Aflac Incorporated 2008 Form 10-K [g17619e10vk.htm]
Exhibit 10.40
STATE OF GEORGIA,
COUNTY OF MUSCOGEE:
EMPLOYMENT AGREEMENT
     THIS AGREEMENT, made and entered into as of the 12th day of September,
1994, by and between AFLAC Incorporated, a Georgia corporation, hereinafter
referred to as “Corporation,” and JOEY M. LOUDERMILK, a resident of said State
and County, hereinafter referred to as “Employee;”
WITNESSETH THAT:
     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 Senior Vice President, Corporate
Secretary, and General Counsel;
     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
Senior Vice President, Corporate Secretary, and General Counsel of the
Corporation.
     2. Duties. Employee agrees to provide executive management services as
Senior Vice President, Corporate Secretary, and General Counsel of Corporation
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 as Senior Vice President, Corporate
Secretary, and General Counsel of Corporation on behalf of Corporation and its
subsidiaries and affiliates.
     4. Term. The term of employment under this Agreement shall begin
September 1, 1994, and shall continue for a period of three (3) years until
August 31, 1997, unless extended or sooner terminated as hereinafter provided.
On an annual basis beginning effective September 1, 1995, the scheduled term of
this Agreement shall be extended for successive one year periods unless written
notice of termination is given prior to such annual date by one party to the
other party that the Agreement will not be extended by its terms.
     5. Base salary. For all the services rendered by Employee, Corporation
shall continue to pay Employee a base salary of
                                         per year commencing September 1, 1994,
said salary to be payable in accordance with Corporation’s normal payroll
procedures. Employee’s base salary may be increased annually during the term of
this Agreement and any extensions hereof as determined by the Chief Executive
Officer.
     6. Adjustments to base salary. Corporation and Employee shall, 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

 

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Compensation,” 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
1994, continue to 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 thirty-five
percent (35%) of base salary. Nothing in this paragraph shall preclude Employee
from receiving additional discretionary bonuses approved by the Chief Executive
Officer or the Board.
     8. 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 as General Counsel
of Corporation, 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.
     9. Stock option plans. Employee shall be eligible to be awarded stock
options to purchase Corporation’s common stock under Corporation’s Stock Option
Plans for selected key employees and directors during the term of this
Agreement.
     10. 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 Corporation unless the Compensation
Committee of the Board shall determine in advance that any such expense of
Employee should be paid by Employee.

 

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     11. 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.
     12. 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 12
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.
     It is understood that for purposes of this Paragraph 12, Employee shall,
upon his becoming totally disabled, be given such additional “credited service”
if necessary to fully qualify Employee under Corporation’s Supplemental
Executive Retirement Plan (SERP) and to provide a survivor annuity to Employee’s
spouse under the Plan.
     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.
     13. 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

 

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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 selection,
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,
                    (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 18
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.

 

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                    (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 18, 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
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 18 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 notice. The amount of such performance bonus, if any
shall be calculated on a basis, using the number of days Employee was actually
employed by Corporation during such year of termination; and the amount so
calculated shall be paid to Employee within a reasonable time after the end of
Corporation’s fiscal year in which Employee’s notice of termination is given;
               (c) continue to honor all stock options, subject to the terms
thereof, granted to Employee which are fully vested prior to the termination
date stated in said written notice;
               (d) pay Employee, and if elected by Employee, his spouse such
retirement benefits as are provided for in the Supplemental Executive Retirement
Plan (SERP) under paragraph 9 hereof, said benefits to commence at such time as
provided for under the Retirement Plan. For purposes of this subparagraph,
Employee shall continue

 

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to accrue “credited service” as Employee under the Supplemental Executive
Retirement Plan (SERP) up through the termination date stated in said notice.
                    (2) In the event such termination by Employee shall be for
“good reason” (as defined in paragraph 18 hereof), the Corporation shall be
obligated to provide Employee with the payments, benefits and rights specified
in subparagraphs A.(2)(a)-(d) of this paragraph 13 hereof.
                    (3) In the event such termination by Employee shall be
without “good reason” (as defined in paragraph 18 hereof) and with the intention
or purpose to work or invest, directly or indirectly, in a business or activity
which is in competition, directly or indirectly, with Corporation or any of its
subsidiaries or affiliates or, irrespective of Employee’s intention at the time
of his termination, if Employee shall violate his covenant not to compete under
paragraph 15 or the requirements of paragraph 16, then Corporation shall not be
obligated to make or provide any further payments or benefits to Employee under
this Agreement except as herein provided in this subparagraph.
               (a) Subject to Corporation’s rights under paragraphs 15 and 16,
Corporation shall pay Employee his base salary due him under paragraph 5 of this
Agreement up to the termination date stated in said written notice;
               (b) Subject to Corporation’s rights under paragraphs 15 and 16
hereof, Corporation shall continue to honor all stock options, subject to the
terms thereof, granted to Employee which are fully vested prior to the
termination date stated in said written notice;
               C. Termination while disabled. If Employee is totally disabled at
the time any such notice of termination is given, then notwithstanding the
provisions of this paragraph 13, Corporation shall nevertheless continue to pay
Employee, as his sole compensation hereunder, the compensation and other
benefits for the remaining period of Employee’s total disability as provided for
in paragraph 12 hereinabove. It is understood that in no event shall such
disabled Employee be entitled to compensation under this paragraph 13 in
addition to the continuation of his compensation under paragraph 12.
               D. Cooperation after notice of termination Following any such
notice of termination, Employee shall fully cooperate with Corporation in all
matters relating to the winding up of his pending work on behalf of Corporation
and the orderly transfer of any such pending work to other employees of
Corporation as may be designated by the Chief Executive Officer; and to that
end, Corporation shall be entitled to such full-time or part-time services of
Employee as Corporation may reasonably require during all or any part of the
sixty (60) day period following any such notice of
     14. Death of Employee. In the event of Employee’s death during the term of
this agreement or any extension hereof, this Agreement shall terminate
immediately, and Employee’s estate shall be entitled to receive terminal pay in
an amount equal to the amount of Employee’s base salary and any performance
bonus compensation actually paid by Corporation to Employee during the last
thirty-six (36) months of his life, said terminal pay to be paid in thirty-six
(36) equal monthly installments beginning on the first day of the month next
following the month during which Employee’s death occurs. Terminal pay as herein
provided for in this paragraph shall be in addition to amounts otherwise
receivable by Employee or his estate under this or any other agreements with
Corporation or under any employee benefits or retirement plans established by
Corporation

 

