Document:

pava_ex44.htm

Exhibit 4.4

 

SEPARATION AGREEMENT

 

  

This Separation Agreement (this "Agreement") is made as of September 25, 2011, by and between FIRST NATIONAL ENERGY CORPORATION ("First National"), a Nevada corporation, and PAVANA POWER CORPORATION ("Pavana"), a Nevada corporation, a wholly-owned subsidiary of First National.

RECITALS

 

  

WHEREAS, the Board of Directors of First National has determined that it would be advisable and in the best interests of the stockholders of First National for First National to distribute, as of a record date to be agreed by the parties and on a pro rata basis to the holders of First National’s common stock, par value $.001 per share (“First National Common Stock”), without any consideration being paid by the holders of such First National Common Stock, all of the outstanding shares of Pavana common stock, par value $.001 per share (the “Pavana Common Stock”), then owned by First National (the “Distribution”);

WHEREAS, for federal income tax purposes, the Distribution is intended to qualify for tax-free treatment under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”); and

WHEREAS, it is appropriate and desirable to set forth the principal transactions required to effect the Distribution and certain other agreements that will govern the relationship of First National and Pavana following the Distribution.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto hereby agree as follows:

ARTICLE I 

DEFINITIONS

 

  

SECTION 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1.

“Actions” means any action, claim, demand, suit, arbitration, inquiry, subpoena, discovery request, proceeding or investigation by or before any court or grand jury, any governmental or other regulatory or administrative entity, agency or commission or any arbitration tribunal, domestic or foreign.

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such Person. For the purpose of this definition, the term “control” means the power to direct the management of an entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term “controlled” has the meaning correlative to the foregoing. After the Distribution, First National and Pavana shall not be deemed to be under common control for purposes hereof due solely to the fact that First National and Pavana have common stockholders.

“Agent” means Select Fidelity Transfer Services Ltd, of Fonthill, Ontario, the distribution agent appointed by First National to distribute shares of Pavana Common Stock pursuant to the Distribution.

“Code” has the meaning set forth in the Recitals.

“Contracts” has the meaning set forth in Section 2.1(h).

“Copyrights” means United States and foreign copyrights, both registered and unregistered, along with the registrations and applications to register any such copyrights.

 

  

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“Corporate Services Agreement” means the Corporate Services Agreement, dated the date hereof, between First National and Pavana.

“Distribution” has the meaning set forth in the Recitals.

“Distribution Date” means the date determined by the Board of Directors of First National as the date on which the Distribution is payable to holders of First National Common Stock on the Record Date.

“Expenses” means any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, expert witnesses, consultants, accountants and other professionals).

“First National” has the meaning set forth in the first paragraph of this Agreement.

“First National Common Stock” has the meaning set forth in the Recitals.

“First National Parties” means First National and its Subsidiaries (including those formed or acquired after the date hereof), other than the Pavana Parties.

“First National Indemnified Parties” has the meaning set forth in Section 10.2.

“Governmental Authority” means any foreign, federal, state, local or other government, governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral body.

“Indemnified Party” has the meaning set forth in Section 10.5(a).

“Indemnifying Party” has the meaning set forth in Section 10.5(a).

“IRS” means the Internal Revenue Service.

“Liability” means any and all debts, liabilities and obligations, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising (unless otherwise specified in this Agreement), including all costs and expenses relating thereto, and including, without limitation, those debts, liabilities and obligations arising under any law, rule, regulation, Action, threatened Action, order or consent decree of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking.

“Losses” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, fees, expenses, deficiencies, claims or other charges, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown (including, without limitation, the costs and expenses of any and all Actions, threatened Actions, demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened Actions).

 

  

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“Material Governmental Approvals and Consents” means any material notices, reports or other filings to be made with or to, or any material consents, registrations, approvals, permits, clearances or authorizations to be obtained from, any Governmental Authority.

“Pavana” has the meaning set forth in the first paragraph of this Agreement.

“Pavana Common Stock” has the meaning set forth in the recitals.

“Pavana Distributable Share” means for each holder of record of First National Common Stock as of the close of business on the Record Date one share of Pavana Common Stock for every one (1) share of First National Common Stock outstanding and held of record by such holder at such time.

“Pavana Indemnified Parties” has the meaning set forth in Section 10.3.

“Pavana Parties” means Pavana and any Subsidiaries of Pavana formed or acquired after the date hereof.

“Pavana Shares” means each share of Pavana Common Stock.

“Party” means the First National Parties or the Pavana Parties.

“Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or Governmental Authority.

“Privilege” has the meaning set forth in Section 12.8(a).

“Privileged Information” has the meaning set forth in Section 12.8(a).

“Record Date” means the date determined by the Board of Directors of First National as the record date for the Distribution.

“Registration Statement” has the meaning set forth in Section 6.10.

“SEC” means the United States Securities and Exchange Commission.

“Shared Contract” means a Contract with a third Person that directly benefits both the First National Parties and the Pavana Parties.

“Subsidiary” means, when used with reference to any Person, any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person. After the Distribution, First National and Pavana shall not be deemed to be under common control for purposes hereof due solely to the fact that First National and Pavana have common stockholders.

 

  

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“Third Party Claim” has the meaning set forth in Section 10.6(a).

“Third Party Consents” has the meaning set forth in Section 6.14.

“Trademarks” means all United States, state and foreign trademarks, service marks, logos, trade dress and trade names, whether registered or unregistered, including all goodwill associated with the foregoing, and all registrations and pending applications to register the foregoing.

SECTION 1.2 Interpretation. (a) In this Agreement, unless the context clearly indicates otherwise:

(i) words used in the singular include the plural and words used in the plural include the singular;

(ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement;

(ii) reference to any gender includes the other gender;

(iv) the word “including” means “including but not limited to”;

(v) reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof;

(vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(viii) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(ix) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(x) accounting terms used herein shall have the meanings historically ascribed to them by First National and its Subsidiaries based upon First National’s internal financial policies and procedures in effect prior to the date of this Agreement;

(xi) if there is any conflict between the provisions of the body of this Agreement and the Exhibits or Schedules hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Exhibit or Schedule;

 

  

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(xii) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;

(xiii) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be; and

(xiv) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States.

(b) This Agreement was negotiated by the Parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against either Party shall not apply to any construction or interpretation hereof.

ARTICLE II 

THE DISTRIBUTION

SECTION 2.1 Issuance and Delivery of Pavana Shares. Pavana shall issue to First National, in a forward stock split, the number of Pavana Shares required so that the total number of Pavana Shares held by First National immediately prior to the Distribution is equal to the total number of Pavana Shares distributable pursuant to Section 3.2. First National shall deliver to the Agent one or more stock certificates representing all Pavana Shares then issued and outstanding, together with one or more stock power(s) endorsed in blank and, with respect to any uncertificated shares to be distributed pursuant to Section 3.2, shall take such steps as are necessary to permit such shares to be distributed in the manner described in Section 3.2. In its capacity as Pavana’s transfer agent, the Agent will distribute such shares in the manner described in Section 3.2.

SECTION 2.2 Distribution of Pavana Shares. First National shall instruct the Agent to (i) distribute the Pavana Distributable Shares to each holder of record of First National Common Stock at the close of business on the Record Date. Each distributed Pavana Share shall be validly issued, fully paid and non-assessable and free of preemptive rights. The Agent shall deliver a new stock certificate together with an account statement to each new holder of Pavana Common Stock reflecting such holder’s ownership interest in shares of Pavana Common Stock.

SECTION 2.3 Treatment of Fractional Shares. No certificates or scrip representing fractional Pavana Shares shall be issued in the Distribution.

SECTION 2.4 First National Board Action. The First National Board of Directors shall, in its discretion, establish the Record Date and the Distribution Date and all appropriate procedures in connection with the Distribution. The Board of Directors of First National also shall have the right to adjust the Pavana Distributable Share at any time prior to the Distribution. The consummation of the transactions provided for in this Article II shall only be effected after the Distribution has been declared by the First National Board of Directors.

SECTION 2.5 Additional Approvals. First National shall cooperate with Pavana in effecting, and if so requested by Pavana, First National shall, as the majority stockholder of Pavana prior to the Distribution, ratify any actions which are reasonably necessary or desirable to be taken by Pavana to effectuate the transactions referenced in or contemplated by this Agreement in a manner consistent with the terms hereof.

