Document:

afl10k03exh10serp

AFLAC Incorporated Form 10-K

EXHIBIT 10.4

AFLAC INCORPORATED

SUPPLEMENTAL EXECUTIVE

RETIREMENT PLAN

EXH 10.4

 

	
TABLE OF CONTENTS

	
 
	 	 	 	 	
Page

	
ARTICLE I
	 	
DEFINITIONS
	
1

	
 
	
1.1
	 	
Actuarial Equivalent
	
1

	
 
	
1.2
	 	
Administrative Committee
	
1

	
 
	
1.3
	 	
Affiliate
	
1

	
 
	
1.4
	 	
Annual Compensation 
	
2

	
 
	
1.5
	 	
Annual Retirement Benefit
	
2

	
 
	
1.6
	 	
Average Annual Compensation
	
2

	
 
	
1.7
	 	
Benefit Commencement Date 
	
2

	
 
	
1.8
	 	
Board
	
2

	
 
	
1.9
	 	
Cause
	
2

	
 
	
1.10
	 	
Change in Control
	
3

	
 
	
1.11
	 	
Code
	
3

	
 
	
1.12
	 	
Company
	
3

	
 
	
1.13
	 	
Compensation Committee
	
3

	
 
	
1.14
	 	
Confidential Information
	
4

	
 
	
1.15
	 	
Contiguous Consulting Agreement
	
4

	
 
	
1.16
	 	
Delayed Early Retirement Date
	
4

	
 
	
1.17
	 	
Disability or Disabled
	
4

	
 
	
1.18
	 	
Early Retirement Date
	
4

	
 
	
1.19
	 	
Effective Date
	
4

	
 
	
1.20
	 	
Eligible Employee
	
4

	
 
	
1.21
	 	
Employment Date
	
5

	
 
	
1.22
	 	
ERISA
	
5

	
 
	
1.23
	 	
Final Base Pay
	
5

	
 
	
1.24
	 	
Good Reason
	
5

	
 
	
1.25
	 	
Grandfathered Participant
	
6

	
 
	
1.26
	 	
Joint and 50% Survivor Annuity
	
6

	
 
	
1.27
	 	
Normal Retirement Date
	
6

	
 
	
1.28
	 	
Participant
	
6

	
 
	
1.29
	 	
Participation Date
	
6

	
 
	
1.30
	 	
Pension Plan
	
6

	
 
	
1.31
	 	
Pension Plan Benefit
	
7

	
 
	
1.32
	 	
Plan
	
7

	
 
	
1.33
	 	
Qualifying Termination
	
7

	
 
	
1.34
	 	
Single Life Annuity
	
7

	
 
	
1.35
	 	
Surviving Spouse
	
7

	
 
	
1.36
	 	
Total Payments
	
7

	
 
	
1.37
	 	
Trade Secret
	
7

	
 
	
1.38
	 	
Year of Employment
	
7

	
 
	
1.39
	 	
Year of Participation
	
8

	 	 	 	 
	
ARTICLE II
	 	
ELIGIBILITY AND PARTICIPATION
	
8

	
 
	
2.1
	 	
Selection of Participants
	
8

	
 
	
2.2
	 	
Cessation of Participation
	
8

	
 
	
2.3
	 	
Termination of Employment Before Early Retirement Date; 
	 
	
 
	 	 	
Removal from Participation
	
8

EXH 10.4-i

	
ARTICLE III
	
BENEFITS
	
9

	
 
	
3.1
	 	
Eligibility for Benefits
	
9

	
 
	
3.2
	 	
Normal Retirement Benefit
	
9

	
 
	
3.3
	 	
Delayed Early Retirement Benefit
	
10

	
 
	
3.4
	 	
Early Retirement Benefit
	
10

	
 
	
3.5
	 	
Reduced Early Retirement Benefit
	
11

	
 
	
3.6
	 	
Payment of Annual Retirement Benefit
	
11

	
 
	
3.7
	 	
Change in Control
	
11

	
 
	
3.8
	 	
Noncompetition
	
13

	
 
	
3.9
	 	
Confidential Information
	
13

	
 
	
3.10
	 	
Death Benefit
	
13

	 	 	 	 	 	 
	
ARTICLE IV
	
CLAIMS
	
13

	
 
	
4.1
	 	
Claims
	
13

	 	 	 	 	 	 
	
ARTICLE V
	
SOURCE OF FUNDS 
	
14

	
 
	
5.1
	 	
Source of Funds
	
14

	 	 	 	 	 	 
	
ARTICLE VI
	
ADMINISTRATIVE AND COMPENSATION COMMITTEES
	
15

	
 
	
6.1
	 	
Action of Administrative Committee
	
15

	
 
	
6.2
	 	
Rights and Duties of Administrative Committee
	
15

	
 
	
6.3
	 	
Rights and Duties of Compensation Committee
	
15

	
 
	
6.4
	 	
Compensation, Indemnity and Liability
	
16

	
 
	
6.5
	 	
Taxes
	
16

	 	 	 	 	 	 
	
ARTICLE VII
	
AMENDMENT AND TERMINATION
	
16

	
 
	
7.1
	 	
Amendments
	
16

	
 
	
7.2
	 	
Termination of Plan
	
16

	 	 	 	 	 	 
	
ARTICLE VIII
	
MISCELLANEOUS
	
17

	
 
	
8.1
	 	
Taxation
	
17

	
 
	
8.2
	 	
No Employment Contract
	
17

	
 
	
8.3
	 	
Headings
	
17

	
 
	
8.4
	 	
Gender and Number
	
17

	
 
	
8.5
	 	
Successors
	
17

	
 
	
8.6
	 	
Legal Expenses
	
17

	
 
	
8.7
	 	
Assignment of Benefits
	
18

	
 
	
8.8
	 	
Legally Incompetent
	
18

	
 
	
8.9
	 	
Governing Law
	
18

 

EXH 10.4-ii

EXH 10.4 Table of Contents

AFLAC INCORPORATED

SUPPLEMENTAL EXECUTIVE

RETIREMENT PLAN

     Effective as of the 1st day of January, 2001, AFLAC Incorporated, a corporation duly organized and existing under the laws of the State of Georgia (the "Company"), hereby amends and restates the AFLAC Incorporated Supplemental Executive Retirement Plan (the "Plan").

BACKGROUND AND PURPOSE

     A.  PURPOSE.  The primary purpose of the Plan is to provide supplemental retirement income to selected executives of the Company and its affiliated companies. 

     B.  TYPE OF PLAN.  The Plan constitutes an unfunded, nonqualified deferred compensation plan that benefits certain designated employees who are within a select group of key management or highly compensated employees.

STATEMENT OF AGREEMENT

     To establish the Plan with the purposes and goals as hereinabove described, the Company hereby sets forth the terms and provisions as follows:

ARTICLE I

DEFINITIONS

     For purposes of the Plan, the following terms, when used with an initial capital letter, shall have the meaning set forth below unless a different meaning plainly is required by the context.

     1.1  Actuarial Equivalent means an amount of equivalent value determined by applying the Unisex Pension 1984 Mortality Table and a 7% rate of interest; provided, consistent with the terms of Section 7.1, the Administrative Committee may, in its sole discretion from time to time, modify this rate of interest.

     1.2  Administrative Committee means the committee designated by the Compensation Committee to act on behalf of the Company to administer the Plan.  If at any time the Compensation Committee has not designated an Administrative Committee, the Compensation Committee shall serve as the Administrative Committee.  Subject to the limitation in Section 6.1 relating to decisions which affect solely their own benefits under the Plan, individuals who are management level employees and/or Participants may serve as members of the Administrative Committee.

     1.3  Affiliate means (i) any corporation or other entity that is required to be aggregated with the Company under Code Sections 414(b), (c), (m) or (o), and (ii) any other entity in which the Company has an ownership interest and which the Company designates as an Affiliate for purposes of the Plan.

EXH 10.4-1

EXH 10.4 Table of Contents

     1.4  Annual Compensation means the amount actually paid to a Participant for services performed as an employee (but not as a consultant) during a relevant calendar year as wages, salaries for professional services, and cash bonuses.  Annual Compensation for a relevant calendar year shall also include compensation (i) contributed by the Company on behalf of a Participant pursuant to a salary reduction agreement which is not includable in the gross income of the Participant under Code Sections 125, 402(a)(8) or 402(h), or (ii) deferred by the Company on behalf of a Participant pursuant to a salary reduction agreement under the AFLAC Incorporated Executive Deferred Compensation Plan.

     1.5  Annual Retirement Benefit means the annual amount payable to a retired Participant as determined pursuant to the terms of Article III.

     1.6  Average Annual Compensation means, for each Participant, the average of his Annual Compensation for the 3-consecutive-calendar year period in the final 10-consecutive-calendar year period of employment with the Company and its Affiliates that yields the highest average.  For purposes hereof, the Participant's Annual Compensation for the calendar year in which the Participant terminates employment with the Company and all of its Affiliates shall be taken into account only if such termination occurs as of December 31 of such year.

     1.7  Benefit Commencement Date means the first day of the calendar month coinciding with or next following the date on which a Participant becomes entitled to receive or begin receiving an Annual Retirement Benefit under Section 3.2, 3.3, 3.4 or 3.5.

     1.8  Board means the Board of Directors of the Company.

     1.9  Cause means, in connection with a Participant's termination of employment and/or removal from participation in the Plan (whether by action of his employer or the Compensation Committee, or by the Participant's resignation for other than Good Reason in anticipation of such action for Cause to terminate his employment or participation) (i) the continued failure by the Participant to substantially perform the Participant's duties with the Company or an Affiliate of the Company (other than any such failure resulting from the Participant's incapacity due to physical or mental illness or any such actual or anticipated failure after a Participant gives a notice of termination of employment for Good Reason) after a written demand for substantial performance is delivered to the Participant by the Board, which demand specifically identifies the manner in which the Board believes that the Participant has not substantially performed the Participant's duties; (ii) the engaging by the Participant in conduct that is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise; or (iii) the Participant's conviction of, or plea of guilty or no contest to, a felony or crime involving moral turpitude. Notwithstanding the foregoing, a termination for Cause shall not be deemed to have occurred under clause (i) or (ii) unless and until there shall have been delivered to the Participant a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Participant and an opportunity for him, together with his counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Participant engaged in conduct set forth above and specifying the particulars thereof in detail. 

