Document:

Exhibit 10(a)

 

PROTECTIVE LIFE CORPORATION

ANNUAL INCENTIVE PLAN

(Effective as of January 1, 2002)

 

1.                                       Purpose.

 

The
purposes of the Plan are to enable the Company and its Subsidiaries to attract,
retain, motivate and reward qualified executive officers and key employees by
providing them with the opportunity to earn competitive compensation directly
linked to the Company’s performance.  The
Plan is designed to assure that amounts paid to certain executive officers of
the Company will not fail to be deductible by the Company for Federal income
tax purposes because of the limitations imposed by Section 162(m).

 

2.                                       Definitions.

 

Unless
the context requires otherwise, the following words as used in the Plan shall
have the meanings ascribed to each below, it being understood that masculine,
feminine and neuter pronouns are used interchangeably and that each comprehends
the others.

 

(a)                                  “Board” shall mean the Board of Directors of
the Company.

 

(b)                                 “Committee” shall mean the Compensation and
Management Succession Committee of the Board (or such other committee of the
Board that the Board shall designate from time to time) or any subcommittee
thereof comprised of two or more directors each of whom is an “outside director”
within the meaning of Section 162(m).

 

(c)                                  “Company” shall mean Protective Life
Corporation.

 

(d)                                 “Covered Employee” shall have the meaning set
forth in Section 162(m).

 

(f)                                    “Participant” shall mean (i) each executive
officer of the Company and (ii) each other key employee of the Company or a
Subsidiary who the Committee designates as a participant under the Plan.

 

(g)                                 “Plan” shall mean the Protective Life
Corporation Annual Incentive Plan, as set forth herein and as may be amended
from time to time.

 

(h)                                 “Section 162(m)” shall mean Section 162(m)
of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.

 

3.                                       Administration.

 

The
Committee shall administer and interpret the Plan, provided that, in no
event, shall the Plan be interpreted in a manner which would cause any amount
payable under the Plan to any Covered Employee to fail to qualify as
performance-based compensation under Section 162(m).  The Committee shall establish the performance
objectives for any calendar year in accordance with Section 4 and certify
whether such performance objectives have been obtained.  Any determination made by the Committee under
the Plan shall be final and conclusive. 
The Committee may employ such legal counsel, consultants

 

 

and
agents (including counsel or agents who are employees of the Company or a
Subsidiary) as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant or agent and
any computation received from such consultant or agent.  All expenses incurred in the administration
of the Plan, including, without limitation, for the engagement of any counsel,
consultant or agent, shall be paid by the Company.  No member or former member of the Board or
the Committee shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan other than as a
result of such individual’s willful misconduct.

 

4.                                       Bonuses.

 

(a)                                  Performance Criteria.  On
or before April 1 of each year (or such other date as may be required or
permitted under Section 162(m)), the Committee shall establish the
performance objective or objectives that must be satisfied in order for a
Participant to receive a bonus for such year. 
Any such performance objectives will be based upon the relative or
comparative achievement of one or more of the following criteria, as determined
by the Committee:  (i) net income;
(ii) operating income; (iii) income per share; (iv) economic value added;
(v) return on equity; (vi) total return; (vii) division or subsidiary income;
(viii) division or subsidiary sales or revenues; (ix) division or subsidiary
economic value added; or (x) other reasonable bases provided  that
to the extent required to qualify compensation paid to certain executive
officers under the Plan the performance criteria shall be based on one or more
of the criteria listed in (i) through (ix) above.

 

(b)                                 Maximum Amount Payable.  If
the Committee certifies that any of the performance objectives established for
the relevant year under Section 4(a) has been satisfied, each Participant
who is employed by the Company or one of its Subsidiaries on the last day of
the calendar year for which the bonus is payable shall be entitled (subject to
the provisions of Section 4(c) hereof) to receive an annual bonus equal to
200% of such Participant’s base salary up to a maximum of $2,000,000.  Unless the Committee shall otherwise
determine, if a Participant’s employment terminates for any reason (including,
without limitation, his death, disability or retirement under the terms of any
retirement plan maintained by the Company or a Subsidiary) prior to the last
day of the calendar year for which the bonus is payable, such Participant shall
receive an annual bonus equal to the amount the Participant would have received
as an annual bonus award if such Participant had remained an employee through
the end of the year multiplied by a fraction, the numerator of which is the
number of days that elapsed during the calendar year in which the termination
occurs prior to and including the date of the Participant’s termination of
employment and the denominator of which is 365.

