STATE
OF GEORGIA,
COUNTY OF MUSCOGEE:
THIS
AGREEMENT, made and entered into as of the 1st day of February,
2007, by and between American Family Life Assurance Company of
Columbus, a Nebraska corporation with its principal place of
business in Columbus, Georgia, corporation, hereinafter referred to
as “Corporation,” and TOHRU TONOIKE, hereinafter
referred to as “Employee;”
WHEREAS,
Corporation and Employee desire to enter into an Employment
Agreement and to set forth the terms and conditions of
Employee’s employment as an executive employee by Corporation
as its Deputy President of AFLAC Japan;
NOW,
THEREFORE, the parties, for and in consideration of the mutual
covenants and agreements hereinafter contained, do contract and
agree as follows, to-wit:
1.
Purpose and employment . The purpose of this Agreement is to
define the relationship between Corporation as an employer and
Employee as an employee and Deputy President of AFLAC Japan. (This
Agreement is further made in contemplation of Employee becoming
President of AFLAC Japan in the future. Unless modified by the
mutual consent of the parties hereto, this Agreement shall continue
to govern the relationship between the parties in all
respects.)
2.
Duties . Employee agrees to provide executive management
services as Deputy President of AFLAC Japan (or as President of
AFLAC Japan if so designated) to Corporation and its subsidiaries
and affiliates on a full-time and exclusive basis; provided,
however, nothing shall preclude Employee from engaging in
charitable and community affairs or managing his own or his
family’s personal investments.
3.
Performance . Employee agrees to devote all necessary time
and his best efforts in the performance of his duties on behalf of
Corporation and its subsidiaries and affiliates.
4.
Term . The term of employment under this Agreement shall
begin February 1, 2007, and shall continue until
December 31, 2010, unless extended or sooner terminated as
hereinafter provided.
5.
Base salary . For all the services rendered by Employee,
Corporation shall pay Employee a base salary of 40 million yen
per annum, said salary shall be payable in accordance with
Corporation’s normal payroll procedures. Said salary shall be
further increased to: 50 million per annum effective
January 1, 2008; 55 million yen effective January 1,
2009; and 60 million yen effective January 1, 2010.
Thereafter, Employee’s base salary may be increased annually
during any extensions of this Agreement as determined by the Chief
Executive Officer.
6.
Adjustments to base salary . Corporation and Employee may,
from time to time, reflect increases in Employee’s base
salary as provided for in Paragraph 5 by entering the change
on the “Schedule of Compensation,”
1
as
shown by the form attached hereto as Exhibit “A” and
made a part hereof. If an increase in compensation is entered on
said Schedule and duly signed by the proper officers of Corporation
and by Employee, said entry shall constitute an amendment to this
Employment Agreement as of the date of said entry and shall
supersede the base salary provided for in Paragraph 5 and any
other increases in Employee’s base salary previously entered
on said Schedule.
7.
Management Incentive Plan . In addition to the base salary
paid to Employee in accordance with Paragraph 5, Corporation
shall, for each calendar year of Employee’s employment by
Corporation, beginning with the calendar year 2007, pay Employee,
as performance bonus compensation, an amount determined each year
under Corporation’s current Management Incentive Plan
(short-term Incentive Program) with a target level based on at
least 37.5% of base salary in 2007, 42.5% in 2008 and 50%
thereafter. Nothing in this paragraph shall preclude Employee from
receiving additional discretionary bonuses approved by the Chief
Executive Officer or the Board.
8.
Special Retirement Benefit . Upon Employee’s
termination of employment with Corporation, Corporation shall
within a reasonable period of time after such termination, pay to
employee a one-time, lump-sum special retirement benefit in
recognition of Employee’s service to corporation. This
special retirement benefit shall be equal to 110% of the sum of all
amounts actually paid to employee as performance bonus compensation
under corporation’s Management Incentive Plan for calendar
years 2007, 2008, 2009, 2010, as set forth in
Paragraph 7.
9.
Employee benefits . Employee shall be eligible to
participate with other employees of the Corporation in all fringe
benefit programs applicable to employees generally which may be
authorized and adopted from time to time by the Board, including
without limitation: a qualified pension plan, a profit sharing
plan, a disability income or sick pay plan, a thrift and savings
plan, an accident and health plan (including medical reimbursement
and hospitalization and major medical benefits), and a group life
insurance plan. In addition, Corporation shall furnish to Employee
such other “fringe” or employee benefits as are
provided to key executive employees of Corporation and such
additional employee benefits which the Compensation Committee of
the Board shall determine to be appropriate to Employee’s
duties and responsibilities including, without limitation,
reimbursement of legal and accounting expenses incurred by Employee
in connection with the preparation of his employment or other
agreements with Corporation and any expenses for legal, accounting
or financial services incurred by Employee in connection with his
employment.