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and in which Employee is participating at the time of his death. In addition,
Corporation shall honor all stock options, subject to the terms thereof, granted
to Employee prior to his death and Employee or his Estate shall, if not
otherwise vested, become fully vested in said options as of the date of
Employee’s death. For purposes of this paragraph, Employee shall, upon his
death, be given such additional “credited service” as necessary to fully qualify
Employee under Corporation’s Supplemental Executive Retirement Plan (SERP) and
to provide a survivor annuity to Employee’s spouse under the Plan.
     15. Agreement not to compete.
          It is specifically agreed that, in the event Employee shall
voluntarily terminate his employment without “good reason” (as defined in
Paragraph 18) or be terminated by Corporation for “good cause” (as defined in
Paragraph 13) Employee shall not work for a period of two (2) years from the
date of such termination, as a manager, officer, owner, partner or employee or
render any services as a consultant or advisor or engage or invest, directly or
indirectly, in any activity which is in competition with the business of the
Corporation, its subsidiaries or affiliates within the States of Georgia or
Alabama. Provided, however it is agreed that Employee may invest in the publicly
traded securities of any corporation, partnership or trust which is in
competition with Corporation so long as such investment does not exceed three
percent (3%) of such securities at any time. It is specifically agreed that if,
after Employee’s termination of employment, Employee engages in any such
prohibited activity at any time during said two year period, Corporation shall,
in addition to any other rights it may have under this contract and applicable
law be entitled to injunctive relief or, if the Corporation shall so elect, (due
to the difficulty of determining damages) be entitled to liquidated damages in
the amount of Two Hundred and Fifty Thousand Dollars ($250,000.00) which
Employee agrees to promptly pay to Corporation upon demand.
     16. Nondisclosure of trade secrets and confidential information. Employee
agrees to protect the business interest of Corporation, its subsidiaries and
affiliates, and not to disclose any trade secrets, confidential information or
any organizational, operating, marketing, product design, or business know-how
which Employee has access to or knowledge of as a result of his employment by
Corporation. It is specifically agreed that if, at any time during the term of
this Agreement and for a period of two (2) years after the date of employee’s
termination of employment with Corporation for any reason, Employee shall
violate the provisions of this paragraph 16, Corporation shall, in addition to
any rights it may have under this contract and applicable law, be entitled to
liquidated damages of Two Hundred and Fifty Thousand Dollars ($250,000.00) which
Employee agrees to promptly pay Corporation upon demand. It is understood and
agreed that Corporation’s remedies under this paragraph 16 shall be separate and
in addition to the remedies provided to Corporation under paragraph 15 hereof.
It is also understood and agreed that, notwithstanding the foregoing two
(2) year period, Employee shall not use or disclose any written confidential
information or any policyholder lists at any time or times hereafter, except in
the performance of Employee’s obligations to the Corporation.
     17. Right to acquire insurance. If Employee shall terminate his employment
hereunder for any reason other than death, he may, at his election, acquire any
insurance policies upon his life owned by the Corporation by giving written
notice of his election to Corporation within ninety (90) days after his
termination of employment. Such policies shall be transferred to the Employee
upon his payment to Corporation of the then interpolated terminal reserve value
of said insurance. In the event any policies transferred to Employee as herein
provided shall not have an interpolated terminal reserve value, then the amount
to be paid by Employee shall be its then fair market value.

 

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     18. Change in control.
               A. In general. In the event there is a Change in Control (as
defined in this paragraph) of Corporation, this Agreement shall, in order to
help eliminate the uncertainties and concerns which may arise at such time, be
automatically extended upon all of the same terms and provisions contained
herein, for an additional period of three (3) years, beginning on the first day
of the month during which such Change in Control shall occur.
               B. Notwithstanding the term of subparagraph A(2) and (B)(2) of
Paragraph 13, and in lieu of the obligations of the Corporation under such
paragraph, if, after a Change in Control Employee’s employment is terminated by
Corporation without “good cause” (as defined in paragraph 13), or is terminated
by Employee for “good reason” (as defined in paragraph 18), any such termination
by Corporation to be made only in accordance with the requirements specified by
paragraph 13.A, Employee shall be entitled to the following:
               (1) The Corporation shall pay Employee’s full base salary to
Employee through the date of termination stated in Corporation’s written notice
required pursuant to paragraph 13.A hereof (hereinafter in this paragraph the
“Termination Date”) at the rate in effect on the date such notice is given and,
additionally, shall pay Employee all compensation and benefits payable to
Employee under the terms of any compensation or benefit plan, program or
arrangement maintained by the Corporation during such period through the
Termination Date.
               (2) The Corporation shall pay Employee all compensation and
benefits due Employee under Corporation’s retirement, insurance and other
compensation or benefit plans, programs of arrangements as such payments become
due. The amount of such compensation and benefits shall be determined under, and
paid in accordance with, Corporation’s retirement, insurance and other
compensation or benefit plans, programs and arrangements.
               (3) In lieu of any further salary payments to Employee for
periods subsequent to the Termination Date, the Corporation shall pay to
Employee, immediately after the Termination Date, a lump sum severance payment,
in cash, equal to three times the sum of (i) Employee’s annual base salary in
effect immediately prior to the Change in Control and (ii) the higher of the
amount paid to Employee pursuant to the Corporation’s Management Incentive Plan
(or any successor plan thereto) for the year preceding the year in which the
Termination Date occurs or paid in the year preceding the year in which the
Change in Control occurs.
               (4) The Corporation shall pay to Employee, immediately after the
Termination Date, a lump sum amount, in cash, equal to a prorata portion (based
on the number of days Employee is an employee during the year in which the
Termination Date occurs) of the aggregate value of the maximum annual target
amount of all contingent incentive compensation awards to Employee for all
uncompleted periods under the Corporation’s Management Incentive Plan (or
successor plan.
               (5) For a thirty-six (36) month period after the termination
date, the Corporation shall provide Employee with life, disability, accident and
health insurance benefits substantially similar to an equal or greater in
economic value than such benefits which Employee is receiving immediately prior
to the Termination Date (without giving effect to any reduction in such benefits
subsequent to a Change in

 

