\n Termination due Payable Payable Payable Not Payable
\n to death <\/p>\nTermination due to Payable Payable Payable Not Payable
\n Disability <\/p>\n
Termination for Payable Payable Not Payable Not Payable
\n Cause <\/p>\n
Termination Payable Payable Payable Payable
\n Without Cause <\/p>\n
Termination for Payable Payable Payable Payable
\n Good Reason <\/p>\n
Termination by Payable Payable Not Payable Not Payable
\n Executive other
\n than for Good
\n Reason
\n<\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
4
\n 5<\/p>\n
c. Timing of Payments. Earned Salary and Accrued Bonus shall be paid
\nin a single lump sum as soon as practicable, but in no event more than 30 days,
\nfollowing the end of the Contract Employment Period. Vested Benefits shall be
\npayable in accordance with the terms of the plan, policy, practice, program,
\ncontract or agreement under which such benefits have accrued.<\/p>\n
Severance Benefits shall be paid in approximately equal
\ninstallments, at the same intervals at which Executive was receiving his salary
\npayments hereunder, for the greater of (i) one year, (ii) the period over which
\nsuch benefits would be payable if paid to Executive under the Company’s
\notherwise applicable plans, policies or procedures as currently in effect or
\n(iii) the period over which such benefits would be payable if paid to Executive
\nunder the Company’s otherwise applicable plans, policies or procedures, as in
\neffect at the time of Executive’s termination of employment. Notwithstanding the
\nforegoing, Executive may elect, by written notice given to the Company prior to
\nthe first periodic payment and within ten business days after such termination,
\nthat, instead of periodic installments, Severance Benefits shall be paid in
\neither a single lump sum, payable within ten business days of receipt by the
\nCompany of such election, or in two equal installments, the first payable within
\nten business days of receipt by the Company of such election, and the second
\npayable on the first business day of the following calendar year.<\/p>\n
d. Definitions. For purposes of this Paragraph 6, capitalized terms
\nhave the following meanings:<\/p>\n
“Accrued Bonus” means a pro-rated amount equal to the product of (i)
\nthe annual incentive compensation Executive would have been entitled to receive
\nunder Paragraph 3(b) for the calendar year in which his active service for the
\nCompany terminates pursuant to Paragraph 6(a) had he remained employed for the
\nentire year and assuming that all targets for such year had been met, multiplied
\nby (ii) a fraction, the numerator of which is equal to the number of days in
\nsuch calendar year occurring on or prior to the termination of Executive’s
\nactive service for the Company (including any period of absence due to
\ndisability) and the denominator of which is 365.<\/p>\n
“Earned Salary” means any Base Salary earned, but unpaid, for
\nservices rendered to the Company on or prior to the date on which the Contract
\nEmployment Period ends (other than Base Salary deferred pursuant to Executive’s
\nelection, as provided in Paragraph 3(a) hereof).<\/p>\n
“Severance Benefit” means an amount equal to the greater of:<\/p>\n
(i) the sum of<\/p>\n
(A) the annual Base Salary payable to Executive immediately prior
\n to the end of the Contract Employment Period; and<\/p>\n
5
\n 6<\/p>\n
(B) an amount (the “Bonus Severance Amount”) equal to the product
\n of Executive’s Base Salary times the greater of (1) the
\n Minimum Bonus Percentage and (2) the percentage of Base Salary
\n that would have been payable to Executive for the year of such
\n termination assuming achievement of target levels of
\n performance and Executive’s continued employment for the
\n entire year, or<\/p>\n
(ii) the amount otherwise payable to Executive under the Company’s
\n otherwise applicable severance plans, policies or programs as in
\n effect on the date hereof (or, if more favorable to Executive, as in
\n effect on the date of Executive’s termination), assuming for
\n purposes of determining the amount payable thereunder that
\n Executive’s employment was terminated as a result of the elimination
\n of his position, but calculated by including the Bonus Severance
\n Amount as part of Executive’s eligible compensation for purposes of
\n calculating the benefits payable under such plans, policies or
\n programs;<\/p>\n
except that, in the event that Executive becomes entitled to receive Severance
\nBenefits hereunder following a Change in Control, the Severance Benefit payable
\nto Executive shall be determined under Paragraph 7(c). Additionally, while
\nExecutive is receiving payment of Severance Benefits in periodic installments,
\nExecutive shall also be eligible to continue to participate in the welfare
\nbenefit plans and programs (excluding the long-term disability plan, the
\nsick-pay plan and vacation accruals) generally made available to employees of
\nthe Company and in which he participated immediately prior to the termination of
\nhis employment on the same terms and conditions as would have applied had
\nExecutive continued to be employed. Upon an election to receive Severance
\nBenefits in either a single lump sum payment or in two installments, Executive
\nwill forfeit any right to continue to receive any coverage under the Company’s
\nwelfare benefit plans, other than COBRA coverage (determined from the original
\ndate of termination) at Executive’s expense as required by applicable law;
\nprovided that, if Executive elects to receive Severance Benefits in two
\ninstallments instead of periodic installments, the Company shall pay one-half of
\nthe cost of Executive’s COBRA coverage from the date the first installment
\npayment is made until the date the second installment payment is made.
\nNotwithstanding the foregoing, receipt of a lump sum payment or two installment
\npayments hereunder shall not cause Executive to cease to be eligible for any
\nretiree benefit programs for which he is otherwise eligible under the terms of
\nthe Company’s employee benefit plans, policies or programs.<\/p>\n
“Termination for Cause” means a termination of Executive’s
\nemployment by the Company due to (i) the willful failure by Executive to perform
\nsubstantially Executive’s duties as an employee of the Company (other than due
\nto physical or mental illness) after reasonable notice to Executive of such
\nfailure, (ii) Executive’s engaging in misconduct that is materially injurious to
\nthe Company or any subsidiary or any affiliate of the Company, (iii) Executive’s
\nhaving been convicted of, or entered a plea of nolo contendere to, a crime that
\nconstitutes a felony, (iv) the material breach by Executive of any written
\ncovenant or agreement not to compete with the Company or any subsidiary or any
\naffiliate or (v) the breach by Executive of his duty of loyalty to the Company
\nwhich shall include, without <\/p>\n
6
\n 7<\/p>\n
limitation, (A) the disclosure by Executive of any confidential information
\npertaining to the Company or any subsidiary or any affiliate of the Company,
\nother than (x) in the ordinary course of the performance of his duties on behalf
\nof the Company or (y) pursuant to a judicial or administrative subpoena from a
\ncourt or governmental authority with jurisdiction over the matter in question,
\n(B) the harmful interference by Executive in the business or operations of the
\nCompany or any subsidiary or any affiliate of the Company, (C) any attempt by
\nExecutive directly or indirectly to induce any employee, insurance agent,
\ninsurance broker or broker-dealer of the Company or any subsidiary or any
\naffiliate to be employed or perform services elsewhere, other than actions taken
\nby Executive that are intended to benefit the Company or any subsidiary or
\naffiliate and do not benefit Executive financially other than as an employee or
\nstockholder of the Company, (D) any attempt by Executive directly or indirectly
\nto solicit the trade of any customer or supplier, or prospective customer or
\nsupplier, of the Company on behalf of any person other than the Company or a
\nsubsidiary thereof, other than actions taken by Executive that are intended to
\nbenefit the Company or any subsidiary or affiliate and do not benefit Executive
\nfinancially other than as an employee or stockholder of the Company, provided,
\nhowever, that this provision shall only apply to any product or service which is
\nin competition with a product or service of the Company or any subsidiary or
\naffiliate thereof or (E) any breach or violation of the Company’s Code of
\nConduct, as amended from time to time sufficient to warrant a for cause
\ntermination consistent with the Company’s past practice. Notwithstanding the
\nforegoing, a breach of Executive’s duty of loyalty to the Company as described
\nin subclause (A) or a breach of the Company’s Code of Conduct as described in
\nsubclause (E) of clause (v) of the preceding sentence shall not be grounds for a
\nTermination for Cause unless such breach has had or could reasonably be expected
\nto have a significant adverse effect on the business or reputation of the
\nCompany.<\/p>\n
“Termination due to Disability” means a termination of Executive’s
\nemployment by the Company because Executive has been incapable, with or without
\nreasonable accommodation, of substantially fulfilling the positions, essential
\nduties, responsibilities and obligations of Executive’s positions set forth in
\nthis Agreement because of physical, mental or emotional incapacity resulting
\nfrom injury, sickness or disease for a period of (i) at least four consecutive
\nmonths or (ii) more than six months in any twelve month period. Any question as
\nto the existence, extent or potentiality of Executive’s disability shall be made
\nby a qualified, independent physician selected by the chief or assistant chief
\n(or the equivalent position) of the department which treats the condition giving
\nrise to Executive’s absence at a nationally or regionally recognized teaching
\nhospital chosen by the Company. The determination of any such physician shall be
\nfinal and conclusive for all purposes of this Agreement. Notwithstanding the
\nforegoing, (i) a Termination for Disability shall not affect Executive’s right
\nto receive any amount that would otherwise have been payable to Executive under
\nthe Company’s plans, policies, practices or programs pertaining to short-term or
\nlong-term disability had Executive’s employment continued and (ii) if it is
\ndetermined, at the time Executive is first eligible to receive long-term
\ndisability benefits under the Company’s plans, policies, practices or programs,
\nthat Executive is not entitled to receive such long-term disability benefits
\n(other than due to Executive’s failure to cooperate), Executive shall, for
\npurposes of this Paragraph 6, be deemed to have been terminated as of the date
\nof such <\/p>\n
7
\n 8<\/p>\n
determination pursuant to a Termination Without Cause and to be entitled to
\nreceive any additional benefits payable hereunder in respect of a Termination
\nWithout Cause.<\/p>\n
“Termination for Good Reason” means a termination of Executive’s
\nemployment by Executive within 90 days following actual knowledge of (i) a
\nreduction in Executive’s annual Base Salary or incentive compensation
\nopportunity as provided under Paragraph 3(b), (ii) a material reduction in
\nExecutive’s positions, duties and responsibilities from those described in
\nParagraph 2 hereof, (iii) the relocation of Executive’s principal place of
\nemployment to a location more than 50 miles from the location at which he
\nperformed his principal duties on the date immediately prior to such relocation,
\n(iv) a breach of the obligation to provide Executive with the benefits required
\nto be provided in accordance with Paragraph 5(a), (v) a failure by the Company
\nto pay any amounts due and owing to Executive within 10 days following written
\nnotice from Executive of such failure to pay, or (vi) any other material breach
\nof the Company’s obligations to Executive hereunder that materially affects the
\ncompensation or benefits payable to Executive or materially impairs Executive’s
\nability to perform the duties and responsibilities of his position.