EXH 10.4-2

EXH 10.4 Table of Contents

     1.10  Change in Control means the occurrence of any of the following events:

          (a)  Any Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; provided, for purposes of this subsection (a), securities acquired directly from the Company or its Affiliates shall not be taken into account as securities beneficially owned by such Person;

          (b)  During any period of 2 consecutive years, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in subsection (a), (c) or (d) hereof) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

          (c)  The shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Company's then outstanding securities; or

          (d)  The shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets.

     As used herein, the term "Person" shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as modified and used in Sections 13(d) and 14(d) thereof; provided, a Person shall not include (i) the Company or any of its subsidiaries; (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries; (iii) an underwriter temporarily holding securities pursuant to an offering of such securities; or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

     1.11  Code means the Internal Revenue Code of 1986, as amended.

     1.12  Company means AFLAC Incorporated, a Georgia corporation with its principal place of business in Columbus, Georgia.

     1.13  Compensation Committee means the Compensation Committee of the Board.

EXH 10.4-3

EXH 10.4 Table of Contents

     1.14  Confidential Information means (i) all Trade Secrets; and (ii) any other information that is material to the Company and not generally available to the public, including, without limitation, information concerning the Company's methods and plans of operation, production processes, marketing and sales strategies, research and development, know-how, computer programming, style and design technology and plans, non-published product specifications, patent applications, product and raw material costs, pricing strategies, business plans, financial data, personnel records, suppliers and customers (whether or not such information constitutes a Trade Secret).

     1.15  Contiguous Consulting Agreement means a written consulting agreement between the Company (and/or an Affiliate) and a Participant that (i) commences immediately upon the Participant's termination of employment with the Company and all Affiliates, (ii) obligates the Participant to perform consulting services for the Company or an Affiliate for a specified period, and (iii) is approved by the Company's Chief Executive Officer or the Compensation Committee. 

     1.16  Delayed Early Retirement Date means (i) for a Participant whose Participation Date occurred before August 11, 1992, the date the Participant attains age 60; and (ii) for a Participant whose Participation Date occurred on or after August 11, 1992, the latest of (A) the date the Participant attains age 60, (B) the date the Participant completes 15 Years of Employment, or (C) the date the Participant completes 5 consecutive Years of Participation (that is, for a Participant who has continuously been an active Participant in the Plan since his Participation Date, the 5th anniversary of such date).

     1.17  Disability or Disabled means that a Participant is, in the opinion of the Compensation Committee, wholly prevented from performing the duties assigned to such Participant by the Company or Affiliate employing such Participant, by reason of a medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.  In making such determination, the Compensation Committee, in its sole discretion, may require such medical proof as it deems necessary, including the certificate of one or more licensed physicians selected by the Compensation Committee.  The decision of the Compensation Committee as to Disability shall be final and binding.

     1.18  Early Retirement Date means (i) for a Participant whose Participation Date occurred before August 11, 1992, the date the Participant attains age 55; and (ii) for a Participant whose Participation Date occurred on or after August 11, 1992, the latest of (A) the date the Participant attains age 55, (B) the date the Participant completes 15 Years of Employment, or (C) the date the Participant completes 5 consecutive Years of Participation (that is, for a Participant who has continuously been an active Participant in the Plan since his Participation Date, the 5th anniversary of such date).

     1.19  Effective Date means January 1, 2001, the date as of which this restatement shall be effective.  (The Plan was initially effective on October 1, 1989 and previously restated effective as January 1, 1998.)

     1.20  Eligible Employee means an Employee who is a member of a select group of highly compensated or key management employees of the Company or an Affiliate.

EXH 10.4-4

EXH 10.4 Table of Contents

     1.21  Employment Date means, with respect to an Eligible Employee, the date his employment with the Company or an Affiliate first commenced (whether or not he was an Eligible Employee on such date); provided, if an individual ceases to be an employee of the Company and all Affiliates for any reason and subsequently is reemployed by the Company and/or an Affiliate, his Employment Date shall be the date his employment recommences (unless the Compensation Committee designates an earlier date).

     1.22  ERISA means the Employee Retirement Income Security Act of 1974, as amended.

     1.23  Final Base Pay means the highest annual base salary (excluding bonuses) paid to a Participant during any of the 3 calendar years immediately preceding the calendar year in which the Participant terminates employment with the Company and all of its Affiliates.

     1.24  Good Reason means the occurrence after a Change in Control of any of the following circumstances, unless the Participant expressly consents to such circumstance in writing or, in the case of a circumstance described in subsection (a), (e) or (f) hereof, such circumstance is fully corrected prior to the date the Participant terminates employment:

          (a)  The assignment to the Participant of any duties inconsistent with the position he held in the Company (or any subsidiary or Affiliate of the Company) immediately prior to the Change in Control, or a significant adverse alteration in the nature or status of his responsibilities from those in effect immediately prior to such change;

          (b)  A reduction by the Company and all Affiliates in the Participant's annual base salary, or a reduction by the Company and all Affiliates in the Participant's total compensation, as in effect immediately prior to the Change in Control or as the same may be increased from time to time;

          (c)  The relocation of the Company's principal executive offices to a location outside the Columbus, Georgia Metropolitan Area (or, if different, the metropolitan area in which such offices are located immediately prior to the Change in Control); or the Company's requiring the Participant to be based anywhere other than the Company's principal executive offices except for required travel on the Company's business to an extent substantially consistent with the Participant's business travel obligations immediately prior to the Change in Control;

          (d)  The failure by the Company and all Affiliates to pay to the Participant any portion of his current compensation within 7 days of the date such compensation is due;

          (e)  The failure by the Company and all Affiliates to continue in effect any compensation plan in which the Participant participates immediately prior to the Change in Control and which is material to the Participant's total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; or the failure by the Company and all Affiliates to continue the Participant's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Participant's participation relative to other participants, as existed at the time of the Change in Control; or

EXH 10.4-5

EXH 10.4 Table of Contents

          (f)  The failure by the Company and all Affiliates to continue to provide the Participant with benefits substantially similar to those enjoyed by him under any of the Company's life insurance, medical, health and accident, or disability plans in which he was participating at the time of the Change in Control; the taking of any action by the Company or an Affiliate which would directly or indirectly materially reduce any of such benefits or deprive the Participant of any material fringe benefit enjoyed by him at the time of the Change in Control; or the failure by the Company  and all Affiliates to provide the Participant with the number of paid vacation days to which he is entitled on the basis of years of service with the Company and all Affiliates in accordance with the Company's or Affiliate's normal vacation policy in effect at the time of the Change in Control.

     A Participant's right to terminate his employment for Good Reason shall not be affected by the Participant's incapacity due to physical or mental illness.  The Participant's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

     1.25  Grandfathered Participant means a Participant who was an active Participant in the Plan on December 31, 1997.

     1.26  Joint and 50% Survivor Annuity means the Actuarial Equivalent of a Participant's Annual Retirement Benefit payable monthly during the Participant's lifetime (commencing as of his Benefit Commencement Date and ending with the payment due as of the first day of the month during which the Participant dies), with 50% of such monthly benefit amount continuing after his death (beginning as of the first day of the month following the month in which he dies) to his Surviving Spouse (if the Surviving Spouse survives the Participant) for such Surviving Spouse's remaining lifetime.  Payments shall cease after the payment due on the first day of the month coinciding with or immediately preceding the later of the Participant's death or his Surviving Spouse's death.

     1.27  Normal Retirement Date means (i) for a Participant whose Participation Date occurred before August 11, 1992, the date the Participant attains age 65; and (ii) for a Participant whose Participation Date occurred on or after August 11, 1992, the latest of (A) the date the Participant attains age 65, (B) the date the Participant completes 15 Years of Employment, or (C) the date the Participant completes 5 consecutive Years of Participation (that is, for a Participant who has continuously been an active Participant in the Plan since his Participation Date, the 5th anniversary of such date).

     1.28  Participant means an active Participant or retired Participant who has a benefit payable under the Plan.

     1.29  Participation Date means, with respect to each Eligible Employee who is designated as a Participant, the date his participation in the Plan commences (see Section 2.1); provided, if an Eligible Employee ceases to be an active Participant for any reason and subsequently is again designated as a Participant, his Participation Date shall be the date his active participation recommences (unless the Compensation Committee designates an earlier date).

     1.30  Pension Plan means the AFLAC Incorporated Pension Plan, a defined benefit plan qualified under Code Section 401(a), as such plan may be amended from time to time.

EXH 10.4-6

EXH 10.4 Table of Contents

     1.31  Pension Plan Benefit means the Actuarial Equivalent of a Participant's accrued benefit under the Pension Plan, calculated as if that benefit was payable annually for the life of the Participant commencing on the Participant's Benefit Commencement Date.

     1.32  Plan means the AFLAC Incorporated Supplemental Executive Retirement Plan, as contained herein and all amendments hereto.  The Plan is intended to be an unfunded, nonqualified deferred compensation plan covering certain designated employees who are within a select group of key management or highly compensated employees.

     1.33  Qualifying Termination means a Participant's termination of employment with the Company and all Affiliates following a Change in Control, unless such termination of employment is (i) because of the Participant's death or Disability, (ii) by the Company or an Affiliate for Cause, or (iii) by the Participant other than for Good Reason.

     1.34  Single Life Annuity means the Actuarial Equivalent of a Participant's Annual Retirement Benefit payable monthly during the Participant's lifetime, commencing as of his Benefit Commencement Date and ending after the payment due on the first day of the month coinciding with or immediately preceding the date of his death.

     1.35  Surviving Spouse means, with respect to a Participant, the person who is treated as married to such Participant under the laws of the state in which the Participant resides.  The determination of a Participant's Surviving Spouse shall be made as of the date of such Participant's termination of employment.

     1.36  Total Payments has the meaning as defined in Section 3.7(e).

     1.37  Trade Secret means information of or about the Company that would be considered a trade secret under Georgia law; namely, that information which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.  Trade Secrets may include, but shall not be limited to, technical or nontechnical data, a formula, pattern, compilation, program, device, method, technique, drawing or process, financial data or plans, product plans, or a list of actual or potential customers or suppliers.

     1.38  Year of Employment means, with respect to an Eligible Employee, a 12-month period, beginning on his Employment Date or on any anniversary thereof, during which such Eligible Employee either (i) remains continuously employed by, or engaged to provide full-time service to, the Company and/or an Affiliate, or (ii) is subject to the terms of a Contiguous Consulting Agreement.  If an individual ceases to be an employee or consultant of the Company and all Affiliates for any reason and subsequently is reemployed or reengaged by the Company and/or an Affiliate, his previously earned Years of Employment shall be taken into account only to the extent (if any) specified by the Compensation Committee.