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Control which reduction in benefits would constitute “good reason” as defined in
this paragraph). Benefits required to be provided to Employee pursuant to this
subparagraph B(5) shall be reduced to the extent comparable benefits are
actually received by or made available to Employee without cost during such
thirty-six (36) month period and any such benefit actually received by Employee
shall be reported to the Corporation by Employee.
               C. In addition to the payments provided for in subparagraph B of
this paragraph 18, in the event that after a Change in Control Employee’s
employment by the Corporation is terminated by the Corporation without “good
cause” or by Employee for “good reason,” the Corporation shall continue to honor
all stock options granted to Employee (subject to the terms of such options)
prior to the Termination Date, and all stock options granted to Employee prior
to the Termination Date shall become fully vested and exercisable as of the
Termination Date.
               D. Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by Employee in
connection with a Change in Control or the termination of Employee’s employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Corporation, any person whose actions result in a Change
in Control or any person affiliated with the Corporation or such person) (all
such payment and benefits being hereinafter called “Total Payments”) would not
be deductible (in whole or in part) by the Corporation, an affiliate or person
making such payment or providing such benefit as a result of section 280G of the
Internal Revenue Code of 1986 (the “Code”) then, to the extent necessary to make
such portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payment provided by reason of Section 280G of the Code in
such other plan, arrangement or agreement), adjustments in such payments shall
be made as follows: (1) the cash payments provided pursuant to subparagraph B(3)
and B(4) of this paragraph 18 shall first be reduced (if necessary, to zero),
and (2) benefits provided under subparagraph B(5) of this paragraph 18. For
purposes of this limitation (i) no portion of the Total Payments the receipt or
enjoyment of which Employee shall have effectively waived in writing prior to
the date of termination of employment shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which in the opinion
of tax counsel selected by the Corporation’s independent auditors and reasonably
acceptable to Employee does not constitute a “parachute payment” within the
meaning of Section 280G(b) (2) of the Code, including by reason of
Section 280G(b) (4) (A) of the Code, (iii) the payments and benefits be reduced
only to the extent necessary so that the Total Payments (other than those
referred to in clauses (i) or (ii) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of
Section 280G(b) (4) (B) of the Code or are otherwise not subject to disallowance
as deductions, (iv) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the Corporation’s
independent auditors in accordance with the principles of Section 280G(d) (3)
(4) of the Code. In no event shall the Corporation’s obligation to continue to
honor all stock options granted to Employee prior to the Termination Date nor
the vesting of stock options in accordance with Paragraph 18.C. hereof be
affected by this Paragraph 18.D.
               E. Definitions.
          (1) “Beneficial Owner” has the meaning provided in Rule 13d-3 under
the Exchange Act.

 

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          (2) “Change in Control” means the occurrence of either (a), (b),
(c) or (d), as hereinafter set forth:
               (a) any person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation (not including in the securities
beneficially owned by such person any securities acquired directly from the
Corporation, subsidiaries or its affiliates) representing 30% or more of the
combined voting power of the Corporation’s then outstanding securities; or
               (b) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board and any director (other than a
director designated by a person who has entered into an agreement with the
Corporation to effect a transaction described in clause (a), (c) or (d) of this
subparagraph) whose election by the Board or nomination for election by the
Corporation’s stockholders was approved by a vote of at least two-thirds (2/3)
of the members of the Board (or, if Board nominations are not voted on by the
full Board, members of the Board Committee voting on such nominations) then
still in office who either were members of the Board at the beginning of the
period or whose election or nomination for elections was previously so approved,
cease for any reason to constitute a majority of the Board; or
               (c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than (i) a
merger or consolidation which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities or
the surviving trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, at least 75% of the combined voting power of
the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no person acquires more than 30% of the combined
voting power of the Corporation’s then outstanding securities; or
               (d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all the Corporation’s
assets.
          (3) “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
          (4) “Person” shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Section 13(d) and 14(d) of the Exchange
Act; however, a person shall not include (a) the Corporation or any of its
subsidiaries, (b) a trustee or other fiduciary holding securities under an
employee benefit plan of the corporation or any of its subsidiaries, (c) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (d) a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation.
          (5) “Good reason” shall mean the termination of employment by Employee
upon the occurrence of any one or more of the following:

 

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               (a) Any breach by Corporation of the terms and conditions of this
Agreement affecting Employee’s salary and bonus compensation, any employee
benefit, stock options or the loss of any of Employee’s titles or positions with
Corporation;
               (b) A significant diminution of Employee’s duties and
responsibilities;
               (c) the assignment to Employee of any duties inconsistent with or
significantly different from his duties and responsibilities existing at the
time of a Change in Control.
               (d) Any purported termination of Employee’s employment by
Corporation other than as permitted by this Agreement;
               (e) The relocation of Corporation’s principal office or of
Employee’s own office to any place beyond twenty- five (25) miles from the
current principal office of Corporation in Columbus, Georgia;
               (f) The failure of any successor to Corporation to expressly
assume and agree to discharge Corporation’s obligations to Employee under this
Agreement as extended under this paragraph, in form and substance satisfactory
to Employee.
          F. Continuation of compensation and benefits. If Corporation shall
attempt to terminate Employee’s employment at any time after a change in Control
and such termination is in good faith disputed by Employee, Corporation shall
continue to pay Employee all of his compensation and benefits provided for in
this Agreement until the dispute is finally resolved, either by mutual written
agreement or by final judgment, order or decree of a court of competent
jurisdiction.
     19. No requirement to seek employment and no offset. Corporation agrees
that, if Employee’s employment is terminated by Corporation during the term of
this Agreement or by Employee for “good reason” during the term of this
Agreement, Employee is not required to seek other employment or attempt in any
way to reduce the amounts payable to Employee by Corporation pursuant to the
applicable terms of this Agreement; it being understood and agreed that the
amount of any payment or benefit to Employee provided for hereunder shall not be
reduced by any compensation or other benefits earned by Employee as a result of
his employment by another employer or, after a Change in Control, by
Corporation’s attempt to offset any amount claimed to be owed by Employee to
Corporation or otherwise.
     20. Waiver of breach or violation not deemed continuing. The waiver by
either party of a breach or violation of any provision of this Agreement shall
not operate as or be construed to be a waiver of any subsequent breach hereof.
     21. Notices. Any and all notices required or permitted to be given under
this Agreement will be sufficient if furnished in writing, sent by registered or
certified mail to his last known residence in the case of Employee or to its
principal office in Columbus, Georgia, in the case of the Corporation.
     22. Arbitration. Except for any dispute or matter arising after a Change in
Control, as defined in paragraph 18, any dispute arising under this Agreement,
to the maximum extent allowed by applicable law,

 