ARTICLE III 

CLOSING MATTERS

SECTION 3.1 Delivery of Closing Documents. In order to effectuate the transactions contemplated by Article I, the Parties shall execute and deliver, or cause to be executed and delivered, prior to or as of the Distribution such agreements, stock powers and other things (collectively, the “Closing Documents”) as the Parties shall reasonably deem necessary or appropriate to effect such transactions.

 

SECTION 3.2 Provision of Corporate Records. Prior to or as promptly as practicable after the Distribution, First National shall deliver to Pavana all corporate books and records of the Pavana Parties.

 

  

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ARTICLE IV

 NO REPRESENTATIONS AND WARRANTIES

SECTION 4.1 No First National Representations or Warranties. Except as expressly set forth herein, First National does not represent or warrant in any way as to the value or freedom from encumbrance of, or any other matter concerning any of the assets and liabilities of Pavana, and the Pavana Parties shall bear the economic and legal risks that any such assets shall prove to be insufficient or that the Pavana Parties’ title to any such assets shall be other than good and marketable and free of encumbrances. Except as expressly set forth in this Agreement, First National does not represent or warrant that the obtaining of the consents or approvals and the making of the filings and applications contemplated by this Agreement shall satisfy the provisions of all applicable agreements or the requirements of all applicable laws or judgments, and the Pavana Parties shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of law or judgments are not complied with. Notwithstanding the foregoing, the Parties shall fully cooperate and use commercially reasonable efforts to obtain all consents and approvals and to make all filings and applications that may be required for the consummation of the transactions contemplated by this Agreement.

ARTICLE V

CERTAIN COVENANTS

 

  

SECTION 5.1 Material Governmental Approvals and Consents. The Parties will use commercially reasonable efforts to obtain any Material Governmental Approvals and Consents required by the transactions contemplated by this Agreement.

SECTION 5.2 Further Assurances. (a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the Distribution and the other agreements and documents contemplated hereby. Without limiting the generality of the foregoing, each Party shall cooperate with the other Party to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, Contract or other instrument, and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement and the other agreements and documents contemplated hereby or thereby.

SECTION 5.3 Election of Pavana Board of Directors. Prior to the Distribution, First National agrees to vote all shares of Pavana Common Stock held by it in favor of the nominees to the Board of Directors of Pavana, as set forth on Schedule 5.3.

SECTION 5.4 Registration and Listing. Prior to the Distribution:

(a) First National and Pavana shall cooperate with respect to the preparation of a registration statement on Form S-1, including such amendments or supplements thereto as may be necessary (together, the “Registration Statement”), to effect the registration of the Pavana Common Stock under the Exchange Act. The Registration Statement shall include an information statement to be sent by First National to its stockholders in connection with the Distribution (the "Information Statement"). First National and Pavana shall use commercially reasonable efforts to cause the Registration Statement to become and remain effective under the Exchange Act as soon as reasonably practicable. As soon as practicable, after the Registration Statement becomes effective, First National shall mail the Information Statement to the holders of First National Common Stock.

(b) The Parties shall use commercially reasonable efforts to take all such action as may be necessary or appropriate under state and foreign securities and “Blue Sky” laws in connection with the transactions contemplated by this Agreement.

(c) First National and Pavana shall prepare, and Pavana shall file and seek to make effective, an application for the listing of the Pavana Common Stock on the OTC bulletin board, subject to official notice of issuance. First National shall, to the extent commercially reasonable, give FINRA notice of the Record Date in compliance with Rule 10b-17 of the Securities Exchange Act of 1934, as amended.

 

  

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(d) The Parties shall cooperate in preparing, filing with the SEC and causing to become effective any registration statements or amendments thereto that are necessary or appropriate in order to effect the transactions contemplated.

SECTION 5.5 No Noncompetition. After the Distribution, either Party may (i) engage in the same or similar activities or lines of business as the other Party or (ii) do business, or refrain from doing business, with any potential or actual supplier or customer of the other Party.

SECTION 5.6 Commercially Reasonable Efforts. Upon the terms and subject to the conditions set forth in this Agreement, each of the Parties agrees to use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement, including (i) the obtaining of all necessary actions or non-actions, waivers, consents and approvals from Governmental Authorities and the making of all necessary registrations and filings (including filings with Governmental Authorities) and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Authority, (ii) the obtaining of all necessary consents, approvals or waivers from third parties (“Third Party Consents”), (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by this Agreement.

  

 

SECTION 5.7 Conduct of Pavana Business in Ordinary Course. The Parties hereby agree and acknowledge that it is their intent that between the date of this Agreement and the Distribution Date the business of Pavana be operated in the ordinary course of business consistent with past practice, other than such actions (including failures to act) and decisions relating solely to the Distribution which were taken (or not taken) or made with the consent of the other Party (such operation is referred to as the “Ordinary Course").

ARTICLE VI

CONDITIONS TO THE DISTRIBUTION

The obligation of First National to effect the Distribution is subject to the satisfaction or the waiver by First National of each of the following conditions:

SECTION 6.1 Approval by First National Board of Directors. This Agreement and the transactions contemplated hereby, including the declaration of the Distribution, shall have been duly approved by the Board of Directors of First National in accordance with applicable law and the Articles of Incorporation, as amended, and By-Laws of First National.

SECTION 6.2 Receipt of Tax Opinion. First National shall have received an opinion of its tax counsel, which shall not have been rescinded, substantially to the effect that the Distribution will qualify as a tax-free distribution for federal income tax purposes under Section 355 of the Code, and that no income, gain or loss will be recognized by First National, Pavana or their respective stockholders upon the Distribution.

SECTION 6.3 Compliance with State and Foreign Securities and “Blue Sky” Laws. The Parties shall have taken all such action as may be necessary or appropriate under state and foreign securities and “blue sky” laws in connection with the Distribution.

SECTION 6.4 SEC Filings and Approvals. The Parties shall have prepared and Pavana shall, to the extent required under applicable law, have filed with the SEC any such documentation that First National reasonably determines are necessary or desirable to effectuate the Distribution, and each Party shall have obtained all necessary approvals from the SEC.

SECTION 6.5 Effectiveness of Registration Statement; No Stop Order. The Registration Statement shall have been declared effective by the SEC, and no stop order suspending the effectiveness of the Registration Statement shall have been initiated or, to the knowledge of either of the Parties, threatened by the SEC.

 

  

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SECTION 6.6 Dissemination of Information to First National Stockholders. Prior to the Distribution, the Parties shall have prepared and mailed to the holders of First National Common Stock such information concerning Pavana, its business, operations and management, the Distribution and such other matters as First National shall reasonably determine and as may be required by law.

SECTION 6.7 Approval of Listing Application. The Pavana Common Stock to be distributed in the Distribution shall have been approved for listing on the OTC Bulletin Board, subject to official notice of issuance.  

 

SECTION 6.8 Consents.

(a) All Material Governmental Approvals and Consents required to permit the valid consummation of the Distribution shall have been obtained without any conditions being imposed that would have a material adverse effect on First National or Pavana; and

(b) First National shall have obtained the Third Party Consents that shall be required in connection with the Distribution, except those for which the failure to obtain such consents, approvals or waivers would not, in the reasonable opinion of First National, individually or in the aggregate have a material adverse effect on First National, Pavana or the consummation of the Distribution.

SECTION 6.9 No Actions. No action, suit or proceeding shall have been instituted or threatened by or before any court or quasi-judicial or administrative agency of any federal, state, local or foreign jurisdiction or before any arbitrator to restrain, enjoin or otherwise prevent the Distribution or the other transactions contemplated by this Agreement (including a stop order with respect to the effectiveness of the Registration Statement), and no order, injunction, judgment, ruling or decree issued by any court of competent jurisdiction shall be in effect restraining the Distribution or such other transactions.  

 

SECTION 6.10 No Other Events. No other events or developments shall have occurred that, in the judgment of the First National Board of Directors, would result in the Distribution having a material adverse effect on First National or its stockholders.  

 

SECTION 6.11 Satisfaction of Conditions. The satisfaction of the foregoing conditions are for the sole benefit of First National and shall not give rise to or create any duty on the part of First National or the First National Board of Directors to waive or not waive any such condition, to effect the Distribution or in any way limit First National‘s power of termination set forth in Section 12.12.

