Document:

Exhibit 10(b)(2)

 

                          

 

2005 STOCK APPRECIATION RIGHTS AWARD LETTER

FOR SENIOR OFFICERS

 

The
Compensation and Management Succession Committee of the Company’s Board of
Directors (the “Committee”) has awarded you the following:

 

              
Stock Appreciation Rights

Base Price:  $41.05

Grant Date:  March 4, 2005

 

The
Stock Appreciation Rights were awarded pursuant to the Company’s Long-Term
Incentive Plan, as amended (the “Plan”), and are subject to the terms and
conditions contained in the Plan and in the Provisions for 2005 Stock
Appreciation Rights for Senior Officers set forth in Appendix A to this Award
Letter.

 

This
Award is intended to fulfill the Plan’s purpose of furthering the long-term
growth in profitability of the Company by offering long-term incentives to key
executives, officers and employees who will be largely responsible for such
growth.  Since these Awards have been
granted to only a select group of Company employees, I request that you keep
the terms of this Award confidential.

 

 

	
   

  	
   

  
	
  H.
  Corbin Day, Chairman,

  
	
  Compensation
  and Management Succession Committee

  
	
  of
  the Board of Directors

  
	
  of
  Protective Life Corporation

  

 

 

APPENDIX A

 

PROVISIONS FOR

2005 STOCK APPRECIATION RIGHTS

FOR SENIOR OFFICERS

MARCH 4, 2005

 

On
March 4, 2005, Protective Life Corporation (the “Company”) granted stock
appreciation rights (“SARs”) under its Long-Term Incentive Plan (the “Plan”).  Each individual who was granted SARs received
a 2005 Stock Appreciation Rights Award Letter for Senior Officers (the “Award
Letter”).  The terms of your Award are
contained in these Provisions for 2005 Stock Appreciation Rights for Senior
Officers (“SAR Provisions”), which refer to and incorporate information
contained in the Award Letter.  This
Award is also subject to the terms and conditions set forth in the Plan and any
rules and regulations adopted by the Compensation and Management Succession
Committee of the Board of Directors (the “Committee”).  Any terms used in these SAR Provisions and
not defined herein have the meanings set forth in the Plan.

 

These SAR Provisions and the Award Letter constitute part of a
prospectus covering securities that have been registered under the Securities
Act of 1933.  The date of this part of
the prospectus is March 4, 2005.

 

1.                                      General Provisions.  The
number of SARs that you have been awarded, the Base Price of the SARs, and the
Grant Date of the SARs are set forth in your Award Letter.

 

2.                                      Term of SARs. 
Except as otherwise provided in these SAR Provisions or the Plan, the
SARs will terminate on the tenth anniversary of the Grant Date (the “Normal
Expiration Date”).

 

3.                                      Earn-out of SARs. 
Except as otherwise provided in these SAR Provisions or the Plan, the
SARs will become exercisable as follows:

 

one-fourth
of the SARs will become exerciseable on March 4, 2006;

an
additional one-fourth of the SARs will become exerciseable on March 4,
2007;

an
additional one-fourth of the SARs will become exerciseable on March 4,
2008; and

the
remaining one-fourth of the SARs will become exerciseable on March 4,
2009.

 

4.                                      Method of Exercise and Form of
Payment.  You may exercise all or any portion of the
SARs that have become exercisable by written notice of exercise to the Chief
Accounting Officer of the Company (or such other person as the Company may
designate).  As soon as practicable after
receipt of a written exercise notice of any exercisable SARs, the Company shall
deliver to you an amount equal to the number of SARs exercised multiplied by the
excess of (a) the Fair Market Value of a share of Common Stock on the date of
exercise of the SARs over (b) the Base Price. 
Unless the Committee determines otherwise, payment shall be made in
shares of Common Stock, subject to tax withholding as described in paragraph
10.  The shares of Common Stock that you
receive upon exercise of your SARs may consist of authorized but unissued
shares or treasury shares of the Company, as determined by the Company from
time to time.

 

2

 

5.                                      Termination of Employment.

 

(a)                                  Death, Disability or Retirement.  If
your employment with the Company and its subsidiaries terminates due to death,
disability or early or normal retirement under the Company’s qualified pension
plan, then all of the SARs shall become exercisable as of the date of such
termination of employment and such SARs may be exercised at any time on or
before the earlier to occur of (i) the Normal Expiration Date or (ii) the day
before the third anniversary of your termination of employment.

 

(b)                                 Other Termination.  If
your employment with the Company and its subsidiaries terminates for any reason
other than death, disability or early or normal retirement under the Company’s
qualified pension plan, then all unexercised SARs (whether or not then exercisable)
shall terminate and be canceled immediately upon such termination of
employment.

