Exhibit 10.8
UNUM GROUP
CHANGE IN
CONTROL SEVERANCE AGREEMENT
AGREEMENT by and
between Unum Group, a Delaware corporation having its principal
executive offices in Chattanooga, Tennessee (the
“Company”), and [
] (the “Executive”), dated as of the [
] day of
[
] , 200[
].
The Company has
determined that it is in the best interests of its shareholders to
provide the Company with continuity of management, including the
continued dedication of the Executive. Therefore, in order to
accomplish these objectives, the Executive and the Company desire
to enter into this Agreement.
NOW, THEREFORE, IT
IS HEREBY AGREED AS FOLLOWS:
1.
Effective Date . The “Effective
Date” shall mean [
] , provided the Executive is employed by the Company on such
date.
2.
Term of Agreement . The Company hereby agrees
that the term of this Agreement shall be for the period commencing
on the Effective Date and ending on the second anniversary of the
Effective Date (the “Initial Term”). Beginning on the
second anniversary of the Effective Date, the Initial Term shall be
automatically extended for one year terms unless either the Company
or the Executive shall give the other party, not less than 90 days
prior to such Renewal Date, written notice that the Agreement shall
not be so extended.
3.
Termination of
Employment .
(a)
Death or Disability . The Executive’s
employment shall terminate automatically upon the Executive’s
death. If the Company determines in good faith that the Disability
of the Executive has occurred (pursuant to the definition of
Disability set forth below), it may give to the Executive written
notice in accordance with Section 10(b) of this Agreement of
its intention to terminate the Executive’s employment. In
such event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive
from the Executive’s duties with the Company on a full time
basis for 180 business days during any consecutive twelve-month
period as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative.
(b)
Cause . The Company may terminate the
Executive’s employment for Cause. For purposes of this
Agreement, “Cause” shall mean:
(i) the
continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates
(other than
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any such failure resulting from incapacity due to physical or
mental illness), after a written demand for substantial performance
is delivered to the Executive by the Chief Executive Officer of the
Company (“CEO”) which specifically identifies the
manner in which the CEO believes that the Executive has not
substantially performed the Executive’s duties, or
(ii) the
willful engaging by the Executive in illegal conduct (as determined
by the Company after due inquiry) or gross misconduct which is
materially and demonstrably injurious to the Company, or
(iii) conviction
of a felony or guilty or nolo contendere plea by the Executive with
respect thereto.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered “willful”
unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive’s
action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of
the CEO or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to
the Executive written notice signed by the CEO of the Company of an
event constituting cause within 90 days of the Company’s
knowledge of its existence.
(c)
Good Reason . The Executive’s employment
may be terminated by the Executive for Good Reason. In order to
invoke a termination for Good Reason, the Executive shall provide
written notice to the Company of one or more of the conditions
described in clauses (i) through (vii) below within 90
days following the Executive’s knowledge of the initial
existence of such condition, specifying in reasonable detail the
conditions constituting Good Reason, and the Company shall have 30
days following receipt of such written notice (the “Cure
Period”) during which it may remedy the condition. In the
event that the Company fails to remedy the condition constituting
Good Reason during the applicable Cure Period, the
Executive’s “separation from service” (within the
meaning of Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”)) must occur, if at all, within
2 years following such Cure Period in order for such termination as
a result of such condition to constitute a termination for Good
Reason. For purposes of this Agreement, “Good Reason”
shall mean:
(i) the
assignment to the Executive of any duties materially inconsistent
with the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities, or any other action by the Company which results
in a material diminution in the Executive’s authority, duties
or responsibilities, or the budget over which the Executive retains
authority, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith;
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(ii) a
material reduction in the Executive’s annual base salary or
annual target bonus as in effect prior to a Change in Control;
(iii) the
failure of the Company to (A) continue in effect any material
employee benefit plan, compensation plan, welfare benefit plan or
fringe benefit plan in which the Executive is participating
immediately prior to such Change in Control or the taking of any
action by the Company which would materially and adversely affect
the Executive’s participation in or materially reduce the
Executive’s benefits under any such plan, unless Executive is
permitted to participate in other plans providing the Executive
with materially equivalent benefits in the aggregate (at materially
equivalent cost with respect to welfare benefit plans), or
(B) provide the Executive with paid vacation materially
similar to that provided by the most favorable vacation policies of
the Company as in effect for the Executive immediately prior to
such Change in Control, including the crediting of all service for
which the Executive had been credited under such vacation policies
prior to the Change in Control;
(iv) any
material failure by the Company to comply with and satisfy
Section 9(c) of this Agreement;
(v) any
required relocation of the Executive following a Change in Control
(as defined herein) of more than 50 miles from Executive’s
principal business office as of immediately prior to the Effective
Date;
(vi) any
other action or inaction that constitutes a material breach by the
Company of any agreement under which the Executive provides
services to the Company; or
(vii) any
material diminution in the authority, duties, or responsibilities
of those to whom the Executive is required to report.