ARTICLE VII

EXPENSES AND WORKING CAPITAL

 

  

SECTION 7.1 Allocation of Expenses. Except as otherwise provided in this Agreement or any other agreement contemplated hereby, or as otherwise agreed to in writing by the Parties, all fees and expenses incurred in connection with the transactions contemplated hereby or thereby, shall be paid by First National. Specifically, (i) First National shall absorb all of the costs associated with the dedication of internal resources and personnel to the transactions contemplated hereby at all times prior to the Distribution Date, and (ii) First National shall pay all fees and expenses that are related directly to the implementation of the Distribution transaction on or prior to the Distribution Date, and any additional costs incurred after the Distribution Date; provided that such expenses do not exceed the sum of $10,000 in the aggregate. In the event that the transaction costs exceed $10,000 in the aggregate (such excess, the “Excess Expenses”) the Pavana Parties shall reimburse First National for the amount, if any, by which the aggregate amount of actual transaction costs exceeds the amount of $10,000. No later than 75 days after the Distribution Date, First National shall notify Pavana in writing of the amount of any Excess Expenses, and the portion thereof that is to be reimbursed pursuant to this Section 7.1, and provide a reasonably detailed accounting of such Excess Expenses.

 

  

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ARTICLE VIII

INDEMNIFICATION

SECTION 8.1 Release of Pre-Distribution Claims.

(a) Except as provided in Section 9.1(b), effective as of the Distribution Date, each Party does hereby, on behalf of itself and its respective Subsidiaries and Affiliates, successors and assigns and all Persons who at any time prior to the Distribution Date have been shareholders, directors, officers, agents or employees of either Party (in each case, in their respective capacities as such), remise, release and forever discharge the other Party, its respective Subsidiaries and Affiliates, successors and assigns and all Persons who at any time prior to the Distribution Date have been shareholders, directors, officers, agents or employees of such Party (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Date, including in connection with the transactions and all other activities to implement the Distribution; provided, however, that the foregoing shall not impair any right of any Person identified herein to enforce this Agreement.

(b) It is the intent of each of the Parties by virtue of the provisions of this Section 8.1 to provide for a full and complete release and discharge of all liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Distribution Date, between the Parties (including any contractual agreements or arrangements existing or alleged to exist between the Parties on or before the Distribution Date). At any time, at the reasonable request of either Party, the other Party shall execute and deliver releases reflecting the provisions hereof.

SECTION 8.2 Indemnification by Pavana. Except as otherwise provided herein, Pavana shall, and shall cause each of the other Pavana Parties to, indemnify, defend and hold harmless the First National Parties and each of their Affiliates, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “First National Indemnified Parties”), from and against any and all Expenses or Losses incurred or suffered by one or more of the First National Indemnified Parties, in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:

(a) any claim that the information included in the Registration Statement or the Information Statement that was supplied by Pavana, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to the applicable matter took place prior to or subsequent to the Distribution Date;

  

(b) the Pavana Business as conducted by the First National Parties or their Affiliates or predecessors on or at any time prior to the Distribution Date;  

 

(c) the business of Pavana not being operated in the Ordinary Course as a result of any action or failure to act by any Pavana Party, or any of the persons who served (or would have served had such person not retired or his employment been terminated voluntarily or involuntarily) or is serving, in each case, after the Distribution, as a director, officer or employee of any Pavana Party; and  

 

(d) the breach by any Pavana Party of any covenant or agreement set forth in this Agreement, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Expense or Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported.  

 

SECTION 8.3 Indemnification by First National. Except as otherwise provided herein, First National shall indemnify, defend and hold harmless the Pavana Parties and each of their Affiliates, directors, officers, employees and agents, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Pavana Indemnified Parties”), from and against any and all Expenses or Losses incurred or suffered by one or more of the Pavana Indemnified Parties in connection with, relating to, arising out of or due to, directly or indirectly, any of the following items:  

 

(a) the business (other than the business of Pavana) conducted by the First National Parties or their Affiliates or predecessors on or at any time prior to the Distribution Date;

 

  

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(b) the assets owned by First National or its Subsidiaries other than the assets of Pavana;  

 

(c) the Liabilities of the First National Parties other than the express liabilities of Pavana;  

 

(d) the business of Pavana not being operated in the Ordinary Course as a result of any action or failure to act by any First National Party or any of the persons who served or is serving, in each case, after the Distribution, as a director, officer or employee of any First National Party;  

 

(e) the breach by any First National Party of any covenant or agreement set forth in this Agreement; and  

 

(f) any claim that the information included in the Registration Statement or the Information Statement that was supplied by First National, is or was false or misleading with respect to any material fact or omits or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, regardless of whether the occurrence, action or other event giving rise to the applicable matter took place prior to or subsequent to the Distribution Date.  

 

SECTION 8.4 Applicability of and Limitation on Indemnification. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATIONS UNDER THIS ARTICLE VIII SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY INDEMNIFIED PARTY AND SHALL APPLY WITHOUT REGARD TO WHETHER THE LOSS, LIABILITY, CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED HEREUNDER IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY, ANY OTHER THEORY OF LIABILITY OR ARISES AS AN OBLIGATION FOR CONTRIBUTION.  

 

SECTION 8.5 Remedies Cumulative. The remedies provided in this Article VIII shall be cumulative and shall not preclude assertion by an Indemnified Party of any other rights or the seeking of any and all other remedies against any Indemnifying Party.  

 

SECTION 8.6 Survival. All covenants and agreements of the Parties contained in this Agreement relating to indemnification shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein.

ARTICLE IX

MISCELLANEOUS

SECTION 9.1 Entire Agreement. This Agreement and the Schedules and Exhibits referred to herein and therein and the documents delivered pursuant hereto and thereto, constitute the entire agreement between the Parties with respect to the subject matter contained herein or therein, and supersede all prior agreements, negotiations, discussions, understandings, writings and commitments between the Parties with respect to such subject matter.  

 

SECTION 9.2 Choice of Law and Forum. This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Nevada and the federal laws of the United States of America applicable therein, as though all acts and omissions related hereto occurred in Nevada.  

 

SECTION 9.3 Amendment. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the Parties.  

 

SECTION 9.4 Waiver. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. Any such waiver shall be validly and sufficiently given for the purposes of this Agreement if, as to any Party, it is in writing signed by an authorized representative of such Party. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, or in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

 

  

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SECTION 9.5 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable law, but in case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.  

 

SECTION 9.6 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by and delivered to each of the Parties.  

 

SECTION 9.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and thereto, respectively, and their successors and permitted assigns; provided, however, that the rights of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party. The successors and permitted assigns hereunder shall include, without limitation, any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).  

 

SECTION 9.8 Third Party Beneficiaries. Except to the extent otherwise provided herein, the provisions of this Agreement are solely for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and shall not confer upon any third Person any remedy, claim, liability, reimbursement or other right in excess of those existing without reference to this Agreement.  

 

SECTION 9.9 Notices. All notices, requests, claims, demands and other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile when confirmation of transmission is received, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third business day after mailing or (iv) if sent by private courier when received; and shall, for notice purposes hereunder, be addressed to the Parties at their principal business addresses registered with the Nevada Secretary of State, or to such other address as a Party may indicate by a notice delivered to the other Party.  

 

SECTION 9.10 Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.  

 

SECTION 9.11 No Public Announcement. Neither First National nor Pavana shall, without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Party shall be so obligated by law or the rules of any stock exchange or quotation system, in which case the other Party shall be advised and the Parties shall use commercially reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided, however, that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and SEC disclosure obligations or the rules of any stock exchange.  

 

SECTION 9.12 Termination. Notwithstanding any provisions hereof, this Agreement may be terminated and the Distribution abandoned at any time prior to the Distribution Date by and in the sole discretion of the Board of Directors of First National without the prior approval of any Person. In the event of such termination, this Agreement shall forthwith become void and no Party shall have any liability to any Person by reason of this Agreement, except that First National shall be liable for any costs and expenses, including reasonable attorneys’ fees, prior to or arising out of such termination.

 

  

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their authorized representatives as of the date first above written.

 

 

	 " First National" 	FIRST NATIONAL ENERGY CORPORATION	 
	 	 	 	 
	
 

	
By: 

	  /s/ Gregory Sheller	 
	 	 	Name: Gregory Sheller	 
	 	 	Title: Chief Executive Officer	 
	 	 	 	 

	 "Pavana" 	PAVANA POWER CORPORATION	 
	 	 	 	 
	
 

	
By: 

	 /s/ Peter Wanner	 
	 	 	Name: Peter Wanner	 
	 	 	 Title: Chief Financial Officer	 

 

 

12

 

 

CORPORATE SERVICES AGREEMENT

THIS AGREEMENT for the performance of corporate services is dated as of September 25, 2011, between First National Energy Corporation, a Nevada corporation (“First National”), and Pavana Power Corporation, a Nevada corporation (“Pavana”), and, as of the date hereof, a wholly-owned subsidiary of First National.