 

(c)                                  Adjustments by the Committee.  The
Committee may, in its sole discretion, exercised before or after your
termination of employment, declare all or any portion of the SARs to be
immediately exercisable and/or permit all or any portion of the SARs to remain
exercisable for such period designated by it after the time when the SARs would
have otherwise terminated as provided in the applicable provisions of this
paragraph 5, but not beyond the Normal Expiration Date.

 

6.                                      Forfeiture and Pay-Back of SAR
Amount.

 

(a)                                  Non-Compete Provision.  If,
within one year after the exercise of all or a portion of the SARs, you
voluntarily terminate your employment (at a time when you are an officer of the
Company for purposes of Section 16(b) of the Securities Exchange Act of
1934 (“Section 16(b)”) and become employed by a competitor of the Company
in the financial services industry (which includes, but is not limited to, the
insurance, mutual fund, broker-dealer, financial institution or investment
company industries), you agree to pay the Company, within 30 days of commencing
such employment, an amount, in cash or the equivalent value in shares of Common
Stock, equal to the aggregate of all amounts attributable to the SARs exercised
within the one year period prior to the date of such termination of employment.

 

(b)                                 Termination for Cause.  If,
after your termination of employment, the Committee determines that, either
during or after your employment with the Company or its subsidiaries, you
engaged in conduct that (i) would have permitted the Company or its
subsidiaries to terminate your employment for Cause had you still been employed
or (ii) otherwise results in damage to the business or reputation of the
Company or any of its subsidiaries, all SARs that are still outstanding at the
time of such determination shall immediately terminate and be canceled.  Upon such a determination by the Committee,
the Company may disregard any attempted exercise of the SARs by notice
delivered prior to such determination if, at such time, the Company had not
completed the steps necessary to effect such exercise.

 

7.                                      Change in Control. 
Unless the Committee shall otherwise determine in the manner set forth in
the Plan, in the event of a Change in Control, each SAR (regardless of whether
such SAR is at such time otherwise exercisable) shall be canceled in exchange
for a payment in cash of an amount equal to the excess, if any, of (a) the
greater of (i) the price per share of Common Stock immediately preceding any
transaction resulting in a Change in Control or (ii) the highest price per
share of Common Stock offered in conjunction with any transaction resulting in
a Change in Control (as determined in good faith by the Committee if any part
of the offered price is payable other than in cash) over (b) the Base Price,
subject to tax withholding as described in paragraph 10.

 

3

 

8.                                      Federal Income Tax Consequences.

 

(a)                                  General.  The following description of
the federal income tax consequences of the SARs is based on currently
applicable provisions of the Internal Revenue Code (the “Code”) and related
regulations, and is intended to be only a general summary.  The summary does not discuss state and local
tax laws, which may differ from the federal tax law, or federal estate, gift
and employment tax laws.  For these
reasons, you are urged to consult with your own tax advisor regarding the
application of the tax laws to your particular situation.

 

(b)                                 SAR Grant.  This grant of SARs will not
cause you to be subject to federal income tax.

 

(c)                                  SAR Exercise.  You
will recognize ordinary income for federal income tax purposes on the date the
SAR is exercised.  The amount of income
recognized will be equal to the aggregate of the amount of cash and the fair
market value (as of the date of exercise) of the shares of Common Stock paid
upon the SAR exercise.

 

(d)                                 Sale of SAR Shares.  Your
tax basis in the shares of Common Stock acquired upon exercise of the SAR will
be equal to the fair market value of the shares on the exercise date.

 

You
will recognize capital gain or loss on the sale or exchange of the acquired
shares to the extent of any difference between the amount realized and the tax
basis in the shares.  The tax treatment
of the capital gain or loss will depend upon the period of time between the
date of exercise and the date of the sale or exchange, your adjusted gross
income, and other factors.

 

(f)                                    Company Deductions.  As a
general rule, the Company or one of its subsidiaries will be entitled to a
deduction for federal income tax purposes at the same time and in the same
amount that an SAR holder recognizes ordinary income, to the extent that such
income is considered reasonable compensation under the Code.  Neither the Company nor any subsidiary will
be entitled to a deduction with respect to payments that constitute “excess
parachute payments” pursuant to Section 280G of the Code and that do not
qualify as reasonable compensation pursuant to that section.  Such payments will also subject the
recipients to a 20% excise tax.

 

(g)                                 ERISA.  The Plan is not qualified
under Section 401(a) of the Code and is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974.