\nNotwithstanding the foregoing, a termination shall not be treated as a
\nTermination for Good Reason (i) if Executive shall have consented in writing to
\nthe occurrence of the event giving rise to the claim of Termination for Good
\nReason or (ii) unless Executive shall have delivered a written notice to the
\nChief Executive Officer of the Company within 60 days of his having actual
\nknowledge of the occurrence of one of such events stating that he intends to
\nterminate his employment for Good Reason and specifying the factual basis for
\nsuch termination, and such event shall not have been cured within 30 days of the
\nreceipt of such notice.<\/p>\n
“Termination Without Cause” means any termination of Executive’s
\nemployment by the Company other than (i) a Termination due to Disability or (ii)
\na Termination for Cause. Subject to the Company’s obligations to make the
\npayments, if any, required pursuant to this paragraph 6, nothing in this
\nAgreement shall be construed to limit the right of the Company to terminate
\nExecutive’s employment at any time for any reason or without reason.<\/p>\n
“Vested Benefits” means amounts payable under the terms of or in
\naccordance with any plan, policy or practice or program of, or any contract or
\nagreement with, the Company or any of its subsidiaries (including, without
\nlimitation, any supplemental pension plan, supplemental savings plan or other
\ndeferred compensation arrangement, the 1994 Plan and the Company’s 1984 Stock
\nOption Plan (the “1984 Plan”) with respect to which Executive’s rights to such
\namounts (i) have become vested and nonforfeitable on or before Executive’s
\ntermination of employment or (ii) otherwise have or will become nonforfeitable
\nat or subsequent to his termination of employment without regard to the
\nperformance by Executive of further services or the resolution of a contingency
\nthat is not satisfied at or after such termination, provided that, at any time
\nduring which Executive is entitled to receive the Severance Benefits hereunder,
\nExecutive shall not also be entitled to receive any benefits under the Company’s
\ngenerally applicable severance or other termination plans, policies or programs.<\/p>\n
8
\n 9<\/p>\n
e. Full Discharge of Company Obligations. Except to the extent
\nprovided in this Paragraph 6, the amounts payable to Executive pursuant to this
\nParagraph 6 (including, without limitation, under Paragraph 6(f)) following
\ntermination of his employment shall be in full and complete satisfaction of
\nExecutive’s rights under this Agreement and, except to the extent prohibited by
\nlaw, any other claims he may have in respect of his employment by the Company or
\nany of its subsidiaries. Such amounts shall constitute liquidated damages with
\nrespect to any and all such rights and claims and shall not be subject to any
\noffset or mitigation. Notwithstanding anything else contained herein to the
\ncontrary, unless the Company shall waive its rights to any such release, the
\nCompany’s obligations under this Paragraph 6 are expressly conditioned upon
\nExecutive’s execution simultaneously with or immediately following such
\ntermination of employment, of a release and waiver, substantially in the form
\nattached hereto as Exhibit B (subject to, in the event any change of law
\noccurring after the date hereof, to such modifications as shall be necessary or
\nappropriate to place the Company in a substantially the same position as though
\nno change in law had occurred), of any claims he may have in connection with the
\ntermination of, or arising out of, his employment with the Company, provided
\nthat such release shall not be construed to waive, release or otherwise limit
\nany amounts required to be paid hereunder or any benefits due and payable to
\nExecutive under the terms of any employee pension benefit plan, as defined in
\nSection 3(2) of the Employee Retirement Income Security Act of 1974, as amended,
\nany other Vested Benefit or any right of Executive to be indemnified by the
\nCompany pursuant to its applicable policies and practices from and against any
\nthird party claims arising out of or relating to Executive’s employment with or
\nother services on behalf of the Company or any subsidiary of the Company.<\/p>\n
f. Special Continuation of Certain Protection for the Executive.
\nNotwithstanding anything contained in this Agreement to the contrary, if, at the
\nend of the Contract Employment Period, (i) Executive remains an at-will employee
\nof the Company and (ii) within one year following the end of the Contract
\nEmployment Period, the Company effects a Termination Without Cause or takes
\nactions which, if they had occurred within the Contract Employment Period, would
\nhave given Executive the right to terminate his employment pursuant to a
\nTermination for Good Reason and Executive, after giving the Company timely
\nwritten notice of the events permitting a Termination for Good Reason and the
\nopportunity to cure described in the definition of a Termination for Good
\nReason, voluntarily terminates his employment within 90 days of the date of such
\nactions by the Company, then in either case, Executive shall receive payment of
\nthe Severance Benefits that would otherwise have been payable to Executive
\nhereunder had his termination of employment occurred during the Contract
\nEmployment Period. Notwithstanding the preceding sentence, this Section 6(f)
\nshall not be applicable unless Executive executes the waiver and release
\nreferred to in Paragraph 6(e) above in connection with his termination of
\nemployment pursuant to this Paragraph 6(f).<\/p>\n
g. Outplacement Services. In addition to any other benefits
\ndescribed in this Paragraph 6, in the event Executive is eligible to receive
\nSeverance Benefits, the Company shall also provide to Executive, at its expense,
\nindividual outplacement services from a qualified outplacement firm selected by
\nthe Company. The outplacement services to <\/p>\n
9
\n 10<\/p>\n
be provided to Executive shall be no less favorable to Executive than those made
\navailable to other executives prior to the date hereof under the Company’s
\ngenerally applicable policies, programs or arrangements.<\/p>\n
7. Change in Control of the Company.<\/p>\n
a. Accelerated Vesting and Payment. Unless the Board (or the
\nappropriate committee thereof) shall otherwise determine in the manner set forth
\nin Paragraph 7(b), the Option shall become fully exercisable upon the occurrence
\nof a Change in Control (as defined below) and shall remain exercisable for a
\nperiod of one year thereafter regardless of whether Executive continues to be
\nemployed by the Company or, if longer, for the period during which such Option
\nwould otherwise be exercisable in accordance with its terms or the generally
\napplicable provisions of the 1994 Plan. If no Alternative Option is provided as
\nset forth in Section 7(b) below, and the Company does not survive as a publicly
\ntraded corporation following a Change in Control, the Company shall pay
\nExecutive, in full settlement of all rights with respect to the Option, an
\naggregate amount in cash equal to the product of (i) (A) the Fair Market Value
\nof a Share of the Company’s Common Stock on the date the Change in Control
\noccurs minus (B) the per share exercise price for the Option times (ii) the
\nnumber of shares as to which such Option has not been exercised at the time of
\nthe Change in Control. Any amount payable pursuant to the preceding sentence
\nshall be paid within 30 days following such Change in Control.<\/p>\n
b. Alternative Options. Notwithstanding Paragraph 7(a), no
\nacceleration of exercisability shall occur with respect to any Option if the
\nBoard (or the appropriate committee thereof) reasonably determines in good
\nfaith, prior to the occurrence of a Change in Control, that such Option shall be
\nhonored or assumed, or new rights substituted therefor (such honored, assumed or
\nsubstituted Option being hereinafter referred to as an “Alternative Option”) by
\nthe successor in interest to the Company, provided that any such Alternative
\nOption must:<\/p>\n
(i) provide Executive with rights and entitlements substantially
\n equivalent to or better than the rights, terms and conditions
\n applicable under the Option, including, but not limited to, an
\n identical or better exercise and vesting schedule and identical or
\n better timing and methods of payment;<\/p>\n
(ii) have substantially equivalent economic value to such Option
\n (determined at the time of the Change in Control); and<\/p>\n
(iii) have terms and conditions which provide that, in the event that
\n Executive’s employment is terminated by the Company for any reason
\n or is terminated by Executive pursuant to a Termination for Good
\n Reason within two years following a Change in Control, (A) any
\n conditions on Executive’s rights under, or any restrictions on
\n exercisability applicable to, each such Alternative Option shall be
\n waived or shall lapse, as the case may be and (B) the Alternative
\n Option shall remain exercisable until the second anniversary of the
\n Change in <\/p>\n
10
\n 11<\/p>\n
Control or, if longer, for the period during which such Alternative
\n Option would otherwise be exercisable in accordance with its terms
\n or the provisions of the plan under which it is granted that permit
\n the longest post-termination exercise period for involuntary
\n terminations (other than due to death, disability or retirement).<\/p>\n
c. Enhanced Severance Payments. If Executive’s employment is terminated
\nfollowing a Change in Control pursuant to a Termination for Good Reason or a
\nTermination Without Cause, the Severance Benefit payable to Executive pursuant
\nto Paragraph 6 shall be equal to two times the sum of Executive’s annual Base
\nSalary and the Bonus Severance Amount.<\/p>\n
d. Additional Payments by the Company.<\/p>\n
(i) Application of Paragraph 7(d). In the event that any amount or
\n benefit paid or distributed to Executive pursuant to this Agreement,
\n taken together with any amounts or benefits otherwise paid or
\n distributed to Executive by the Company or any affiliated company
\n (collectively, the “Covered Payments”), would be an “excess
\n parachute payment” as defined in Section 280G of the Code and would
\n thereby subject Executive to the tax (the “Excise Tax”) imposed
\n under Section 4999 of the Code (or any similar tax that may
\n hereafter be imposed), the provisions of this Section 7(d) shall
\n apply to determine the amounts payable to Executive pursuant to this
\n Agreement.<\/p>\n
(ii) Calculation of Benefits. Immediately following delivery of any
\n Notice of Termination, the Company shall notify Executive of the
\n aggregate present value of all termination benefits to which he
\n would be entitled under this Agreement and any other plan, program