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shall be subject to arbitration and prior to commencing any court action, the
parties agree that they shall arbitrate all controversies. The arbitration shall
be pursuant to the terms of the Federal Arbitration Act. The parties shall
notify each other of the existence of an arbitrable controversy by certified
mail and shall attempt in good faith to resolve their differences within fifteen
(15) days after the receipt of such notice. Notice to Employee shall be sent to
Employee’s address as it appears in Corporation’s records and notice to
Corporation shall be sent to: Arbitration Officer, AFLAC Incorporated, AFLAC
Worldwide Headquarters, Columbus, Georgia, 31999. If the dispute cannot be
resolved within said fifteen (15) day period, either party may file a written
demand for arbitration with the other party. The party filing such demand shall
simultaneously specify his or its arbitrator, giving the name, address and
telephone number of said arbitrator. The party receiving such notice shall
notify the party demanding the arbitration of his or its arbitrator giving the
name, address, and telephone number of said arbitrator within five (5) days of
the receipt of such demand. The arbitrator named by the respective parties need
not be neutral. The Senior Judge of the Superior court of Muscogee County,
Georgia, on request by either party, shall appoint a neutral person to serve as
the third arbitrator and shall also appoint an arbitrator for any party failing
or refusing to name his arbitrator within the time herein specified. The
arbitrators thus constituted shall promptly meet, select a chairperson, fix the
time and place of the hearing, and notify the parties. The majority of the panel
shall render an award within ten (10) days of the completion of the hearing, and
shall promptly transmit an executed copy of the award to the respective parties.
Such an award shall be binding and conclusive upon the parties hereto, in the
absence of fraud or corruption. Each party shall have the right to have the
award made the judgment of the court of competent jurisdiction.
     23. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Georgia.
     24. Paragraph Headings. The paragraph headings contained in this Agreement
are for convenience only and shall in no manner be construed as part of this
Agreement.
     25. Two originals. This Agreement is executed in two (2) originals, each of
which shall be deemed an original and together shall constitute one and the same
Agreement, with one original being delivered to each party hereto.
     IN WITNESS WHEREOF, Corporation has hereunto caused its name to be signed
and its seal to be affixed by its duly authorized officers, and Employee has
hereunto set his hand and seal, all being done in duplicate originals, with one
original being delivered to each party as of the 12th day of September, 1994.

                 
/s/ Joey M. Loudermilk                 (L.S.)
           AFLAC INCORPORATED    
JOEY M. LOUDERMILK
EMPLOYEE
               
 
      BY:   /s/ Daniel P. Amos    
 
               
 
          DANIEL P. AMOS
CHIEF EXECUTIVE OFFICER    

 

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                  ATTEST:   /s/ Kathelen V. Spencer         KATHELEN V. SPENCER 
      ASSISTANT CORPORATE SECRETARY     

 

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AMENDMENT TO EMPLOYMENT AGREEMENT
     This Amendment, made and entered into as of the 2nd day of January, 1997,
by and between AFLAC Incorporated (hereinafter “AFLAC”) and Joey M. Loudermilk
(hereinafter “Employee”).
     WHEREAS, AFLAC and Employee have previously entered into an Employment
Agreement dated September 12, 1994; and
     WHEREAS, the parties desire to amend said Employment Agreement to change
Employee’s minimum target level bonus under AFLAC’s Management Incentive Plan;
     NOW, THEREFORE, the parties do amend said Employment Agreement as follows:
     1. Paragraph 7 entitled “ Management Incentive Plan ” shall be stricken in
its entirety and the following paragraph substituted therefor:
     “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 1997, continue to 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 fifty percent (50%) of base salary.”
     2. Except as specifically set forth in this Amendment, said Employment
Agreement (as previously amended) between the parties dated September 12, 1994,
shall continue in full force and effect and is hereby reaffirmed, it being the
sole intent of the parties to make only the corrections set forth hereinabove.
     IN WITNESS WHEREOF, AFLAC has hereunto caused its name to be signed and its
seal to be affixed by its duly authorized officers, and Employee has hereunto
set his hand and seal, all being done in duplicate originals, with one original
being delivered to each party as of the 2nd day of January, 1997.

         
AFLAC INCORPORATED
  /s/ Joey M. Loudermilk (L.S.) 
 
       
 
  JOEY M. LOUDERMILK    

                BY:  /s/ Daniel P. Amos           DANIEL P. AMOS,         Chief
Executive Officer            /s/ Lawanda G. Lugo         Witness   

                ATTEST:  /s/ Kathelen V. Spencer         KATHELEN V. SPENCER,  
      Secretary     

 

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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment, made and entered into as of the 27th day of May, 1999, by and
between AFLAC Incorporated (herinafter) “AFLAC”) and Joey M. Loudermilk
(herinafter “Employee”).
WHEREAS, AFLAC and Employee have previously entered into an Employment Agreement
dated September 12, 1994; and
NOW, THEREFORE, the parties do amend said Employment Agreement as follows:

1.   Subparagraph B(3) of Paragraph 18 shall be stricken in its entirety and the
following paragraph substituted therefore:

  (3)   In consideration for the Employee’s obligations under subparagraph G to
refrain from competing with the Corporation and in lieu of any further salary
payments to Employee for periods subsequent to the Termination Date, the
corporation shall pay to Employee, immediately after the Termination Date, a
lump sum payment, in cash, equal to three (3) times the sum of (i) Employee’s
annual base salary in effect immediately prior to the Change in Control and
(ii) the higher of the amount paid to Employee pursuant to the Corporation’s
Management Incentive Plan (or any successor plan thereto) for the year preceding
the year in which the Termination Date occurs or paid in the year preceding the
year in which the Change in Control occurs.

2.   A new subparagraph G shall be added for Paragraph 18 as follows:

(G)   In consideration for the payments received by Employee under subparagraph
(B)(3) above, for a period of three (3) years following the Termination Date,
Employee shall not directly or indirectly compete with the Corporation, its
subsidiaries or affiliates by acting in a management or executive capacity with
respect to the life, accident and health insurance business as an officer,
director, employee, owner, partner, advisor or consultant within the United
States of America (excluding any state in which Corporation, its subsidiaries,
and affiliates have not been engaged in business activities within one (1) year
prior to the Termination Date), the country of Japan or within two hundred
(200) miles of any office of the Corporation, its subsidiaries or affiliates
outside the United States of America or Japan which was in existence, or in the
process of being established, at the time of Employee’s termination of
employment. Provided, however, it is agreed that Employee may invest in the
publicly traded securities of any corporation, partnership or trust which is in
competition with Corporation so long as such investment does not exceed three
percent (3%) of such securities at any time. It is specifically agreed that if
the Employee engages in any such prohibited activity at any time during said
three (3) year period, the Corporation shall, in addition to any other rights it
may have under this contract and applicable law, be entitled to injunctive
relief or, if the Corporation shall so elect, (due to the difficulty of
determining damages and without regard to whether injunctive relief would be
available to the Corporation) be entitled to liquidated damages in an amount
equal to the aggregate payments received by Employee under subparagraph B(3)
above, which Employee agrees to promptly pay to the Corporation upon demand.

3.   Except as specifically set forth in this Amendment, said Employment5
Agreement (as previously amended) between the parties dated September 12, 1994
shall continue in full force and effect and is hereby reaffirmed, it being the
sole intent of the parties to make only the amendments set forth hereinabove.

