gross-Up Amount") such that, after
payment of all federal, state and local income tax and any
additional excise tax under Section 4999 of the Code in respect of
the Gross-Up Amount payment, Executive will be fully reimbursed for
the amount of such excise tax.
(b) The determination of the Parachute Amount and Base Amount
(as these terms are defined under the Code), and the Gross-Up
Amount, as well as any other calculations necessary to implement
this Section, shall be made by a nationally recognized accounting or
benefits consulting firm selected by the Corporation and which has
not performed services, other than minor incidental services, for
either the Corporation or Executive for three years prior to the
date such consultant is retained for this purpose. The consultant's
fee shall be paid by the Corporation.
(c) As promptly as practicable following any such
determination, the Corporation shall pay to or distribute to or for
the benefit of the Executive such amounts as are due to Executive
under this Section.
4. Expenses and Interest. If, after a Change in Control of the
Corporation, a good faith dispute arises with respect to the
enforcement of the Executive's rights under the Plan, or if any
legal or arbitration proceeding shall be brought in good faith to
enforce or interpret any rights provided under the Plan, Executive
shall recover from the Corporation any reasonable attorney's fees
and necessary costs and disbursements incurred as a result of such
dispute, and prejudgment interest on any money judgment or
arbitration award obtained by Executive, calculated at 10% per annum
from the date that payments should have been made under the Plan to
the date such payments are made.
5. Definitions Used in the Plan:
(a) "Change in Control" of the Corporation means the
occurrence of any of the following:
(i) any event, circumstance or transaction (other than
a Corporate Transaction as defined in paragraph (ii) below) pursuant
to which individuals who constitute the Board on the date hereof
("Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to such date whose election, or nomination for election,
is at any time approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though he or she were a member of the Incumbent Board but excluding,
for this purpose, any such individual whose initial assumption of
office as a director occurs as a result of (A) an actual or
threatened election contest with respect to the election or removal
of directors, (B) any other actual or threatened solicitation of
proxies or consents by or on behalf of a Person or Group (as defined
in (C)) other than the Board or (C) any other type of pressure from
any "person" ("Person") or "group" ("Group") that "beneficially
owns" (as such terms are defined in Rule 13d-3 or otherwise under
the Securities Exchange Act of 1934, as amended or any successor
thereto (the "Act")) 20% or more of the Outstanding Common Stock or
the Outstanding Voting Securities;
(ii) any transaction involving, directly or indirectly,
the issuance or acquisition of the Corporation's equity securities
by the Corporation or any of its affiliates or associates (as such
terms are defined in Rule 12b-2 or otherwise under the Act), or
consummation of a reorganization, merger or consolidation or a sale
or other disposition of all or substantially all of the assets of
the Corporation or the acquisition of assets of another corporation
(any such transaction, "Corporate Transaction") in which, upon
consummation of such transaction:
(A) any Person (excluding any employee benefit
plan (or related trust) of the Corporation or such corporation
resulting from such Corporate Transaction or any affiliate of either
of them), or Group beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such Corporate Transaction or the
combined voting power of the then outstanding voting securities of
such corporation (a "20% Holder"), except to the extent (x) that
such ownership existed prior to the Corporate Transaction or (y)
such 20% Holder has agreed, for a period of five years after the
consummation of the Corporate Transaction, not to solicit or
participate, directly or indirectly, in the solicitation of proxies
in opposition to management of the Corporation and not to vote any
securities beneficially owned by the 20% Holder other than in
proportion to the votes cast by other shareholders who are not
affiliates of such 20% Holder, or
(B) at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction are not members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the
Board, providing for such Corporate Transaction.
(iii) any Person or Group is or becomes the beneficial
owner, directly or indirectly, of at least 40% of the Outstanding
Common Stock or the Outstanding Voting Securities (giving effect to
the deemed ownership of securities by such Person or Group, as
provided in Rule 13d-3(d)(1) under the Act, but not giving effect to
any such deemed ownership of securities by another Person or Group
(the "40% Holder"), unless prior to becoming a 40% Holder such
Person has agreed, for a period of at least five years after
becoming a 40% Holder, not to solicit or participate, directly or
indirectly, in the solicitation of proxies in opposition to
management of the Corporation and not to vote any securities
beneficially owned by the 40% Holder other than in proportion to the
votes cast by other shareholders who are not affiliates of such 40%
Holder.