\n or arrangement as of the projected date of termination, together
\n with the projected maximum payments, determined as of such projected
\n date of termination that could be paid without Executive being
\n subject to the Excise Tax.<\/p>\n
(iii) Imposition of Payment Cap. If the aggregate value of all
\n compensation payments or benefits to be paid or provided to
\n Executive under this Agreement and any other plan, agreement or
\n arrangement with the Company exceeds the amount which can be paid to
\n Executive without Executive incurring an Excise Tax by less than
\n 105%, then the amounts payable to Executive under this Agreement
\n may, in the discretion of the Company, be reduced (but not below
\n zero) to the maximum amount which may be paid hereunder without
\n Executive becoming subject to such an Excise Tax (such reduced
\n payments to be referred to as the “Payment Cap”). In the event that
\n Executive receives reduced payments and benefits hereunder,
\n Executive shall have the right to designate which of the payments
\n and benefits otherwise provided for in this Agreement that he will
\n receive in connection with the application of the Payment Cap.<\/p>\n
11
\n 12<\/p>\n
(iv) Further Payments by the Company. If the aggregate value of all
\n compensation payments or benefits to be paid or provided to
\n Executive under this Agreement and any other plan, agreement or
\n arrangement with the Company exceeds the amount which can be paid to
\n Executive without Executive incurring an Excise Tax by more than
\n 105%, the Company shall pay to Executive immediately following
\n Executive’s termination of employment an additional amount (the “Tax
\n Reimbursement Payment”) such that the net amount retained by
\n Executive with respect to such Covered Payments, after deduction of
\n any Excise Tax on the Covered Payments and any Federal, state and
\n local income tax and Excise Tax on the Tax Reimbursement Payment
\n provided for by this Paragraph 7(d)(iv), but before deduction for
\n any Federal, state or local income or employment tax withholding on
\n such Covered Payments, shall be equal to the amount of the Covered
\n Payments.<\/p>\n
(v) Application of Section 280G. For purposes of determining whether any
\n of the Covered Payments will be subject to the Excise Tax and the
\n amount of such Excise Tax,<\/p>\n
(A) such Covered Payments will be treated as “parachute payments”
\n within the meaning of Section 280G of the Code, and all
\n “parachute payments” in excess of the “base amount” (as
\n defined under Section 280G(b)(3) of the Code) shall be treated
\n as subject to the Excise Tax, unless, and except to the extent
\n that, in the good faith judgment of the Company’s independent
\n certified public accountants appointed prior to the Effective
\n Date or tax counsel selected by such Accountants (the
\n “Accountants”), the Company has a reasonable basis to conclude
\n that such Covered Payments (in whole or in part) either do not
\n constitute “parachute payments” or represent reasonable
\n compensation for personal services actually rendered (within
\n the meaning of Section 280G(b)(4)(B) of the Code) in excess of
\n the “base amount,” or such “parachute payments” are otherwise
\n not subject to such Excise Tax, and<\/p>\n
(B) the value of any non-cash benefits or any deferred payment or
\n benefit shall be determined by the Accountants in accordance
\n with the principles of Section 280G of the Code.<\/p>\n
(vi) Applicable Tax Rates. For purposes of determining whether Executive
\n would receive a greater net after-tax benefit were the amounts
\n payable under this Agreement reduced in accordance with Paragraph
\n 7(d)(iii), Executive shall be deemed to pay:<\/p>\n
(A) Federal income taxes at the highest applicable marginal rate
\n of Federal income taxation for the calendar year in which the
\n first amounts are to be paid hereunder, and<\/p>\n
12
\n 13<\/p>\n
(B) any applicable state and local income taxes at the highest
\n applicable marginal rate of taxation for such calendar year,
\n net of the maximum reduction in Federal incomes taxes which
\n could be obtained from the deduction of such state or local
\n taxes if paid in such year;<\/p>\n
provided, however, that Executive may request that such
\n determination be made based on his individual tax circumstances,
\n which shall govern such determination so long as Executive provides
\n to the Accountants such information and documents as the Accountants
\n shall reasonably request to determine such individual circumstances.<\/p>\n
(vii) Adjustments in Respect of the Payment Cap. If Executive receives
\n reduced payments and benefits under this Paragraph 7(d) (or this
\n Paragraph 7(d) is determined not to be applicable to Executive
\n because the Accountants conclude that Executive is not subject to
\n any Excise Tax) and it is established pursuant to a final
\n determination of a court or an Internal Revenue Service proceeding
\n (a “Final Determination”) that, notwithstanding the good faith of
\n Executive and the Company in applying the terms of this Agreement,
\n the aggregate “parachute payments” within the meaning of Section
\n 280G of the Code paid to Executive or for his benefit are in an
\n amount that would result in Executive being subject an Excise Tax,
\n then the amount equal to such excess parachute payments shall be
\n deemed for all purposes to be a loan to Executive made on the date
\n of receipt of such excess payments, which Executive shall have an
\n obligation to repay to the Company on demand, together with interest
\n on such amount at the applicable Federal rate (as defined in Section
\n 1274(d) of the Code) from the date of the payment hereunder to the
\n date of repayment by Executive. If this Paragraph 7(d) is not
\n applied to reduce Executive’s entitlements under this Paragraph 7
\n because the Accountants determine that Executive would not receive a
\n greater net-after tax benefit by applying this Paragraph 7(d) and it
\n is established pursuant to a Final Determination that,
\n notwithstanding the good faith of Executive and the Company in
\n applying the terms of this Agreement, Executive would have received
\n a greater net after tax benefit by subjecting his payments and
\n benefits hereunder to the Payment Cap, then the aggregate “parachute
\n payments” paid to Executive or for his benefit in excess of the
\n Payment Cap shall be deemed for all purposes a loan to Executive
\n made on the date of receipt of such excess payments, which Executive
\n shall have an obligation to repay to the Company on demand, together
\n with interest on such amount at the applicable Federal rate (as
\n defined in Section 1274(d) of the Code) from the date of the payment
\n hereunder to the date of repayment by Executive. If Executive
\n receives reduced payments and benefits by reason of this Paragraph
\n 7(d) and it is established pursuant to a Final Determination that
\n Executive could have received a greater amount without exceeding the
\n Payment Cap, then the Company shall promptly thereafter pay
\n Executive the aggregate additional amount which could have been paid
\n without exceeding the Payment Cap, together with interest on such<\/p>\n
13
\n 14<\/p>\n
amount at the applicable Federal rate (as defined in Section 1274(d)
\n of the Code) from the original payment due date to the date of
\n actual payment by the Company.<\/p>\n
(viii) Adjustments in Respect of the Tax Reimbursement Payments. In the
\n event that the Excise Tax is subsequently determined by the
\n Accountants or pursuant to any proceeding or negotiations with the
\n Internal Revenue Service to be less than the amount taken into
\n account hereunder in calculating the Tax Reimbursement Payment made,
\n Executive shall repay to the Company, at the time that the amount of
\n such reduction in the Excise Tax is finally determined, the portion
\n of such prior Tax Reimbursement Payment that would not have been
\n paid if such Excise Tax had been applied in initially calculating
\n such Tax Reimbursement Payment, plus interest on the amount of such
\n repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
\n Notwithstanding the foregoing, in the event any portion of the Tax
\n Reimbursement Payment to be refunded to the Company has been paid to
\n any Federal, state or local tax authority, repayment thereof shall
\n not be required until actual refund or credit of such portion has
\n been made to Executive, and interest payable to the Company shall
\n not exceed interest received or credited to Executive by such tax
\n authority for the period it held such portion. Executive and the
\n Company shall mutually agree upon the course of action to be pursued
\n (and the method of allocating the expenses thereof) if Executive’s
\n good faith claim for refund or credit is denied.<\/p>\n
In the event that the Excise Tax is later determined by the
\n Accountants or pursuant to any proceeding or negotiations with the
\n Internal Revenue Service to exceed the amount taken into account
\n hereunder at the time the Tax Reimbursement Payment is made
\n (including, but not limited to, by reason of any payment the
\n existence or amount of which cannot be determined at the time of the
\n Tax Reimbursement Payment), the Company shall make an additional Tax
\n Reimbursement Payment in respect of such excess (plus any interest
\n or penalty payable with respect to such excess) at the time that the
\n amount of such excess is finally determined.<\/p>\n
(ix) Timing of Payment. Any Tax Reimbursement Payment (or portion
\n thereof) provided for in Paragraph 7(d)(iv) above shall be paid to
\n Executive not later than 10 business days following the payment of
\n the Covered Payments; provided, however, that if the amount of such
\n Tax Reimbursement Payment (or portion thereof) cannot be finally
\n determined on or before the date on which payment is due, the
\n Company shall pay to Executive by such date an amount estimated in
\n good faith by the Accountants to be the minimum amount of such Tax
\n Reimbursement Payment and shall pay the remainder of such Tax
\n Reimbursement Payment (together with interest at the rate provided
\n in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof
\n can be determined, but in no event later than 45 calendar days after
\n payment of the related <\/p>\n
14
\n 15<\/p>\n
Covered Payment. In the event that the amount of the estimated Tax
\n Reimbursement Payment exceeds the amount subsequently determined to
\n have been due, such excess shall constitute a loan by the Company to
\n Executive, payable on the fifth business day after written demand by
\n the Company for payment (together with interest at the rate provided
\n in Section 1274(b)(2)(B) of the Code).<\/p>\n
e. Definition of “Change in Control”. For purposes of this Paragraph
\n7, a “Change in Control” means the happening of any of the following:<\/p>\n
(i) When any “person” as defined in Section 3(a)(9) of the