WHEREAS, First National, through its subsidiary, Pavana, is engaged in the business of developing wind power projects in India (the “Pavana Business”);

WHEREAS, First National has determined that it would be in the best interests of its stockholders to conduct a spinoff of its ownership shares of Pavana;

WHEREAS, the date on which the above transaction is to become effective is referred to as the “Distribution Date” as defined in that certain Separation Agreement between First National and Pavana, dated as of the date hereof; and

WHEREAS, the parties hereto deem it to be appropriate and in the best interests of Pavana and First National that First National provide certain services to Pavana to facilitate the transaction described above on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto agree as follows:

1. Description of First National Services. First National shall, subject to the terms and provisions of this Agreement:

(a) provide Pavana with general services of a financial, technical, commercial, administrative and/or advisory nature, with respect to the Business, as set forth on Exhibit A hereto; and

(b) assist Pavana in the efficient transfer of each of the services provided by First National under this Agreement to Pavana, including training of the Pavana personnel primarily responsible for each of the services going forward, or to a third party designated by Pavana; and

(c) render such other specific services as Pavana may from time to time reasonably request, subject to First National’s discretion and its being in a position to supply such additional services at the time of such request.

  

Unless otherwise specifically provided on Exhibit A, First National will provide each of the services until December 31, 2013. Pavana may, at its option, upon no less than thirty (30) days' prior written notice (or such other period as the parties may mutually agree in writing), direct First National to provide no longer all or any category of such services.

2. Consideration for First National Services. Pavana shall pay First National in accordance with this Section 2 and First National shall accept as consideration for the services rendered to Pavana hereunder the following service charges:

(a) for the services rendered by First National for or on behalf of Pavana pursuant to Section 1, Pavana will be charged certain fees to be negotiated and agreed to by the parties at the time such services are requested.

3. Terms of Payment. First National shall submit in writing an invoice covering its charges to Pavana for services rendered hereunder. Such invoice shall be submitted on a monthly basis and shall contain a summary description of the charges and services rendered. Payment shall be made no later than thirty (30) days after the invoice date.

4. Method of Payment. All amounts payable by Pavana for the services described on Exhibit A shall be remitted to First National in United States dollars to a bank to be designated in the invoice or otherwise in writing by First National, unless otherwise provided for and agreed upon in writing by the parties. Detailed billing information will be provided upon request.

 

  

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5. WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, THERE ARE NO EXPRESS WARRANTIES OR GUARANTIES AND THERE ARE NO IMPLIED WARRANTIES OR GUARANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR A PARTICULAR PURPOSE.

6. Limitation on Liability.

(a) In no event shall either party have any liability, whether based on contract, tort (including, without limitation, negligence), warranty or any other legal or equitable grounds, for any punitive, consequential, special, indirect or incidental loss or damage suffered by the other party arising from or related to this Agreement, including without limitation, loss of data, profits (excluding profits under this Agreement), interest or revenue, or use or interruption of business, even if such party is advised of the possibility of such losses or damages.

(b) The limitations set forth in Section 6(a) above shall not apply to liabilities which may arise as the result of (i) willful misconduct or gross negligence of First National or its subsidiaries or Pavana or its subsidiaries, (ii) amounts inadvertently overpaid by either party, or (iii) amounts for charges otherwise due and payable under this Agreement.

(c) In no event will First National’s liability, whether based on contract, tort (including without limitation, negligence), warranty or any other legal or equitable grounds, exceed in the aggregate the amount of fees paid to First National under this Agreement.

7. Termination. This Agreement shall terminate on December 31, 2013, but may be terminated earlier in accordance with the following:

(a) upon the mutual written agreement of the parties;

(b) by either Pavana or First National for material breach of any of the terms hereof by First National or Pavana, as the case may be, if the breach is not corrected within thirty (30) calendar days after written notice of breach is delivered to the defaulting party;

(c) by either Pavana or First National forthwith, upon written notice to First National or Pavana, as the case may be, if First National or Pavana, as the case may be, shall become insolvent or shall make an assignment for the benefit of creditors, or shall be placed in receivership, reorganization, liquidation or bankruptcy;

(d) by First National forthwith, upon written notice to Pavana, if, for any reason, the ownership or control of Pavana or any of Pavana’s operations, becomes vested in, or is made subject to the control or direction of, any direct competitor of First National’s products, service or industrial businesses, or any governmental or regulatory authority; or

(e) by Pavana forthwith, upon written notice to First National, if for any reason, the ownership or control of First National or any of First National‘s operations becomes vested in, or is made subject to the control or direction of, any direct competitor of Pavana, or any governmental or regulatory authority.

Upon any such termination, each party shall be compensated for all services performed to the date of termination in accordance with the provisions of this Agreement.

 

  

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8. Performance. The services rendered by First National hereunder shall be performed in the same manner and with the same skill and care as First National employs in service of its own business.

9. Independent Contractor. First National is providing the services pursuant to this Agreement as an independent contractor and the parties hereby acknowledge that they do not intend to create a joint venture, partnership or any other type of agency between them.

10. Confidentiality. The specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a party in conjunction herewith are confidential and are subject to the terms of the Confidentiality provisions of the Distribution Agreement.

11. Ownership of Information. Any information owned by one party or any of its subsidiaries that is provided to the other party or any of its subsidiaries pursuant to this Agreement shall remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such information.

  

 

12. Records. First National shall maintain and retain records related to the provision of the services under this Agreement consistent with First National’s historical policies regarding its own retention of records. As needed from time to time during the period in which services are provided, and upon termination of the provision of any service, the parties agree to provide each other with records related to the provision of the services under this Agreement to the extent that (i) such records exist in the ordinary course of business, (ii) such records do not involve the incurrence of any material expense to the party providing such records, and (iii) such records are reasonably necessary for such party to comply with its obligations under this Agreement or applicable law.

13. Amendment. This Agreement may be modified or amended only by the agreement of the parties hereto in writing, duly executed by the authorized representatives of each party.

14. Force Majeure. Any delays in or failure of performance by any party hereto, other than the payment of money, shall not constitute a default hereunder if and to the extent such delays or failures of performance are caused by occurrences beyond the reasonable control of such party, including, but not limited to: acts of God or the public enemy; expropriation or confiscation of facilities; compliance with any order or request of any governmental authority; acts of war; riots or strikes or other concerted acts of personnel; or any causes, whether or not of the same class or kind as those specifically named above, which are not within the reasonable control of such party, and which by the exercise of reasonable diligence, such party is unable to prevent.

15. Assignment. This Agreement shall not be assignable by either party hereto without the prior written consent of the other party hereto. When duly assigned in accordance with the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the assignee.

16. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile transmission or mailed by registered or certified mail (return receipt requested) be addressed to the Parties at their principal business addresses registered with the Nevada Secretary of State, or to such other address as a Party may indicate by a notice delivered to the other Party.

17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA, U.S.A.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

	 	
FIRST NATIONAL ENERGY CORPORATION

	 
	 	 	 
	 	
By: 

	
/s/ Gregory Sheller

	 
	 	 	
Gregory Sheller

	 
	 	 	
President and Chief Executive Officer 

	 
	 
	 	
PAVANA POWER CORPORATION

	 
	 	 	 
	 	By: 	/s/ Peter Wanner	 
	 	
 

	
Peter Wanner

	 
	 	 	
Chief Financial Officer

	 

  

15

  

  

EXHIBIT A

SERVICES TO BE RENDERED BY FIRST NATIONAL

Tax Services

First National will provide advice and counsel on tax planning issues relating to the preparation of U.S. federal income and excise tax, and state and local income, franchise, property and sales tax return. Such tax planning services will be provided at a cost of $250 per hour and will be available for 6 months after the Distribution Date.

Accounting Services

First National will provide such accounting services to Pavana as Pavana shall determine necessary from time to time.

 

 

A-1pnx_ex101.htm

EXHIBIT 10.1

 

CHANGE IN CONTROL AGREEMENT

 

This Change in Control Agreement (this “Agreement”), effective as of January 1, 2012, is between The Phoenix Companies, Inc., a Delaware corporation (the “Company”), and «Name» (the “Executive”).