 

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     IN WITNESS WHEREOF, AFLAC has hereunto caused its name to be signed and its
seal to be affixed by its duly authorized officers, and Employee has hereunto
set his hand and seal, all being done in duplicate originals, with one original
being delivered to each party as of the 27TH day of May, 1999.

         
AFLAC INCORPORATED
  /s/ Joey M. Loudermilk (L.S.) 
 
       
 
  JOEY M. LOUDERMILK    

                BY:  /s/ Daniel P. Amos        DANIEL P. AMOS,        Chief
Executive Officer     

                  /s/ Lawanda G. Lugo       WITNESS    

                ATTEST:  /s/ Kathelen V. Spencer        KATHELEN V. SPENCER,   
    Assistant Secretary     

 

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AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN JOEY M. LOUDERMILK AND
AFLAC INCORPORATED
     THIS AMENDMENT (“Amendment”) is entered into as of the 10th day of
December, 2008, by and between Aflac Incorporated, a Georgia corporation
(hereinafter referred to as “Corporation”) and Joey M. Loudermilk (hereinafter
referred to as “Employee”).
WITNESSETH:
     WHEREAS, Corporation and Employee entered into an Employment Agreement
dated September 12, 1994, that was subsequently amended by the parties (as so
amended, the “Employment Agreement”);
     WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”), is applicable to certain provisions of the Employment
Agreement; and
     WHEREAS, Corporation and Employee desire to modify the Employment
Agreement, effective as of January 1, 2009, in order to comply with
Section 409A;
     NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth and contained herein, Corporation and Employee agree that the Employment
Agreement shall be modified as follows:

  1.   Paragraph 7 shall be amended by adding at the end thereof the following:
        Amounts payable to Employee under the Management Incentive Plan (or any
successor executive bonus program) shall be payable in such manner, at such
times and in such forms, as prescribed by the terms of the Management Incentive
Plan (or successor program).     2.   Paragraph 8 shall be amended by adding at
the end thereof the following:         Any reimbursements made pursuant to the
preceding sentence shall be paid as soon as practicable but no later than
90 days after Employee submits evidence of such expenses to Corporation (which
payment date shall in no event be later than the last day of the calendar year
following the calendar year in which the expense was incurred). The amount of
such reimbursements during any calendar year shall not affect the benefits
provided in any other calendar year, and the right to any such benefits shall
not be subject to liquidation or exchange for another benefit.     3.  
Paragraph 10 shall be amended by adding a new (unnumbered) paragraph at the end
thereof to read as follows:

Any expense reimbursements made to satisfy the terms of this Paragraph 10 shall
be paid as soon as practicable but no later than 90 days after Employee submits
evidence of such

 

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expenses to Corporation (which payment date shall in no event be later than the
last day of the calendar year following the calendar year in which the expense
was incurred). The amount of such reimbursements during any calendar year shall
not affect the benefits provided in any other calendar year, and the right to
any benefits under this paragraph shall not be subject to liquidation or
exchange for another benefit.

  4.   Paragraph 12 shall be amended by deleting the fourth paragraph thereof
and replacing it with a new fourth paragraph to read as follows:

          If, following Employee’s becoming totally disabled, this Agreement
shall be terminated (as provided in the preceding paragraph) and Employee’s
employment with Corporation terminated, Employee shall be 100% vested in, and
entitled to, benefits under the Aflac Incorporated Supplemental Executive
Retirement Plan (“SERP”) determined as if Employee’s “Years of Participation”
and “Years of Employment” (as such terms (or similar terms) are defined in the
SERP) include the period of time before such termination date during which
Employee was totally disabled. Furthermore, if on such termination date Employee
is not yet eligible for an early retirement benefit under the SERP, Employee
will be entitled to benefits under the SERP the amount of which shall be
determined as if his termination date was Employee’s Early Retirement Date (as
such term is defined in the SERP); provided, these provisions shall not affect
the timing or form of his SERP distributions, which shall be determined solely
under the terms of the SERP.

  5.   Paragraph 13.A(1)(a) shall be amended by:

  (i)   Adding at the beginning thereof the following:         upon Employee’s
separation from service (as defined in Paragraph 13.E below),     (ii)   Adding
at the end thereof the following:         provided further, such amount (if any)
payable for the period after the date of Employee’s actual termination of
employment (his “Actual Termination Date”) will be paid in a timely manner in
accordance with Corporation’s normal payroll practices; and provided further, to
the extent any amount payable for the period after his Actual Termination Date
is not exempt from Section 409A, such amount will be paid in a single lump sum
upon the day after the six (6)-month anniversary of his separation from service;

  6.   Paragraph 13.A(1)(b) shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

               (b) pay Employee an amount equal to 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 five
(5)-day period if such termination is without the approval of Corporation (the
earlier of such dates being referred to as the

 

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“Applicable Date”). The amount of said bonus, if any, will be calculated on a
prorated basis, using the number of days during the calendar year up to the
Applicable Date, and will be paid to Employee pursuant to the terms and
customary operations of the Management Incentive Program (or other applicable
bonus program) except that Employee’s performance will be deemed to have
achieved target while the actual performance of Corporation will be applied to
the performance goals under the plan; provided, if the Applicable Date occurs
after the end of the calendar year in which the notice of termination is given,
(i) the bonus payment for the calendar year in which such notice is given will
be paid without any proration, and (ii) the proration described herein will
apply to the next calendar year (i.e., the calendar year in which the Applicable
Date occurs), and the bonus for such next calendar year will be paid upon
Employee’s separation from service in a lump sum between January 1 and March 15,
inclusive, of the calendar year following the calendar year in which the
Applicable Date occurs or, if later and the payment is not exempt from
Section 409A, upon the day after the six (6)-month anniversary of Employee’s
separation from service;

  7.   Paragraph 13.A(1)(d) shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

               (d) upon Employee’s separation from service, continue to pay all
of Employee’s fringe and other employee benefits as provided for in this
Agreement up to the Applicable Date. Notwithstanding the foregoing, even if
Corporation approves Employee’s cessation of rendering full-time services on
behalf of Corporation prior to the termination date stated in the written notice
of termination from Corporation, after Employee’s Actual Termination Date,
Employee shall not actively participate in any retirement plan qualified under
Code Section 401(a), any employee stock purchase plan under Code Section 423,
any fully insured benefit for which the insurer does not allow post-employment
participation, or any other plan or benefit (other than Corporation’s
self-insured group health plan) that Corporation or the third-party insurer of
such benefit reasonably determines is not suitable or available for
post-employment participation. In such event, Employee shall be entitled to the
benefits described in clauses (i) and (ii) of Paragraph 13.A(2)(d) below, to the
extent applicable, but only up to the Applicable Date;