\n Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as
\n used in Sections 13(d) and 14(d) thereof, including a “group” as defined
\n in Section 13(d) of the Exchange Act but excluding the Company and any
\n subsidiary thereof and any employee benefit plan sponsored or maintained
\n by the Company or any Subsidiary (including any trustee of such plan
\n acting as trustee), directly or indirectly, becomes the “beneficial owner”
\n (as defined in Rule 13d-3 under the Exchange Act, as amended from time to
\n time), of securities of the Company representing 20 percent or more of the
\n combined voting power of the Company’s then outstanding securities;<\/p>\n
(ii) When, during any period of 24 consecutive months after the
\n Commencement Date, the individuals who, at the beginning of such period,
\n constitute the Board (the “Incumbent Directors”) cease for any reason
\n other than death to constitute at least a majority thereof, provided that
\n a director who was not a director at the beginning of such 24-month period
\n shall be deemed to have satisfied such 24-month requirement (and be an
\n Incumbent Director) if such director was elected by, or on the
\n recommendation of or with the approval of, at least two-thirds of the
\n directors who then qualified as Incumbent Directors either actually
\n (because they were directors at the beginning of such 24-month period) or
\n by prior operation of this Paragraph 7(e)(ii); or<\/p>\n
(iii) The occurrence of a transaction requiring stockholder approval
\n for the acquisition of the Company by an entity other than the Company or
\n a subsidiary through purchase of assets, or by merger, or otherwise.<\/p>\n
8. Noncompetition and Confidentiality.<\/p>\n
a. Noncompetition. During the Contract Employment Period and for a
\nperiod of one year following Executive’s termination of employment during the
\nContract Employment Period other than due to a Termination Without Cause or a
\nTermination for Good Reason, Executive shall not become associated, whether as a
\nprincipal, partner, employee, consultant or shareholder (other than as a holder
\nof not in excess of 1% of the outstanding voting shares of any publicly traded
\ncompany), with any entity that is actively engaged in any geographic area in any
\nbusiness which is in substantial and direct competition with the business or
\nbusinesses of the Company for which Executive provides substantial <\/p>\n
15
\n 16<\/p>\n
services or for which Executive has substantial responsibility, provided that
\nnothing in this Paragraph 8(a) shall preclude Executive from performing services
\nsolely and exclusively for a division or subsidiary of such an entity that is
\nengaged in a non-competitive business.<\/p>\n
b. Nondisclosure, Nonsolicitation and Cooperation.<\/p>\n
(i) Executive shall not (except to the extent required by an order
\n of a court having competent jurisdiction or under subpoena from an
\n appropriate government agency) disclose to any third person, whether
\n during or subsequent to the Executive’s employment with the Company, any
\n trade secrets; customer lists; product development and related
\n information; marketing plans and related information; sales plans and
\n related information; operating policies and manuals; business plans;
\n financial records; or other financial, commercial, business or technical
\n information related to the Company or any subsidiary or affiliate thereof
\n unless such information has been previously disclosed to the public by the
\n Company or has become public knowledge other than by a breach of this
\n Agreement; provided, however, that this limitation shall not apply to any
\n such disclosure made while Executive is employed by the Company, or any
\n subsidiary or affiliate thereof in the ordinary course of the performance
\n of Executive’s duties;<\/p>\n
(ii) during the Contract Employment Period and for two years after
\n the termination of such Period, Executive shall not attempt, directly or
\n indirectly, to induce any employee or Insurance Agent (as defined below)
\n of the Company, or any subsidiary or any affiliate thereof to be employed
\n or perform services elsewhere provided that this covenant shall not
\n preclude Executive from taking any actions during the Contract Employment
\n Period that (x) are intended to benefit the Company or any subsidiary or
\n affiliate and (y) do not benefit Executive financially other than as an
\n employee or stockholder of the Company;<\/p>\n
(iii) during the Contract Employment Period and for two years after
\n the termination of such Period, Executive shall not attempt, directly or
\n indirectly, to induce any insurance agent or agency, insurance broker,
\n broker-dealer or supplier of the Company, or any subsidiary or affiliate
\n thereof to cease providing services to the Company, or any subsidiary or
\n affiliate thereof provided that this covenant shall not preclude Executive
\n from taking any actions during the Contract Employment Period that (x) are
\n intended to benefit the Company or any subsidiary or affiliate and (y) do
\n not benefit Executive financially other than as an employee or stockholder
\n of the Company;<\/p>\n
(iv) during the Contract Employment Period and for two years after
\n the termination of such Period, Executive shall not attempt, directly or
\n indirectly, to solicit, on behalf of any person or entity other than the
\n Company or any of its subsidiaries, the trade of any individual or entity
\n which, at the time of the solicitation, is a customer of the Company, or
\n any subsidiary or affiliate thereof, or which the Company, or any
\n subsidiary or affiliate thereof is undertaking reasonable steps to <\/p>\n
16
\n 17<\/p>\n
procure as a customer at the time of or immediately preceding termination
\n of the Contract Employment Period; provided, however, that this limitation
\n shall only apply to (x) any product or service which is in competition
\n with a product or service of the Company or any subsidiary or affiliate
\n thereof and (y) with respect to any customer or prospective customer with
\n whom Executive has or had (by virtue of Executive’s position or otherwise)
\n a personal relationship; and<\/p>\n
(v) following the termination of the Contract Employment Period,
\n Executive shall provide assistance to and shall cooperate with the Company
\n or any subsidiary or affiliate thereof, upon its reasonable request, with
\n respect to matters within the scope of Executive’s duties and
\n responsibilities during the Contract Employment Period. (The Company
\n agrees and acknowledges that it shall, to the maximum extent possible
\n under the then prevailing circumstances, coordinate (or cause a subsidiary
\n or affiliate thereof to coordinate) any such request with Executive’s
\n other commitments and responsibilities to minimize the degree to which
\n such request interferes with such commitments and responsibilities). The
\n Company agrees that it will reimburse Executive for reasonable travel
\n expenses (i.e., travel, meals and lodging) that Executive may incur in
\n providing assistance to the Company hereunder.<\/p>\n
Solely for purposes of Paragraph 8(b)(ii) above, the term “Insurance Agent”
\nshall mean those insurance agents or agencies representing the Company or any
\nsubsidiary or affiliate thereof, that are exclusive or career agents or agencies
\nof the Company or any subsidiary or affiliate thereof, or any insurance agents
\nor agencies which derive 50% or more of their business revenue from the Company
\nor any subsidiary or affiliate thereof (calculated on an aggregate basis for the
\n12-month period prior to the date of determination or such other similar period
\nfor which such information is more readily available).<\/p>\n
c. Company Property. Promptly following Executive’s termination of
\nemployment, Executive shall return to the Company all property of the Company,
\nand all copies thereof in Executive’s possession or under his control.<\/p>\n
d. Intention of the Parties. If any provision of Paragraph 8 is
\ndetermined by an arbitrator (or a court of competent jurisdiction asked to
\nenforce the decision of the arbitrator) not to be enforceable in the manner set
\nforth in this Agreement, the Company and Executive agree that it is the
\nintention of the parties that such provision should be enforceable to the
\nmaximum extent possible under applicable law and that such arbitrator (or court)
\nshall reform such provision to make it enforceable in accordance with the intent
\nof the parties. Executive acknowledges that a material part of the inducement
\nfor the Company to provide the salary and benefits evidenced hereby is
\nExecutive’s covenants set forth in Paragraph 8(a), (b) and (c) and that the
\ncovenants and obligations of Executive with respect to nondisclosure and
\nnonsolicitation relate to special, unique and extraordinary matters and that a
\nviolation of any of the terms of such covenants and obligations will cause the
\nCompany irreparable injury for which adequate remedies are not available at law.
\nTherefore, Executive agrees that, if Executive shall materially breach any of
\nthose covenants following termination of employment, the Company shall have no
\nfurther obligation to pay Executive any benefits <\/p>\n
17
\n 18<\/p>\n
otherwise payable hereunder and the Company shall be entitled to an injunction,
\nrestraining order or such other equitable relief (without the requirement to
\npost a bond) restraining Executive from committing any violation of the
\ncovenants and obligations contained in Paragraph 8(a), (b) and (c). The remedies
\nin the preceding sentence are cumulative and are in addition to any other rights
\nand remedies the Company may have at law or in equity as an arbitrator (or
\ncourt) shall reasonably determine.<\/p>\n
e. Waiver. Without limiting the generality of the foregoing, upon
\nrequest of Executive prior to engaging in any conduct otherwise prohibited by
\nthis Paragraph 8, the Company may, in its sole discretion, waive in writing, on
\nsuch terms and conditions as it may deem appropriate, any violation of this
\nParagraph 8 which would otherwise occur due to such conduct.<\/p>\n
9. Miscellaneous.<\/p>\n
a. Survival. Paragraph 7 (relating to a Change in Control), 8
\n(relating to noncompetition, nonsolicitation and confidentiality) and 9
\n(relating, among other things, to survival, assignment and governing law) shall
\nsurvive the termination hereof, whether such termination shall be by expiration
\nof the Contract Employment Period or an early termination pursuant to Paragraph
\n6 hereof. Paragraph 6((other than Paragraph 6(f)) (relating to early
\ntermination) shall survive the termination hereof to the extent that, prior
\nthereto, or at the time of termination, Executive (or his beneficiary) has
\nbecome or becomes entitled to receive any of the benefits payable thereunder.