EXH 10.4-7

EXH 10.4 Table of Contents

     1.39  Year of Participation means, with respect to a Participant, a 12-month period, beginning on his Participation Date or on any anniversary thereof, during which such Participant continues to actively participate in, and to thereby accrue benefits under, the Plan.  If an individual ceases to be a Participant for any reason and subsequently is readmitted to participation in the Plan, his previously earned Years of Participation shall be taken into account only to the extent (if any) specified by the Compensation Committee.

ARTICLE II

ELIGIBILITY AND PARTICIPATION

     2.1  Selection of Participants.

          The Compensation Committee, in its sole discretion, shall designate which Eligible Employees shall become Participants in the Plan and, for each such Eligible Employee, his Participation Date.  The Administrative Committee then shall set forth the name of each Participant on Schedule A hereto.  Notwithstanding anything herein to the contrary, all aspects of the selection of Participants shall be in the sole discretion of the Compensation Committee and regardless of title, duties or any other factors, there shall be no requirement whatsoever that any individual or group of individuals be allowed to participate herein.

     2.2  Cessation of Participation.

          Unless the Compensation Committee specifies otherwise, a Participant's active participation in the Plan shall cease at the time his employment with the Company and all Affiliates terminates for any reason (whether or not he enters into a Contiguous Consulting Agreement), such that he shall not accrue any additional benefit under the Plan.  In addition, subject to Section 3.7(b), the Compensation Committee, in its sole discretion, may remove any Participant from participation in the Plan due to Cause.  Any such removal shall be effective as of the later of (i) the date that the Compensation Committee has taken such action, or (ii) the effective date that the Compensation Committee specifies for such action.  A Participant who remains entitled to benefits under the Plan after he terminates employment with the Company and its Affiliates shall remain a retired Participant as long as he is entitled to any portion of his benefits as described in the Plan.  During the period a former employee, who completed at least 5 Years of Participation while an Eligible Employee, is subject to the terms of a Contiguous Consulting Agreement, he shall remain an active Participant potentially eligible pursuant to the terms of Section 3.5; provided, during such period, he shall not accrue any additional benefit under the Plan nor shall he earn any credits towards a Year of Participation.

     2.3  Termination of Employment Before Early Retirement Date; Removal from Participation.

          (a)  Termination Before Early Retirement Date.  Except as provided in Section 3.5 or 3.7, upon a Participant's termination of employment with the Company and all Affiliates before his Early Retirement Date, neither the Participant nor his Surviving Spouse (if any) shall be entitled to any benefit or payment under the Plan.

EXH 10.4-8

EXH 10.4 Table of Contents

          (b)  Removal from Participation.  Notwithstanding anything herein to the contrary, if the Compensation Committee determines, in its sole discretion, that either (i) a Participant's employment or participation in the Plan was terminated by the Company, an Affiliate or the Compensation Committee for Cause, or (ii) the Participant resigned for other than Good Reason in anticipation of such action for Cause to terminate his employment or participation, then the Participant and/or his Surviving Spouse shall forfeit all rights and entitlements under the Plan.  The decision of the Compensation Committee as to whether the Participant's discharge or removal was for Cause will be final and binding; provided, no dispute over the reason for such discharge shall affect the finality of the discharge of the Participant by the Company or Affiliate.

ARTICLE III

BENEFITS

     3.1  Eligibility for Benefits.

          Subject to the terms of Section 2.3, a Participant or Surviving Spouse shall be eligible to receive the amount, if any, determined in accordance with the terms of this Article. 

     3.2  Normal Retirement Benefit.

          (a)  General Formula.  Upon a Participant's termination of employment with the Company and all Affiliates on or after his Normal Retirement Date for any reason other than Cause or death, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (a)(i) and the amount determined under subsection (a)(ii), as follows:

	
 
	
(i)
	 	
60% of the Participant's Average Annual Compensation; and

	 	 	 	 
	
 
	
(ii)
	 	
the Participant's Pension Plan Benefit.

          (b)  Grandfathered Benefits.  Notwithstanding the terms of subsection (a) hereof, the Annual Retirement Benefit of any Grandfathered Participant who terminates employment on or after his Normal Retirement Date for any reason other than Cause or death shall be the greater of the amount determined under subsection (a) hereof or an amount equal to the difference between the amount determined under subsection (b)(i) and the amount determined under subsection (b)(ii), as follows:

	 	
(i)
	 	
65% of the Participant's Final Base Pay; and

	 	 	 	 
	
 
	
(ii)
	 	
the Participant's Pension Plan Benefit.

 

EXH 10.4-9

EXH 10.4 Table of Contents

     3.3  Delayed Early Retirement Benefit.

          (a)  General Formula.  Upon a Participant's termination of employment with the Company and all Affiliates on or after his Delayed Early Retirement Date but before his Normal Retirement Date for any reason other than Cause or death, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (a)(i) and the amount determined under subsection (a)(ii), as follows:

	 	
(i)
	 	
50% of the Participant's Average Annual Compensation; and

	 	 	 	 
	
 
	
(ii)
	 	
the Participant's Pension Plan Benefit.

          (b)  Grandfathered Benefits.  Notwithstanding the terms of subsection (a), the Annual Retirement Benefit of any Grandfathered Participant who terminates employment on or after his Delayed Early Retirement Date but before his Normal Retirement Date for any reason other than Cause or death shall be the greater of the amount determined under subsection (a) hereof or an amount equal to the difference between the amount determined under subsection (b)(i) and the amount determined under subsection (b)(ii), as follows:

	 	
(i)
	 	
50% of the Participant's Final Base Pay; and

	 	 	 	 
	
 
	
(ii)
	 	
the Participant's Pension Plan Benefit.

     3.4  Early Retirement Benefit.

          (a)  General Formula.  Upon a Participant's termination of employment with the Company and all Affiliates on or after his Early Retirement Date but before his Delayed Early Retirement Date for any reason other than Cause or death, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (a)(i) and the amount determined under subsection (a)(ii), as follows:

	 	
(i)
	 	
40% of the Participant's Average Annual Compensation; and

	 	 	 	 
	
 
	
(ii)
	 	
the Participant's Pension Plan Benefit.

          (b)  Grandfathered Benefits.  Notwithstanding the terms of subsection (a), the Annual Retirement Benefit of any Grandfathered Participant who terminates employment on or after his Early Retirement Date but before his Delayed Early Retirement Date for any reason other than Cause or death shall be the greater of the amount determined under subsection (a) hereof or an amount equal to the difference between the amount determined under subsection (b)(i) and the amount determined under subsection (b)(ii), as follows:

	 	
(i)
	 	
50% of the Participant's Final Base Pay; and

	 	 	 	 
	
 
	
(ii)
	 	
the Participant's Pension Plan Benefit.

 

EXH 10.4-10

EXH 10.4 Table of Contents

     3.5  Reduced Early Retirement Benefit.

          Upon a Participant's attainment of his Early Retirement Date after his termination of employment but while he is subject to the terms of a Contiguous Consulting Agreement, the Participant shall be entitled to an Annual Retirement Benefit that is the product of (i) the Annual Retirement Benefit to which the Participant would have been entitled had he remained actively employed by the Company or an Affiliate as a Participant until his Early Retirement Date, and (ii) a fraction, (A) the numerator of which is the number of complete and partial 12-month periods of employment with the Company and its Affiliates completed by the Participant as of the date of his termination of employment, and (B) the denominator of which is the number of complete and partial 12-month periods between the Participant's first day of employment with the Company and its Affiliates and the Participant's Early Retirement Date.

     3.6  Payment of Annual Retirement Benefit.

          (a)  Commencement.  A Participant's Annual Retirement Benefit shall commence as soon as practicable after the Participant's Benefit Commencement Date.

          (b)  Normal Form of Payment.  Except as provided in subsection (c) hereof, a Participant's Annual Retirement Benefit shall be paid in the form of a Single Life Annuity, commencing on the Participant's Benefit Commencement Date.

          (c)  Optional Form of Payment.  A Participant may elect, not later than 6 months before his termination of employment with the Company and all Affiliates, to have his Annual Retirement Benefit paid in the form of a Joint and 50% Survivor Annuity, which shall be the Actuarial Equivalent of the Participant's Annual Retirement Benefit payable in the form of a Single Life Annuity.  Notwithstanding any such election, if a Participant who has elected a Joint and 50% Survivor Annuity is not married on the date of his termination of employment, his benefit shall be paid in the form of a Single Life Annuity.

          (d)  Cash Payments.  All benefit payments hereunder shall be made in cash.

     3.7  Change in Control.

          (a)  General.  In the event of a Change in Control, the provisions of this Section shall apply to each Participant who was an active Participant in the Plan immediately preceding the date of the Change in Control.

          (b)  Restriction on Changes.  For a period of 3 years following a Change in Control, (i) no Participant may be removed from participation in the Plan pursuant to the terms of Section 2.2, and (ii) the Plan may not be terminated or amended in any manner which would adversely affect in any way the amount of, or the entitlement to, retirement benefits hereunder or remove a Participant from participation hereunder.  Notwithstanding any other provisions of the Plan, the foregoing provisions of this subsection may not be amended following a Change in Control without the written consent of a majority in both number and interest of the Participants who are actively employed by the Company or any Affiliate, both immediately prior to the Change in Control and at the date of such amendment.

EXH 10.4-11

EXH 10.4 Table of Contents

          (c)  Termination Within Two Years of a Change in Control.  If a Participant's employment with the Company and all Affiliates terminates during the 2-year period immediately following the Change in Control and such termination of employment constitutes a Qualifying Termination, the Company shall pay to the Participant, no later than the fifth day following the date of the Participant's Qualifying Termination, a lump-sum cash amount that is the Actuarial Equivalent (determined as of the date of the Qualifying Termination) of the Annual Retirement Benefit to which the Participant would have been entitled had he remained in the employ of the Company or an Affiliate as a Participant in the Plan (i) until he attained his Early Retirement Date, in the case of a Participant who had not yet attained his Early Retirement Date as of the date of his Qualifying Termination, (ii) until he had attained his Delayed Early Retirement Date, in the case of a Participant who had attained his Early Retirement Date but not his Delayed Early Retirement Date as of the date of the Qualifying Termination, or (iii) until he had attained his Normal Retirement Date, for a participant who had attained his Delayed Early Retirement Date but not his Normal Retirement Date as of the date of the Qualifying Termination.