 

9.                                      Deferral of Payment by the
Company.  The Committee may defer the payment of cash
and the issuance or delivery of Common Stock to prevent the Company or its
subsidiaries from being denied a federal income tax deduction with respect to
any exercised SARs.  If a cash payment or
distribution of Common Stock to a Participant is deferred, the Company will
establish for the Participant a book-entry account (the “Account”) representing
all such deferrals.  If dividends are
paid by the Company during the deferral period, the Participant’s Account shall
be credited with the amount of any dividends which would otherwise have been
payable to the Participant if the number of shares represented by such Account
had been owned directly, and such amount shall be deemed to be reinvested in
additional shares of Common Stock.

 

10.                               Income Tax Withholding.  You
must make arrangements satisfactory to the Company to satisfy any applicable
federal, state or local tax withholding obligation.  The Company may withhold, or require you to
remit, an amount sufficient to satisfy this obligation, and may postpone any
payment due to you with respect to your SAR exercise until the withholding
obligation is satisfied.

 

4

 

The
amount of withholding tax retained by the Company or paid by you to the Company
will be paid to the appropriate federal, state and local tax authorities in
satisfaction of the withholding obligations under the tax laws.  The total amount of income you recognize by
reason of the SAR exercise will be reported on Form W-2 in the year in which
you recognize income with respect to the exercise.  Whether you owe additional tax will depend on
your overall taxable income for the applicable year and the total tax remitted
for that year through withholding or by estimated payments.

 

11.                               Non-transferability of SAR. 
These SARs may be exercised only by you as the SAR holder, and may not
be assigned, pledged, or otherwise transferred, with the exception that in the
event of your death the SARs may be exercised (at any time prior to its
expiration or termination as provided in the Plan or these SAR Provisions) by
the executor or administrator of your estate or by a person who acquired the
right to exercise the SARs by reason of your death.

 

12.                               Beneficiary Designations.  You
may name a beneficiary or beneficiaries (who must be members of your family and
who may be named contingently or successively) with respect to your rights
under the Plan (including the right to receive the proceeds of an SAR exercise
that occurred immediately before your death, and the right to exercise SARs
after your death) by submitting a written beneficiary designation in a form
acceptable to the Company.  Any such
designation will be effective only when filed with the Company’s Chief
Accounting Officer (or such other person as the Company may designate) before
your date of death, and will (unless specifically set forth therein) revoke all
prior designations.  If there is no
beneficiary designation in effect on the date of your death, your beneficiary
will be your surviving spouse or, if you have no surviving spouse, your estate.

 

13.                               Adjustment in Certain Events.  In
the event of specified changes in the Company’s capital structure, the
Committee may make appropriate adjustment in the number and kind of shares
authorized by the Plan, and the number, base price and kind of shares covered
by outstanding Awards.  These SAR
Provisions will continue to apply to your Award as so adjusted.

 

14.                               Administration of the Plan.  The
Plan is administered by the Committee, which consists of at least two
directors, none of whom is an employee of the Company.  The members of the Committee are appointed annually
by the Board of Directors and may be removed by the Board of Directors.  To the Company’s best knowledge, there is no
other material relationship between any member of the Committee and the Company
or its affiliates or employees.

 

The
Committee designates the eligible employees to be granted awards and the type and
amount of awards to be granted.  The
Committee also has authority to interpret the Plan, to adopt rules for
administering the Plan, to decide all questions of fact arising under the Plan,
and to make all other determinations necessary or advisable for the
administration of the Plan.  Committee
determinations need not be uniform, whether or not the Participants are
similarly situated.  All decisions and
acts of the Committee are final and binding on all affected Participants.

 

15.                               Stock Purchase Rights.  Pursuant to a Rights Agreement, on August 18,
1995, the Company paid a dividend of one right (a “Right”) on each share of
Common Stock then outstanding.  Each
Right entitles the holder to purchase one one-hundredth of a share of Series A
Junior Participating Cumulative Preferred Stock.  The Rights Agreement provides that the
Company will issue one Right together with each share of Common Stock issued by
it in the future.

 

The
Rights are currently represented by certificates for the Common Stock and can
only be transferred together with the Common Stock.   However, upon the occurrence of certain
events the Rights will become exercisable and at that time may be transferred
separately from the Common Stock.

 

5

 

Unless
and until such Rights become exercisable they are expected to have no value
independent of the Common Stock

 

If
you exercise your SARs, you will receive one Right with respect to each share
of Common Stock received.  The exercise
price of the SARs is not affected by the Rights.  You cannot exercise the SARs with respect to
the shares of Common Stock without the Rights and vice versa.  If the Rights become exercisable, the Company
will provide more detailed information about how they affect Awards under the
Plan.