  8.   Paragraphs 13.A(2)(a) and (b) shall be amended by deleting said
paragraphs in their entirety and replacing them with the following:

               (a) upon Employee’s separation from service, 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; provided, such amount payable for the
period after his Actual Termination Date will be paid in accordance with the
regular payroll schedule applicable to all other similarly-situated active
executive employees of Corporation commencing with the next regularly scheduled
payday, with any portion of such amount that is not exempt from Section 409A and
that is otherwise payable within the six (6)-month period beginning on the date
of his separation from service being paid in a lump sum upon the day after the
six (6)-month anniversary of his separation from service;

 

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               (b) pay Employee an amount equal to a portion of his performance
bonus compensation as provided for in Paragraph 7 of this Agreement prorated
based on the number of days through the end of the scheduled term of this
Agreement. The amount of such bonus, if any, will be paid to Employee pursuant
to the terms and customary operations of the Management Incentive Program (or
other applicable bonus program) except that Employee’s performance will be
deemed to be at target while actual performance of Corporation will be applied;
provided, if the scheduled term of this Agreement ends after the calendar year
in which the notice of termination is given, (i) the bonus payment for the
calendar year in which such notice is given will be paid without any proration;
and (ii) the amount of the bonus payment for the calendar year in which the
scheduled term of this Agreement ends will be calculated on a pro rata basis,
using the number of days elapsed during such calendar year through the end of
the scheduled term of this Agreement, and will be paid upon Employee’s
separation from service in a lump sum between January 1 and March 15, inclusive,
of the calendar year following the calendar year in which the scheduled term of
this Agreement ends or, if later and the payment is not exempt from
Section 409A, upon the day after the six (6)-month anniversary of his separation
from service;

  9.   Paragraph 13.A(2)(d) shall be amended by:

  (i)   Adding, at the beginning thereof the following:         upon Employee’s
separation from service,     (ii)   Adding at the end thereof a new
(unnumbered) paragraph as follows:         Notwithstanding the foregoing, after
Employee’s Actual Termination Date, Employee shall not actively participate in
any retirement plan qualified under Code Section 401(a), any employee stock
purchase plan under Code Section 423, any fully insured benefit for which the
insurer does not allow post-employment participation, or any other plan or
benefit (other than Corporation’s self-insured group health plan) that
Corporation or the third-party insurer of such benefit reasonably determines is
not suitable or available for post-employment participation. In such event,
Employee shall be entitled to the benefits described in clauses (i) and (ii) of
this paragraph below, to the extent applicable, up to the end of the scheduled
term of this Agreement.

               (i) After Employee’s Actual Termination Date, Employee shall no
longer actively participate in the Aflac Incorporated 401(k) Savings and Profit
Sharing Plan (the “401(k) Plan”). Corporation shall pay to Employee an amount
equal to the dollar amount of matching contributions, if any, that would have
been made to Employee’s account(s) under the 401(k) Plan if Employee had
continued to actively participate in such plan for the period from Employee’s
Actual Termination Date through the end of the scheduled term of this Agreement,
and had made Employee deferrals at the deferral rate necessary to receive the
maximum matching contribution (if any) available to him under the

 

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terms of the 401(k) Plan with such amount being calculated as if Employee’s
compensation and the limits applicable under the 401(k) plan all remained at the
levels in effect as of the date the notice of termination is given. This payment
shall be made to Employee in a lump sum upon the day of his separation from
service or, to the extent such amount is not exempt from Section 409A, upon the
day after the six (6)-month anniversary of his separation from service.
               (ii) If, following Employee’s separation from service, Employee
does not qualify for retiree health benefits (if any) under Corporation’s group
health plan, then upon Employee’s separation from service, Corporation shall
allow Employee to continue to participate in Corporation’s group health plan for
the remainder of the stated term of this Agreement as if he remained an active
employee; provided, Employee pays the full premium cost for such coverage; and
provided further, Corporation shall reimburse Employee for the employer portion
of the cost of such coverage (such that Employee shall pay in net terms only the
active employee cost of such coverage) within sixty 60 days after the end of
each calendar month in which Employee maintains such coverage.

  10.   Paragraphs 13.B(1)(a) and (b) shall be amended by deleting said
paragraphs in their entirety and by replacing them with the following:

          (a) pay Employee his base salary due him under Paragraph 5 of this
Agreement up to his Actual Termination Date;
          (b) pay Employee an amount equal to any performance bonus compensation
due him under Paragraph 7 of this Agreement for the period ending on the earlier
of (i) the termination date stated in such written notice, or (ii) the last day
of the calendar year in which Employee provides such written notice of
termination. The amount of said bonus, if any, will be paid to Employee pursuant
to the terms and customary operations of the Management Incentive Program (or
other applicable bonus program) except that Employee’s performance will be
deemed at target while actual performance of Corporation will be applied, and
will be calculated on a pro rata basis, using the number of days Employee was
actually employed by Corporation during the calendar year in which Employee
provides such written notice of termination;

  11.   Paragraph 13.B(1)(d) shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

          (d) pay Employee, and if elected by Employee, his spouse such
retirement benefits as are provided for in the Supplemental Executive Retirement
Plan (the “SERP”) under paragraph 9 thereof. For purposes of this subparagraph,
Employee shall continue to accrue “credited service” as an employee under the
SERP up through the termination date stated in said notice; provided, these
provisions shall not affect the timing or form of his SERP distributions, which
shall be determined solely under the terms of the SERP.

 

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  12.   Paragraph 13.B(2) shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

          (2) In the event such termination by Employee shall be for “good
reason” (as defined in Paragraph 18 hereof), the Corporation shall be obligated
to provide Employee with the payments, benefits and rights in a manner, at such
times and in such forms as specified in subparagraphs A.(2)(a)-(d) of this
Paragraph 13 hereof.

  13.   Paragraph 13.B(3)(a) shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

               (a) subject to Corporation’s rights under Paragraphs 15 and 16,
Corporation shall pay Employee his base salary due him under Paragraph 5 of this
Agreement up to his Actual Termination Date;

  14.   Paragraph 13.D shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

          D. Cooperation After Notice of Termination. Following any such notice
of termination, Employee shall fully cooperate with Corporation in all matters
relating to the winding up of his pending work on behalf of Corporation and the
orderly transfer of any such pending work to other employees of Corporation as
may be designated by the Chief Executive Officer; and to that end, Corporation
shall be entitled to full-time services of Employee through his Actual
Termination Date and such full-time or part-time services of Employee as
Corporation may reasonably require during all or any part of the sixty (60) day
period that both follows any such notice of termination and his Actual
Termination Date; provided, the parties acknowledge that, depending on the level
of services so required, the provision of such services may delay the timing of
Employee’s separation from service.