          (d)  Termination or Removal More than Two Years after a Change in Control.  If after the 2-year period immediately following a Change in Control and before a Participant's Early Retirement Date (i) the Participant's employment with the Company and all Affiliates terminates and such termination constitutes a Qualifying Termination, or (ii) the Participant is removed from participation in the Plan (pursuant to the terms of Section 2.2 but subject to the terms of subsection (b) hereof), the Company shall pay to the Participant, no later than the fifth day following the date of the Participant's Qualifying Termination or removal from the Plan, a lump-sum cash amount that is the Actuarial Equivalent (determined as of the date of the Qualifying Termination or removal) of the product of (i) the Annual Retirement Benefit to which the Participant would have been entitled had he remained in the employ of the Company or an Affiliate as a Participant in the Plan until his Early Retirement Date, and (ii) a fraction, (A) the numerator of which is the number of complete and partial 12-month periods of employment with the Company and its Affiliates completed by the Participant as of the date of the Qualifying Termination or removal from participation, and (B) the denominator of which is the number of complete and partial 12-month periods between the Participant's first day of employment with the Company and its Affiliates and the Participant's Early Retirement Date.

          (E)  Limitations on Payments.  Notwithstanding any other provisions of the Plan, in the event that any payment or benefit received or to be received by a Participant in connection with a Change in Control or the termination of the Participant's employment, whether pursuant to the terms of the Plan or any other plan, arrangement or agreement with the Company or entity whose actions result in a Change in Control or any affiliate of the Company or such entity (all such payments and benefits, including the payments under this Section 3.7, being hereinafter called "Total Payments") would not be deductible (in whole or part) by the Company, an affiliate or entity making such payment or providing such benefit, as a result of Code Section 280G, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments made on account of Code Section 280G in such other plan, arrangement or agreement), the payment described in this Section shall be reduced (if necessary, to zero).  For purposes of this limitation (i) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Participant does not constitute a "parachute payment" within the meaning of Code Section 280G(b)(2), including by reason of Code Section 280G(b)(4)(A); (ii) the payment under this Section shall be reduced only to the extent necessary so that the Total Payments are not subject to disallowance as deductions, in the opinion of the tax counsel referred to in clause (i); and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors in accordance with the principles of Code Sections 280G(d)(3) and (4).

EXH 10.4-12

EXH 10.4 Table of Contents

     3.8  Noncompetition.

          The payment of Annual Retirement Benefits to a Participant under the Plan shall immediately cease and be forfeited if the Participant, without the prior consent of the Board, directly or indirectly renders advisory or any other services to, or becomes employed by, or participates or engages in any business competitive with any of the business activities of the Company (or any subsidiary or Affiliate of the Company) in any states or foreign countries in which the Company or any of its subsidiaries or Affiliates do business.  For purposes of this Section, "participates or engages" in means acting as an agent, consultant, representative, officer, director, member, independent contractor or employee; or as an owner, partner, limited partner, joint venturer, creditor or shareholder (except as a shareholder holding no more than a 1% interest in a publicly traded entity).  As a condition to receiving or continuing to receive benefit payments hereunder, the Compensation Committee, in its sole discretion and at any time, may require any Participant to enter into a noncompete and/or nonsolicitation agreement with such terms and provisions as the Compensation Committee may dictate.

     3.9  Confidential Information.

          The payment of an Annual Retirement Benefit to a Participant under the Plan shall immediately cease and be forfeited if the Participant, at any time during or following the Participant's employment with the Company or its Affiliates, discloses any Confidential Information to any other person or entity (except employees of the Company and its Affiliates) without the prior written consent of the Board or Compensation Committee.

     3.10  Death Benefit.  

          In the event a Participant dies after attaining his Early Retirement Date but before his Benefit Commencement Date, his Surviving Spouse (if any) shall be entitled to receive, commencing as of the first day of the month coinciding with or immediately following the date of the Participant's death, an annual survivor benefit in an amount determined as if the Participant had retired on the day immediately preceding his death and had elected to receive a Joint and 50% Survivor Annuity.

ARTICLE IV

CLAIMS

     4.1  Claims.

          (a)  Initial Claim.  Claims for benefits under the Plan may be filed in writing with the Compensation Committee.  The Compensation Committee shall furnish to the claimant written notice of the disposition of a claim within 90 days after the application therefor is filed; provided, if special circumstances require an extension, the Compensation Committee may extend such 90-day period by up to an additional 90 days, by providing a notice of such extension to the claimant before the end of the initial 90-day period.  In the event the claim is denied, the notice of the disposition of the claim shall provide the specific reasons for the denial, citations of the pertinent provisions of the Plan, and, where appropriate, an explanation as to how the claimant can perfect the claim and/or submit the claim for review.

EXH 10.4-13

EXH 10.4 Table of Contents

          (b)  Appeal.  Any Participant or Surviving Spouse who has been denied a benefit shall be entitled, upon request to the Compensation Committee, to appeal the denial of his claim.  The claimant (or his duly authorized representative) may review pertinent documents related to the Plan and in the Compensation Committee's possession in order to prepare the appeal.  The request for review, together with a written statement of the claimant's position, must be filed with the Compensation Committee no later than 60 days after receipt of the written notification of denial of a claim provided for in subsection (a).  The Compensation Committee's decision shall be made within 60 days following the filing of the request for review; provided, if special circumstances require an extension, the Compensation Committee may extend such 60-day period by up to an additional 60 days, by providing a notice of such extension to the claimant before the end of the initial 60-day period.  If unfavorable, the notice of decision shall explain the reasons for denial and indicate the provisions of the Plan or other documents used to arrive at the decision.

          (c)  Satisfaction of Claims.  Any payment to a Participant or Surviving Spouse shall to the extent thereof be in full satisfaction of all claims hereunder against the Compensation Committee, the Company, and all Affiliates, any of which may require such Participant or Surviving Spouse as a condition to such payment to execute a receipt and release therefor in such form as shall be determined by the Compensation Committee.  If receipt and release is required but the Participant or Surviving Spouse (as applicable) does not provide such receipt and release in a timely enough manner to permit a timely distribution in accordance with the general timing of distribution provisions in the Plan, the payment of any affected distribution(s) may be delayed until the Compensation Committee receives a proper receipt and release.

ARTICLE V

SOURCE OF FUNDS

     5.1  Source of Funds.

          (a)  Allocation Among Affiliates.  The obligation to pay benefits hereunder shall be the obligation of the Company and its Affiliates that participate in the Plan and whose employees are Participants entitled to benefits hereunder.  The Compensation Committee shall allocate the total liability to pay benefits under the Plan among the Company and its Affiliates that participate in the Plan in such manner and amount as the Compensation Committee in its sole discretion deems appropriate.

          (b)  General Creditors.  Each of the Company and its Affiliates shall provide the benefits described in the Plan and allocable to such entity pursuant to the terms of subsection (a) hereof from its general assets.  The Company's and Affiliates' obligations to pay benefits under the Plan constitute mere promises of the Company and its Affiliates to pay such benefits; and a Participant or Surviving Spouse shall be and remain no more than an unsecured, general creditor of the Company. 

EXH 10.4-14

EXH 10.4 Table of Contents

ARTICLE VI

ADMINISTRATIVE AND COMPENSATION COMMITTEES

     6.1  Action of Administrative Committee.

          Action of the Administrative Committee may be taken with or without a meeting of committee members; provided, action shall be taken only upon the vote or other affirmative expression of a majority of the committee members qualified to vote with respect to such action.  If a member of the committee is a Participant or Surviving Spouse, he shall not participate in any decision which solely affects his own benefit under the Plan.  For purposes of administering the Plan, the Administrative Committee shall choose a secretary who shall keep minutes of the committee's proceedings and all records and documents pertaining to the administration of the Plan.  The secretary may execute any certificate or any other written direction on behalf of the Administrative Committee.

     6.2  Rights and Duties of Administrative Committee.

          The Administrative Committee shall administer the Plan and shall have all powers necessary to accomplish that purpose, including (but not limited to) the following:

          (a)  To maintain all the necessary records of the administration of the Plan;

          (b)  To maintain records regarding Participants' and Surviving Spouses' benefits hereunder;

          (c)  To effect all disbursements approved by the Compensation Committee pursuant to the Plan;

          (d)  To delegate to other individuals or entities from time to time the performance of any of its duties or responsibilities hereunder; and 

          (e)  To hire agents, accountants, actuaries, consultants and legal counsel to assist in operating and administering the Plan.

     6.3  Rights and Duties of Compensation Committee.

          The Compensation Committee shall have the exclusive right to construe and to interpret the Plan, to decide all questions of eligibility for benefits and to determine the amount of such benefits, and its decisions on such matters shall be final and conclusive on all parties.  The Compensation Committee may establish rules for the regulation of the Plan as are not inconsistent with the terms hereof.

EXH 10.4-15

EXH 10.4 Table of Contents

     6.4  Compensation, Indemnity and Liability.

          The Compensation Committee, the Administrative Committee and their members shall serve as such without bond and without compensation for services hereunder.  All expenses of the Compensation Committee and the Administrative Committee shall be paid by the Company.  No member of either committee shall be liable for any act or omission of any other member of the committee, nor for any act or omission on his own part, excepting his own willful misconduct.  The Company shall indemnify and hold harmless the Compensation Committee, the Administrative Committee and each member thereof against any and all expenses and liabilities, including reasonable legal fees and expenses, arising out of his membership on the committee, excepting only expenses and liabilities arising out of his own willful misconduct.

     6.5  Taxes.

          If the whole or any part of any Participant's or Surviving Spouse's benefit hereunder shall become subject to any estate, inheritance, income or other tax which the Company or an Affiliate shall be required to pay or withhold, the Company and such Affiliate shall have the full power and authority to withhold and pay such tax out of any monies or other property in its hand for the account of the Participant or Surviving Spouse whose interests hereunder are so affected.  Prior to making any payment, the Company and Affiliates may require such releases or other documents from any lawful taxing authority as they shall deem necessary.

ARTICLE VII

AMENDMENT AND TERMINATION

     7.1  Amendments.

          Subject to Section 3.7(b), the Board or the Compensation Committee may amend the Plan in whole or in part at any time and from time to time.  An amendment to the Plan may modify its terms in any respect whatsoever; provided, the Board may not amend the Plan to decrease the level of benefits which a Participant or Surviving Spouse would be entitled to receive under Article III, if he terminated employment with the Company and all Affiliates on the later of (i) the date such amendment is adopted, or (ii) the date such amendment is effective.