 

16.                               Amendment.  The
Committee may from time to time amend the terms of this Award in accordance
with the terms of the Plan in effect at the time of such amendment, but no
amendment which is unfavorable to you can be made without your written consent.  The Plan will terminate on December 31,
2012; however, such termination will not affect an Award previously
granted.  The Company may amend,
terminate or discontinue the Plan at any time, but no amendment, termination or
discontinuance of the Plan will unfavorably affect any Award previously
granted.

 

17.                               Section 16(b) Considerations.  If
you are deemed to be an officer of the Company for purposes of Section 16(b),
you will be required to return to the Company any “profit” realized from the “purchase”
and “sale”, or “sale” and “purchase”, of Common Stock within any six-month
period.  The grant of an SAR and the
receipt of shares upon exercise of an SAR under the Plan are not purchases for
purposes of Section 16(b).  The
withholding of shares to satisfy your tax liability in connection with an SAR
exercise (as described in paragraph 10) will also be exempt from Section 16(b).

 

Reporting
requirements apply with respect to the grant and exercise of SARs.  If you are subject to Section 16(b), you
should consult the Company’s Legal Department with respect to these provisions.

 

18.                               Restrictions on Resale. 
There are no restrictions imposed by the Plan on the resale of Common
Stock acquired under the Plan.  However,
under the provisions of the Securities Act of 1933 (the “Securities Act”) and
the rules and regulations of the Securities and Exchange Commission (the “SEC”),
resales of stock acquired under the Plan by certain officers and directors of
the Company who may be deemed to be “affiliates” of the Company must be made
pursuant to an appropriate effective registration statement filed with the SEC,
pursuant to the provisions of Rule 144 issued under the Securities Act, or
pursuant to another exemption from registration provided in the Securities Act.  At the present time, the Company does not
have a currently effective registration statement pursuant to which such
resales may be made by affiliates.  In
addition, the Company’s directors, officers and employees are subject to the
Company’s policies and procedures regarding the purchase and sale of Common
Stock (including its Code of Business Conduct, Statement of Policy on Purchase
or Sale of Protective Corporation Stock, and Stock Ownership Guidelines).

 

19.                               Effect on Employment and Other
Benefits.  Receipt of an Award under the Plan does not
confer any right to receive Awards in the future or to continue in the employ
of the Company and its subsidiaries, and Award recipients are subject to
discipline and discharge in the same manner as any other employee.  Income recognized as a result of exercise of
an SAR will not be included in the formula for calculating your benefits under
the Company’s Pension, 401(k) and Stock Ownership, and Disability Plans.

 

20.                               Regulatory Compliance. 
Under the Plan, the Company is not required to deliver Common Stock upon
exercise of an SAR if such delivery would violate any applicable law,
regulation or stock exchange requirement. 
If required by any federal or state securities law or regulation, the
Company may impose restrictions on an SAR holder’s ability to transfer shares
received under the Plan.

 

6

 

21.                               Company and Plan Documents.  Each
year the Company sends a copy of its Annual Report to Share Owners for its last
fiscal year to all share owners of the Company (including participants in its
401(K) and Stock Ownership Plan).  An
additional copy of the Company’s most recent Annual Report to Share Owners and
all other communications distributed by the Company to its shareholders may be
obtained without charge, by written or oral request to Investor Relations,
Protection Life Corporation, P. O. Box 2606, Birmingham, Alabama 35202
(telephone (205) 268-3573).

 

The
following documents filed by the Company with the SEC under the Securities
Exchange Act of 1934 (the “Exchange Act”) are incorporated herein by reference:

 

(a)                                  The Company’s most recent Annual Report on
Form 10-K;

 

(b)                                 All other reports filed by the Company under Section 13(a)
or 15(d) of the Exchange Act after the end of the year covered by its most
recent Annual Report on Form 10-K; and

 

(c)                                  The description of the Common Stock and the
Rights contained in the registration statements therefore under the Exchange
Act, including any amendments filed for the purpose of updating such
descriptions.

 

All
documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act after the date of this document and prior to the filing of
a post-effective amendment which indicates that all securities offered under the
Plan have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of the filing of such documents.

 

A
copy of any or all of the documents referred to above, as well as any documents
constituting part of a prospectus covering shares offered under the Plan, may
be obtained, without charge, by written or oral request to Investor Relations,
Protective Life Corporation, P. O. Box 2606, Birmingham, Alabama 35202
(telephone (205) 268-3573).

 

 

Questions
regarding this Award and requests for additional information about the Plan or
the Committee should be directed to Jason Hudson, Protective Life Corporation,
P. O. Box 2606, Birmingham, Alabama 35202 (telephone (205) 268-5279).  These SAR Provisions and your Award Letter
contain the formal terms and conditions of your Award, and should be retained
for future reference.