 

(c)                                  Negative Discretion. 
Notwithstanding anything else contained in Section 4(b) to the
contrary, the Committee shall have the right, in its absolute discretion, (i)
to reduce or eliminate the amount otherwise payable to any Participant under Section 4(b)
based on individual performance or any other factors that the Committee, in its
discretion, shall deem appropriate and (ii) to establish rules or procedures
that have the effect of limiting the amount payable to each Participant to an
amount that is less than the maximum amount otherwise authorized under Section 4(b).

 

(d)                                 Affirmative Discretion. 
Notwithstanding any other provision in the Plan to the contrary, (i) the
Committee shall have the right, in its discretion, to pay to any Participant
who is not a Covered Employee an annual bonus for such year in an amount up to
the maximum bonus payable under Section 4(b), based on individual
performance or any other criteria that the Committee deems appropriate and (ii)
in connection with the hiring of any person who is or becomes a Covered
Employee, the Committee may provide for a minimum bonus amount in any calendar
year, regardless of whether performance objectives are attained.

 

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5.                                       Payment.

 

Except
as may be determined pursuant to the terms of Section 4(e) or as otherwise
provided hereunder, payment of any bonus amount determined under Section 4
shall be made to each Participant as soon as practicable after the Committee
certifies that one or more of the applicable performance objectives have been
attained (or, in the case of any bonus payable under the provisions of Section 4(d),
after the Committee determines the amount of any such bonus).

 

6.                                       General Provisions.

 

(a)                                  Effectiveness of the Plan. 
Subject to the approval by the holders of the Common Stock at the 2002
Annual Meeting of Stockholders, the Plan, as amended, shall be effective with
respect to calendar years beginning on or after January 1, 2002, and
ending on or before December 31, 2011, unless the term hereof is extended
by action of the Board.

 

(b)                                 Amendment and Termination. 
Notwithstanding Section 6(a), the Board or the Committee may at any
time amend, suspend, discontinue or terminate the Plan; provided, however, that
no such amendment, suspension, discontinuance or termination shall adversely
affect the rights of any Participant in respect of any calendar year which has
already commenced and no such action shall be effective without approval by the
stockholders of the Company to the extent necessary to continue to qualify the
amounts payable hereunder to Covered Employees as performance-based
compensation under Section 162(m).

 

(c)                                  Designation of Beneficiary.  Each
Participant may designate a beneficiary or beneficiaries (which beneficiary may
be an entity other than a natural person) to receive any payments which may be
made following the Participant’s death. 
Such designation may be changed or canceled at any time without the
consent of any such beneficiary.  Any
such designation, change or cancellation must be made in a form approved by the
Committee and shall not be effective until received by the Committee.  If no beneficiary has been named, or the
designated beneficiary or beneficiaries shall have predeceased the Participant,
the beneficiary shall be the Participant’s spouse or, if no spouse survives the
Participant, the Participant’s estate. 
If a Participant designates more than one beneficiary, the rights of
such beneficiaries shall be payable in equal shares, unless the Participant has
designated otherwise.

 

(d)                                 Delegation.  Except where required by Section 162(m),
the Committee may delegate authority for establishing performance goals and for
the certification of the achievement of such goals for Participants who are not
executive officers of the Company to the Chief Executive Officer or President.

 

(e)                                  No Right of Continued Employment. 
Nothing in this Plan shall be construed as conferring upon any
Participant any right to continue in the employment of the Company or any of
its Subsidiaries.

 

(f)                                    Interpretation. 
Notwithstanding anything else contained in this Plan to the contrary, to
the extent required to so qualify any award as other performance based
compensation within the meaning of Section 162(m) (4) (C) of the Code, the
Committee shall not be entitled to exercise any discretion otherwise authorized
under this Plan (such as the right to accelerate vesting without regard to the
achievement of the relevant performance objectives) with respect to such award
if the ability to exercise such discretion (as opposed to the exercise of such
discretion) would cause such award to fail to qualify as other performance
based compensation.