     7.2  Termination of Plan.

          Subject to Section 3.7(b), the Board shall have the right to discontinue and terminate the Plan at any time, for any reason; provided, such discontinuance or termination shall not have the effect of decreasing the level of benefits which a Participant would be entitled to receive under Article III, if he terminated employment with the Company and all Affiliates on the later of (i) the date the resolution to terminate and discontinue the Plan is adopted, or (ii) the date the termination and discontinuance is effective.  Termination and discontinuance of the Plan shall be binding on all Participants and Surviving Spouses.

EXH 10.4-16

EXH 10.4 Table of Contents

ARTICLE VIII

MISCELLANEOUS

     8.1  Taxation.

          It is the intention of the Company and Affiliates that the benefits payable hereunder shall not be deductible by the Company or Affiliates nor taxable for federal income tax purposes to Participants or Surviving Spouses until such benefits are paid by the Company or Affiliates to such Participants or Surviving Spouses.  When such benefits are so paid, it is the intention of the Company and Affiliates that they shall be deductible by the Company and Affiliates under Code Section 162.

     8.2  No Employment Contract.

          Nothing herein contained is intended to be nor shall be construed as constituting a contract arrangement between the Company or any Affiliate and any Participant to the effect that the Participant will be employed or engaged as a consultant by the Company or any Affiliate for any specific period of time.

     8.3  Headings.

          The headings of the various articles and sections in the Plan are solely for convenience and shall not be relied upon in construing any provisions hereof.  Any reference to a section shall refer to a section of the Plan unless specified otherwise.

     8.4  Gender and Number.

          Use of any gender in the Plan will be deemed to include all genders when appropriate, and use of the singular number will be deemed to include the plural when appropriate, and vice versa in each instance.

     8.5  Successors.

          The Company and the Affiliates shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company and/or the Affiliates to expressly assume their obligations hereunder in the same manner and to the same extent that the Company and the Affiliates would be required to perform if no such succession had taken place.

     8.6  Legal Expenses.

          The Company shall pay or reimburse a Participant for all fees and disbursements of counsel, if any, incurred by the Participant in seeking to obtain or enforce any right or benefit provided by the Plan.

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EXH 10.4 Table of Contents

     8.7  Assignment of Benefits.

          The right of a Participant or any other person to receive payments under the Plan shall not be assigned, transferred, pledged or encumbered, except by will or by the laws of descent and distribution and then only to the extent permitted under the terms of the Plan.

     8.8  Legally Incompetent.

          The Administrative Committee, in its sole discretion, may direct that payment be made to an incompetent or disabled person, whether because of minority or mental or physical disability, to the guardian of such person or to the person having custody of such person, without further liability either on the part of the Company or the Affiliates for the amount of such payment to the person on whose account such payment is made.

     8.9  Governing Law.

          The Plan shall be construed, administered and governed in all respects in accordance with applicable federal law and, to the extent not preempted by federal law, in accordance with the laws of the State of Georgia.  If any provisions of this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

     IN WITNESS WHEREOF, the Company has caused the Plan to be executed by its duly authorized officer as of the day and year first above written.

	
 
	
AFLAC INCORPORATED

	 	 	 
	 	 	 
	
 
	
By:
	
/s/ Joey M. Loudermilk

	
	
	

	 	 	 
	
 
	
Title:
	
Corporate Secretary

	
	
	

 

EXH 10.4-18

EXH 10.4 Table of Contents

FIRST AMENDMENT TO THE AFLAC INCORPORATED

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as amended and restated effective January 1, 2001)

     This First Amendment to the AFLAC Incorporated Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2001, is adopted by AFLAC Incorporated (the "Company"), effective as of September 1, 2002.

W I T N E S S E T H

     WHEREAS, the Company maintains the AFLAC Incorporated Supplemental Executive Retirement Plan (the "Plan") for the benefit of certain key management and highly compensated employees; and

     WHEREAS, pursuant to Section 7.1 of the Plan, the Compensation Committee of the Board of Directors of the Company (the "Committee") has the right to amend the Plan at any time; and

     WHEREAS, effective September 1, 2002, the Committee desires to amend the Plan to change the latest time as of which a participant may elect to receive his annual retirement benefit in the form of a joint and survivor annuity;

     NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended to read as follows:

	
 
	
1.
	
Effective September 1, 2002, Section 3.6(c) of the Plan is hereby amended by deleting such 

	
section in its entirety and substituting in lieu thereof the following:

	 	 	 	 
	
 
	 	
(c)
	
Optional Form of Payment.  A Participant may elect, not later than 3 months before his

	
 
	
termination of employment with the Company and all Affiliates, to have his Annual Retirement Benefit paid in the form of a Joint and 50% Survivor Annuity, which shall be the Actuarial Equivalent of the Participant's Annual Retirement Benefit payable in the form of a Single Life Annuity.  Notwithstanding any such election, if a Participant who has elected a Joint and 50% Survivor Annuity is not married on the date of his termination of employment, his benefit shall be paid in the form of a Single Life Annuity.

	 	 	 	 
	
 
	
2.
	
Except as amended herein, the Plan shall continue in full force and effect.

     IN WITNESS WHEREOF, the Company has caused this First Amendment to the Plan to be executed on the date shown below, but effective as of September 1, 2002.

	 	
AFLAC INCORPORATED

	 	 
	 	
By:
	
/s/ Daniel P. Amos

	
	
	

	 	 	 
	 	
Date:
	
April 7, 2003

	
	
	

 

EXH 10.4-19

EXH 10.4 Table of Contents

SECOND AMENDMENT TO THE AFLAC INCORPORATED

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as amended and restated effective January 1, 2001)

     This Second Amendment to the AFLAC Incorporated Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2001, is adopted by AFLAC Incorporated (the "Company"), effective as of April 1, 2003.

W I T N E S S E T H:

     WHEREAS, the Company maintains the AFLAC Supplemental Executive Retirement Plan (the "Plan") for the benefit of certain key management and highly compensated employees; and 

     WHEREAS, pursuant to Section 7.1 of the Plan, the Compensation Committee of the Board of Directors of the Company (the "Committee") has the right to amend the Plan at any time; and

     WHEREAS, the Committee desires to amend certain provisions of the Plan to provide  (i) an additional approval process for Contiguous Consulting Agreements, (ii) a plan benefit for participants who terminate with at least 15 years of employment, and (iii) lump-sum distributions in certain circumstances;  

     NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended as follows:

	
1.
	 	 	
Section 1.7 of the Plan is hereby amended by deleting said section in its entirety and by

	
substituting in lieu thereof the following:

	 	 	 	 	 	 
	 	 	 	
1.7
	
Benefit Commencement Date means (i) for purposes of Normal, Delayed, Early and

	 	
Reduced Early Retirement Benefits, the first of the calendar month coinciding with or next following the date on which a Participant becomes entitled to receive or begin receiving an Annual Retirement Benefit under Section 3.2, 3.3, 3.4 or 3.5, respectively; and (ii) for purposes of a Participant's pre-retirement, termination benefit, as described in Section 3.5A, the date the Participant attains age 55.

	 	 	 	 	 	 
	
2.
	 	 	
Section 1.15 of the Plan is hereby amended by deleting said section in its entirety and by

	
substituting in lieu thereof the following:

	 	 	 	 	 	 
	 	 	 	
1.5
	
Contiguous Consulting Agreement means a written consulting agreement between the

	 	 	
Company (and/or an Affiliate) and a Participant that (i) commences immediately upon the Participant's termination of employment with the Company and all Affiliates, (ii) obligates the Participant to perform consulting services for the Company or an Affiliate for a specified period, and (iii) is approved by the Company's Chief Executive Officer (to the extent permitted by applicable law) or the Compensation Committee.

	 	 	 	 	 

 

EXH 10.4-20

EXH 10.4 Table of Contents

	
3.
	 	 	
Article III of the Plan is hereby amended by adding thereto, immediately after Section 3.5,

	
a new Section 3.5A as follows:

	 	 	 	 	 	 
	 	 	 	
3.5A
	 	
Termination.

	 	 	 	 	 	 
	 	 	 	 	 	
If a Participant's employment with the Company and all Affiliates terminates and 

	 	 	
any Contiguous Consulting Agreement ends, for a reason other than Cause or death, before he attains age 55 but after he has completed 15 Years of Employment, the Participant shall be entitled to an Annual Retirement Benefit in an amount equal to the difference between the amount determined under subsection (i) and the amount determined under subsection (ii), as follows:

	 	 	 	 	 	 
	 	 	 	 	 	
(i)
	
30% of the Participant's Average Annual Compensation; and

	 	 	 	 	 	 
	 	 	 	 	 	
(ii)
	
the Participant's Pension Plan Benefit.

	 	 	 	 	 	 
	
4.
	 	 	
Section 3.6(b) of the Plan is hereby amended by deleting said section in its entirety and by

	
substituting in lieu thereof the following:

	 	 	 	 	 	 
	 	 	 	 	 	
(b)
	
Normal Form of Payment.  Except as provided in subsection (c) or (d)

	 	 	
hereof, a Participant's Annual Retirement Benefit shall be paid in the form of a Single Life Annuity, commencing on the Participant's Benefit Commencement Date.

	 	 	 	 	 	 
	
5.
	 	 	
Section 3.6(d) is hereby amended by deleting said subsection in its entirety and by

	
substituting in lieu thereof the following:

	 	 	 	 	 	 
	 	 	 	 	 	
(d)
	
Single-Sum Payment.  The Company's Chief Executive Officer (to the extent

	 	 	
permitted by applicable law) or the Compensation Committee, in his or its sole discretion, may determine to pay a Participant's Annual Retirement Benefit in a single-sum payment rather then the normal form of payment or any optional form of payment the Participant may select; provided, in no event may a Participant elect a single-sum payment.  The single-sum payment shall be the Actuarial Equivalent of the Participant's Annual Retirement Benefit expressed in the form of a Single Life Annuity.

	 	 	 	 	 	 
	
6.
	 	 	
Section 3.6 is hereby amended by adding thereto, immediately following subsection (d)

	
thereof, subsection (e) [formerly subsection (d)] as follows:

	 	 	 	 	 	 
	 	 	 	 	 	
(e)
	
Cash Payments.  All benefit payments hereunder shall be made in cash.

	 	 	 	 	 	 
	
7.
	 	 	
Except as amended herein, the Plan shall continue in full force and effect.

     IN WITNESS WHEREOF, AFLAC Incorporated has caused this Second Amendment to the Plan to be executed on the date shown below, but effective as of April 1, 2003.