 

7Exhibit 10(b)(3)

 

                            

 

2005 STOCK APPRECIATION RIGHTS AWARD LETTER

 

The
Compensation and Management Succession Committee of the Company’s Board of
Directors (the “Committee”) has awarded you the following:

 

             
Stock Appreciation Rights

Base Price:  $41.05

Grant Date:  March 4, 2005

 

The
Stock Appreciation Rights were awarded pursuant to the Company’s Long-Term
Incentive Plan, as amended (the “Plan”), and are subject to the terms and
conditions contained in the Plan and in the Provisions for 2005 Stock
Appreciation Rights set forth in Appendix A to this Award Letter.

 

This
Award is intended to fulfill the Plan’s purpose of furthering the long-term
growth in profitability of the Company by offering long-term incentives to key
executives, officers and employees who will be largely responsible for such
growth.  Since these Awards have been
granted to only a select group of Company employees, I request that you keep
the terms of this Award confidential.

 

 

	
   

  	
   

  
	
  H.
  Corbin Day, Chairman,

  
	
  Compensation
  and Management Succession Committee

  
	
  of
  the Board of Directors

  
	
  of
  Protective Life Corporation

  

 

 

APPENDIX A

 

PROVISIONS FOR

2005 STOCK APPRECIATION RIGHTS

MARCH 4, 2005

 

On
March 4, 2005, Protective Life Corporation (the “Company”) granted stock
appreciation rights (“SARs”) under its Long-Term Incentive Plan (the “Plan”).  Each individual who was granted SARs received
a 2005 Stock Appreciation Rights Award Letter (the “Award Letter”).  The terms of your Award are contained in
these Provisions for 2005 Stock Appreciation Rights (“SAR Provisions”), which
refer to and incorporate information contained in the Award Letter.  This Award is also subject to the terms and
conditions set forth in the Plan and any rules and regulations adopted by the
Compensation and Management Succession Committee of the Board of Directors (the
“Committee”).  Any terms used in these
SAR Provisions and not defined herein have the meanings set forth in the Plan.

 

These SAR Provisions and the Award Letter constitute part of a
prospectus covering securities that have been registered under the Securities
Act of 1933.  The date of this part of
the prospectus is March 4, 2005.

 

1.                                      General Provisions.  The
number of SARs that you have been awarded, the Base Price of the SARs, and the
Grant Date of the SARs are set forth in your Award Letter.

 

2.                                      Term of SARs. 
Except as otherwise provided in these SAR Provisions or the Plan, the
SARs will terminate on the tenth anniversary of the Grant Date (the “Normal
Expiration Date”).

 

3.                                      Earn-out of SARs. 
Except as otherwise provided in these SAR Provisions or the Plan, the
SARs will become exercisable on March 4, 2010.

 

4.                                      Method of Exercise and Form of
Payment.  You may exercise all or any portion of the
SARs that have become exercisable by written notice of exercise to the Chief
Accounting Officer of the Company (or such other person as the Company may
designate).  As soon as practicable after
receipt of a written exercise notice of any exercisable SARs, the Company shall
deliver to you an amount equal to the number of SARs exercised multiplied by
the excess of (a) the Fair Market Value of a share of Common Stock on the date
of exercise of the SARs over (b) the Base Price.  Unless the Committee determines otherwise,
payment shall be made in shares of Common Stock, subject to tax withholding as
described in paragraph 10.  The shares of
Common Stock that you receive upon exercise of your SARs may consist of
authorized but unissued shares or treasury shares of the Company, as determined
by the Company from time to time.

 

5.                                      Termination of Employment.

 

(a)                                  Death, Disability or Retirement.  If
your employment with the Company and its subsidiaries terminates due to death,
disability or early or normal retirement under the Company’s qualified pension
plan, then all of the SARs shall become exercisable as of the date of such
termination of employment and such SARs may be exercised at any time on or
before the earlier to occur of (i) the Normal Expiration Date or (ii) the day
before the third anniversary of your termination of employment.

 

(b)                                 Other Termination.  If
your employment with the Company and its subsidiaries terminates for any reason
other than death, disability or early or normal retirement under the Company’s

 

2

 

qualified
pension plan, then all unexercised SARs (whether or not then exercisable) shall
terminate and be canceled immediately upon such termination of employment.