(d)
Change in Control . For purposes of this
Agreement, “Change in Control” shall mean the
occurrence of any one of the following events and shall not include
the merger of Unum Corporation and Provident Companies, Inc.
pursuant to the Agreement and Plan of Merger dated as of
November 22, 1998 as amended as of May 25, 1999 and
consummated on June 30, 1999:
(i) during
any period of 2 consecutive years, individuals who, at the
beginning of such period, constitute the Board (the
“Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director and whose election or nomination for
election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board (either by a specific vote or
by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director;
provided , however , that no individual initially
elected or nominated as a director of the Company as a result of an
actual or threatened election
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contest (as described in Rule 14a-11 under the Securities Exchange
Act of 1934 (the “Act”)) (“Election
Contest”) or other actual or threatened solicitation of
proxies or consents by or on behalf of any “person” (as
such term is defined in Section 3(a)(9) of the Act and as used
in Sections 13(d)(3) and 14(d)(2) of the Act) other than the Board
(“Proxy Contest”), including by reason of any agreement
intended to avoid or settle any Election or Contest or Proxy
Contest, shall be deemed an Incumbent Director;
(ii) any
person is or becomes a “beneficial owner” (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities
of the Company representing 20% (30% with respect to deferred
compensation subject to Section 409A of the Code) or more of
the combined voting power of the Company’s then outstanding
securities eligible to vote for the election of the Board (the
“Company Voting Securities”); provided ,
however , that the event described in this paragraph
(ii) shall not be deemed to be a Change in Control of the
Company by virtue of any of the following acquisitions: (A) by
the Company of any subsidiary, (B) by any employee benefit
plan (or related trust) sponsored or maintained by the Company or
any subsidiary, (C) by an underwriter temporarily holding
securities pursuant to an offering of such securities,
(D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (iii)), or (E) a transaction (other than one
described in (iii) below) in which Company Voting Securities
are acquired from the Company, if a majority of the Incumbent
Directors approve a resolution providing expressly that the
acquisition pursuant to this clause (E) does not constitute a
Change in Control of the Company under this paragraph (ii);
(iii) the
consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Company or
any of its subsidiaries that requires the approval of the
Company’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a
“Reorganization”), or sale or other disposition of all
or substantially all of the Company’s assets to an entity
that is not an affiliate of the Company (a “Sale”),
unless immediately following such Reorganization or Sale:
(A) more than 50% of the total voting power of (x) the
corporation resulting from such Reorganization or the corporation
which has acquired all or substantially all of the assets of the
Company (in either case, the “Surviving Corporation”),
or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the
voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”), is represented
by the Company Voting Securities that were outstanding immediately
prior to such Reorganization or Sale (or, if applicable, is
represented by shares into which such Company Voting Securities
were converted pursuant to such Reorganization or Sale), and such
voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Reorganization
or Sale, (B) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation) is or becomes the beneficial
owner, directly or indirectly, of 20% (30% with respect to deferred
compensation subject to Section 409A of the Code) or more of
the total voting power of the outstanding voting securities
eligible to elect
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directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a
majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Reorganization or
Sale were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for
such Reorganization or Sale (any Reorganization or Sale which
satisfies all of the criteria specified in (A), (B) and
(C) above shall be deemed to be a “Non-Qualifying
Transaction”); or
(iv) the
stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 20% (30% with respect to deferred
compensation subject to Section 409A of the Code) of the
Company Voting Securities as a result of the acquisition of Company
Voting Securities by the Company which reduces the number of
Company Voting Securities outstanding; provided ,
that if after such acquisition by the Company such person
becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company
Voting Securities beneficially owned by such person, a Change in
Control of the Company shall then occur.