	 	
AFLAC INCORPORATED

	 	 
	 	
By:
	
/s/ Daniel P. Amos

	
	
	

	 	
Date:
	
May 5, 2003

	
	
	

EXH 10.4-21afl10k03exh10lake

AFLAC Incorporated Form 10-K

EXHIBIT 10.6

STATE OF GEORGIA,

COUNTY OF MUSCOGEE:

EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made and entered into as of the 1st day of January, 2002, by and between AFLAC Incorporated, a Georgia corporation, hereinafter referred to as "Corporation," and CHARLES D. LAKE, II, hereinafter referred to as "Employee;"

W I T N E S S E T H    T H A T:

     WHEREAS, Corporation and Employee desire to enter into an Employment Agreement and to set forth the terms and conditions of Employee's employment as an executive employee by Corporation as its Deputy President of AFLAC Japan;

     NOW, THEREFORE, the parties, for and in consideration of the mutual covenants and agreements hereinafter contained, do contract and agree as follows, to-wit:

          1.  Purpose and employment.  The purpose of this Agreement is to define the relationship between Corporation as an employer and Employee as an employee and Deputy President of AFLAC Japan.  (This Agreement is further made in contemplation of Employee becoming President of AFLAC Japan in the future.  Unless modified by the mutual consent of the parties hereto, this Agreement shall continue to govern the relationship between the parties in all respects.)

          2.  Duties.  Employee agrees to provide executive management services as Deputy President of AFLAC Japan (or as President of AFLAC Japan if so designated) to Corporation and its subsidiaries and affiliates on a full-time and exclusive basis; provided, however, nothing shall preclude Employee from engaging in charitable and community affairs or managing his own or his family's personal investments.

          3.  Performance.  Employee agrees to devote all necessary time and his best efforts in the performance of his duties on behalf of Corporation and its subsidiaries and affiliates.

          4.  Term.  The term of employment under this Agreement shall begin January 1, 2002, and shall continue until December 31, 2007, unless extended or sooner terminated as hereinafter provided. 

          5.  Base salary.  For all the services rendered by Employee, Corporation shall pay Employee a base salary of Three Hundred Thousand Dollars ($300,000.00) per annum, said salary shall be payable in accordance with Corporation's normal payroll procedures.  Said salary shall increase to Three Hundred Thirty-three Thousand Three Hundred and Thirty-three Dollars ($333,333.00) per annum effective January 2, 2003.  Commencing in 2004, Employee's base salary may be increased annually during the term of this Agreement and any extensions hereof as determined by the Chief Executive Officer.  Further, Employee shall be entitled to continue to receive an annual cost of living allowance as heretofore provided.

EXH 10.6-1

 

              Deferred compensation.  The Corporation shall also provide Employee with a deferred compensation arrangement (which shall be in lieu of Employee's participation in the Corporation's Supplemental Executive Retirement Plan or AFLAC Japan's retirement program.)  The Corporation shall contribute One Million Dollars ($1,000,000) to a deferred compensation account effective January 1, 2003. Employee shall vest in the market value of the deferred compensation account at twenty percent (20%) per year commencing December 31, 2003 (with the remainder vesting on December 31 each year until fully vested.)

          6.  Adjustments to base salary.  Commencing in 2004, Corporation and Employee may, from time to time, reflect increases in Employee's base salary as provided for in Paragraph 5 by entering the change on the "Schedule of Compensation," as shown by the form attached hereto as Exhibit "A" and made a part hereof. If an increase in compensation is entered on said Schedule and duly signed by the proper officers of Corporation and by Employee, said entry shall constitute an amendment to this Employment Agreement as of the date of said entry and shall supersede the base salary provided for in Paragraph 5 and any other increases in Employee's base salary previously entered on said Schedule.

          7.  Management Incentive Plan.  In addition to the base salary paid to Employee in accordance with Paragraph 5, Corporation shall, for each calendar year of Employee's employment by Corporation, beginning with the calendar year 2002, continue to pay Employee, as performance bonus compensation, an amount determined each year under Corporation's current Management Incentive Plan (short-term Incentive Program) with a target level based on at least sixty-five percent (65%) of base salary.  For 2003, Employee's MIP target bonus shall be eighty-five (85%) percent of base pay.  Nothing in this paragraph shall preclude Employee from receiving additional discretionary bonuses approved by the Chief Executive Officer or the Board.

           8.  Employee benefits.  Employee shall be eligible to participate with other employees of the Corporation in all fringe benefit programs applicable to employees generally which may be authorized and adopted from time to time by the Board, including without limitation:  a qualified pension plan, a profit sharing plan, a disability income or sick pay plan, a thrift and savings plan, an accident and health plan (including medical reimbursement and hospitalization and major medical benefits), and a group life insurance plan.  While Employee resides outside of the United States, Employee shall participate in the AFLAC Compensation Program for Officers on Overseas Assignment, including reimbursement of apartment lease payments and participation in the Corporation's tax equalization program for expatriates, except to the extent otherwise provided for in this agreement.  In addition, Corporation shall furnish to Employee such other "fringe" or employee benefits as are provided to key executive employees of Corporation and such additional employee benefits which the Compensation Committee of the Board shall determine to be appropriate to Employee's duties and responsibilities including, without limitation, reimbursement of legal and accounting expenses incurred by Employee in connection with the preparation of his employment or other agreements with Corporation and any expenses for legal, accounting or financial services incurred by Employee in connection with his employment.

          9.  Stock option plans.  Employee shall be awarded stock options to purchase Corporation's common stock under Corporation's Stock Option Plans equal to $2.5 million of fair market value of the Corporation's stock as established by the following procedures: The number of options will be determined based on the average of the high and low price of AFLAC Incorporated stock each day for the last ten business days of December 2002.  As of December 31, 2002, (subject to approval by the Compensation Committee of the Board of Directors) Employee shall be granted the number of options determined using the ten-day average price.  The strike price of the grant will be determined on December 31, 2002.  Said options shall vest 20% at the end of each year of service for the five-year period ended December 31, 2007.

EXH 10.6-2

 

          10.  Working facilities and expenses.  Employee shall be provided with an office, books, periodicals, stenographic and technical help, ground and air transportation, and such other facilities, equipment, supplies and services suitable to his position and adequate for the performance of his duties.  The Corporation shall pay Employee's fees and dues in such social and country clubs, civic clubs and business societies and associations as shall be appropriate in facilitating Employee's job performance and in the best interest of Corporation.  The Corporation shall also pay all appropriate business liability insurance and any business licenses and fees pertaining to the services rendered by Employee hereunder.

          Employee is encouraged and is expected, from time to time to incur reasonable expenses for promoting the business of Corporation, including expenses for social and civic club memberships and participation, entertainment, travel and other activities associated with Employee's duties.  The cost of all such activities shall be the expenses of Corporation unless the Compensation Committee of the Board shall determine in advance that any such expense of Employee should be paid by Employee.

          11.  Vacation.  Employee shall continue to be entitled to his vacation time with pay during each calendar year in accordance with Corporation's vacation policy for senior executive employees.  In addition, Employee shall be entitled to such holidays as Corporation shall recognize for its employees generally.

          12.  Sickness and total disability.  Employee's absence from work because of sickness or accident (not resulting in Employee becoming "totally disabled," as that term is hereinafter defined) shall not result in any adjustment in Employee's compensation or other benefits under this Agreement.

          Should Employee become totally disabled as a result of sickness or accident and unable to adequately perform his regular duties prescribed under this Agreement, his base salary (which shall continue to be adjusted as provided for in Paragraph 5), together with incentive bonuses under the Corporation's Management Incentive Plan and his participation in Corporation's employee benefit programs and retirement plan shall continue without reduction except as hereinafter provided, during the continuance of such disability of a period not exceeding the earlier of (1) the end of the term of this Agreement or any extension hereof or (2) a period of one and one-half (1-1/2) years (547 calendar days) for each continuous disability.  Payments pursuant to this paragraph 12 shall be reduced by any amounts paid to Employee during any such period of disability from time to time under any disability programs, plans or policies maintained by Corporation, its subsidiaries or affiliates.

          Should Employee's total disability continue for a period beyond the end of the term of this Agreement or in excess of 547 calendar days, this Agreement shall, at the end of such period which first occurs, be automatically terminated.  If, however, prior to such time, Employee's total disability shall have ceased and he shall have resumed the adequate performance of his duties hereunder, this Agreement shall continue in full force and effect and Employee shall be entitled to continue his employment hereunder and to receive his full compensation and other benefits as though he had not been disabled; provided, however, unless Employee shall adequately perform his duties hereunder for a continuous period of at least sixty (60) calendar days following a period of total disability before Employee again becomes totally disabled, he shall not be entitled to start a new 547-day period under this paragraph, but instead may only continue under the remaining portion of the original 547-day period of total disability.  In the event Employee shall not adequately perform his duties hereunder for a continuous period of at least sixty (60) calendar days following a period of total disability, the running of the original 547-day period shall cease during the time of Employee's adequate performance of his duties hereunder before Employee again becomes totally disabled.

EXH 10.6-3

          For the purpose of this Agreement, the term "totally disabled" or "total disability" shall mean Employee's inability to adequately perform his executive and management duties hereunder on account of accident or illness.  It is understood that Employee's occasional sickness or other incapacity of short duration may not result in his being or becoming "totally disabled;" however, such illness or incapacity could constitute Employee's being or becoming "totally disabled" if such illness or incapacity is prolonged or recurring.

          13.  Termination of employment.

	 	 	
A.  Termination by Corporation.  The Corporation's Chief Executive Officer may terminate this

	
Agreement, at any time, with or without "good cause" ("good cause" being hereinafter defined), by giving at least sixty (60) days' written notice to Employee of its intention to terminate Employee's employment without "good cause" or at least five (5) days' written notice to Employee of its intention to terminate Employee's employment for "good cause;" provided, however, Corporation may, at its election, terminate Employee's actual employment (so that Employee no longer renders services on behalf of Corporation) at any time during said sixty (60) day or five (5) day period; and,

	 	 	 	 
	 	 	 	
(1)  In the event such termination is for "good cause," Corporation shall be obligated only to:

	 	 	 	 
	 	 	
(a)  pay Employee his base salary as provided for in Paragraph 5 of this Agreement up to the termination date stated in said written notice; provided, however, if Corporation does not elect to terminate Employee's employment during said five (5) day period, but Employee, after receiving such notice of termination from Corporation, elects to leave the employ of Corporation prior to the end of said five (5) day period without the approval of Corporation, then Corporation shall pay said base salary only up to the date on which Employee actually terminates his employment;

	 	 	 	 
	 	 	
(b)  pay Employee any performance bonus due Employee under Paragraph 7 of this Agreement for the period ending on the termination date stated in said written notice or on such earlier date of Employee's actual termination of his employment prior to the end of said (5) day period if such termination is without the approval of Corporation.  The amount of said bonus, if any, shall be calculated on a prorata basis, using the number of days Employee was actually employed during such period, and the amount so calculated shall be paid to Employee within a reasonable time after the end of Corporation's fiscal year in which written notice of Employee's termination is given;

	 	 	 	 
	 	 	
(c)  continue to honor all fully vested stock options, subject to the terms thereof, granted to Employee prior to the termination date stated in said written notice or prior to such earlier date of Employee's actual termination of his employment prior to the end of said five (5) day period if such termination is without the approval of the Corporation;

	 	 	 	 
	 	 	
(d)  continue to pay all of Employee's fringe and other employee benefits as provided for in this Agreement up to the termination date stated in said written notice or up to such earlier date of Employee's actual termination of his employment prior to the end of said five (5) day period if such termination is without the approval of the Corporation.