 

(c)                                  Adjustments by the Committee.  The
Committee may, in its sole discretion, exercised before or after your
termination of employment, declare all or any portion of the SARs to be
immediately exercisable and/or permit all or any portion of the SARs to remain
exercisable for such period designated by it after the time when the SARs would
have otherwise terminated as provided in the applicable provisions of this
paragraph 5, but not beyond the Normal Expiration Date.

 

6.                                      Forfeiture and Pay-Back of SAR
Amount.

 

(a)                                  Non-Compete Provision.  If,
within one year after the exercise of all or a portion of the SARs, you
voluntarily terminate your employment (at a time when you are an officer of the
Company for purposes of Section 16(b) of the Securities Exchange Act of
1934 (“Section 16(b)”) and become employed by a competitor of the Company
in the financial services industry (which includes, but is not limited to, the
insurance, mutual fund, broker-dealer, financial institution or investment
company industries), you agree to pay the Company, within 30 days of commencing
such employment, an amount, in cash or the equivalent value in shares of Common
Stock, equal to the aggregate of all amounts attributable to the SARs exercised
within the one year period prior to the date of such termination of employment.

 

(b)                                 Termination for Cause.  If,
after your termination of employment, the Committee determines that, either
during or after your employment with the Company or its subsidiaries, you
engaged in conduct that (i) would have permitted the Company or its
subsidiaries to terminate your employment for Cause had you still been employed
or (ii) otherwise results in damage to the business or reputation of the
Company or any of its subsidiaries, all SARs that are still outstanding at the
time of such determination shall immediately terminate and be canceled.  Upon such a determination by the Committee,
the Company may disregard any attempted exercise of the SARs by notice
delivered prior to such determination if, at such time, the Company had not completed
the steps necessary to effect such exercise.

 

7.                                      Change in Control. 
Unless the Committee shall otherwise determine in the manner set forth
in the Plan, in the event of a Change in Control, each SAR (regardless of
whether such SAR is at such time otherwise exercisable) shall be canceled in
exchange for a payment in cash of an amount equal to the excess, if any, of (a)
the greater of (i) the price per share of Common Stock immediately preceding
any transaction resulting in a Change in Control or (ii) the highest price per
share of Common Stock offered in conjunction with any transaction resulting in
a Change in Control (as determined in good faith by the Committee if any part
of the offered price is payable other than in cash) over (b) the Base Price,
subject to tax withholding as described in paragraph 10.

 

8.                                      Federal Income Tax Consequences.

 

(a)                                  General.  The following description of
the federal income tax consequences of the SARs is based on currently
applicable provisions of the Internal Revenue Code (the “Code”) and related
regulations, and is intended to be only a general summary.  The summary does not discuss state and local
tax laws, which may differ from the federal tax law, or federal estate, gift
and employment tax laws.  For these
reasons, you are urged to consult with your own tax advisor regarding the
application of the tax laws to your particular situation.

 

(b)                                 SAR Grant.  This grant of SARs will not
cause you to be subject to federal income tax.

 

3

 

(c)                                  SAR Exercise.  You
will recognize ordinary income for federal income tax purposes on the date the
SAR is exercised.  The amount of income
recognized will be equal to the aggregate of the amount of cash and the fair
market value (as of the date of exercise) of the shares of Common Stock paid
upon the SAR exercise.

 

(d)                                 Sale of SAR Shares.  Your
tax basis in the shares of Common Stock acquired upon exercise of the SAR will
be equal to the fair market value of the shares on the exercise date.

 

You
will recognize capital gain or loss on the sale or exchange of the acquired
shares to the extent of any difference between the amount realized and the tax
basis in the shares.  The tax treatment
of the capital gain or loss will depend upon the period of time between the
date of exercise and the date of the sale or exchange, your adjusted gross
income, and other factors.

 

(f)                                    Company Deductions.  As a
general rule, the Company or one of its subsidiaries will be entitled to a
deduction for federal income tax purposes at the same time and in the same
amount that an SAR holder recognizes ordinary income, to the extent that such
income is considered reasonable compensation under the Code.  Neither the Company nor any subsidiary will
be entitled to a deduction with respect to payments that constitute “excess
parachute payments” pursuant to Section 280G of the Code and that do not
qualify as reasonable compensation pursuant to that section.  Such payments will also subject the
recipients to a 20% excise tax.

 

(g)                                 ERISA.  The Plan is not qualified
under Section 401(a) of the Code and is not subject to any of the
provisions of the Employee Retirement Income Security Act of 1974.