 

RECITALS

The Company or one of its Affiliates (as defined below) has employed the Executive in an officer position and has determined that the Executive holds a critical position with the Company and/or such Affiliate.

The Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of its shareholders.

The Company understands that any such situation will present significant concerns for the Executive with respect to the Executive’s financial and job security.  The Company desires to assure the Company and its Affiliates of the Executive’s services during the period in which it is confronting such a situation, and to provide the Executive certain financial assurances to enable the Executive to perform the responsibilities of the Executive’s position without undue distraction and to exercise the Executive’s judgment without bias due to the Executive’s personal circumstances.  To achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and its Affiliates and the Executive with certain rights and obligations upon the occurrence of a Change in Control (as defined below).

 

The Company and the Executive therefore agree as follows:

 

1.           Operation of Agreement.

 

(a)           Term.  The initial term of this Agreement shall commence on the date of this Agreement and continue through December 31, 2013, unless terminated earlier as provided in Section 5.  Upon the expiration of the initial or any renewal term, this Agreement shall automatically renew for successive one-year terms, subject to earlier termination as provided in Section 5, unless either party provides the other party with a written notice at least sixty (60) days prior to the end of the initial term or any renewal term that the Company or the Executive does not want the term to be so extended.  Notwithstanding anything to the contrary in this Agreement, the term of this Agreement shall in all events expire (regardless of when the term would otherwise have expired) on the second anniversary of a Change in Control; provided that any payment obligations hereunder resulting from the Executive’s termination of employment prior to the expiration of the term shall continue in full force and effect following the expiration of the term.

 

 

  

  

  

 

(b)   Effective Date.  If a Change in Control occurs during the term of this Agreement, this Agreement shall govern the terms and conditions of the Executive’s employment and the benefits and compensation to be provided to the Executive commencing on the date on which a Change in Control occurs (the “Effective Date”) and ending on the second anniversary of the Effective Date; provided that if the Executive is not employed by the Company or one of its Affiliates on the Effective Date, this Agreement shall be void and without effect, and shall not constitute a contract of employment or a guarantee of employment for any period of time.  Notwithstanding the preceding sentence, in the event that prior to the Effective Date, the Executive’s employment with the Company or any of its Affiliates is terminated in connection with a Change in Control (which shall in all events be deemed the case if such termination is within 90 days prior to the Effective Date and deemed not to be the case if such termination is more than 180 days before the Effective Date) without Cause or for Good Reason (as such terms are defined in Sections 5(b) and 5(c) below, but without regard to the requirement under Section 5(c) that such termination occur after the Effective Date), the Executive shall be entitled to receive the benefits provided under Section 6(b), but only to the extent that such benefits are in excess of those previously received by the Executive as a result of the Executive’s prior termination.

 

2.           Definitions.

 

(a)           “Affiliate” means any corporation, partnership, limited liability company, trust or other entity which directly, or indirectly through one or more intermediaries, controls, is under common control with, or is controlled by, the Company.

 

(b)           “Change in Control” means the first occurrence of:

 

(i)           any Person acquires “beneficial ownership” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or indirectly, of securities of the Company representing 25% or more of the combined Voting Power of the Company’s securities;

 

(ii)          within any 24-month period, the persons who were directors of the Company at the beginning of such period (the “Incumbent Directors”) shall cease to constitute at least a majority of the Board of Directors (the “Board”) or the board of directors of any successor to the Company; provided that any director elected or nominated for election to the Board by a majority of the Incumbent Directors still in office shall be deemed to be an Incumbent Director for purposes of this subclause 2(b)(ii);

 

 

  

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(iii)         the effective date of the consummation of any merger, consolidation, share exchange, division, sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Event”), if immediately following the consummation of such Corporate Event those Persons who were stockholders of the Company immediately prior to such Corporate Event do not hold, directly or indirectly, a majority of the Voting Power, in substantially the same proportion as prior to such Corporate Event, of (x) in the case of a merger or consolidation, the surviving or resulting corporation or (y) in the case of a division or a sale or other disposition of assets, each surviving, resulting or acquiring corporation which, immediately following the relevant Corporate Event, holds more than 25% of the consolidated assets of the Company immediately prior to such Corporate Event;

 

(iv)          the approval by stockholders of the Company of a plan of liquidation with respect to the Company; or

 

(v)           the occurrence of any other event occurs which the Board declares to be a Change in Control.

 

(c)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(d)           “Delay Period” means that period of time between the Executive’s date of Separation from Service and the earlier of (i) six months from the Separation from Service date, and (ii) the Executive’s date of death.

 

(e)           “Employment Period” means the period during which the Executive remains employed with the Company or any Affiliate following the Effective Date through the expiration of the term of this Agreement.

 

(f)            “Person” shall have the same meaning as ascribed to such term in Section 3(a)(9) of the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act, and shall include any group (within the meaning of Rule 13d-5(b) under the Exchange Act); provided that Person shall not include (i) the Company or any of its Affiliates, or (ii) any employee benefit plan (including an employee stock ownership plan) sponsored by the Company or any of its Affiliates.

 

(g)           “PIP” means the Company's Performance Incentive Plan (or any successor plan) or similar annual incentive plan applicable to the Executive.

 

(h)           “Separation from Service” shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

 

(i)            “Voting Power” means such number of Voting Securities as shall enable the holders thereof to cast all the votes which could be cast in an annual election of directors of a company.

 

 

  

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(j)           “Voting Securities” shall mean all securities entitling the holders thereof to vote in an annual election of directors of a company.

 

3.           Business Time.  During the Employment Period, the Executive shall devote substantially the Executive’s full business time and efforts to the performance of the Executive’s duties on behalf of the Company, and its Affiliates, except for periods of vacation and sick leave or other leave period required by law.  So long as the following activities do not (individually or in the aggregate) materially interfere with the performance of the Executive’s duties with the Company and its Affiliates and are conducted in compliance with the Company’s Code of Conduct (as in effect from time to time), the Executive may:  (a) participate in charitable, civic, educational, professional, community or industry affairs or serve on the boards of directors or advisory boards of not for profit companies; and (b) manage his/her and his/her family’s personal financial and legal affairs.  The Executive may serve on the boards of directors or similar governing bodies of any for profit entity only with the prior written consent of the Company’s Chief Executive Officer or, if the Executive is the Company’s Chief Executive Officer, the Company’s Board of Directors and only as long as such service is not in violation of the Company’s Code of Conduct.  It is expressly understood and agreed that the Executive’s continuing to serve to the same extent and in the same manner on any boards and committees on which the Executive is serving or with which the Executive is otherwise associated immediately preceding the Effective Date shall not be deemed to interfere with the performance of the Executive’s services to the Company and its Affiliates.

 

4.           Compensation.

 

(a)           Base Salary.  During the Employment Period, the Executive shall receive a base salary at a monthly rate at least equal to the monthly salary paid to the Executive immediately prior to the Effective Date.  The base salary may be increased (but not decreased) at any time and from time to time by action of the Board or any committee thereof, the board of directors of any Affiliate or any committee thereof in the event the Executive is employed by an Affiliate, and any individual having authority to take such action in accordance with the Company’s or any Affiliate’s regular practices.  The Executive’s base salary, as it may be increased from time to time, shall hereafter be referred to as the “Base Salary.”

 

(b)           Total Incentive Compensation.  During the Employment Period, the total incentive compensation opportunities made available to the Executive in each year in the form of short-term incentive compensation and long-term incentive compensation (“Total Incentive Compensation”), whether in equity or cash, shall not be less than the Total Incentive Compensation made available to the Executive immediately prior to the Effective Date.  For purposes of this Section 4(b), the amount of Total Incentive Compensation made available to the Executive, whether prior to or after a Change in Control, shall be conclusively determined by an independent compensation consultant selected by the Company prior to the occurrence of a Change in Control (or, if that entity is no longer able to serve or declines to serve in such capacity, such other independent

 

 

  

4

  

compensation consultant that has no existing client relationship with the Company and its Affiliates as shall be selected by the designated consultant and reasonably acceptable to the Board (either such consultant hereinafter referred to as the “Compensation Consultant”)), using methods of valuation and comparison commonly used in competitive compensation practices, which shall be consistently applied.  The Company shall provide the Compensation Consultant with any and all data that the consultant shall reasonably request in order to make its evaluations hereunder.