 

(g)                                 No Limitation to Corporation Action. 
Nothing in this Plan shall preclude the Committee or the Board, as each
or either shall deem necessary or appropriate, from authorizing the payment to
the

 

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eligible
employees of compensation outside the parameters of the Plan, including,
without limitation, base salaries, awards under any other plan of the Company
and/or its Subsidiaries (whether or not approved by stockholders), any other
bonuses (whether or not based on the attainment of performance objectives) and
retention or other special payments, provided that, if the stockholders
of the Company do not approve the Plan at the first annual meeting of
stockholders following the adoption of the Plan, the Plan set forth herein
shall not be implemented.

 

(h)                                 Nonalienation of Benefits. 
Except as expressly provided herein, no Participant or beneficiary shall
have the power or right to transfer, anticipate, or otherwise encumber the
Participant’s interest under the Plan. 
The Company’s obligations under this Plan are not assignable or
transferable except to (i) a corporation which acquires all or substantially
all of the Company’s assets or (ii) any corporation into which the Company may
be merged or consolidated.  The provisions
of the Plan shall inure to the benefit of each Participant and the Participant’s
beneficiaries, heirs, executors, administrators or successors in interest.

 

(i)                                     Withholding.  Any amount payable to a
Participant or a beneficiary under this Plan shall be subject to any applicable
Federal, state and local income and employment taxes and any other amounts that
the Company or a Subsidiary is required at law to deduct and withhold from such
payment.

 

(j)                                     Severability.  If
any provision of this Plan is held unenforceable, the remainder of the Plan
shall continue in full force and effect without regard to such unenforceable
provision and shall be applied as though the unenforceable provision were not
contained in the Plan.

 

(k)                                  Governing Law.  The
Plan shall be construed in accordance with and governed by the laws of the
State of Delaware, without reference to the principles of conflict of laws.

 

(l)                                     Headings.  Headings are inserted in this
Plan for convenience of reference only and are to be ignored in a construction
of the provisions of the Plan.

 

4Exhibit 10(b)(1)

 

                                             

 

2005 PERFORMANCE SHARE AWARD LETTER

FOR SENIOR OFFICERS

 

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

 

           
Performance Shares

Award Period:  January 1,
2005 – December 31, 2008

Grant Date:  March 4, 2005

 

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

 

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

 

 

	
   

  	
   

  
	
  H.
  Corbin Day, Chairman,

  
	
  Compensation
  and Management Succession Committee

  
	
  of
  the Board of Directors

  
	
  of
  Protective Life Corporation

  

 

1

 

APPENDIX A

 

PROVISIONS FOR

2005 PERFORMANCE SHARES

FOR SENIOR OFFICERS

MARCH 4, 2005

 

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

 

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

 

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

 

2.                                      Earn-Out of Performance Shares.

 

(a)                                  General.  Payment of the Performance
Share Award will be based upon a comparison of the Company’s “average return on
average equity” (as defined below) for the Award Period to that of a “comparison
group” (as defined below).  If the
Company’s average return on average equity for the Award Period ranks below the
40th percentile of such measure for the comparison group, no payment
will be made; if it is at the 40th percentile, a 33% payment will be
made; if it is at the 50th percentile, a 50% payment will be made;
if it is at the 75th percentile, a 125% payment will be made; and if
it is at the 90th percentile, a 170% payment will be made.  There will be interpolation between the 40th
and 50th percentiles to determine the exact percentage to be paid
between 33% and 50%, interpolation between the 50th and 75th
percentiles to determine the exact percentage to be paid between 50% and 125%,
and interpolation between the 75th and 90th percentiles
to determine the exact percentage to be paid between 125% and 170%.