(iv) approval by the shareholders of the Corporation of
a complete liquidation or dissolution of the Corporation.
(b) "Annual Incentive Plan" means the Corporation's
Management Incentive Compensation Plan and any such successor plans
as may be adopted to provide annual incentive compensation for
executives.
(c) "Option Plan" means the Corporation's Long Term Stock
Incentive Plan and any successor stock option plans, or any
combination of such plans.
(d) "LTIP" means the Corporation's Long Term Incentive
Compensation program and any successor programs or plans as may be
adopted to provide long term incentive compensation for senior
executives ("LTIP").
(e) "Benefit Plans" means the group life insurance, health
insurance, disability insurance, and survivor income insurance
plans, JP TeamShare Plan or any successor thereto, qualified, and if
applicable the nonqualified, retirement plan, and any other benefit
plans or programs, maintained by the Corporation and/or its
subsidiaries and covering Executive, as in effect immediately prior
to the earlier of Executive's termination of employment or a Change
in Control.
(f) "Cause" means:
(i) a willful and continuing failure to perform
substantially the duties of Executive's office as assigned from time
to time (other than as a result of Executive's death or disability);
or
(ii) conduct undertaken by the Executive which is
demonstrably willful and deliberate on the Executive's part and
which is intended to result in (A) substantial personal enrichment
of the Executive at the Corporation's expense and (B) substantial
injury to the Corporation; or
(iii) Executive's conviction of, or plea of guilty or
nolo contendere to, a felony, unless committed in the good faith
belief that Executive's actions were in the Corporation's best
interests and would not violate criminal law.
(g) "Disability" means Executive is unable to substantially
perform his or her duties for a period of at least three months due
to physical or mental disability, and at the end of such period a
physician agreed upon by the Corporation and the Executive
determines that such disability is permanent.
(h) "Good Reason" means:
(i) any reduction in the aggregate amount of
Executive's base salary and benefits (excluding programs described
in (ii)) as in effect from time to time; or
(ii) any significant reduction in annual bonus and
LTIP, except variation in bonus and/or LTIP related to corporate or
business unit performance and calculated under a formula and
individual performance evaluation criteria not significantly less
favorable to Executive than the formula and criteria in place prior
to the Change in Control.
Upon the occurrence of any event described in (i)
or (ii) above, Executive may give the Corporation written notice
that such event constitutes Good Reason, and the Corporation shall
thereafter have 30 days in which to cure. If the Corporation has not
wholly cured in that time, the event shall constitute Good Reason.
(i) "Outstanding Common Stock" means the then outstanding
shares of common stock of the Corporation.
(j) "Outstanding Voting Securities" means the combined voting
power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors.
6. Terminations for Cause. In the case of termination for Cause
in anticipation of, upon or following a Change in Control, Executive
shall be given written notice that the Corporation intends to
terminate employment for Cause. Such notice shall specify the
particular acts, or failures to act, that give rise to the decision
to terminate employment.
7. Payment Obligations Absolute. The Corporation's obligation to
pay the Executive the compensation and to make the arrangements
provided in the Plan shall be absolute and unconditional and shall
not be affected by any circumstances including, without limitation,
any set-off, counterclaim, recoupment, defense or other right which
the Corporation may have against Executive or anyone else. All
amounts due under the Plan shall be paid without notice or demand.
Each such payment shall be final and the Corporation will not seek
to recover all or any part of the payment from Executive or from
whomsoever may be entitled thereto, for any reason whatever;
provided that if Executive is convicted of, or pleads guilty or nolo
contendere to, a felony or misdemeanor involving acts or omissions
of the Executive in connection with his employment by the
Corporation, the Corporation shall be allowed to recover any actual
damages it has incurred from such action or omission out of amounts
paid or owing to Executive hereunder.