 

5.           Termination.

 

(a)           Death, Disability, or Voluntary Resignation.  This Agreement shall terminate automatically upon the Executive’s termination due to death, termination due to “Disability” (as defined below), voluntary retirement (other than for Good Reason, as defined below) under any of the retirement plans of the Company or its Affiliates applicable to the Executive as in effect from time to time, or Executive’s voluntary resignation for any reason (other than for Good Reason).  For purposes of this Agreement, “Disability” shall mean the Executive’s inability to perform his or her material duties for six consecutive months due to a physical or mental incapacity.

 

(b)           Cause.  The Company and each of its Affiliates that employ the Executive may terminate the Executive’s employment for Cause.  For purposes of this Agreement, “Cause” means:  (i) the Executive’s conviction of or plea of nolo contendere to, a felony (other than with respect to a traffic violation or an incident of vicarious liability); (ii) an act of willful misconduct on Executive’s part with regard to the Company or its Affiliates having a material adverse impact on the Company or its Affiliates (including, without limitation, a willful violation of the Company’s Code of Conduct), or (iii) the Executive’s failure in good faith to attempt or refusal to perform legal directives of the Board or executive officers of the Company, as applicable, which directives are consistent with the scope and nature of the Executive’s employment duties and responsibilities and which failure or refusal is not remedied by the Executive within thirty (30) days after notice of such non-performance is given to the Executive.  The Executive shall be provided an opportunity, together with his or her counsel, to be heard before the Board prior to termination and after such notice.  If the majority of the members of the Board do not confirm, through a duly-adopted resolution following such opportunity, that the Company had grounds for a “Cause” termination, the Executive shall have the option to treat his or her employment as not having terminated or as having been terminated pursuant to a termination without Cause.  No event shall constitute grounds for a “Cause” termination in the event that the Company fails to take action within 90 days after the Company’s Chairman or the Chairman of the Company’s Audit Committee obtains actual knowledge of the occurrence of such event.  Additionally, for purposes of clause (ii) of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith

 

 

  

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and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and its subsidiaries.

 

(c)           Good Reason.  After the Effective Date, the Executive may resign from employment at any time for Good Reason.  For purposes of this Agreement, “Good Reason” means the occurrence after the Effective Date of any of the following, without the express written consent of the Executive and which occurrence is not remedied by the Company within thirty (30) days after written notice of such occurrence is given to the Company):

 

(i)          the material reduction in the Executive’s title, position, duties or responsibilities from the title, position, duties or responsibilities held or exercised by the Executive prior to the Effective Date;

 

(ii)         any requirement by the Company that the geographic location where the Executive regularly provides services to the Company is materially changed to a location that is more than 35 miles from where the Executive provides service to the Company immediately prior to the Effective Date;

 

(iii)        a material diminution/reduction by the Company of the Executive’s Base Salary or Total Incentive Compensation opportunity or a reduction in the employee benefits provided to the Executive under the Company’s employee benefit plans (unless the Executive is provided with substantially equivalent replacement benefits); or

 

(iv)        any failure to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 12(b).

 

(d)           Notice of Termination.  Any termination of the Executive’s employment after the Effective Date by the Company and/or its Affiliates for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto in accordance with Section 14(d).  For purposes of this Agreement, a “Notice of Termination” means a written notice given:  (i) in the case of a termination for Cause, within 10 business days of the Company or any Affiliate that employs the Executive having actual knowledge of the events giving rise to such termination; or (ii) in the case of a termination for Good Reason, within 10 business days of the Executive’s having actual knowledge of the events giving rise to such termination, but in no event later than 90 calendar days after the actual event.  Any such Notice of Termination shall (x) indicate the specific termination provision in this Agreement relied upon, (y) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (z) if the termination date is other than the date of receipt of such notice, specify the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice).

 

 

  

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(e)           Date of Termination.  For the purpose of this Agreement, the term “Date of Termination” means:  (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive’s Separation from Service occurs during the Employment Period.

 

6.           Obligations of the Company or an Affiliate upon Termination.

 

(a)           Death, Disability, Retirement, Voluntary Resignation and Termination for Cause.  If the Executive’s employment is terminated during the Employment Period by reason of the Executive’s death, Disability, termination for Cause, or voluntary termination due to his or her retirement or other resignation (other than on account of Good Reason), this Agreement shall terminate without further obligations to the Executive or the Executive’s legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company or the Affiliate that employs the Executive shall pay to the Executive (or the Executive’s beneficiary or estate), at the times determined below:  (i) the Executive’s full Base Salary through the Date of Termination (the “Earned Salary”), (ii) any vested amounts or benefits owing to the Executive under and in accordance with the terms and conditions of any otherwise applicable employee benefit plans, agreements and programs and any accrued vacation pay not yet paid (the “Accrued Obligations”), and (iii) any other benefits payable in such situation under the plans, agreements, policies or programs of the Company and its Affiliates and in accordance with the terms of such plans, policies and programs (the “Additional Benefits”).  Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 30 days (or at such earlier or later date required by law), following the Date of Termination.  Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement.

 

(b)           Termination Without Cause or for Good Reason.  If, during the Employment Period, the Company or the Affiliate that employs the Executive terminates the Executive’s employment other than for Cause or the Executive terminates his or her employment for Good Reason:

 

(i)           Additional Lump Sum Payments.  In lieu of (and not in addition to) any severance benefits payable to the Executive under any other plan, policy or program of the Company or any Affiliate (each, a “Severance Policy”) or under any written agreement between the Executive and the Company (each, a “Prior Agreement”), the Company shall pay to the Executive (or cause the Executive to be paid), at the times determined below, the following amounts:

 

(A)        the Executive’s Earned Salary;

 

 

  

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(B)        a cash amount (the “Severance Amount”) equal to [2.0 or 1.0] times the sum of (x) the Executive’s annual rate of Base Salary as then in effect and (y) the target applicable to the Executive under the PIP for the year in which the Executive’s employment terminates; and

 

(C)        the Accrued Obligations and Additional Benefits.

 

The Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 30 days (or at such earlier or later date required by law), following the Date of Termination.  The Severance Amount shall be paid in a single lump sum as soon as practicable, but no later than 60 days, following the Date of Termination.  The Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement.  Notwithstanding the foregoing, but subject to Section 13(b), the Executive may elect in writing to receive the benefits payable under any Severance Policy that would otherwise be available to him or her, or the termination benefits under any Prior Agreement to which he or she is a party, in each case in lieu of receiving the benefits payable hereunder; provided, however, that such benefits shall be paid in a lump sum at the same times as in the preceding sentences of this paragraph.

 

[(ii)           Payment in Consideration of the Restrictive Covenants in Section 7.  In addition to the Severance Amount specified in and payable under Section 6(b)(i) and as the consideration for the covenants made by Executive pursuant to Section 7 hereof, the Company shall pay to the Executive (or cause the Executive to be paid) a single lump sum amount equal to the product of 1.5 times the sum of (x) the Executive’s annual rate of Base Salary as then in effect and (y) the target applicable to the Executive under the PIP for the year in which the Executive’s employment terminates (the “Non-competition Payment”).  Such Non-Competition Payment shall be paid as soon as practicable, but no later than 60 days, following the Date of Termination.]

 

(iii)           Continuation of Benefits.  The Executive (and, to the extent applicable, the Executive’s dependents) shall be entitled, after the Date of Termination until the end of the second calendar year following the calendar year of the Date of Termination (the “End Date”), to continue participation in all of the employee and executive plans providing medical, dental and long-term disability benefits that the Executive participated in prior to the Date of Termination (collectively, the “Continuing Benefit Plans”); provided that coverage with regard to medical, dental and long-term disability benefits for the period after the end of the eighteen (18)-month period following the Date of Termination shall be deemed to be monthly, in-kind payments of the premiums and 

 

 

  

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will be taxable income to the Executive; and provided further that the participation by the Executive (and, to the extent applicable, the Executive’s dependents) in any Continuing Benefit Plan shall cease on the date, if any, prior to the End Date on which the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer (“Prior Date”).  The Executive agrees to notify the Company promptly if and when Executive begins employment with another employer and if and when Executive becomes eligible to participate in any benefit or other welfare plans, programs or arrangements of another employer.  The Executive’s participation in the Continuing Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company or the Affiliate that employs the Executive through the End Date or the Prior Date.  To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide (or shall cause to be provided) comparable benefits under another plan or from its general assets.  To the extent any medical or dental plan is a “self-insured medical reimbursement plan” under Code section 105(h) and such coverage would be discriminatory thereunder, the premiums (both during and after the eighteen (18)-month period) shall be taxable income to the Executive and the Company or its Affiliates shall pay the Executive promptly after the provision of such benefits additional cash payments to the extent necessary for the Executive to receive the same net after-tax benefits that the Executive would have received under such plans if the Executive had continued to receive such plan benefits while employed with the Company; provided that any such additional cash payment that would be paid within the Delay Period (as defined in Section 2(d) hereof) shall not be paid during such Delay Period, but shall be paid immediately thereafter.