 

(b)                                 Definitions.  “Return on average equity” for
a calendar year is generally defined as net income per share divided by average
stockholders’ equity (excluding accumulated comprehensive income) per share,
capped at a maximum of 25% per calendar year. 
“Average stockholders’ equity” for a calendar year is the average
of the stockholders’ equity on the last business day of each calendar quarter
during such calendar year and of the stockholders’ equity on the last business
day of the preceding calendar year.  “Average return on average equity” for the
Award Period is the average of the returns on average equity for the calendar
years during the Award Period.  Unless
the Committee determines otherwise, any one-time, special or non-recurring
charge against the Company’s earnings shall be taken into account only in the
Award Period ending in the year in which such charge is

 

2

 

taken,
and not in other Award Periods.  The “comparison
group” is generally comprised of the Company and the 40 largest public held
stock life and multiline insurance companies (as measured by net worth).  The companies in the comparison group are listed
in Appendix B.  If any comparison group
company’s net income per share or stockholders’ equity per share shall cease to
be publicly available (due to a business combination, receivership, bankruptcy,
or other event) or if any such company is no longer publicly held or becomes a
downstream affiliate of any other company in the comparison group on or before January 1
following the end of the Award Period, or substantially exits the insurance
industry (due to a divestiture of its insurance business, or other events), its
average return on average equity shall be ranked below that of the
Company.  The Committee may adjust the
performance criteria to recognize special or non-recurring situations or
circumstances with respect to the Company or any other company in the
comparison group for any year during the Award Period.

 

3.                                      Time and Form of Payment.  As
soon as practicable after the end of the Award Period, the Committee will
determine the extent to which the Performance Share Award has been earned.  The amount of the total payment shall be
based on the Fair Market Value of the Common Stock.  Unless the Committee determines otherwise,
payment will be made partly in shares of Common Stock and partly in cash, with
the cash portion being approximately equal to the federal, state and local
income tax withholding obligation with respect to such payment.

 

4.                                      Termination of Employment.

 

(a)                                  Death, Disability or Retirement.  If
your employment is terminated by death, disability or by retirement on or after
normal retirement age or prior to normal retirement age at the request of the
Company, you will receive a pro rata
payment with respect to the Performance Shares based on the period of
employment during the Award Period and determined by reference to the
performance achieved as of the end of the fiscal year immediately preceding
your termination date (or, if your employment terminates in 2005, by reference
to performance as of December 31, 2004).

 

(b)                                 Special Termination.  If
your employment is terminated by reason of (1) retirement prior to normal
retirement age at your request and approved in writing by the Company, (2) the
divestiture of a business segment or a significant portion of the assets of the
Company, or (3) a significant reduction by the Company in its salaried work
force, the determination of whether any payment shall be made with respect to
any unvested portion of your Performance Share Award shall be at the discretion
of the Committee.  Any such payment, if
made, will not exceed the number of Performance Shares determined as set forth
in paragraph 4(a).

 

(c)                                  Retirement in Calendar Year of Grant.  Any
provision of these Performance Share Provisions to the contrary
notwithstanding, if (i) this Award is intended, at the time of grant, to be “performance-based
compensation” within the meaning of Section 162(m)(4)(c) of the Internal
Revenue Code (the “Code”), to the extent required to so qualify any Award
thereunder, and (ii) your employment is terminated before January 1, 2006
by retirement on or after normal retirement age or prior to normal retirement
age at the request of the Company, you will receive a pro rata payment
with respect to the Performance Shares based on the period of employment during
the Award Period and determined by reference to the performance achieved as of December 31,
2005.

 

(d)                                 Other Termination.  If
your employment is terminated for any reason not set forth in paragraphs 4(a),
(b) or (c), any unvested portion of your Performance Share Award will be
forfeited.

 

5.                                      Change in Control.  In
the event of a Change in Control, you shall be deemed to have earned
Performance Shares with respect to your Award based upon performance as of the December 31
preceding the date of the Change in Control, provided that the number of
Performance Shares earned shall

 

3

 

never
be less than the aggregate number of Performance Shares at the 75th
percentile (as described in paragraph 2(a)) with respect to the Award.  Each Performance Share so earned shall be
canceled in exchange for a payment in cash of an amount equal to the greater of
(a) the price per share of Common Stock immediately preceding any transaction
resulting in a Change in Control or (b) the highest price per share of Common
Stock offered in conjunction with any transaction resulting in a Change in
Control (as determined in good faith by the Committee if any part of the
offered price is payable other than in cash).