\nParagraph 6(f) (and to the extent applicable to such Paragraph 6(f), 6(e)) shall
\nsurvive for one year following the termination hereof. The option referred to in
\nParagraph 4 survives for the term specified in Attachment A.<\/p>\n
b. Binding Effect. This Agreement shall be binding on, and shall
\ninure to the benefit of, the Company and any person or entity that succeeds to
\nthe interest of the Company (regardless of whether such succession does or does
\nnot occur by operation of law) by reason of the sale of all or a portion of the
\nCompany’s stock, a merger, consolidation or reorganization involving the Company
\nor, unless in the case of a sale involving less than all or substantially all of
\nthe Company’s assets the Company otherwise elects in writing, a sale of the
\nassets of the business of the Company (or portion thereof) in which Executive
\nperforms a majority of his services. Any successor in interest to the Company
\nshall acknowledge in writing to Executive that it has assumed this Agreement and
\nis responsible to Executive for the performance of the Company’s obligations
\nunder this Agreement. Without limiting the generality of the foregoing, the
\nCompany shall have the right, without the consent of Executive, to assign this
\nAgreement and its obligations hereunder to any New Entity or any subsidiary of
\nany New Entity by which Executive becomes employed, at the discretion of the
\nCompany, by reason of the implementation of any restructuring of the Company,
\nand, following any such assignment, such New Entity or subsidiary shall be
\ntreated as the Company for all purposes of this Agreement. This Agreement shall
\nalso enure to the benefit of Executive’s heirs, executors, administrators and
\nlegal representatives.<\/p>\n
18
\n 19<\/p>\n
c. Assignment. Except as provided under Paragraph 9(b), neither this
\nAgreement nor any of the rights or obligations hereunder shall be assigned or
\ndelegated by any party hereto without the prior written consent of the other
\nparty. In the event the Company assigns this Agreement pursuant to Section 9(b),
\nthe Company shall guarantee payment to Executive of any amounts at any time due
\nand payable hereunder in the event (and only to the extent) that the assignee
\nhas become a debtor in bankruptcy, is the subject of a receivership or similar
\npreceding or has become insolvent, provided that Executive shall be required to
\nassign his rights against the assignee through subrogation as a condition of
\nreceiving any payment under the Company’s guarantee. In consideration of such
\nguarantee, Executive agrees that following such assignment, the covenants of
\nExecutive in Paragraphs 8(b)(i) and (v) shall continue to inure to the benefit
\nof the Company, as well as the assignee. The Company and Executive agree that
\nfollowing any assignment all other covenants described herein in favor of the
\nCompany shall, from and after the date of such assignment, inure solely to the
\nbenefit of the assignee.<\/p>\n
d. Entire Agreement. Except as expressly provided below, this
\nAgreement, the Option Agreement and the portion, if any, of any other agreement
\nrelating to pension service or credits referred to in Paragraph 5(a) shall
\nconstitute the entire agreement between the parties hereto with respect to the
\nmatters referred to herein and any other agreement or any portion of any such
\nother agreement not expressly preserved hereby shall cease to be effective upon
\nthe execution hereof and shall not become reinstated upon the expiration or
\nother termination of this Agreement. There are no promises, representations,
\ninducements or statements between the parties other than those that are
\nexpressly contained herein. Executive acknowledges that he is entering into this
\nAgreement of his own free will and accord, and with no duress, that he has read
\nthis Agreement and that he understands it and its legal consequences. Other than
\nthe provisions of Paragraph 6 which limit Executive’s eligibility to receive
\nseverance benefits under the Company’s generally applicable plans, programs or
\nagreements, nothing in this Agreement shall be construed to limit or otherwise
\nsupersede Executive’s rights or entitlements under any compensatory plan,
\nprogram or arrangement made available generally to all employees or all officers
\nof the Company or under the 1994 Plan or the 1984 Plan and this Paragraph 9(d)
\nshall not preclude reference to the documents governing any such plan, program
\nor arrangement to determine such rights and entitlements.<\/p>\n
e. Severability; Reformation. In the event that one or more of the
\nprovisions of this Agreement shall become invalid, illegal or unenforceable in
\nany respect, the validity, legality and enforceability of the remaining
\nprovisions contained herein shall not be affected thereby. In the event any of
\nParagraph 8(a), (b) or (c) is not enforceable in accordance with its terms,
\nExecutive and the Company agree that such Paragraph shall be reformed to make
\nsuch Paragraph enforceable in a manner which provides the Company the maximum
\nrights permitted at law.<\/p>\n
f. Waiver. Waiver by any party hereto of any breach or default by
\nthe other party of any of the terms of this Agreement shall not operate as a
\nwaiver of any other breach or default, whether similar to or different from the
\nbreach or default waived. No <\/p>\n
19
\n 20<\/p>\n
waiver of any provision of this Agreement shall be implied from any course of
\ndealing between the parties hereto or from any failure by either party hereto to
\nassert its or his rights hereunder on any occasion or series of occasions.<\/p>\n
g. Notices. Any notice required or desired to be delivered under
\nthis Agreement shall be in writing and shall be delivered personally, by courier
\nservice, by registered mail, return receipt requested, or by telecopy and shall
\nbe effective upon actual receipt by the party to which such notice shall be
\ndirected, and shall be addressed as follows (or to such other address as the
\nparty entitled to notice shall hereafter designate in accordance with the terms
\nhereof):<\/p>\n
If to the Company:<\/p>\n
Aetna Life and Casualty Company
\n 151 Farmington Avenue
\n Hartford, Connecticut
\n Attention: Corporate Secretary<\/p>\n
If to Executive:<\/p>\n
Thomas J. McInerney
\n 110 Mountain Terrace Road
\n West Hartford, Connecticut 06107<\/p>\n
h. Arbitration. The Company and Executive agree that any claim,
\ndispute or controversy arising under or in connection with this Agreement, or
\notherwise in connection with Executive’s employment by the Company (including,
\nwithout limitation, any such claim, dispute or controversy arising under any
\nfederal, state or local statute, regulation or ordinance or any of the Company’s
\nemployee benefit plans, policies or programs) shall be resolved solely and
\nexclusively by binding arbitration. The arbitration shall be held in the city of
\nHartford, Connecticut (or at such other location as shall be mutually agreed by
\nthe parties). The arbitration shall be conducted in accordance with the
\nExpedited Employment Arbitration Rules (the “Rules”) of the American Arbitration
\nAssociation (the “AAA”) in effect at the time of the arbitration, except that
\nthe arbitrator shall be selected by alternatively striking from a list of five
\narbitrators supplied by the AAA. All fees and expenses of the arbitration,
\nincluding a transcript if either requests, shall be borne equally by the
\nparties. If Executive prevails as to any material issue presented to the
\narbitrator, the entire cost of such proceedings (including, without limitation,
\nExecutive’s reasonable attorneys fees) shall be borne by the Company. If
\nExecutive does not prevail as to any material issue, each party will pay for the
\nfees and expenses of its own attorneys, experts, witnesses, and preparation and
\npresentation of proofs and post-hearing briefs (unless the party prevails on a
\nclaim for which attorney’s fees are recoverable under the Rules). Any action to
\nenforce or vacate the arbitrator’s award shall be governed by the Federal
\nArbitration Act, if applicable, and otherwise by applicable state law. If either
\nthe Company or Executive pursues any claim, dispute or controversy against the
\nother in a proceeding other than the arbitration provided for herein, the
\nresponding party shall <\/p>\n
20
\n 21<\/p>\n
be entitled to dismissal or injunctive relief regarding such action and recovery
\nof all costs, losses and attorney’s fees related to such action.<\/p>\n
i. Amendments. This Agreement may not be altered, modified or
\namended except by a written instrument signed by each of the parties hereto.<\/p>\n
j. Headings. Headings to paragraphs in this Agreement are for the
\nconvenience of the parties only and are not intended to be part of or to affect
\nthe meaning or interpretation hereof.<\/p>\n
k. Counterparts. This Agreement may be executed in counterparts,
\neach of which shall be deemed an original but all of which together shall
\nconstitute one and the same instrument.<\/p>\n
l. Withholding. Any payments provided for herein shall be reduced by
\nany amounts required to be withheld by the Company from time to time under
\napplicable Federal, State or local income or employment tax laws or similar
\nstatutes or other provisions of law then in effect.<\/p>\n
m. Governing Law. This Agreement shall be governed by the laws of
\nthe State of Connecticut, without reference to principles of conflicts or choice
\nof law under which the law of any other jurisdiction would apply.<\/p>\n
IN WITNESS WHEREOF, the Company has caused this Agreement to be
\nexecuted by its duly authorized officer and Executive has hereunto set his hand
\nas of the day and year first above written.<\/p>\n
Aetna Life and Casualty Company<\/p>\n
\/s\/ Ronald E. Compton
\n ——————————-
\n Ronald E. Compton
\n Chairman<\/p>\n
\/s\/ Thomas J. McInerney
\n ——————————-
\n Thomas J. McInerney<\/p>\n
21
\n 22<\/p>\n
EXHIBIT A TO EMPLOYMENT AGREEMENT<\/p>\n
AETNA LIFE AND CASUALTY COMPANY
\n 1994 STOCK INCENTIVE PLAN<\/p>\n
PERFORMANCE VESTED NONSTATUTORY STOCK OPTION AGREEMENT<\/p>\n
Pursuant to its 1994 Stock Incentive Plan, Aetna Life and Casualty Company
\nhereby grants to the person named below the right and option to purchase the
\nstated number of shares of Common Stock on the terms and conditions hereinafter
\nset forth.<\/p>\n
\n\n——————————————————————————–
\nEffective Date Aetna No. Grantee Total Optioned Shares Option Price
\n <\/p>\n——————————————————————————–
\n<\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
ARTICLE I<\/p>\n
DEFINITIONS<\/p>\n
(a) “Board” means the Board of Directors of Aetna Life and Casualty Company.<\/p>\n
(b) “Committee” means the Board’s Committee on Compensation and Organization
\n or any successor thereto.<\/p>\n
(c) “Common Stock” means shares of the Company’s Common Capital Stock, without
\n par value.<\/p>\n
(d) “Company” means Aetna Life and Casualty Company.<\/p>\n
(e) “Disability” means long-term disability as defined under the terms of the
\n Company’s applicable long-term disability plans or policies.<\/p>\n
(f) “Effective Date” means the date of grant of this Option, as set forth
\n above.<\/p>\n
(g) “Fair Market Value” means the closing price of the Common Stock as
\n reported by the Consolidated Tape of the New York Stock Exchange Listed
\n Shares on the date such value is to be determined, or, if no shares were