	 	 	 	 
	 	 	
(e)  For purposes of this subparagraph (1) and paragraph 18 hereof, "good cause" shall mean:  (i) the willful and deliberate failure of Employee to substantially perform his executive and management duties hereunder for a continuous period of more than sixty (60) days for reasons other than Employee's sickness, injury or disability; (ii) the willful and deliberate conduct by Employee which is intended by Employee to cause, and which does in fact result in substantial injury or damage to Corporation; or (iii) the conviction or plea of guilty by Employee of a felony crime involving moral turpitude.

EXH 10.6-4

 

	 	 	 	 
	 	 	 	
(2)  In the event such termination is without "good cause," as defined in subparagraph (1)(e) of this

	
paragraph and, if applicable, subject to the terms of paragraph 18, Corporation shall be obligated to:

	 	 	 	 
	 	 	
(a)  pay employee his base salary as provided for in paragraph 5 of this Agreement up to the end of the scheduled term of this Agreement;

	 	 	 	 
	 	 	
(b)  pay employee his performance bonus compensation as provided for in paragraph 7 of this Agreement up to the end of the scheduled term of this Agreement;

	 	 	 	 
	
 
	 	
(c)  continue to honor all stock options, subject to the terms thereof, granted to Employee prior to the termination date stated in said written notice, all of said options to be or become fully vested as of the termination date stated in said written notice;

	 	 	 	 
	 	 	
(d)  continue to pay or provide to Employee all of the retirement, health, life and disability benefits, as are provided for in this Agreement or under any programs, plans or policies covering Employee at the time of any such notice of termination, up to the end of the scheduled term of this Agreement.

	 	 	 	 
	 	 	
B.  Termination by Employee.  Employee may terminate this Agreement, at any time by giving at least 

	
sixty (60) days' written notice to Corporation of his intention to terminate his employment;

	 	 	 	 
	 	 	 	
(1)  in the event such termination by Employee shall be without "good reason" (as defined in paragraph 18 hereof) and with a bona fide intent to retire or to work or engage in a business or activity which is not in competition with Corporation or any of its subsidiaries or affiliates, Corporation shall be obligated to:

	 	 	 	 
	 	 	 	 
	 	 	
(a)  pay Employee his base salary due him under paragraph 5 of this Agreement up to the termination date stated in said written notice;

	 	 	 	 
	 	 	
(b)  pay Employee any performance bonus compensation due him under paragraph 7 of this Agreement

	
for the period ending on the termination date stated in said written notice.  The amount of such performance bonus, if any shall be calculated on a prorata basis, using the number of days Employee was actually employed by Corporation during such year of termination; and the amount so calculated shall be paid to Employee within a reasonable time after the end of Corporation's fiscal year in which Employee's notice of termination is given; continue to honor all stock options, subject to the terms thereof, granted to Employee which are fully vested prior to the termination date stated in said written notice.

	 	 	 	 
	 	 	 	
(2)  In the event such termination by Employee shall be for "good reason"  (as defined in paragraph

	
18 hereof), the Corporation shall be obligated to provide Employee with the payments, benefits and rights specified in subparagraphs A.(2)(a)-(c) of this paragraph 13 hereof.  

	 	 	 	 
	 	 	 	
(3)  In the event such termination by Employee shall be without "good reason" (as defined in

	
paragraph 18 hereof) and with the intention or purpose to work or invest, directly or indirectly, in a business or activity which is in competition, directly or indirectly, with Corporation or any of its subsidiaries or affiliates or, irrespective of Employee's intention at the time of his termination, if Employee shall violate his covenant not to compete under paragraph 15 or the requirements of paragraph 16, then Corporation shall not be obligated to make or provide any further payments or benefits to Employee under this Agreement except as herein provided in this subparagraph.

EXH 10.6-5

	

 
	 	
(a)  Subject to Corporation's rights under paragraphs 15 and 16, Corporation shall pay Employee his base salary due him under paragraph 5 of this Agreement up to the termination date stated in said written notice;

	 	 	 	 
	
 
	 	
(b)  Subject to Corporation's rights under paragraphs 15 and 16 hereof, Corporation shall continue to honor all stock options, subject to the terms thereof, granted to Employee which are fully vested prior to the termination date stated in said written notice;

	 	 	 	 
	 	 	
C.   Termination while disabled.  If Employee is totally disabled at the time any such notice of

	
termination is given, then notwithstanding the provisions of this paragraph 13, Corporation shall nevertheless continue to pay Employee, as his sole compensation hereunder, the compensation and other benefits for the remaining period of Employee's total disability as provided for in paragraph 12 hereinabove.  It is understood that in no event shall such disabled Employee be entitled to compensation under this paragraph 13 in addition to the continuation of his compensation under paragraph 12.

	 	 	 	 
	 	 	
D.   Cooperation after notice of termination.  Following any such notice of termination, Employee shall

	
fully cooperate with Corporation in all matters relating to the winding up of his pending work on behalf of Corporation and the orderly transfer of any such pending work to other employees of Corporation as may be designated by the Chief Executive Officer; and to that end, Corporation shall be entitled to such full-time or part-time services of Employee as Corporation may reasonably require during all or any part of the sixty (60) day period following any such notice of termination.

          14.  Death of Employee.  In the event of Employee's death during the term of this agreement or any extension hereof, this Agreement shall terminate immediately, and Employee's estate shall be entitled to receive terminal pay in an amount equal to the amount of Employee's base salary and any performance bonus compensation actually paid by Corporation to Employee during the last thirty-six (36) months of his life, said terminal pay to be paid in thirty-six (36) equal monthly installments beginning on the first day of the month next following the month during which Employee's death occurs.  Terminal pay as herein provided for in this paragraph shall be in addition to amounts otherwise receivable by Employee or his estate under this or any other agreements with Corporation or under any employee benefits or retirement plans established by Corporation and in which Employee is participating at the time of his death.  In addition, Corporation shall honor all stock options, subject to the terms thereof, granted to Employee prior to his death and Employee or his Estate shall, if not otherwise vested, become fully vested in said options as of the date of Employee's death.  

          15.  Agreement not to compete.  

               It is specifically agreed that, in the event Employee shall voluntarily terminate his employment without "good reason" (as defined in Paragraph 18) or be terminated by Corporation for "good cause" (as defined in Paragraph 13) Employee shall not work for a period of two (2) years from the date of such termination, as a manager, officer, owner, partner or employee or render any services as a consultant or advisor or engage or invest, directly or indirectly, in any activity which is in competition with the business of the Corporation, its subsidiaries or affiliates within the United States or Japan.  Provided, however it is agreed that Employee may invest in the publicly traded securities of any corporation, partnership or trust which is in competition with Corporation so long as such investment does not exceed three percent (3%) of such securities at any time.  It is specifically agreed that if, after Employee's termination of employment, Employee engages in any such prohibited activity at any time during said two year period, Corporation shall, in addition to any other rights it may have under this contract and applicable law be entitled to injunctive relief or, if the Corporation shall so elect, (due to the difficulty of determining damages) be entitled to liquidated damages in the amount of One Million Dollars ($1,000,000) which Employee agrees to promptly pay to Corporation upon demand.  

EXH 10.6-6

 

          16.  Nondisclosure of trade secrets and confidential information.  Employee agrees to protect the business interest of Corporation, its subsidiaries and affiliates, and not to disclose any trade secrets, confidential information or any organizational, operating, marketing, product design, or business know-how which Employee has access to or knowledge of as a result of his employment by Corporation.  It is specifically agreed that if, at any time during the term of this Agreement and for a period of two (2) years after the date of employee's termination of employment with Corporation for any reason, Employee shall violate the provisions of this paragraph 16, Corporation shall, in addition to any rights it may have under this contract and applicable law, be entitled to liquidated damages of One Million Dollars ($1,000,000) which Employee agrees to promptly pay Corporation upon demand.  It is understood and agreed that Corporation's remedies under this paragraph 16 shall be separate and in addition to the remedies provided to Corporation under paragraph 15 hereof.  It is also understood and agreed that, notwithstanding the foregoing two (2) year period, Employee shall not use or disclose any written confidential information or any policyholder lists at any time or times hereafter, except in the performance of Employee's obligations to the Corporation.

          17.  Right to acquire insurance.  If Employee shall terminate his employment hereunder for any reason other than death, he may, at his election, acquire any insurance policies upon his life owned by the Corporation by giving written notice of his election to Corporation within ninety (90) days after his termination of employment.  Such policies shall be transferred to the Employee upon his payment to Corporation of the then interpolated terminal reserve value of said insurance.  In the event any policies transferred to Employee as herein provided shall not have an interpolated terminal reserve value, then the amount to be paid by Employee shall be its then fair market value.

          18.  Change in control.

	 	 	 	 
	 	 	
A.  In general.  In the event there is a Change in Control (as defined in this paragraph) of Corporation,

	
this Agreement shall, in order to help eliminate the uncertainties and concerns which may arise at such time, be automatically extended upon all of the same terms and provisions contained herein, for an additional period of three (3) years, beginning on the first day of the month during which such Change in Control shall occur.