(e)
Notice of Termination . Any termination by the Company or by
the Executive shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(b) of
this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, 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 Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days
after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights hereunder.
(f)
Date of Termination . “Date of Termination”
means (i) if the Executive’s employment is terminated by
the Company other than for Disability, or by the Executive, the
date of receipt of the Notice of Termination or any later date
specified therein within 30 days of such notice, or (ii) if
the Executive’s employment is terminated by reason of death
or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.
4.
Obligations of the Company upon Termination .
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(a) Good Reason;
Other Than for Cause, Death or Disability . If, within 2 years
following a Change in Control, the Company shall terminate the
Executive’s employment other than for Cause, Disability or
death, or the Executive shall terminate employment for Good
Reason:
(i) the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, subject to the
Executive’s execution and nonrevocation, within 52 days after
the Date of Termination, of the general release described in
Section 11:
A. the
product of 2 times the sum of (x) the Executive’s annual
bonus, including any deferred amounts (based upon the higher of
(1) the Executive’s target bonus for the fiscal year in
which the Change in Control occurs (or, if the Executive’s
target bonus for such period has not been established at the time
of the Change in Control, the Executive’s target bonus for
the fiscal year prior to the fiscal year in which the Change in
Control occurs) and (2) the bonus the Executive received for
the fiscal year immediately preceding the fiscal year in which the
Change in Control occurs) and (y) the Executive’s annual
base salary (based upon the higher of (i) the
Executive’s annual base salary as of the Date of Termination
or (ii) the highest annual base salary the Executive received
within the 12-month period prior to the Change in Control);
B. the
sum of (x) the Executive’s annual base salary through
the Date of Termination to the extent not theretofore paid or
deferred pursuant to an irrevocable election under any deferred
compensation arrangement subject to Section 409A of the Code,
and (y) the product of (1) the Executive’s annual
bonus for the fiscal year in which the Change in Control occured,
assuming that the Executive achieved his target (or, if the
Executive’s target bonus for such period has not been
established at the time of the Change in Control, the
Executive’s target bonus for the fiscal year prior to the
fiscal year in which the Change in Control occurs) and (2) a
fraction, the numerator of which is the number of days in the
fiscal year in which the Date of Termination occured through the
Date of Termination and the denominator of which is 365 (the sum of
the amounts described in clauses (x) and (y) shall be
hereinafter referred to as the “Accrued Obligations”);
and
C. if
applicable, any compensation previously deferred by Executive under
the Unum Deferred Compensation Plan (together with any earnings and
interest thereon), unless payment of such deferred compensation in
a lump sum cash amount within 30 days after the Date of Termination
would (x) violate the terms of the applicable plan or
(y) result in the imposition of taxation or penalties pursuant
to Section 409A of the Code.
(ii) the
Company shall continue to provide, for a period of 2 years
following the Executive’s Date of Termination, the Executive
(and the Executive’s
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dependents, if applicable) with the same level of medical, dental,
disability and life insurance benefits upon substantially the same
terms and conditions (including contributions required by the
Executive for such benefits) as existed immediately prior to the
Executive’s Date of Termination (or, if more favorable to the
Executive, as such benefits and terms and conditions existed
immediately prior to the Change in Control); provided that, if the
Executive cannot continue to participate in the Company plans
providing such benefits, the Company shall otherwise provide such
benefits on the same after-tax basis as if continued participation
had been permitted; provided , however , that the
medical and dental benefits provided pursuant to this paragraph
shall be provided in such a manner that such benefits (and the
costs and premiums thereof) are excluded from the Executive’s
income for federal income tax purposes and, if the Company
reasonably determines that providing continued coverage under one
or more of its benefit plans could be taxable to the Executive, the
Company may provide such benefits at the level required hereby
through the purchase of individual insurance coverage.