\n traded on such day, on the next preceding day on which the Common Stock
\n was traded.<\/p>\n
(h) “For Cause” means a termination of Grantee’s employment by the Company due
\n to (i) the willful failure by Grantee to perform substantially Grantee’s
\n duties as an employee of the Company (other than due to physical or mental
\n illness) after reasonable notice to Grantee of such failure, (ii)
\n Grantee’s engaging in serious misconduct that is injurious to the Company
\n or any subsidiary or any affiliate of the Company, (iii) Grantee’s having
\n been convicted of, or entered a plea of nolo <\/p>\n
22
\n 23<\/p>\n
contendere to, a crime involving an act that is immoral or wrong in and of
\n itself (e.g., burglary, larceny, murder or arson) or a crime involving
\n deceit, fraud, perjury or embezzlement, (iv) the breach by Grantee of any
\n written covenant or agreement not to compete with the Company or any
\n subsidiary or any affiliate or (v) the breach by Grantee of his duty of
\n loyalty to the Company which shall include, without limitation, (A) the
\n disclosure by Grantee of any confidential information pertaining to the
\n Company or any Subsidiary or any affiliate of the Company, other than (x)
\n in the, ordinary course of the performance of his duties on behalf of the
\n Company or (y) pursuant to a judicial or administrative subpoena from a
\n court or governmental authority with jurisdiction over the matter in
\n question, (B) the harmful interference by Grantee in the business or
\n operations of the Company or any Subsidiary or any affiliate of the
\n Company, (C) any attempt by Grantee directly or indirectly to induce any
\n employee, insurance agent, insurance broker or broker-dealer of the
\n Company or any Subsidiary or any affiliate to be employed or perform
\n services elsewhere, (D) any attempt by Grantee directly or indirectly to
\n solicit the trade of any customer or supplier, or prospective customer or
\n supplier, of the Company on behalf of any person other than the Company or
\n a Subsidiary thereof or (E) any breach or violation of the Company’s Code
\n of Conduct, as amended from time to time. Notwithstanding the foregoing, a
\n breach of Grantee’s duty of loyalty to the Company as described in
\n subclause (A) or (E) of clause (v) of the preceding sentence shall not be
\n grounds for a termination For Cause unless such breach has had or could
\n reasonably be expected to have a significant adverse effect on the
\n business or reputation of the Company.<\/p>\n
(i) “Fundamental Corporate Event” shall mean any stock dividend, extraordinary
\n cash dividend, recapitalization, reorganization, merger, consolidation,
\n split-up, spin-off, combination, exchange of shares, warrants or rights
\n offering to purchase Common Stock at a price substantially below fair
\n market value, or similar event.<\/p>\n
(j) “Good Reason” means a termination of Grantee’s employment by Grantee
\n within 90 days following (i) a reduction in Grantee’s annual Base Salary
\n or incentive compensation opportunity as provided under Paragraph 3(b) of
\n the employment agreement signed by Grantee and the Company dated as of
\n December 8, 1995 (the “Employment Agreement”), (ii) a material reduction
\n in Grantee’s positions, duties and responsibilities from those described
\n in Paragraph 2 of the Employment Agreement, (iii) the relocation of
\n Grantee’s principal place of employment to a location more than 50 miles
\n from the location at which he performed his principal dudes on the date
\n immediately prior to such relocation, (iv) a breach of the obligation to
\n provide Grantee with the benefits required to be provided in accordance
\n with Paragraph 5(a) of the Employment Agreement, (v) a failure by the
\n Company to pay any amounts due and owing to Grantee within 10 days
\n following written notice from Grantee of such failure to pay, or (vi) any
\n other material breach of the Company’s obligations to Grantee under the
\n Employment Agreement that significantly affects the compensation or
\n benefits payable to Grantee or materially impairs Grantee’s ability to
\n perform the duties and responsibilities of his position. Notwithstanding
\n the foregoing, a termination shall not be treated as a termination for
\n Good Reason (i) if Grantee shall <\/p>\n
23
\n 24<\/p>\n
have consented in writing to the occurrence of the event giving rise to
\n the claim of termination for Good Reason or (ii) unless Grantee shall have
\n delivered a written notice to the Chief Executive Officer of the Company
\n within 60 days of his having actual knowledge of the occurrence of one or
\n such events stating that he intends to terminate his employment for Good
\n Reason and specifying the factual basis for such termination, and such
\n event shall not have been cured within 30 days of the receipt of such
\n notice.<\/p>\n
(k) “Grantee” means the person named above to whom this Option has been
\n granted.<\/p>\n
(l) “Interim Performance Period” means the period of time beginning on the
\n Effective Date and ending on April 28, 1997.<\/p>\n
(m) “Option” means the option herein granted.<\/p>\n
(n) “Option Price” means the amount per share of Common Stock required to be
\n paid upon the exercise of this Option, as set forth above, or such other
\n amount per share of Common Stock as may result by operations of Article IV
\n of this Agreement.<\/p>\n
(o) “Optioned Shares” means the number of shares of Common Stock represented
\n by this Option, as set forth above, or such other amount as may result by
\n operation of Article IV of this Agreement.<\/p>\n
(p) “Performance Target” means the performance objective measured by the price
\n of the Common Stock as described in Article II.<\/p>\n
(q) “Performance Period” means the period of time beginning on the Effective
\n Date and ending on April 28, 1998.<\/p>\n
(r) “Plan” means the Aetna Life and Casualty Company 1994 Stock Incentive
\n Plan.<\/p>\n
(s) “Retirement” means the termination of employment of a Grantee from active
\n service with the Company or a Subsidiary under circumstances which would
\n entitle an employee of the Company or a Subsidiary to an immediate pension
\n under one of the Company’s approved retirement plans (such pension may be
\n actuarially reduced for early commencement of benefits).<\/p>\n
(t) “Shares of Stock” or “Stock” means the Common Stock.<\/p>\n
(u) “Subsidiary” means any entity of which, at the time such subsidiary status
\n is to be determined, at least 50% of the total combined voting power of
\n all classes of stock in such entity is held by the Company and its
\n Subsidiaries (exclusive of ownership by the entity whose subsidiary status
\n is being determined).<\/p>\n
24
\n 25<\/p>\n
(v) “Successor” means the legal representative of the estate of a deceased
\n Grantee or the person or persons who shall acquire the right to exercise
\n an Option by bequest or inheritance or by reason of the death of the
\n Grantee.<\/p>\n
25
\n 26<\/p>\n
ARTICLE II<\/p>\n
TERM OF OPTION AND VESTING<\/p>\n
(a) The Term of this Option shall commence on the Effective Date and shall
\n terminate, unless sooner terminated by the terms of the Plan or this
\n Agreement, at:<\/p>\n
(i) the close of the Company’s business on the day preceding the tenth
\n anniversary of the Effective Date, if the Company is open for
\n business on such day; or<\/p>\n
(ii) the close of the Company’s business on the next preceding day that
\n the Company is open for business.<\/p>\n
(b) Except as provided in (c), (d) and (e) below, all or a portion of this
\n Option will become vested and the Option will be exercisable on April 28,
\n 1998 only to the extent the Fair Market Value of the Common Stock meets or
\n exceeds the Performance Targets described below. A Performance Target
\n shall be deemed to have been met only to the extent the Fair Market Value
\n of the Common Stock meets or exceeds the Performance Target for at least
\n five consecutive trading business days at any time during the Performance
\n Period.<\/p>\n
\n\n ————————————————-
\n Performance Target Amount Vested
\n ————————————————-
\n
\n Below $62 Option does not vest
\n $62 33%
\n $67 67%
\n $73 or above 100%
\n ————————————————-
\n<\/c><\/s><\/caption>\n<\/table>\n The portion of the Option which shall vest at performance levels between
\n $62 and $73 shall be determined by mathematical interpolation between the
\n respective measuring points. Notwithstanding anything else contained
\n herein to the contrary, the portion of the Option which has become vested
\n under Section (b), if any, shall be reduced by the amount which has become
\n vested pursuant to (c) below.<\/p>\n
(c) If the Performance Targets described above are met or exceeded during the
\n Interim Performance Period, 50% of the amount which would have become
\n vested in accordance with the above schedule will become vested on April
\n 28, 1997.<\/p>\n
(d) This Option may become vested pursuant to (b) and (c) above only if the
\n Grantee is an active employee of the Company or a Subsidiary as of the
\n last day of the Performance Period or the Interim Performance Period, as
\n the case may be; provided, however, if the Company involuntarily
\n terminates the employment of the Grantee (other than “For Cause”), the
\n Grantee dies or terminates employment for reason of Disability, or if the
\n Grantee voluntarily terminates employment for “Good Reason,” the Option
\n may <\/p>\n
26
\n 27<\/p>\n
continue to vest for such Grantee if the Performance Targets are met
\n during the Performance Period or Interim Performance Period.<\/p>\n
(e) If the Performance Targets are not met as of the end of the Performance
\n Period, the Options will become vested on April 28, 2002, provided the
\n Grantee is an active employee of the Company or a Subsidiary on that date.<\/p>\n
ARTICLE III<\/p>\n
METHOD OF OPTION EXERCISE<\/p>\n
An option is exercisable only after it has become vested as provided in Article
\nII above. In order to exercise this Option, Grantee must comply with procedures
\nadopted by the Company from time to time. Under current procedures, the Grantee
\nmust deliver or mail to the Committee, Attention: Manager, Grantee Compensation,
\nAetna Human Resources, a properly executed exercise notification letter on the
\nappropriate form along with payment of the Option Price. If Grantee is using the
\ncashless exercise program offered by the Company, the exercise notice must be
\ndelivered to the participating broker.<\/p>\n
In addition, if the Grantee has been notified that he or she must consult with a
\nmember of the Company’s Law and Regulatory Affairs Department prior to engaging
\nin transactions in Aetna stock, Grantee must consult with the Law and Regulatory
\nAffairs prior to exercising this Option.<\/p>\n
ARTICLE IV<\/p>\n
CAPITAL CHANGES<\/p>\n
Except as otherwise specifically provided in Article VI, in the event that the
\nCommittee shall determine that any Fundamental Corporate Event affects the
\nCommon Stock such that an adjustment is required to preserve, or to prevent
\nenlargement of, the benefits or potential benefits made available under this
\nPlan, then the Committee may, in such manner as the Committee may deem
\nequitable, adjust the (i) the number and kind of shares subject to the Option
\n(including substitution of shares or Options of another company), (ii) the
\nPerformance Targets, or (iii) the Option Price. Additionally, the Committee may
\nmake provision for a cash payment to a Grantee or the Successor of the Grantee.