  15.   Paragraph 13 shall be amended by adding at the end thereof new
paragraphs 13.E and 13.F as follows:

          E. Separation from Service. The term “separation from service” when
used in this Agreement shall mean that Employee separates from service with
Corporation and all affiliates, as defined in Code Section 409A and guidance
issued thereunder (“Section 409A”). As a general overview of Section 409A’s
definition of “separation from service”, an employee separates from service if
the employee dies, retires, or otherwise has a termination of employment with
all affiliates, determined in accordance with the following:
               (1) Leaves of Absence. The employment relationship is treated as
continuing intact while the employee is on military leave, sick leave, or other
bona fide leave of absence if the period of such leave does not exceed six (6)
months, or, if longer, so long as the employee retains a right to reemployment
with an affiliate under an applicable statute or by contract. A leave of absence
constitutes a bona fide leave of absence only while there is a reasonable
expectation that the employee will return to

 

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perform services for an affiliate. If the period of leave exceeds six (6) months
and the employee does not retain a right to reemployment under an applicable
statute or by contract, the employment relationship is deemed to terminate on
the first date immediately following such six (6)-month period. Notwithstanding
the foregoing, where a leave of absence is due to any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than six (6) months, where
such impairment causes the employee to be unable to perform the duties of his or
her position of employment or any substantially similar position of employment,
a twenty-nine (29)-month period of absence shall be substituted for such six
(6)-month period.
               (2) Status Change. Generally, if an employee performs services
both as an employee and an independent contractor, the employee must separate
from service both as an employee and as an independent contractor pursuant to
standards set forth in Treasury Regulations to be treated as having a separation
from service. However, if an employee provides services to affiliates as an
employee and as a member of the Board of Directors, the services provided as a
director are not taken into account in determining whether the employee has a
separation from service as an employee for purposes of this Agreement.
               (3) Termination of Employment. Whether a termination of
employment has occurred is determined based on whether the facts and
circumstances indicate that the employer and the employee reasonably anticipate
that (A) no further services will be performed after a certain date, or (B) the
level of bona fide services the employee will perform after such date (whether
as an employee or as an independent contractor) will permanently decrease to
less than 50 percent of the average level of bona fide services performed
(whether as an employee or an independent contractor) over the immediately
preceding thirty-six (36)-month period. Facts and circumstances to be considered
in making this determination include, but are not limited to, whether the
employee continues to be treated as an employee for other purposes (such as
continuation of salary and participation in employee benefit programs), whether
similarly-situated service providers have been treated consistently, and whether
the employee is permitted, and realistically available, to perform services for
other service recipients in the same line of business. For periods during which
an employee is on a paid bona fide leave of absence and has not otherwise
terminated employment as described in subparagraph (1) above, for purposes of
this subparagraph, the employee is treated as providing bona fide services at a
level equal to the level of services that the employee would have been required
to perform to receive the compensation paid with respect to such leave of
absence. Periods during which an employee is on an unpaid bona fide leave of
absence and has not otherwise terminated employment are disregarded for purposes
of this subsection (including for purposes of determining the applicable
thirty-six (36)-month period).
          F. Separate Payments. Each payment made to Employee pursuant to this
Paragraph 13 or Paragraph 18 shall be treated as a separate payment for purposes
of Code Section 409A.

 

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  16.   Paragraph 14 shall be amended by deleting the last sentence thereof and
replacing it with the following:

If upon Employee’s death Employee was not eligible for (at least) an early
retirement benefit under SERP, benefits will be payable under the SERP the
amount of which shall be determined as if Employee’s date of death was his Early
Retirement Date (as such term is defined in SERP); provided, these provisions
shall not affect the timing or form of his SERP distributions, which shall be
determined solely under the terms of the SERP.

  17.   Paragraph 18.B(1) shall be amended by deleting the first word of said
paragraph and replacing it with the following:

In a manner, at such times and in such forms as provided in Paragraphs
13.A(1)(a) — (d),

  18.   Paragraph 18.B(3) shall be amended by adding at the end thereof the
following:

; provided, if Employee’s separation from service occurs more than twenty-four
(24) months after the Change in Control, only the portion of such lump-sum
severance payment in excess of the total amount that would have been payable
under Paragraphs 13.A(2)(a) and (b) shall be paid pursuant to the terms
hereinabove, and the remainder shall be paid pursuant to the terms of Paragraphs
13.A(2)(a) and (b) as if no Change in Control had occurred; and, provided
further, to the extent any amount of such lump-sum amount payable after the
Termination Date is not exempt from Section 409A, such amount will be paid upon
the day after the six (6)-month anniversary of Employee’s separation from
service.

  19.   Paragraph 18.B(4) shall be amended by adding at the end thereof the
following:

; provided, to the extent any amount of such lump sum payable after the
Termination Date is not exempt from Section 409A, such amount will be paid upon
the day after the six (6)-month anniversary of Employee’s separation from
service.

  20.   Subparagraph 18.B(5) shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

          (5) For a thirty-six (36)-month period after the Employee’s separation
from service, Corporation shall provide Employee with life, disability, accident
and health insurance benefits substantially similar to and equal or greater in
economic value than such benefits which Employee is receiving immediately prior
to the Termination Date (without giving effect to any reduction in such benefits
subsequent to a Change in Control which reduction in benefits would constitute
“good reason” as defined in this Paragraph). Benefits required to be provided to
Employee pursuant to this subparagraph B(5) shall be reduced to the extent
comparable benefits are actually received by or made available to Employee
without cost during such thirty-six (36)-month period and any such benefit
actually received by Employee shall be reported to Corporation by Employee.

 

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Notwithstanding the foregoing, with respect to any of such life and/or
disability benefits that are fully insured, in lieu of providing such benefits
for such period, Corporation shall pay Executive a lump-sum amount equal to the
cost of such benefits on a post-employment basis for such thirty-six 36-month
period; provided, any such cash payment shall be made as soon as practicable
after Employee’s separation from service, with any amount that is not exempt
from Section 409A and that is otherwise payable within the six (6)-month period
beginning on the date of his separation from service being paid upon the day
after the six (6)-month anniversary of his separation from service.