Except for the compensation rights expressly granted to
Executive herein in connection with a Change in Control, this Plan
shall not confer on Executive any right to remain an employee or to
retain executive responsibilities or compensation, or restrict the
Corporation's right to take any personnel action with respect to
Executive. The Plan also shall not affect any previously signed
employment agreement.
8. Arbitration.
(a) Any dispute, controversy, or claim between the parties
arising out of, relating to, or concerning the Plan or its breach,
termination, or invalidity, or the scope of this arbitration clause,
shall be settled by arbitration in accordance with the Employment
Dispute Resolution Rules of the American Arbitration Association
("AAA") then in effect. Any award rendered shall be final and
binding on the parties hereto, and judgment may be entered in any
court having jurisdiction thereof.
(b) The arbitrator shall be mutually acceptable to the
parties, or failing agreement, selected pursuant to the Employment
Dispute Arbitration Rules of the AAA. The arbitration award shall be
in writing and shall specify the factual and legal bases for the
award. In rendering the award, the arbitrator shall determine the
respective rights and obligations of the parties according to the
laws of the State of North Carolina, not including its choice-of-law
rules, or, if applicable, federal law.
(c) All costs and expenses of the arbitration shall be paid
by the Corporation.
(d) This arbitration clause shall be governed by the Federal
Arbitration Act, 9 U.S.C. Section 1, et seq. ("FAA"); however, if this
clause is unenforceable for any reason under the FAA, then it shall
be governed by the provisions of the North Carolina Uniform
Arbitration Act, N.C.G.S.45A:1-567.1 et seq.
9. Withholding. From payments under the Plan to Executive or his
or her spouse, estate or beneficiaries, the Corporation may withhold
such amounts relating to taxes as it reasonably determines should be
withheld pursuant to any applicable law or regulation.
10. Assignability. Executive's rights under the Plan will inure
to the benefit of Executive's successors, heirs, administrators,
executors and assigns. Executive may not assign, transfer or
otherwise alienate any rights under the Plan, except that rights to
compensation and benefits, which rights will remain subject to the
limitations in the Plan, may be transferred by will or operation of
law or under a qualified domestic relations order, and except that
rights under Benefit Plans may be assigned or transferred in
accordance with such plans or programs or regular practices
thereunder.
No rights or obligations of the Corporation under the Plan may
be assigned or transferred. The Corporation shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to a majority of the business assets of
the Corporation, by written agreement in form and substance
satisfactory to the Incumbent Board, as a condition to such
transaction, expressly to assume and agree to perform the Plan in
the same manner and to the same extent as the Corporation would be
required to perform it if no such succession had occurred (to the
extent not, in fact, performed by the Corporation).
11. Amendment. The Plan may be amended or terminated at any time
by the Board or, except for any increase in the maximum Tier
multiplier, by the Compensation Committee and either body may
terminate an Executive's participation or change the applicable
Tier; provided however that no such action shall diminish the
protection afforded to Executive hereunder (a) upon less than one
year's written notice to any affected Executive or (b) following a
Change in Control, for any termination of employment that occurs on
or before two years after such Change in Control.
12. Severability. If fulfillment of any provision of the Plan, at
the time such fulfillment shall be due, shall transcend the limit of
validity prescribed by law, then the obligation to be fulfilled
shall be deemed reduced to the limit of such validity; and if any
clause or provision contained in the Plan operates or would operate
to invalidate the Plan, in whole or in part, then such clause or
provision only shall be held ineffective to the extent of such
invalidity, as though not herein contained, and the remainder of the
Plan shall remain operative and in full force and effect.
13. References. Upon Executive's death or a judicial
determination of incompetence, reference in the Plan to Executive
will be deemed, where appropriate, to refer to Executive's legal
representative or to Executive's beneficiary or beneficiaries.
14. Governing Law. Except to the extent governed by the FAA as
provided in Section 8 above, the Plan shall be construed in
accordance with and governed by the laws of North Carolina, not
including its choice-of-law rules.