10.
Stock option plans . Employee shall be awarded restricted
stock or stock options to purchase Corporation’s common stock
under Corporation’s Equity Award Plans as determined by the
Compensation Committee of the Board of Directors. The CEO will
recommend that grants in the following number of shares be granted
to Employee: upon employment in 2007, 20,000 restricted shares; in
2008, 40,000 stock options. (It should be understood, however, that
said options can only be granted by the Compensation Committee of
the Corporation’s Board of Directors, and that the 2007 grant
cannot be made until after employment and during a “stock
trading window” period, in accordance with the
Corporation’s policy.)
11.
Working facilities and expenses . Employee shall be provided
with an office, books, periodicals, stenographic and technical
help, ground and air transportation, and such other facilities,
equipment, supplies and services suitable to his position and
adequate for the performance of his duties. The Corporation shall
pay Employee’s fees and dues in such social and country
clubs, civic clubs and business societies and associations as shall
be appropriate in facilitating Employee’s job performance and
in the best interest of Corporation. The Corporation shall also pay
all appropriate business liability insurance and any business
licenses and fees pertaining to the services rendered by Employee
hereunder.
Employee
is encouraged and is expected, from time to time to incur
reasonable expenses for promoting the business of Corporation,
including expenses for social and civic club memberships and
participation, entertainment, travel and other activities
associated with Employee’s duties. The cost of all such
activities shall be the expenses of
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Corporation
unless the Compensation Committee of the Board shall determine in
advance that any such expense of Employee should be paid by
Employee.
12.
Vacation . Employee shall continue to be entitled to his
vacation time with pay during each calendar year in accordance with
Corporation’s vacation policy for senior executive employees.
In addition, Employee shall be entitled to such holidays as
Corporation shall recognize for its employees generally.
13.
Sickness and total disability . Employee’s absence
from work because of sickness or accident (not resulting in
Employee becoming “totally disabled,” as that term is
hereinafter defined) shall not result in any adjustment in
Employee’s compensation or other benefits under this
Agreement.
Should
Employee become totally disabled as a result of sickness or
accident and unable to adequately perform his regular duties
prescribed under this Agreement, his base salary (which shall
continue to be adjusted as provided for in Paragraph 5),
together with incentive bonuses under the Corporation’s
Management Incentive Plan and his participation in
Corporation’s employee benefit programs and retirement plan
shall continue without reduction except as hereinafter provided,
during the continuance of such disability of a period not exceeding
the earlier of (1) the end of the term of this Agreement or
any extension hereof or (2) a period of one and one-half
(1-1/2) years (547 calendar days) for each continuous disability.
Payments pursuant to this paragraph 13 shall be reduced by any
amounts paid to Employee during any such period of disability from
time to time under any disability programs, plans or policies
maintained by Corporation, its subsidiaries or
affiliates.
Should
Employee’s total disability continue for a period beyond the
end of the term of this Agreement or in excess of 547 calendar
days, this Agreement shall, at the end of such period which first
occurs, be automatically terminated. If, however, prior to such
time, Employee’s total disability shall have ceased and he
shall have resumed the adequate performance of his duties
hereunder, this Agreement shall continue in full force and effect
and Employee shall be entitled to continue his employment hereunder
and to receive his full compensation and other benefits as though
he had not been disabled; provided, however, unless Employee shall
adequately perform his duties hereunder for a continuous period of
at least sixty (60) calendar days following a period of total
disability before Employee again becomes totally disabled, he shall
not be entitled to start a new 547-day period under this paragraph,
but instead may only continue under the remaining portion of the
original 547-day period of total disability. In the event Employee
shall not adequately perform his duties hereunder for a continuous
period of at least sixty (60) calendar days following a period
of total disability, the running of the original 547-day period
shall cease during the time of Employee’s adequate
performance of his duties hereunder before Employee again becomes
totally disabled.
For
the purpose of this Agreement, the term “totally
disabled” or “total disability” shall mean
Employee’s inability to adequately perform his executive and
management duties hereunder on account of accident or illness. It
is understood that Employee’s occasional sickness or other
incapacity of short duration may not result in his being or
becoming “totally disabled;” however, such illness or
incapacity could constitute Employee’s being or becoming
“totally disabled” if such illness or incapacity is
prolonged or recurring.