 

(iv)           Deemed Vesting for Certain Benefits.  If not already fully vested in any equity award on the Effective Date, the Executive shall be deemed to have met all service and other requirements for full vesting of benefits under all stock option or other stock or equity compensation plans of the Company in which the Executive participates and the stock options held by the Executive shall remain exercisable for the lesser of two years or the duration of their normal terms, if the Executive’s employment is terminated after a Change-in-Control and during the term of this Agreement, unless during that period the Executive meets all of the full vesting criteria.  Any equity award that is covered by this paragraph and that is subject to performance or market conditions will vest at target.

 

(v)           Pro-rata Payment of PIP and Long-Term Incentive Award.  The Company shall pay to the Executive a cash amount equal to a pro rata portion of (A) the Executive’s target annual incentive award under the PIP for the fiscal year in which the Executive’s Date of Termination occurs and (B) subject to the terms and conditions of the

 

 

  

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individual award agreements underlying each award when granted, any awards made to the Executive under the Company’s long-term incentive plan (or any successor plan) determined using (i) the targets applicable to such awards were achieved if the Change-in-Control occurs prior to the completion of the performance period, or (ii) the actual results achieved if the Change-in-Control occurs after the completion of the performance period.  The PIP amount and the long-term incentive awards amount shall not be paid prior to six (6) months following the Executive’s Date of Termination. The pro-rata portion of each award shall be determined by multiplying the value of the award times a fraction, the numerator of which is the number of days during the performance period applicable to each such award prior to the Date of Termination and the denominator of which is the number of days in the performance period applicable to each such award.  Notwithstanding the foregoing, any amount payable under this subparagraph in respect of the annual incentive award or in respect of any long-term incentive plan shall be the only amounts payable to the Executive under the PIP and long-term incentive plans for the year in which the Date of Termination occurs.

 

(vi)           Outplacement.  The Company shall provide the Executive with reasonable outplacement services at a level commensurate with the Executive’s position for up to twelve (12) consecutive months after the Executive’s Date of Termination.

 

[Outplacement Services:  For those Executives subject to a non-compete clause in this Agreement, reasonable outplacement services will be provided for a period of up to 12 consecutive months following the end of the non-compete period, so long as the services do not extend beyond the end of the second calendar year after the calendar year of the Executive’s termination of employment and reimbursement is made by the end of the third calendar year after the calendar year of the Executive’s termination of employment.]

 

(c)           Discharge of the Company’s and its Affiliates’ Obligations.  Except as expressly provided in the last sentence of this Section 6(c), the amounts payable to the Executive pursuant to this Section 6 following termination of the Executive’s employment shall be in full and complete satisfaction of the Executive’s rights under this Agreement and any other claims the Executive may have in respect of the Executive’s employment by the Company and its Affiliates.  Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive’s receipt of such amounts, the Company and its Affiliates shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive’s employment by the Company and its Affiliates.  Notwithstanding the foregoing: (i) the Executive shall retain all rights with respect to the Company’s continuing obligations to indemnify the Executive as a former officer and/or director of the Company or its Affiliates, and to provide 

 

  

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directors and officers liability insurance, to the fullest extent permitted under the Company’s certificate of incorporation and by-laws or any other arrangement and (ii) to the extent the Executive is entitled to greater rights with respect to any category of severance payments or benefits in any similar situation under any other arrangement with the Company, the Executive shall be entitled to such greater rights.

 

(d)           Section 280G Limitation on Payments by the Company and its Affiliates.

(i)           Application of Section 6(d).  In the event that any amount or benefit to be paid or distributed to, or on behalf of, the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to, or on behalf of, the Executive by the Company, its Affiliates and their successors, including any acquiror of the Company or its Affiliates (or any person or entity required to be aggregated with the Company or its Affiliates for purposes of Code section 280G) under any other plan, agreement, or arrangement (collectively, the “Covered Payments”), would be an “excess parachute payment” as defined in Code section 280G, and would thereby subject the Executive to the tax (the “Excise Tax”) imposed under Code section 4999 (or any similar tax that may hereafter be imposed), the Company shall reduce the aggregate value of all Covered Payments to an amount equal to 2.99 times the Executive’s average annual compensation calculated in accordance with Code section 280G (such reduced payments to be referred to as the “Payment Cap”).  In the event that as a consequence of the foregoing, Executive receives reduced payments and benefits hereunder, Executive shall have the right to designate which of the payments and benefits otherwise provided for in this Agreement that the Executive will receive in connection with the application of the Payment Cap, but may not change the time of payment thereof.

 

(ii)           Calculation of Benefits.  Immediately following delivery of any notice of involuntary termination not for Cause by the Company or of any Notice of Termination by the Executive for Good Reason, the Company shall notify the Executive of the aggregate present value of all “parachute payments” (within the meaning of Code section 280G) to which the Executive would be entitled under this Agreement and any other plan, program or arrangement as of the projected Date of Termination, together with the projected maximum payments, determined as of such projected Date of Termination, that could be paid without the Executive exceeding the Payment Cap.

 

(iii)           Application of Code Section 280G.  For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax,

 

 

  

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(1)           such Covered Payments will be treated as “parachute payments” within the meaning of Code section 280G, and all “parachute payments” in excess of the “base amount” (as defined under Code section 280G(b)(3)) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of an independent certified public accountant other than the Company’s normal independent certified public accountants or tax counsel selected by such accountants (the “Accountants”), relying on the best authority available at the time of such determination (including, but not limited to, any proposed Treasury regulations upon which taxpayers may rely), that the Company or any otherwise applicable Subsidiary has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for personal services actually rendered (within the meaning of Code section 280G(b)(4)(B)) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax, and

(2)           the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Code section 280G.

(iv)           Adjustments in Respect of the Payment Cap.

(1)           If the Executive receives reduced payments and benefits under this Section 6(d) (or this Section 6(d) is determined not to be applicable to the Executive because the Accountants conclude that the Executive is not subject to any Excise Tax) and it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding (a “Final Determination”) that, notwithstanding the good faith of the parties in applying the terms of this Section 6(d), the aggregate “parachute payments” within the meaning of Code section 280G paid to the Executive or for his benefit are in an amount that would result in the Executive being subject to an Excise Tax and, taking into account the amount of such aggregate parachute payments specified in such Final Determination, the Payment Cap should have been applied under the provisions of this Section 6(d), then the amount equal to the excess parachute payments made to the Executive shall be deemed for all purposes to be a loan to the Executive made on the date of receipt of such excess payments, which the Executive shall have an obligation to repay to the entity making such payment on demand, together with interest on such amount at the applicable Federal rate

 

  

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(as defined in Code section 1274(d)) from the date of the payment hereunder to the date of repayment by the Executive.

 

(2)           If the Executive receives reduced payments and benefits under this Section 6(d) and it is established pursuant to a Final Determination that, notwithstanding the good faith of the parties in applying the terms of this Section 6(d), the aggregate “parachute payments” within the meaning of Code section 280G paid to the Executive or for his benefit are in an amount that would result in the Executive being subject to an Excise Tax and, taking into account the amount of such aggregate parachute payments, the Payment Cap should not have been applied under Section 6(d), then the Company shall pay the Executive 30 days following such Final Determination an amount equal to the excess of (i) the amount of Aggregate Parachute Payments that would have been payable to the Executive without regard to Section 6(d) over (ii) the reduced amount actually paid to the Executive in accordance with Section 6(d), together with interest on such excess amount at the applicable Federal rate (as defined in Code section 1274(d)) from the date payment would have been made to the Executive of such excess amount (or any portion thereof) but for the application of Section 6(d) to the date of actual payments.