\nHowever, the number of Shares of Stock subject to the Option shall always be a
\nwhole number.<\/p>\n
ARTICLE V<\/p>\n
TERMINATION OF OPTION<\/p>\n
(a) Except as provided in (d) below, if the Grantee shall cease, for reason of
\n death, Disability or Retirement, to be employed by the Company or its
\n Subsidiaries during <\/p>\n
27
\n 28<\/p>\n
the Term of the Option, the Grantee or Successor of the Grantee may
\n exercise a vested Option until the earlier of:<\/p>\n
(i) the expiration of the Term of the Option; or<\/p>\n
(ii) a period not to exceed five years following such cessation of
\n employment.<\/p>\n
(b) Except as provided in (a) above or (d) below, if the Grantee voluntarily
\n ceases to be employed by the Company or its Subsidiaries (other than for
\n “Good Reason”) during the Term of the Option, the Grantee may exercise a
\n vested Option until the earlier of:<\/p>\n
(i) the expiration of the Term of the Option; or<\/p>\n
(ii) a period not to exceed ninety days following such cessation of
\n employment;<\/p>\n
(c) Except as provided in (a) above or (d) below, if the Grantee involuntarily
\n ceases to be employed by the Company or its Subsidiaries other than for
\n cause, or if Grantee voluntarily terminates employment for “Good Reason”
\n during the Term of the Option, the Grantee may exercise a vested Option
\n under the later of the expiration of four years from the Effective Date,
\n or ninety days following such cessation of employment (but not following
\n the expiration of the Term of the Option).<\/p>\n
(d) An Option that has not become vested as provided in Article II above at
\n the time of cessation of employment (or after cessation of employment as
\n provided in Article II(d)) may not be exercised thereafter. No Option may
\n be exercised after the Company has terminated the employment of the
\n Grantee For Cause, except that the Committee may, in its sole discretion,
\n permit exercises for a period of up to ninety days in cases where the
\n Committee shall determine such period is warranted under the particular
\n circumstances.<\/p>\n
(e) If the Grantee has not entered into a written employment agreement
\n satisfactory to the Company prior to February 16, 1996, this Option shall
\n immediately terminate as of that date and shall have no further force or
\n effect. In addition, if Grantee fails to comply with the terms of any
\n written employment agreement entered into with the Company, said failure
\n shall cause this Option to immediately terminate, whether or not the
\n Option has become vested.<\/p>\n
(f) Employment for purposes of determining eligibility for vesting
\n post-employment exercise rights of the Grantee under this Agreement shall
\n mean continuous full-time salaried employment with the Company or a
\n Subsidiary and shall include periods during which the Grantee is on
\n vacation, sick leave, or other approved absence, or in receipt of
\n severance pay or other form of salary continuation benefit.<\/p>\n
28
\n 29<\/p>\n
(g) Except as otherwise herein provided, exercise of this Option, whether by
\n the Grantee or the Successor of the Grantee, shall be subject to all terms
\n and conditions of this Agreement.<\/p>\n
29
\n 30<\/p>\n
ARTICLE VI<\/p>\n
CHANGE-OF-CONTROL<\/p>\n
(a) For purposes of this Article VI, a “Change of Control” means the happening
\n of any of the following:<\/p>\n
(i) When any “person” as defined in Section 3(a)(9) of the Securities
\n Exchange Act of 1934, as amended (the “Exchange Act”) and as used in
\n Sections 13(d) and 14(d) thereof, including a “group” as defined in
\n Section 13(d) of the Exchange Act but excluding the Company and any
\n subsidiary thereof and any employee benefit plan sponsored or
\n maintained by the Company or any Subsidiary (including any trustee
\n of such plan acting as trustee), directly or indirectly, becomes the
\n “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act,
\n as amended from time to time), of securities of the Company
\n representing 20 percent or more of the combined voting power of the
\n Company’s then outstanding securities;<\/p>\n
(ii) When, during any period of 24 consecutive months after the
\n Commencement Date, the individuals who, at the beginning of such
\n period, constitute the Board (the “Incumbent Directors”) cease for
\n any reason other than death to constitute at least a majority
\n thereof, provided that a director who was not a director at the
\n beginning of such 24-month period shall be deemed to have satisfied
\n such 24-month requirement (and be an Incumbent Director) if such
\n director was elected by, or on the recommendation of or with the
\n approval of, at least two-thirds of the directors who then qualified
\n as Incumbent Directors either actually (because they were directors
\n at the beginning of such 24-month period) or by prior operation of
\n this Article VI(a)(ii); or<\/p>\n
(iii) The occurrence of a transaction requiring stockholder approval for
\n the acquisition of the Company by an entity other than the Company
\n or a subsidiary through purchase of assets, or by merger, or
\n otherwise.<\/p>\n
(b) Unless the Board (or the Committee) shall otherwise determine in the
\n manner set forth in Paragraph (c) below and notwithstanding anything in
\n this Agreement to the contrary, this Option shall become fully exercisable
\n upon the occurrence of a Change of Control (as defined in Paragraph (a)
\n above) and shall remain exercisable for a period of at least one year
\n thereafter regardless of whether Grantee continues to be employed by the
\n Company or, if longer, for the period during which such Option would
\n otherwise by exercisable in accordance with its terms.<\/p>\n
(c) Notwithstanding paragraph (b) above, no acceleration of exercisability
\n shall occur with respect to any Option if the Board (or the Committee)
\n reasonably determines in good faith, prior to the occurrence of a Change
\n of Control, that such Option shall be honored or assumed, or new rights
\n substituted therefor (such honored, assumed or <\/p>\n
30
\n 31<\/p>\n
substituted Option being hereinafter referred to as an “Alternative
\n Option”) by the successor in interest to the Company, provided that any
\n such Alternative Option must:<\/p>\n
(i) provide Grantee with rights and entitlements substantially
\n equivalent to or better than the rights, terms and conditions
\n applicable under the Option, including, but not limited to, an
\n identical or better exercise and vesting schedule and identical or
\n better timing and methods of payment;<\/p>\n
(ii) have substantially equivalent economic value to such Option
\n (determined at the time of the Change of Control); and<\/p>\n
(iii) have terms and conditions which provide that, in the event that the
\n Company involuntarily terminates employment of Grantee for any
\n reason or if the Grantee terminates employment for Good Reason
\n within two years following a Change of Control, any conditions on
\n Grantee’s rights under, or any restrictions on exercisability
\n applicable to, each such Alternative Option shall be waived or shall
\n lapse, as the case may be and the Alternative Option shall remain
\n exercisable until the second anniversary of the Change of Control
\n or, if longer, for the period during which such Alternative Option
\n would otherwise be exercisable in accordance with its terms or the
\n provisions of the plan under which it is granted that permit the
\n longest post-termination exercise period for involuntary
\n terminations (other than due to death, disability or retirement).<\/p>\n
ARTICLE VII<\/p>\n
OTHER TERMS<\/p>\n
(a) Grantee understands that the Grantee shall not have any rights as
\n stockholder by virtue of the grant of an Option but only with respect to
\n shares of Common Stock actually issued to the Grantee in accordance with
\n the terms hereof.<\/p>\n
(b) Anything herein to the contrary notwithstanding, the Company may postpone
\n the exercise of the Option for such time as the Committee in its
\n discretion may deem necessary, in order to permit the Company with
\n reasonable diligence (i) to effect or maintain registration under the
\n Securities Act of 1933, as amended, of the Plan or the shares of Common
\n Stock issuable upon the exercise of the Option, or (ii) to determine that
\n the Plan and such shares are exempt from registration; and the Company
\n shall not be obligated by virtue of this Option Agreement or any provision
\n of the Plan to recognize the exercise of the Option or to sell or issue
\n shares of Common Stock in violation of said Act or of the law of any
\n government having jurisdiction thereof. Any such postponement shall not
\n extend the Term of the Option; and neither the Company nor its Board shall
\n have any obligation or liability to the Grantee, or to the Grantee’s
\n Successor, with respect to any shares of Common Stock as to which the
\n Option shall lapse because of such postponement.<\/p>\n
31
\n 32<\/p>\n
(c) The Option shall be nontransferable and nonassignable except by will and
\n by the laws of descent and distribution. During the Grantee’s lifetime,
\n the Option may be exercised only by the Grantee.<\/p>\n
(d) This Option is not an incentive stock option as described in the Internal
\n Revenue Code of 1986, as amended, Section 422A(b).<\/p>\n
(e) This Agreement is subject to the 1994 Stock Incentive Plan heretofore
\n adopted by the Company and approved by its shareholders. The terms and
\n provisions of the Plan (including any subsequent amendments thereto) are
\n hereby incorporated herein by reference. In the event of a conflict
\n between any term or provision contained herein and a term or provision of
\n the Plan, the applicable terms and provisions of the Plan will govern and
\n prevail.<\/p>\n
IN WITNESS WHEREOF, AETNA LIFE AND CASUALTY COMPANY has caused this Option
\nAgreement to be executed as of the Effective Date, and Grantee has accepted the
\nterms and provisions hereof.<\/p>\n
AETNA LIFE AND CASUALTY COMPANY<\/p>\n
By:_________________________________
\n Its Chairman<\/p>\n
Accepted:________________________
\n (Signature)<\/p>\n
Name: ________________________<\/p>\n
Title: ________________________<\/p>\n
Social Security Number:__________<\/p>\n
Dated: ________________________<\/p>\n
32
\n 33<\/p>\n
EXHIBIT B TO EMPLOYMENT AGREEMENT<\/p>\n
RELEASE AGREEMENT<\/p>\n
I,____________________ acknowledge that this document accurately reflects
\nan agreement entered into between me and Aetna Life and Casualty Company (the
\n“Company”) as of this ______ day of __________, 199__. In consideration for the
\nbenefits and consideration set forth in Paragraph 6 of the attached employment
\nagreement (the “Agreement”), I hereby agree to the following:<\/p>\n
1. DEFINITION. In this agreement the word “Company” means not only the
\nCompany by which I was employed, but also parent and subsidiary corporations,
\nany affiliated entities whether or not incorporated, the employee, agents,
\nofficers, directors and shareholders of all such entities and any person or
\nentity which may succeed to the rights and liabilities of such entities by
\nassignment or otherwise.<\/p>\n
2. RELEASE. I hereby release and hold harmless (on behalf of myself and my
\nfamily, heirs, executors, successors and assigns) now and forever, the Company
\nfrom and waive any claim that I have presently, may have or have had in the
\npast, known or unknown, against the Company by reason of my employment by the
\nCompany including, without limitation, the termination thereof, other than
\nclaims I may have (i) to the payment of amounts due and payable in accordance
\nwith the terms of the Agreement, including without limitation the Severance
\nBenefits and the Vested Benefits (as each such term is defined in the Agreement)
\nand (ii) to be indemnified by the Company pursuant to its applicable policies
\nand practices from and against any third party claims arising out of or relating
\nto Executive’s employment with or other services on behalf of the Company or any
\nsubsidiary of the Company.<\/p>\n
3. EXTENT OF RELEASE. This agreement is valid whether any claim arises
\nunder any federal, state or local statute (including, without limitation, Title
\nVII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
\nDiscrimination in Employment Act of 1967, the Equal Pay Act, the Americans with
\nDisabilities Act of 1990, the Employee Retirement Income Security Act of 1974
\nand all other statutes regulating the terms and conditions of my employment),
\nregulation or ordinance, under the common law or in equity (including any claims