	 	 	 	 
	 	 	
B.  Notwithstanding the term of subparagraph A(2) and (B)(2) of Paragraph 13, and in lieu of the

	
obligations of the Corporation under such paragraph, if, after a Change in Control Employee's employment is terminated by Corporation without "good cause" (as defined in paragraph 13), or is terminated by Employee for "good reason" (as defined in paragraph 18), any such termination by Corporation to be made only in accordance with the requirements specified by paragraph 13.A, Employee shall be entitled to the following:

	 	 	 	 
	 	 	 	
(1)  The Corporation shall pay Employee's full base salary to Employee through the date of

	
termination stated in Corporation's written notice required pursuant to paragraph 13.A hereof (hereinafter in this paragraph the "Termination Date") at the rate in effect on the date such notice is given and, additionally, shall pay Employee all compensation and benefits payable to Employee under the terms of any compensation or benefit plan, program or arrangement maintained by the Corporation during such period through the Termination Date.

	 	 	 	 
	 	 	 	
(2)  The Corporation shall pay Employee all compensation and benefits due Employee under

	
Corporation's retirement, insurance and other compensation or benefit plans, programs of arrangements as such payments become due.  The amount of such compensation and benefits shall be determined under, and paid in accordance with, Corporation's retirement, insurance and other compensation or benefit plans, programs and arrangements.

	 	 	 	 

EXH 10.6-7

 

	 	 	 	
(3)  In lieu of any further salary payments to Employee for periods subsequent to the Termination

	
Date, the Corporation shall pay to Employee, immediately after the Termination Date, a lump sum severance payment, in cash, equal to three times the sum of (i) Employee's annual base salary in effect immediately prior to the Change in Control and (ii) the higher of the amount paid to Employee pursuant to the Corporation's Management Incentive Plan (or any successor plan thereto) for the year preceding the year in which the Termination Date occurs or paid in the year preceding the year in which the Change in Control occurs.

	 	 	 	 
	 	 	 	
(4)  The Corporation shall pay to Employee, immediately after the Termination Date, a lump sum

	
amount, in cash, equal to a prorata portion (based on the number of days Employee is an employee during the year in which the Termination Date occurs) of the aggregate value of the maximum annual target amount of all contingent incentive compensation awards to Employee for all uncompleted periods under the Corporation's Management Incentive Plan (or successor plan thereto).

	 	 	 	 
	 	 	 	
(5)  For a thirty-six (36) month period after the termination date, the Corporation shall provide

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

	 	 	 	 
	 	 	
C.   In addition to the payments provided for in subparagraph B of this paragraph 18, in the event that

	
after a Change in Control Employee's employment by the Corporation is terminated by the Corporation without "good cause" or by Employee for "good reason," the Corporation shall continue to honor all stock options granted to Employee (subject to the terms of such options) prior to the Termination Date, and all stock options granted to Employee prior to the Termination Date shall become fully vested and exercisable as of the Termination Date.

	 	 	 	 

 

EXH 10.6-8

 

	 	 	
D.   Notwithstanding any other provisions of this Agreement in the event that any payment or benefit

	
received or to be received by Employee in connection with a Change in Control or the termination of Employee's employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Corporation, any person whose actions result in a Change in Control or any person affiliated with the Corporation or such person) (all such payment and benefits being hereinafter called "Total Payments") would not be deductible (in whole or in part) by the Corporation, an affiliate or person making such payment or providing such benefit as a result of section 280G of the Internal Revenue Code of 1986 (the "Code") then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payment provided by reason of Section 280G of the Code in such other plan, arrangement or agreement), adjustments in such payments shall be made as follows:  (1) the cash payments provided pursuant to subparagraph B(3) and B(4) of this paragraph 18 shall first be reduced (if necessary, to zero), and (2) benefits provided under subparagraph B(5) of this paragraph 18 shall next be reduced.  For purposes of this limitation (i) no portion of the Total Payments the receipt or enjoyment of which Employee shall have effectively waived in writing prior to the date of termination of employment shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which in the opinion of tax counsel selected by the Corporation's independent auditors and reasonably acceptable to Employee does not constitute a "parachute payment" within the meaning of Section 280G(b) (2) of the Code, including by reason of Section 280G(b) (4) (A) of the Code, (iii) the payments and benefits be reduced only to the extent necessary so that the Total Payments (other than those referred to in clauses (i) or (ii) in their entirety constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b) (4) (B) of the Code or are otherwise not subject to disallowance as deductions, (iv) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Corporation's independent auditors in accordance with the principles of Section 280G(d) (3) (4) of the Code.  In no event shall the Corporation's obligation to continue to honor all stock options granted to Employee prior to the Termination Date nor the vesting of stock options in accordance with Paragraph 18.C. hereof be affected by this Paragraph 18.D.

	 	 	 	 
	 	 	
E.   Definitions.

	 	 	 	 
	 	 	 	
(1)  "Beneficial Owner" has the meaning provided in Rule 13d-3 under the Exchange Act.

	 	 	 	 
	 	 	 	
(2)  "Change in Control" means the occurrence of either (a), (b), (c) or (d), as hereinafter set forth:

	 	 	 	 
	
 
	 	
(a)  any person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities beneficially owned by such person any securities acquired directly from the Corporation, subsidiaries or its affiliates) representing 30% or more of the combined voting power of the Corporation's then outstanding securities; or

	 	 	 	 
	 	 	
(b)  during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clause (a), (c) or (d) of this subparagraph) whose election by the Board or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds (2/3) of the members of the Board (or, if Board nominations are not voted on by the full Board, members of the Board Committee voting on such nominations) then still in office who either were members of the Board at the beginning of the period or whose election or nomination for elections was previously so approved, cease for any reason to constitute a majority of the Board; or

EXH 10.6-9

 

	 	 	 	 
	
 
	 	
(c)  the shareholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities or the surviving trustee or other fiduciary holding securities under an employee benefit plan of the Corporation, at least 75% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no person acquires more than 30% of the combined voting power of the Corporation's then outstanding securities; or

	 	 	 	 
	 	 	
(d)  the shareholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all the Corporation's assets.

	 	 	 	 
	 	 	 	
(3)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

	 	 	 	 
	 	 	 	
(4)  "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and

	
used in Section 13(d) and 14(d) of the Exchange Act; however, a person shall not include (a) the Corporation or any of its subsidiaries, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the corporation or any of its subsidiaries, (c) an underwriter temporarily holding securities pursuant to an offering of such securities, or (d) a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation.

	 	 	 	 
	 	 	 	
(5)  "Good reason" shall mean the termination of employment by Employee upon the occurrence of

	
any one or more of the following events:

	 	 	 	 
	 	 	
(a)  Any breach by Corporation of the terms and conditions of this Agreement affecting Employee's salary and bonus compensation, any employee benefit, stock options or the loss of any of Employee's titles or positions with Corporation;

	 	 	 	 
	 	 	
(b)  A significant diminution of Employee's duties and responsibilities;

	 	 	 	 
	 	 	
(c)  the assignment to Employee of any duties inconsistent with or significantly different from his duties and responsibilities existing at the 

time of a Change in Control.

	 	 	 	 
	 	 	
(d)  Any purported termination of Employee's employment by Corporation other than as permitted by this Agreement;

	 	 	 	 
	
 
	 	
(e)  The relocation of Corporation's principal office to any place beyond twenty-five (25) miles from the current principal office of Corporation in Columbus, Georgia;

	 	 	 	 
	 	 	
(f)  The failure of any successor to Corporation to expressly assume and agree to discharge Corporation's obligations to Employee under this Agreement as extended under this paragraph, in form and substance satisfactory to Employee.

EXH 10.6-10

 

	 	 	 	 
	 	 	
F.  Continuation of compensation and benefits.  If Corporation shall attempt to terminate Employee's employment at any time after a change in Control and such termination is in good faith disputed by Employee, Corporation shall continue to pay Employee all of his compensation and benefits provided for in this Agreement until the dispute is finally resolved, either by mutual written agreement or by final judgment, order or decree of a court of competent jurisdiction.

          19.  No requirement to seek employment and no offset.  Corporation agrees that, if Employee's employment is terminated by Corporation during the term of this Agreement or by Employee for "good reason" during the term of this Agreement, Employee is not required to seek other employment or attempt in any way to reduce the amounts payable to Employee by Corporation pursuant to the applicable terms of this Agreement; it being understood and agreed that the amount of any payment or benefit to Employee provided for hereunder shall not be reduced by any compensation or other benefits earned by Employee as a result of his employment by another employer or, after a Change in Control, by Corporation's attempt to offset any amount claimed to be owed by Employee to Corporation or otherwise.

          20.  Waiver of breach or violation not deemed continuing.  The waiver by either party of a breach or violation of any provision of this Agreement shall not operate as or be construed to be a waiver of any subsequent breach hereof.

          21.  Notices.  Any and all notices required or permitted to be given under this Agreement will be sufficient if furnished in writing, sent by registered or certified mail to his last known residence in the case of Employee or to its principal office in Columbus, Georgia, in the case of the Corporation.

          22.  Arbitration.  Except for any dispute or matter arising after a Change in Control, as defined in paragraph 18, any dispute arising under this Agreement, to the maximum extent allowed by applicable law, shall be subject to arbitration and prior to commencing any court action, the parties agree that they shall arbitrate all controversies.  The arbitration shall be pursuant to the terms of the Corporation's Employee Arbitration Program as provided in the Corporation's Employee Handbook, the provisions of which are incorporated herein by reference. 

          23.  Governing Law.  This Agreement shall be interpreted, construed and governed according to the laws of the State of Georgia.

          24.  Paragraph Headings.  The paragraph headings contained in this Agreement are for convenience only and shall in no manner be construed as part of this Agreement.

          25.  Two originals.  This Agreement is executed in two (2) originals, each of which shall be deemed an original and together shall constitute one and the same Agreement, with one original being delivered to each party hereto.

 

EXH 10.6-11

 

     IN WITNESS WHEREOF, Corporation has hereunto caused its name to be signed and its seal to be affixed by its duly authorized officers, and Employee has hereunto set his hand and seal, all being done in duplicate originals, with one original being delivered to each party as of the 1st day of January, 2002.

 

	 	 	 	 
	
  /s/ Charles D. Lake, II 
	
(L.S.)
	 	
AFLAC INCORPORATED

	
	
	
	

	
CHARLES D. LAKE, II
	 	 	 
	
EMPLOYEE
	 	
BY: 
	
/s/ Kriss Cloninger, III

	
	
	
	

	
 
	 	 	
KRISS CLONINGER, III

	
 
	 	 	
PRESIDENT

	 	 	 	 
	 	 	 	 
	
 
	 	
ATTEST:
	
/s/ Joey M. Loudermilk

	
	
	
	

	
 
	 	 	
JOEY M. LOUDERMILK

	
 
	 	 	
CORPORATE SECRETARY

	 	 	 	 

 

 

EXH 10.6-12

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