 

9.                                      Deferral of Payment by the
Company.  The Committee may defer the payment of cash
and the issuance or delivery of Common Stock to prevent the Company or its
subsidiaries from being denied a federal income tax deduction with respect to
any exercised SARs.  If a cash payment or
distribution of Common Stock to a Participant is deferred, the Company will
establish for the Participant a book-entry account (the “Account”) representing
all such deferrals.  If dividends are
paid by the Company during the deferral period, the Participant’s Account shall
be credited with the amount of any dividends which would otherwise have been
payable to the Participant if the number of shares represented by such Account
had been owned directly, and such amount shall be deemed to be reinvested in
additional shares of Common Stock.

 

10.                               Income Tax Withholding.  You
must make arrangements satisfactory to the Company to satisfy any applicable
federal, state or local tax withholding obligation.  The Company may withhold, or require you to
remit, an amount sufficient to satisfy this obligation, and may postpone any
payment due to you with respect to your SAR exercise until the withholding
obligation is satisfied.

 

The
amount of withholding tax retained by the Company or paid by you to the Company
will be paid to the appropriate federal, state and local tax authorities in
satisfaction of the withholding obligations under the tax laws.  The total amount of income you recognize by
reason of the SAR exercise will be reported on Form W-2 in the year in which
you recognize income with respect to the exercise.  Whether you owe additional tax will depend on
your overall taxable income for the applicable year and the total tax remitted
for that year through withholding or by estimated payments.

 

11.                               Non-transferability of SAR. 
These SARs may be exercised only by you as the SAR holder, and may not
be assigned, pledged, or otherwise transferred, with the exception that in the
event of your death the SARs may be exercised (at any time prior to its
expiration or termination as provided in the Plan or these SAR Provisions) by
the executor or administrator of your estate or by a person who

 

4

 

acquired
the right to exercise the SARs by reason of your death.

 

12.                               Beneficiary Designations.  You
may name a beneficiary or beneficiaries (who must be members of your family and
who may be named contingently or successively) with respect to your rights
under the Plan (including the right to receive the proceeds of an SAR exercise
that occurred immediately before your death, and the right to exercise SARs
after your death) by submitting a written beneficiary designation in a form
acceptable to the Company.  Any such
designation will be effective only when filed with the Company’s Chief
Accounting Officer (or such other person as the Company may designate) before
your date of death, and will (unless specifically set forth therein) revoke all
prior designations.  If there is no
beneficiary designation in effect on the date of your death, your beneficiary
will be your surviving spouse or, if you have no surviving spouse, your estate.

 

13.                               Adjustment in Certain Events.  In
the event of specified changes in the Company’s capital structure, the
Committee may make appropriate adjustment in the number and kind of shares
authorized by the Plan, and the number, base price and kind of shares covered
by outstanding Awards.  These SAR
Provisions will continue to apply to your Award as so adjusted.

 

14.                               Administration of the Plan.  The
Plan is administered by the Committee, which consists of at least two
directors, none of whom is an employee of the Company.  The members of the Committee are appointed
annually by the Board of Directors and may be removed by the Board of
Directors.  To the Company’s best
knowledge, there is no other material relationship between any member of the
Committee and the Company or its affiliates or employees.

 

The
Committee designates the eligible employees to be granted awards and the type
and amount of awards to be granted.  The
Committee also has authority to interpret the Plan, to adopt rules for
administering the Plan, to decide all questions of fact arising under the Plan,
and to make all other determinations necessary or advisable for the
administration of the Plan.  Committee
determinations need not be uniform, whether or not the Participants are
similarly situated.  All decisions and
acts of the Committee are final and binding on all affected Participants.

 

15.                               Stock Purchase Rights. 
Pursuant to a Rights Agreement, on August 18, 1995, the Company
paid a dividend of one right (a “Right”) on each share of Common Stock then
outstanding.  Each Right entitles the
holder to purchase one one-hundredth of a share of Series A Junior
Participating Cumulative Preferred Stock. 
The Rights Agreement provides that the Company will issue one Right
together with each share of Common Stock issued by it in the future.

 

The
Rights are currently represented by certificates for the Common Stock and can
only be transferred together with the Common Stock.   However, upon the occurrence of certain
events the Rights will become exercisable and at that time may be transferred
separately from the Common Stock.  Unless
and until such Rights become exercisable they are expected to have no value
independent of the Common Stock

 

If
you exercise your SARs, you will receive one Right with respect to each share of
Common Stock received.  The exercise
price of the SARs is not affected by the Rights.  You cannot exercise the SARs with respect to
the shares of Common Stock without the Rights and vice versa.  If the Rights become exercisable, the Company
will provide more detailed information about how they affect Awards under the
Plan.