Notwithstanding the foregoing, (x) if and to the extent
required to avoid the imposition of taxes and penalties under
Internal Revenue Code Section 409A, the Executive will pay the
entire cost of such coverage for the first 6 months after the Date
of Termination and the Company will reimburse the Executive for the
Company’s share of such costs, determined pursuant to this
paragraph, on the six-month anniversary of the Executive’s
“separation from service” as defined under Internal
Revenue Code Section 409A, and (y) in the event the
Executive becomes reemployed with another employer and becomes
eligible to receive welfare benefits from such employer, the
welfare benefits described herein shall be secondary to such
benefits during the period of the Executive’s eligibility,
but only to the extent that the Company reimburses the Executive
for any increased cost and provides any additional benefits
necessary to give the Executive the benefits provided hereunder;
provided , however , that such reimbursements shall
be provided only in such a manner that such reimbursements are
excluded from the Executive’s income for federal income tax
purposes.
(iii) notwithstanding
any provision of any Company equity plan or any award agreement
granted thereunder, all stock options, restricted stock awards and
other equity based awards granted to the Executive on or after the
date hereof (the “Equity Awards”) shall vest and shall
remain exercisable for a period of 90 days from the Date of
Termination or the earlier expiration of their initial full
scheduled term; provided , that , any Equity Awards
that constitute “nonqualified deferred compensation”
for purposes of Section 409A of the Code will vest
immediately, but shall not be paid until the date on which such
Equity Awards would otherwise be payable in accordance with the
terms of the Company equity plan under which they were granted.
(iv) the
Company shall pay to the Executive in a lump sum in cash within 60
days after the Date of Termination, subject to the
Executive’s execution and nonrevocation, within 52 days after
the Date of Termination, of the general release described in
Section 11, an amount equal to the excess of (A) the
actuarial equivalent of the Executive’s benefit under the
Company’s tax-qualified defined benefit pension plan (the
“Retirement Plan”) (utilizing actuarial assumptions no
less favorable to the
7
Executive than those in effect under such plan immediately prior to
the Effective Date) and the supplemental defined benefit pension
plan (the “SERP”) that the Executive would receive if
the Executive’s employment continued for 2 additional years
after the Date of Termination, assuming for this purpose that
(1) the Excecutive’s age is increased by the number of
years that the Executive is deemed to be so employed and
(2) the Executive’s compensation in each of the 2 years
is that referred to in Section 4(a)(i)(A) above, over
(B) the actuarial equivalent of the Executive’s actual
benefit (paid or payable), if any, under the Retirement Plan and
the SERP as of the Date of Termination.
(v) to
the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies
through the Date of Termination (such other amounts and benefits
shall be hereinafter referred to as the “Other
Benefits”).
(vi) the
Company shall provide individual outplacement services to the
Executive in accordance with the practices and policies of the
Company in effect immediately prior to the Change in Control of the
Company.
Notwithstanding anything in this Agreement to the contrary, if
(i) the Executive’s employment is terminated prior to a
Change in Control for reasons that would have constituted a Good
Reason or without Cause termination if they had occurred following
a Change in Control; (ii) the Executive reasonably
demonstrates that such termination (or Good Reason event) was in
anticipation of, in connection with, or was at the request of a
third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control; and
(iii) a Change in Control involving such third party (or a
party competing with such third party to effectuate a Change in
Control) does occur, then for purposes of this Agreement, the
Executive shall be treated as if the Change in Control occurred on
the date immediately prior to the date of such termination of
employment or event constituting Good Reason.
(b)
Death or Disability . If the Executive’s employment is
terminated by reason of the Executive’s death or disability,
this Agreement shall terminate without further obligations to t