14.
Termination of employment .
A.
Termination by Corporation. The Corporation’s Chief Executive
Officer may terminate this Agreement, at any time, with or without
“good cause” (“good cause” being
hereinafter defined), by giving at least sixty
(60) days’ written notice to Employee of its intention
to terminate Employee’s employment without “good
cause” or at least five (5) days’ written notice
to Employee of its intention to terminate Employee’s
employment for “good cause;” provided, however,
Corporation may, at its election, terminate Employee’s actual
employment (so that Employee no longer renders services on behalf
of Corporation) at any time during said sixty (60) day or five
(5) day period; and,
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(1) In
the event such termination is for “good cause,”
Corporation shall be obligated only to:
(a) pay
Employee his base salary as provided for in Paragraph 5 of
this Agreement up to the termination date stated in said written
notice; provided, however, if Corporation does not elect to
terminate Employee’s employment during said five (5) day
period, but Employee, after receiving such notice of termination
from Corporation, elects to leave the employ of Corporation prior
to the end of said five (5) day period without the approval of
Corporation, then Corporation shall pay said base salary only up to
the date on which Employee actually terminates his
employment;
(b) pay
Employee any performance bonus due Employee under Paragraph 7
of this Agreement for the period ending on the termination date
stated in said written notice or on such earlier date of
Employee’s actual termination of his employment prior to the
end of said (5) day period if such termination is without the
approval of Corporation. The amount of said bonus, if any, shall be
calculated on a prorata basis, using the number of days Employee
was actually employed during such period, and the amount so
calculated shall be paid to Employee within a reasonable time after
the end of Corporation’s fiscal year in which written notice
of Employee’s termination is given;
(c) continue
to honor all fully vested stock options, subject to the terms
thereof, granted to Employee prior to the termination date stated
in said written notice or prior to such earlier date of
Employee’s actual termination of his employment prior to the
end of said five (5) day period if such termination is without
the approval of the Corporation;
(d) continue
to pay all of Employee’s fringe and other employee benefits
as provided for in this Agreement up to the termination date stated
in said written notice or up to such earlier date of
Employee’s actual termination of his employment prior to the
end of said five (5) day period if such termination is without
the approval of the Corporation.
(e) For
purposes of this subparagraph (1) and paragraph 19 hereof,
“good cause” shall mean: (i) the willful and
deliberate failure of Employee to substantially perform his
executive and management duties hereunder for a continuous period
of more than sixty (60) days for reasons other than
Employee’s sickness, injury or disability; (ii) the
willful and deliberate conduct by Employee which is intended by
Employee to cause, and which does in fact result in substantial
injury or damage to Corporation; or (iii) the conviction or
plea of guilty by Employee of a felony crime involving moral
turpitude.
(2) In
the event such termination is without “good cause,” as
defined in subparagraph (1)(e) of this paragraph and, if
applicable, subject to the terms of paragraph 19, Corporation shall
be obligated to:
(a) pay
employee his base salary as provided for in paragraph 5 of this
Agreement up to the end of the scheduled term of this
Agreement;
(b) pay
employee his performance bonus compensation as provided for in
paragraph 7 of this Agreement up to the end of the scheduled term
of this Agreement;
(c) continue
to honor all stock options, subject to the terms thereof, granted
to Employee prior to the termination date stated in said written
notice, all of said options to be or become fully vested as of the
termination date stated in said written notice;
(d) continue
to pay or provide to Employee all of the retirement, health, life
and disability benefits, as are provided for in this Agreement or
under any programs, plans or policies covering Employee at the time
of any such
4
notice
of termination, up to the end of the scheduled term of this
Agreement.
B.
Termination by Employee . Employee may terminate this
Agreement, at any time by giving at least sixty
(60) days’ written notice to Corporation of his
intention to terminate his employment;
(1) in
the event such termination by Employee shall be without “good
reason” (as defined in paragraph 19 hereof) and with a bona
fide intent to retire or to work or engage in a business or
activity which is not in competition with Corporation or any of its
subsidiaries or affiliates, Corporation shall be obligated
to:
(a) pay
Employee his base salary due him under paragraph 5 of this
Agreement up to the termination date stated in said written
notice;
(b) pay
Employee any performance bonus compensation due him under paragraph
7 of this Agreement for the period ending on the termination date
stated in said written
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