 

16.                               Amendment.  The
Committee may from time to time amend the terms of this Award in accordance
with the terms of the Plan in effect at the time of such amendment, but no
amendment which is unfavorable to you can be made without your written
consent.  The Plan will terminate on
December

 

5

 

31,
2012; however, such termination will not affect an Award previously
granted.  The Company may amend,
terminate or discontinue the Plan at any time, but no amendment, termination or
discontinuance of the Plan will unfavorably affect any Award previously
granted.

 

17.                               Section 16(b) Considerations.  If
you are deemed to be an officer of the Company for purposes of Section 16(b),
you will be required to return to the Company any “profit” realized from the “purchase”
and “sale”, or “sale” and “purchase”, of Common Stock within any six-month
period.  The grant of an SAR and the
receipt of shares upon exercise of an SAR under the Plan are not purchases for
purposes of Section 16(b).  The
withholding of shares to satisfy your tax liability in connection with an SAR
exercise (as described in paragraph 10) will also be exempt from Section 16(b).

 

Reporting
requirements apply with respect to the grant and exercise of SARs.  If you are subject to Section 16(b), you
should consult the Company’s Legal Department with respect to these provisions.

 

18.                               Restrictions on Resale. 
There are no restrictions imposed by the Plan on the resale of Common
Stock acquired under the Plan.  However,
under the provisions of the Securities Act of 1933 (the “Securities Act”) and
the rules and regulations of the Securities and Exchange Commission (the “SEC”),
resales of stock acquired under the Plan by certain officers and directors of
the Company who may be deemed to be “affiliates” of the Company must be made
pursuant to an appropriate effective registration statement filed with the SEC,
pursuant to the provisions of Rule 144 issued under the Securities Act, or
pursuant to another exemption from registration provided in the Securities
Act.  At the present time, the Company
does not have a currently effective registration statement pursuant to which
such resales may be made by affiliates. 
In addition, the Company’s directors, officers and employees are subject
to the Company’s policies and procedures regarding the purchase and sale of
Common Stock (including its Code of Business Conduct, Statement of Policy on
Purchase or Sale of Protective Corporation Stock, and Stock Ownership
Guidelines).

 

19.                               Effect on Employment and Other
Benefits.  Receipt of an Award under the Plan does not
confer any right to receive Awards in the future or to continue in the employ
of the Company and its subsidiaries, and Award recipients are subject to
discipline and discharge in the same manner as any other employee.  Income recognized as a result of exercise of
an SAR will not be included in the formula for calculating your benefits under
the Company’s Pension, 401(k) and Stock Ownership, and Disability Plans.

 

20.                               Regulatory Compliance. 
Under the Plan, the Company is not required to deliver Common Stock upon
exercise of an SAR if such delivery would violate any applicable law,
regulation or stock exchange requirement. 
If required by any federal or state securities law or regulation, the
Company may impose restrictions on an SAR holder’s ability to transfer shares
received under the Plan.

 

21.                               Company and Plan Documents.  Each
year the Company sends a copy of its Annual Report to Share Owners for its last
fiscal year to all share owners of the Company (including participants in its
401(K) and Stock Ownership Plan).  An
additional copy of the Company’s most recent Annual Report to Share Owners and
all other communications distributed by the Company to its shareholders may be
obtained without charge, by written or oral request to Investor Relations,
Protection Life Corporation, P. O. Box 2606, Birmingham, Alabama 35202
(telephone (205) 268-3573).

 

The
following documents filed by the Company with the SEC under the Securities
Exchange Act of 1934 (the “Exchange Act”) are incorporated herein by reference:

 

(a)                                  The Company’s most recent Annual Report on
Form 10-K;

 

6

 

(b)                                 All other reports filed by the Company under Section 13(a)
or 15(d) of the Exchange Act after the end of the year covered by its most
recent Annual Report on Form 10-K; and

 

(c)                                  The description of the Common Stock and the
Rights contained in the registration statements therefore under the Exchange
Act, including any amendments filed for the purpose of updating such
descriptions.

 

All
documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act after the date of this document and prior to the filing of
a post-effective amendment which indicates that all securities offered under
the Plan have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of the filing of such documents.

 

A
copy of any or all of the documents referred to above, as well as any documents
constituting part of a prospectus covering shares offered under the Plan, may
be obtained, without charge, by written or oral request to Investor Relations,
Protective Life Corporation, P. O. Box 2606, Birmingham, Alabama 35202
(telephone (205) 268-3573).

 

 

Questions
regarding this Award and requests for additional information about the Plan or
the Committee should be directed to Jason Hudson, Protective Life Corporation,
P. O. Box 2606, Birmingham, Alabama 35202 (telephone (205) 268-5279).  These SAR Provisions and your Award Letter
contain the formal terms and conditions of your Award, and should be retained
for future reference.

 

7

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