 

6.                                      Federal Income Tax Consequences.

 

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

 

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

 

(c)                                  Payment of Performance Shares.  You
will recognize ordinary income for federal income tax purposes on the date the
Performance Shares are earned and paid (the “payment date”), unless you have
made an effective election under the Company’s Deferred Compensation Plan for
Officers (“Deferred Compensation Plan”), as discussed in paragraph 6(e).  The amount of income recognized will be equal
to the aggregate of the amount of cash and the fair market value (as of the
payment date) of the shares of Common Stock paid.

 

(d)                                 Sale of Performance Shares.  Your
tax basis in the shares of Common Stock acquired upon payment of Performance
Shares will be equal to the fair market value of the shares on the payment date
(unless you have made an effective election under the Deferred Compensation
Plan, as discussed in paragraph 6(e)).

 

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

 

(e)                                  Deferred Compensation Plan.  You
may be able to defer payment of Performance Shares, and the recognition of
taxable income with respect to such payment, by making deferral elections under
the Deferred Compensation Plan.  If you
make effective deferral elections, you will recognize ordinary income on your
Performance Shares as of the date the Performance Shares are paid from the
Deferred Compensation Plan, in an amount equal to the amount of cash and the
fair market value (on such date) of the shares of Common Stock paid.  Similarly, your holding period for capital
gains purposes will begin as of the date of payment from the Deferred
Compensation Plan, and the tax basis in the shares of Common Stock acquired
will equal the fair market value of the shares on such date.

 

You
will be provided with more information about this deferral opportunity, and the
Deferred Compensation Plan, before your Performance Shares become payable.

 

(f)                                    Company Deductions.  As a
general rule, the Company or one of its subsidiaries will be entitled to a
deduction for federal income tax purposes at the same time and in the same
amount that a Performance Share holder recognizes ordinary income, to the
extent that such income is considered

 

4

 

reasonable
compensation under the Code.  Neither the
Company nor any subsidiary will be entitled to a deduction with respect to
payments that constitute “excess parachute payments” pursuant to Section 280G
of the Code and that do not qualify as reasonable compensation pursuant to that
section.  Such payments will also subject
the recipients to a 20% excise tax.

 

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

 

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

 

8.                                      Income Tax Withholding.  The
Company will withhold, from your Performance Share payment (or your payment
from the Deferred Compensation Plan, if you have made deferral elections under
such Plan), an amount in cash sufficient to satisfy any applicable federal,
state or local tax withholding obligation.

 

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

 

9.                                      Non-transferability of Performance
Shares.  Your Performance Shares may not be assigned,
pledged, or otherwise transferred, except upon your death by the laws of
intestacy or descent and distribution.

 

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

 

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

 

12.                               Administration of the Plan.  The
Plan is administered by the Committee, which consists of at least two
directors, none of whom is an employee of the Company.  The members of the Committee are appointed
annually by the Board of Directors and may be removed by the Board of
Directors.  To the

 

5

 

Company’s
best knowledge, there is no other material relationship between any member of
the Committee and the Company or its affiliates or employees.

 

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

 

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

 

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

 

Upon
payment of your Performance Shares, you will receive one Right with respect to
each share of Common Stock received.  If
the Rights become exercisable, the Company will provide more detailed
information about how they affect Awards under the Plan.

 

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

 

15.                               Section 16(b) Considerations.  If
you are deemed to be an officer of the Company for purposes of Section 16(b)
of the Securities Exchange Act of 1934 (“Section 16(b)”), you will be
required to return to the Company any “profit” realized from the “purchase” and
“sale”, or “sale” and “purchase”, of Common Stock within any six-month
period.  The grant of Performance Shares
and the receipt of shares upon payment of Performance Shares under the Plan are
not purchases for purposes of Section 16(b).  The withholding of shares to satisfy your tax
liability in connection with the payment of Performance Shares (as described in
paragraph 8) will also be exempt from Section 16(b).

 

Reporting
requirements apply with respect to the payment of Performance Shares, the
deferral of payment under the Deferred Compensation Plan, and the ultimate
distribution of shares from the Deferred Compensation Plan.  If you are subject to Section 16(b), you
should consult the Company’s Legal Department with respect to these provisions.