 

(3)           If the Executive receives reduced payments and benefits by reason of Section 6(d)(i) and it is established pursuant to a Final Determination that the Executive could have received a greater amount without exceeding the Payment Cap, then the Company or the appropriate Subsidiary shall promptly thereafter pay the Executive within 30 days of the date of the Final Determination the aggregate additional amount which could have been paid without exceeding the Payment Cap, together with interest on such amount at the applicable Federal rate (as defined in Code section 1274(d)) from the original payment due date to the date of actual payment.

 

(v)           Survival.  The provisions of this Section 6(d) of the Agreement shall survive the termination of the Executive’s employment hereunder and the termination of this Agreement with regard to any event that occurred prior thereto.

7.           Restrictive Covenant(s).

 

(a)   Non-Solicitation.  During the Employment Period, and for a period of 1.5 years after the Employment Period, the Executive agrees not to induce, encourage, or solicit, either directly or indirectly, any customer, client, employee, officer, director, agent, broker, registered representative or independent contractor to either:  (i) terminate their respective relationship or contracts with the Company

 

 

  

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or its Affiliates; or (ii) not place business with the Company or its Affiliates.  The Executive agrees the restrictions in this paragraph apply whether the Executive voluntarily terminates his or her employment or is involuntarily terminated with or without Cause or for Good Reason during the Employment Period.

 

[(b)   Non-Competition.  For a period of 1.5 years after his Date of Termination, Executive shall not, directly or indirectly, either for Executive’s own benefit or purposes or for the benefit or purposes of any other person or entity, engage in, invest in, own, manage, operate, control or participate in the ownership, management, operation or control of, or be employed by or render services to, any business which is engaged in a Competitive Activity.  For purposes of this Agreement, the term “Competitive Activity” shall mean any activity that is directly competitive with the Company’s business of manufacturing and distributing life insurance and associated products, including any activities that are directly ancillary thereto. Notwithstanding the foregoing, Executive shall not be deemed to be in breach of the covenant contained in this Section 7(b) unless the activity in which Executive engages, or the services which Executive provides, in respect of such Competitive Activity relate in a substantial way to the services provided to, and responsibilities undertaken by the Executive for, the Company during the 18 month period immediately prior to Executive’s Date of Termination.  For purposes of this Section 7(b), it is agreed that Executive’s ownership of not more than one percent (1%) of the outstanding voting stock of a publicly traded corporation or not more than five percent (5%) of the equity of a private entity shall not in itself constitute a violation of this Agreement, provided that in the case of equity of a private entity such ownership interest is treated by Executive as a passive investment and Executive discloses such ownership interest in writing to the Company.]

 

8.           Non-Exclusivity of Rights.  Except as expressly provided herein, nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its Affiliates and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its Affiliates, including employment agreements, stock option agreements, and other stock or equity compensation agreements.  Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any Affiliate at or subsequent to the Date of Termination shall be payable in accordance with such plan or program.

 

9.           No Offset.  Except as expressly provided in this Agreement, the obligation of the Company to make the payments provided for in this Agreement or any of its Affiliates to make the payments provided for in this Agreement and otherwise to perform the obligations hereunder shall not be diminished or otherwise affected by any circumstances, including, but not limited to, any set-off, counterclaim, recoupment, defense or other right which the Company or any of its Affiliates may have against the Executive or others, whether by reason of the subsequent employment of the Executive or otherwise.

 

 

  

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10.           Legal Fees and Expenses.  If the Executive asserts any claim in any contest (whether initiated by the Executive or by the Company or any of its Affiliates) as to the validity, enforceability or interpretation of any provision of this Agreement or to enforce and/or collect any payment or benefit payable hereunder, the Company shall pay the Executive’s legal expenses (or cause such expenses to be paid) including, but not limited to, the Executive’s reasonable attorneys’ fees, on a quarterly basis, promptly upon presentation of proof of such expenses in a form acceptable to the Company, which submission shall be made within forty-five (45) days after the end of such quarter; provided that the Executive shall reimburse the Company for such amounts (to the extent permitted under applicable law), plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the arbitrator determines that the Executive’s claims were substantially frivolous or brought in bad faith.

 

11.           Surviving Agreements.  This Agreement provides for certain payments and benefits to the Executive to be determined by the employee benefit plans and programs, incentive plans, stock option, and other stock or equity compensation plans of the Company and its Affiliates.  To the extent so provided, such programs and plans constitute part of the agreement and understanding between the Executive and the Company and are incorporated herein and made a part hereof.  The Executive and the Company hereby reaffirm their respective commitments under such programs and plans, and again agree to be bound by each of the covenants contained therein for the benefit of the Company in consideration of the benefits made available to the Executive hereby.

 

12.           Successors.

 

(a)    This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives and his or her estate.

 

(b)    This Agreement shall inure to the benefit of and be binding upon the Company and shall be assignable, in writing, by the Company only to the acquiror of all or substantially all, of the assets of the Company.  The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.

 

13.           Section 409A.

 

(a)    The intent is that payments and benefits under this Agreement comply with Code section 409A and accordingly this Agreement shall be interpreted to be in compliance therewith.  The Company may from time to time amend this Agreement, without obtaining the consent of the Executive, as the Company

 

  

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deems necessary or desirable to comply with the requirements of Code section 409A and the regulations and guidance provided thereunder, regardless of whether any such amendment would cause a reduction or cessation of a benefit accrued prior to the adoption of such amendment.  To the extent that this Agreement is modified to comply with Code section 409A, such modification shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Agreement without violating the provisions of Code section 409A.

 

(b)    It is intended that the payments under this Agreement, to the extent applicable, comply with the short-term deferral rule under Code section 409A.

 

14.           Miscellaneous.

(a)           Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut, applied without reference to principles of conflict of laws.

(b)           Amendments.  Except as provided in Section 13(a), this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

 

(c)           Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the matters referred to herein, and completely supersedes and replaces any prior agreement between the Executive and the Company or any of its Affiliates concerning the subject matter herein.  No subsequent agreement concerning the subject matter herein, oral or otherwise, shall be binding between the parties unless it is in writing and signed by the party against whom enforcement is sought.  Except as expressly provided herein, nothing in this Agreement shall be construed or interpreted to enhance, increase, reduce or diminish any rights, duties or obligations of the Executive under any agreement between the Executive and the Company or any of its Affiliates, or under any employee benefit plan program (as further set forth in Section 11) or procedure established by the Company or any of its affiliates with respect to any subject matter herein.  There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein.  The Executive acknowledges that the Executive is entering into this Agreement of the Executive’s own free will and accord, and with no duress, that the Executive has read this Agreement and that the Executive understands it and its legal consequences.

 

(d)           Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other party, overnight mail, or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

 

  

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If to the Executive:

 

If to the Company:

 

	
Home address of the Executive noted on the records of the Company

 

The Phoenix Companies, Inc.

One American Row

PO Box 5056

Hartford, CT 06102-5056

Attn.:  General Counsel

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

 

(e)           Tax Withholding.  The Company shall withhold (or cause such withholding) from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

(f)           Severability; Reformation.  In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

 

(g)           Waiver.  Waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived.  No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or the Executive’s rights hereunder on any occasion or series of occasions.

 

(h)           Confidentiality.  In further consideration for entering into this Agreement, the Executive, after termination of the Executive’s employment, shall retain in confidence any confidential or proprietary information known to the Executive concerning the Company and its Affiliates and their business so long as such information is not publicly disclosed and shall not use such information in any way injurious to the Company or its Affiliates except for any disclosure to which an authorized officer of the Company or such Affiliate has consented or any disclosure or use required by any order of any governmental body or court (including legal process).  If requested, the Executive shall return to the Company and its Affiliates any memoranda, documents or other materials possessed by the Executive and containing confidential or proprietary information of the Company and its Affiliates.  Notwithstanding the preceding sentence, the Executive shall not be required to return to the Company or its Affiliates, any memoranda, documents or other materials containing confidential or proprietary information of the Company or its Affiliates, if such materials were provided to the Executive in his or her capacity as a director of the Company or its Affiliates.

 

 

  

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(i)           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

(j)          Captions.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written.

	 	THE PHOENIX COMPANIES, INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: Bonnie J. Malley,	 
	 	 	Title: Executive Vice President	 

 

 

	 	WITNESS:	 	 
	 	 	 	 
	 	 	 	 
	 	EXECUTIVE:	 	DATE:
	 	 	 	 
	 	 	 	 
	 	«Name»	 	 
	 	 	 	 
	 	WITNESS:	 	 
	 	 	 	 
	 	 	 	 

 

 

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