  21.   Paragraph 18.D shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

          D. Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by Employee in
connection with a Change in Control or the termination of Employee’s employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Corporation, any person whose actions result in a Change
in Control or any person affiliated with the Corporation or such person) (all
such payments and benefits being hereinafter called “Total Payments”) would not
be deductible (in whole or in part) by the Corporation, an affiliate or person
making such payment or providing such benefit as a result of Section 280G of the
Internal Revenue Code of 1986 (the “Code”) then, to the extent necessary to make
such portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the Code
in such other plan, arrangement or agreement), adjustments in such payments
shall be made as follows: (i) the cash payments provided pursuant to
subparagraph B.(3) and B.(4) of this Paragraph 18 that are exempt from Section
409A shall first be reduced (if necessary, to zero); (ii) then, if further
reductions are necessary, benefits provided under subparagraph B.(5) of this
Paragraph 18 that are exempt from Section 409A shall be reduced (if necessary,
to zero); (iii) then, if still further reductions are necessary, the cash
payments provided pursuant to subparagraph B.(3) and B.(4) of this Paragraph 18
that are not exempt from Section 409A shall be reduced (if necessary, to zero);
and (iv) finally, if still further reductions are necessary, all of the benefits
provided under subparagraph B.(5) of this Paragraph 18 that are not exempt from
Section 409A shall be forfeited. For purposes of this limitation (i) no portion
of the Total Payments, the receipt or enjoyment of which Employee shall have
effectively waived in writing prior to the date of termination of employment
shall be taken into account (provided that, in no event will any such waiver
impermissibly affect any portion of the Total Payments that is subject to
Section 409A), (ii) no portion of the Total Payments shall be taken into account
which in the opinion of the tax counsel selected by the Corporation’s
independent auditors and reasonably acceptable to Employee does not constitute a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code,
including by reason of Section 280G(b)(4)(A) of the Code, (iii) except as
provided in clause (iv) above, the payments and benefits be reduced only to the
extent necessary so that the Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety constitute reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4)(B) of the
Code or are otherwise not subject to disallowance as deductions, in the opinion
of the tax counsel referred to in clause (ii); and (iv) the value

 

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of any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Corporation’s independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code. In no
event shall the Corporation’s obligation to continue to honor all stock options
granted to Employee prior to the Termination Date nor the vesting of stock
options in accordance with Paragraph 18.C hereof be affected by this
Paragraph 18.D.

  22.   Paragraph 18.E shall be amended by deleting said paragraph in its
entirety and replacing it with the following:

E. Definitions.
     (1) “Change in Control” means a change in ownership or effective control of
Corporation or a change in the ownership of a substantial portion of the assets
of Corporation, all within the meaning of Section 409A. As a general overview,
Section 409A’s definition of these terms, and the dates as of which they occur,
are as follows:
          (a) The date any one person, or more than one person acting as a
group, acquires ownership of stock of Corporation that, together with stock held
by such person or group constitutes more than 50 percent of the total voting
power of the stock of Corporation. However, if any one person, or more than one
person acting as a group, is considered to own more than 50 percent of the total
fair market value or total voting power of the stock of Corporation, the
acquisition of additional stock by the same person or persons is not considered
to cause a change in the ownership of Corporation or to cause a change in the
effective control of Corporation.
          (b) The date any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
Corporation possessing 30 percent or more of the total voting power of the stock
of Corporation.
          (c) The date that any one person, or more than one person acting as a
group acquires (or has acquired during the 12-month period ending on the date of
the most recent acquisition by such person or persons) assets from Corporation
that have a total gross fair market value equal to or more than 40 percent of
the total gross fair market value of all of the assets of Corporation
immediately before such acquisition or acquisitions.
          (d) The date a majority Corporation’s board of directors is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of Corporation’s board of directors before
the date of the appointment or election.
     (2) “Good reason” shall mean the termination of employment by Employee upon
the occurrence of any one or more of the following events to the extent that
there is, or would be if not corrected, a material negative change in Employee’s
employment relationship with Corporation:

 

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          (a) A material breach by Corporation of the terms and conditions of
this Agreement affecting Employee’s salary and bonus compensation, any employee
benefit, stock options or the loss of any of Employee’s titles or positions with
Corporation;
          (b) A significant diminution of Employee’s duties and
responsibilities;
          (c) The assignment to Employee of duties significantly inconsistent
with or different from his duties and responsibilities existing at the time of a
Change in Control;
          (d) A purported termination of Employee’s employment by Corporation
other than as permitted by this Agreement;
          (e) The relocation of Corporation’s principal office or of Employee’s
own office to any place beyond twenty five (25) miles from the current principal
office of Corporation in Columbus, Georgia; and
          (f) The failure of any successor to Corporation to expressly assume
and agree to discharge Corporation’s obligations to Employee under this
Agreement as extended under this paragraph, in form and substance satisfactory
to Employee.
Notwithstanding the foregoing, Employee shall have good reason under this
Agreement only if (i) Employee provides Corporation, within ninety (90) days of
the occurrence of the event giving rise to the notice, a written notice
indicating the specific good reason provision(s) in this Agreement relied upon,
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for good reason, and indicating a date of termination of
employment (not less than 30 nor more than 60 days after the date such notice is
given); and (ii) such facts and circumstances are not substantially corrected by
Corporation prior to the date of termination specified by Employee in such
notice. Any failure by Employee to set forth in a notice of good reason any
facts or circumstances which contribute to the showing of good reason shall not
waive any right of Employee hereunder or preclude Employee from asserting such
fact or circumstances in enforcing his rights hereunder.

  23.   Paragraph 18 shall be further amended by deleting in its entirety
subparagraph F thereof.     24.   A new Paragraph 26 shall be added after
Paragraph 25 as follows:

26. CODE SECTION 409A. This Agreement, as amended by the Amendment effective as
of January 1, 2009, is intended to comply with the requirements of Code
Section 409A and shall be construed accordingly. Any payments or distributions
to be made to Employee under this Agreement upon a “separation from service” (as
defined above) of amounts classified as “nonqualified deferred compensation” for
purposes of Code Section 409A, payable due to a separation from service and not
exempt from

 

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Section 409A, shall in no event be made or commence until six (6) months after
such separation from service. Each payment of nonqualified deferred compensation
under this Agreement shall be treated as a separate payment for purposes of Code
Section 409A.

  25.   Except as expressly amended by this Amendment, the Agreement shall
remain in full force and effect in accordance with its terms and continue to
bind the parties.     26.   This Amendment shall be effective as of January 1,
2009.

     IN WITNESS WHEREOF, Corporation has hereunto caused its duly authorized
executive to execute this Amendment on behalf of Corporation, and Employee has
hereunto set his hand and seal, all being done in duplicate originals, with one
original being delivered to each party, as of the 10th day of December, 2008.

              Employee         Aflac Incorporated  
 
           
/s/ Joey M. Loudermilk
      By: /s/ Daniel P. Amos  
 
           
Joey M. Loudermilk
        Daniel P. Amos
Chairman and Chief Executive Officer  
 
           
/s/ Lawanda Lugo
      Attest: /s/ J. Matthew Loudermilk  
 
           
Witness
        J. Matthew Loudermilk
Assistant Corporate Secretary