 

16.                               Restrictions on Resale. 
There are no restrictions imposed by the Plan on the resale of Common
Stock acquired under the Plan.  However,
under the provisions of the Securities Act of 1933 (the “Securities Act”) and
the rules and regulations of the Securities and Exchange Commission (the “SEC”),
resales of stock acquired under the Plan by certain officers and directors of
the Company who may be deemed to be “affiliates” of the Company must be made
pursuant to an appropriate effective

 

6

 

registration
statement filed with the SEC, pursuant to the provisions of Rule 144 issued
under the Securities Act, or pursuant to another exemption from registration
provided in the Securities Act.  At the
present time, the Company does not have a currently effective registration
statement pursuant to which such resales may be made by affiliates.  In addition, the Company’s directors,
officers and employees are subject to the Company’s policies and procedures
regarding the purchase and sale of Common Stock (including its Code of Business
Conduct, Statement of Policy on Purchase or Sale of Protective Life Corporation
Stock, and Stock Ownership Guidelines).

 

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

 

18.                               Regulatory Compliance. 
Under the Plan, the Company is not required to deliver Common Stock for
payment of Performance Shares if such delivery would violate any applicable
law, regulation or stock exchange requirement. 
If required by any federal or state securities law or regulation, the
Company may impose restrictions on a Performance Share holder’s ability to
transfer shares received under the Plan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

8

 

APPENDIX B

 

2005 PERFORMANCE SHARE AWARDS

COMPARISON GROUP

 

The
comparison group is comprised of the Company, Protective Life Corporation (PL),
and the following 40 stock life and multiline insurance companies.

 

	
  Aetna
  Inc. (AET)

  	
  Jefferson-Pilot
  Corporation (JP)

  
	
  AFLAC,
  Inc. (AFL)

  	
  Kansas
  City Life Insurance Company (KCLI)

  
	
  Alfa
  Corporation (ALFA)

  	
  Lincoln
  National Corporation (LNC)

  
	
  Allmerica
  Financial Corporation (AFC)

  	
  MetLife,
  Inc. (MET)

  
	
  Allstate
  Corporation (ALL)

  	
  National
  Western Life Insurance Company (NWLIA)

  
	
  American
  International Group, Inc. (AIG)

  	
  Nationwide
  Financial Services, Inc. (NFS)

  
	
  AmerUS
  Group Co. (AMH)

  	
  Old
  Republic International Corporation (ORI)

  
	
  Annuity
  and Life Re (Holdings), Ltd. (ANNRF.OB)

  	
  Penn
  Treaty American Corporation (PTA)

  
	
  Aon
  Corporation (AOC)

  	
  The
  Phoenix Companies (PNX)

  
	
  Assurant,
  Inc. (AIZ)

  	
  Presidential
  Life Corporation (PLFE)

  
	
  CIGNA
  Corporation (CI)

  	
  Principal
  Financial Group, Inc. (PFG)

  
	
  CNA
  Financial Corporation (CNA)

  	
  Prudential
  Financial, Inc. (PRU)

  
	
  Conseco,
  Inc. (CNO)

  	
  Reinsurance
  Group of America, Inc. (RGA)

  
	
  Delphi
  Financial Group, Inc. (DFG)

  	
  Scottish
  Annuity & Life Holdings, Ltd. (SCT)

  
	
  Erie
  Family Life Insurance Company (ERIF)

  	
  StanCorp
  Financial Group, Inc. (SFG)

  
	
  FBL
  Financial Group, Inc. (FFG)

  	
  Torchmark
  Corporation (TMK)

  
	
  Great
  American Financial Resources, Inc. (GFR)

  	
  United
  Insurance Companies, Inc. (UCI)

  
	
  Genworth
  Financial, Inc. (GNW)

  	
  Unitrin
  Incorporated (UTR)

  
	
  The
  Hartford Financial Services Group, Inc. (HIG)

  	
  Universal
  American Financial Corporation (UHCO)

  
	
  Independence
  Holding Company (INHO)

  	
  UNUMProvident
  Corporation (UNM)

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