\nfor wrongful discharge or otherwise), or under any policy, agreement,
\nunderstanding or promise, written or oral, formal or informal, between the
\nCompany and myself.<\/p>\n
4. CONSIDERATION. The consideration hereby provided to me under the
\nAgreement is not required under the Company’s standard policies and I know of no
\ncircumstances other than my agreeing to the terms of this agreement which would
\nrequire the Company to provide such consideration.<\/p>\n
33
\n 34<\/p>\n
5. RESTRICTIONS. I have not filed, nor will I initiate or cause to be
\ninitiated on my behalf, any complaint, charge, claim or proceeding against the
\nCompany before any local, state or federal agency, court or other body relating
\nto my employment or the termination thereof (each individually a “Proceeding”),
\nnor will I participate in any Proceeding. I waive any right I may have to
\nbenefit in any manner from any relief (whether monetary or otherwise) arising
\nout of any Proceeding, including any EEOC proceeding. I understand that by
\nentering into this agreement, I will be limiting the availability of certain
\nremedies that I may have against the Company and limiting also my ability to
\npursue certain claims against the Company. The foregoing will not be used to
\njustify interfering with any right I may have to file a charge or participate in
\nan investigation or proceeding conducted by the EEOC.<\/p>\n
6. PENALTIES. If I initiate or participate in any legal actions, as
\ndescribed above, the Company shall have the right, but shall not be obligated,
\nto deem this agreement void without effect and to require me to repay to the
\nCompany any amounts (other than Earned Salary and Vested Benefits) payment of
\nwhich was conditioned on the execution of this agreement, plus interest thereon
\nfrom the original date of payment at an annual rate, compounded semi-annually,
\nequal to the prime rate as quoted in the Wall Street Journal on my date of
\ntermination, plus 2 percent and to terminate any benefit or payments (other than
\nwith respect to Vested Benefits) that are otherwise payable under the Agreement.<\/p>\n
7. RIGHT TO COUNSEL. The Company advises me that I should consult with an
\nattorney prior to execution of this agreement and the Agreement. I understand
\nthat it is in my best interest to have this document and the Agreement reviewed
\nby an attorney of my own choosing and at my own expense, and I hereby
\nacknowledge that I have been afforded a period of at least twenty-one days
\nduring which to consider this agreement and the Agreement and to have this
\nagreement and the Agreement reviewed by my attorney.<\/p>\n
8. SEVERABILITY CLAUSE. Should any provision or part of this agreement be
\nfound to be invalid or unenforceable, only that particular provision or part so
\nfound and not the entire agreement shall be inoperative.<\/p>\n
9. EVIDENCE. This document may be used as evidence in any proceeding
\nrelating to my employment or the termination thereof. I waive all objections as
\nto its form.<\/p>\n
10. FREE WILL. I am entering into this agreement and the Agreement of my
\nown free will. The Company has not exerted any undue pressure or influence on me
\nin this regard. I have had reasonable time to determine whether entering into
\nthis agreement and the Agreement is in my best interest. I understand that if I
\nrequest additional time to review the provisions of this agreement and the
\nAgreement, a reasonable extension of time will be granted.<\/p>\n
11. REVOCATION. This agreement may be revoked by me within seven days
\nafter the date on which I sign this agreement and I understand that this
\nagreement and the Agreement are not binding or enforceable until such seven day
\nperiod has expired. Any such revocation must be made in a signed letter executed
\nby me and received by the Company at <\/p>\n
34
\n 35<\/p>\n
the following address no later than 5 p.m. Eastern Standard Time on the seventh
\nday after I have executed this agreement and the Agreement: _____________. I
\nunderstand that if I revoke this agreement, the Agreement will not be effective
\nor enforceable and I will not be entitled to any benefits thereunder.<\/p>\n
12. NON-ADMISSION. Nothing contained in this agreement shall be deemed or
\nconstrued as an admission of wrongdoing or liability on the part of the Company.<\/p>\n
13. GOVERNING LAW. This agreement and the Agreement shall be construed in
\naccordance with the laws of the State of Connecticut, applicable to contracts
\nmade and entirely to be performed therein.<\/p>\n
Date: ________________________ ____________________________________<\/p>\n
35
\n 36<\/p>\n
[LOGO] Interoffice Mary Ann Champlin
\n Communication Senior Vice President
\n Aetna Human Resources, RC3A
\n (203) 273-8371
\n Fax: (203) 560-8721<\/p>\n
To… Thomas J. McInerney<\/p>\n
Date… May 2, 1996<\/p>\n
Subject… Employment Agreement<\/p>\n
This memorandum is intended to amend that certain Employment Agreement dated as
\nof December 19, 1995 by and between Aetna Life and Casualty Company and you.<\/p>\n
1. Paragraph 1 shall be amended and restated as follows:<\/p>\n
Employment. Except as provided in Paragraph 6(a), the Company shall
\n continue to employ Executive and Executive agrees to remain employed by
\n the Company under the terms of this Agreement for the period commencing on
\n the date first written above and ending December 31, 1998. The period
\n during which Executive is employed pursuant to this Agreement shall be
\n referred to as the “Contract Employment Period”. The Contract Employment
\n Period shall automatically be extended for one additional year unless, not
\n later than 180 days prior to the end of the Contract Employment Period,
\n the Company or Executive shall have given notice not to extend the
\n Contract Employment Period. The giving by the Company of a notice not to
\n extend the Contract Employment Period shall not constitute a Termination
\n Without Cause or a Termination for Good Reason (as defined below). Upon
\n the expiration of the Contract Employment Period, Executive’s employment
\n with the Company shall continue on an at-will basis.<\/p>\n
2. Paragraph 3 shall be amended and restated as follows:<\/p>\n
Compensation<\/p>\n
a. Base Salary. During the Contract Employment Period, the Company
\n shall pay Executive a base salary at the annual rate of $450,000
\n effective April 29, 1996. The Board shall periodically review
\n Executive’s base salary and the Company may, in its discretion,
\n increase such base salary by an amount it determines to be
\n appropriate. Any such increase shall not reduce or limit any other
\n obligation of the Company hereunder. Executive’s annual base salary
\n payable hereunder, as it may be increased from time to time and
\n without reduction for any amounts deferred as described above, is
\n referred to herein as “Base Salary”. Executive’s Base Salary, as in
\n effect from time to time, may not be reduced by the Company without
\n Executive’s consent, provided that the Base Salary payable under
\n this paragraph shall be reduced to the extent Executive elects to
\n defer or reduce such salary under the terms of any deferred
\n compensation or savings plan or other employee benefit arrangement
\n maintained or established by the Company. The Company shall pay
\n Executive the portion of his Base Salary not deferred in accordance
\n with its customary periodic payroll practices.<\/p>\n
b. Incentive Compensation. During the term of the Contract Employment
\n Period, Executive shall remain eligible for participation in the
\n Company’s existing and future annual and long term <\/p>\n
36
\n 37<\/p>\n
incentive compensation programs at a level consistent with his
\n position at the Company and the Company’s then current policies and
\n practices; provided that following any assignment of this Agreement
\n in accordance with the provisions of Paragraph 9(c) or a Change in
\n Control of the Company (as defined in Paragraph 7(e)), the
\n calculation of the amount payable as annual incentive compensation
\n and the conditions upon which such bonus shall be payable shall be
\n no less favorable to the Executive (taking into account reasonable
\n changes in the Company’s goals and objectives) than the annual bonus
\n opportunity that had been made available to the Executive for the
\n fiscal year ended immediately prior to such assignment or Change in
\n Control. Without limiting the generality of the foregoing, beginning
\n with the performance year 1997, for each performance year ending
\n during the term hereof, Executive shall receive the opportunity to
\n receive an annual bonus of at least 80% of his Base Salary (the
\n “Minimum Bonus Percentage”), subject to satisfaction of such
\n reasonable performance criteria as shall be established with respect
\n to such year.<\/p>\n
3. Paragraph 4 shall be amended and restated as follows:<\/p>\n
Options.<\/p>\n
a. Stock Option Grant. Contingent upon the execution of this Agreement
\n by the Executive, the Company has granted Executive an option,
\n having a ten-year term, to purchase 25,000 shares of the Company’s
\n Common Stock at an exercise price per share equal to $57 a share
\n (the “Option”). Except to the extent specified below, the terms of
\n the Option shall be determined in accordance with the terms of the
\n 1994 Stock Incentive Plan (the “1994 Plan”) and shall be set forth
\n in the separate agreement embodying the grant of such Option (the
\n “Option Agreement”), the form of which is attached hereto as Exhibit
\n A.<\/p>\n
b. Performance Vested Stock Option Grant. Contingent upon the execution
\n of this amendment to the Agreement by the Executive, the Company has
\n granted Executive an option, having a ten-year term, to purchase
\n 44,400 shares of the Company’s Common Stock at an exercise price per
\n share equal to $71 a share (also referred to as the “Option”).
\n Except to the extent specified below, the terms of the Option shall
\n be determined in accordance with the terms of the 1994 Stock
\n Incentive Plan (the “1994 Plan”) and shall be set forth in the
\n separate agreement embodying the grant of such Option (also referred
\n to as the “Option Agreement”).<\/p>\n
Except as amended herein, the Employment Agreement shall remain in full force
\nand effect.<\/p>\n
Aetna Life and Casualty Company<\/p>\n
By: \/s\/ Mary Ann Champlin \/s\/ Thomas J. McInerney
\n ——————————— ——————————-
\n Thomas J. McInerney<\/p>\n
Date: May 2, 1996 Date: May 7, 1996
\n————————- ——————————-<\/p>\n
37
\n 38<\/p>\n
[LOGO] Interoffice Communication<\/p>\n
Mary Ann Champlin
\n Aetna Human Resources, RC3A
\n (860) 273-8371
\n Fax: (860) 560-8721<\/p>\n
To Thomas McInerney<\/p>\n
Date July 22, 1996<\/p>\n
Subject Employment Agreement<\/p>\n
I am pleased to inform you that effective July 19, 1996, Aetna Inc. has assumed
\nall of the obligations of Aetna Services, Inc. (formerly Aetna Life and Casualty
\nCompany) under your Employment Agreement with Aetna Services, Inc. All
\nreferences to the “Company” in your Employment Agreement will hereinafter be
\ndeemed to mean both Aetna Services, Inc. and Aetna Inc. Among other things, this
\nmeans that the Change in Control provisions of your Employment Agreement would
\nbe triggered by a change in control of either Aetna Services, Inc. or Aetna Inc.<\/p>\n
By way of background, Aetna Inc. became the ultimate parent within the Aetna
\nholding company system as a result of the merger with U.S. Healthcare. Your
\nEmployment Agreement was entered into with Aetna Services, Inc., which is now a
\ndirect subsidiary of Aetna Inc. We felt it would be appropriate for the new
\nultimate parent, Aetna Inc., to assume these obligations to place you on an
\nequivalent footing post-merger.<\/p>\n
The assumption of your Employment Agreement is self-executing. You do not need
\nto take any action in response to this letter. If you have any questions or
\nconcerns, please let me know.<\/p>\n
\/s\/ Mary Ann Champlin<\/p>\n
38<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6587],"corporate_contracts_industries":[9440],"corporate_contracts_types":[9539,9544],"class_list":["post-38897","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-aetna-inc","corporate_contracts_industries-health__plans","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/38897","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=38897"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=38897"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=38897"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=38897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}