EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of November 5, 2001, by and between The
Hartford Financial Services Group, Inc., a Delaware corporation (the "Company"),
and Xxxxx X. Xxxxxxxxxxxx ("Executive").
W I T N E S S E T H:
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WHEREAS, the Company wishes to recognize the substantial services
that Executive has provided to the Company; and
WHEREAS, the Company desires that Executive continue to perform
such services and to enter into an agreement embodying the terms of such
employment (the "Agreement"); and
WHEREAS, Executive desires to continue such employment and enter
into such Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive hereby agree as follows:
1. EMPLOYMENT.
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(A) AGREEMENT TO EMPLOY. Upon the terms and subject to the conditions of
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this Agreement, the Company hereby agrees to continue to employ Executive
and Executive hereby agrees to continue his employment by the Company.
(B) TERM OF EMPLOYMENT. Except as otherwise provided below, the Company
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shall employ Executive for the period commencing on the date first written
above (the "Commencement Date") and ending on the third anniversary of the
Commencement Date. At the expiration of the original term or any extended
term (each a "Renewal Date"), Executive's employment hereunder shall be
extended automatically, upon the same terms and conditions, for successive
one-year periods, unless either party shall give written notice to the
other of its intention not to renew such employment at least twelve months
prior to such Renewal Date. In the event that this Agreement expires at the
end of its then current term by reason of either party having delivered a
written notice of non-renewal to the other in accordance with this Section
1(b), then, except as otherwise provided in Section 9, neither the Company
nor Executive shall have any further duties or obligations to, or rights
against, the other party under or pursuant to this Agreement; provided that
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notwithstanding the foregoing, the Company shall
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continue to have any and all rights against Executive in the event that
Executive was involved during the Employment Period in acts that would have
permitted a Termination For Cause as defined in Section 5(d) hereof.
Without limiting the generality of the foregoing, upon the occurrence of a
Change of Control (as defined below), the term of this Agreement shall be
extended automatically without any action by either party until the third
anniversary of such Change of Control. Notwithstanding the foregoing, if
not previously terminated pursuant to Sections 1(b), 5(a) or 6(a), the term
of this Agreement shall terminate on the last day of the month in which
Executive attains age 65, and such a termination upon Executive reaching
age 65 shall be deemed to be a Termination Due to Retirement for purposes
of this Agreement. The period during which Executive is employed pursuant
to this Agreement, including any extension thereof in accordance with this
Section 1(b), shall be referred to as the "Employment Period."
2. POSITION AND DUTIES.
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During the Employment Period, Executive shall serve as Group Senior Vice
President and Chief Investment Officer of the Company, President of HIMCO, and a
member of the Office of the Chairman of the Company, and/or in such other
position or positions with the Company or its affiliates commensurate with his
position and experience as the Board of Directors of the Company (the "Board")
shall from time to time specify. During the Employment Period, Executive shall
have the duties, responsibilities and obligations customarily assigned to
individuals serving in the position or positions in which Executive serves
hereunder and such other duties, responsibilities and obligations as the Board
shall from time to time specify. Executive shall devote his full time to the
services required of him hereunder, except for vacation time and reasonable
periods of absence due to sickness, personal injury or other disability, and
shall use his best efforts, judgement, skill and energy to perform such services
in a manner consonant with the duties of his position and to improve and advance
the business and interests of the Company and its affiliates. During the
Employment Period, Executive shall comply with the Code of Corporate Conduct of
the Company. Unless and to the extent inconsistent with the terms of any
published Company policy or code of conduct as in effect on the date hereof and
as hereafter amended, nothing contained herein shall preclude Executive from (a)
serving on the board of directors of any business corporation with the consent
of the Board, (b) serving on the board of, or working for, any charitable or
community organization, or (c) pursuing his personal financial and legal
affairs, so long as the foregoing activities, individually or collectively, do
not interfere with the performance of Executive's duties hereunder or violate
any of the provisions of Section 9 hereof.
3. COMPENSATION.
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(A) BASE SALARY. During the Employment Period, the Company shall pay
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Executive a base salary at the annual rate as in effect on the date hereof.
The annual base salary payable under this paragraph shall be reduced,
however, to the extent that Executive
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elects to defer such salary under the terms of any deferred compensation or
savings plan or arrangement maintained or established by the Company or its
affiliates. The Board or the appropriate committee of the Board may in its
discretion periodically review Executive's base salary in light of
competitive practices, the base salaries paid to other executive officers
of the Company and the performance of Executive and the Company and its
applicable affiliates, and may, in its discretion, increase such base
salary by an amount it determines to be appropriate. Any such increase
shall not reduce or limit any other obligation of the Company hereunder.
Executive's base salary (as set forth above or as may be increased from
time to time) shall not be reduced following any Change of Control, but may
be reduced prior to a Change of Control solely pursuant to a cost-saving
plan or structural realignment of total compensation elements that includes
all senior executives and only to the extent that such reduction is
proportionate to the reductions applicable to other senior executives.
Executive's annual base salary payable hereunder, as it may be increased or
reduced from time to time as provided herein and without reduction for any
amounts deferred as described above, shall be referred to herein as "Base
Salary." The Company shall pay Executive the portion of his Base Salary not
deferred not less frequently than in equal monthly installments.
(B) ANNUAL BONUS. For each calendar year ending during the Employment
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Period, Executive shall have the opportunity to earn and receive an annual
bonus, based on the achievement of target levels of performance, equal to
the percentage of his Base Salary used to calculate such annual bonus as of
the date hereof. Executive's annual bonus opportunity may be increased
above such percentage from time to time by the Board or the appropriate
committee thereof. Executive's annual bonus opportunity shall not be
reduced following any Change of Control, but may be reduced prior to a
Change of Control solely pursuant to a cost-saving plan or structural
realignment of total compensation elements that includes all senior
executives and only to the extent that such reduction is proportionate to
the reductions applicable to other senior executives. Executive's annual
bonus opportunity, as it may be increased or reduced from time to time as
provided herein, shall be referred to herein as "Target Bonus." The actual
bonus, if any, payable for any such year shall be determined in accordance
with the terms of the Company's Annual Executive Bonus Program or any
successor annual incentive plan (the "Annual Plan") based upon the
performance of the Company and/or its applicable affiliates and/or
Executive against target objectives established under such Annual Plan.
Subject to Executive's election to defer all or a portion of any annual
bonus payable hereunder pursuant to the terms of any deferred compensation
or savings plan or arrangement maintained or established by the Company or
its affiliates, any annual bonus payable under this Section 3(b) shall be
paid to Executive in accordance with the terms of the Annual Plan.
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(C) LONG-TERM INCENTIVE COMPENSATION. During the Employment Period,
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Executive shall participate in all of the Company's existing and future
long-term incentive compensation programs for key executives at a level
commensurate with his position with the Company and consistent with the
Company's then current policies and practices, as determined in good faith
by the Board or the appropriate committee of the Board.
4. BENEFITS, PERQUISITES AND EXPENSES.
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(A) BENEFITS. During the Employment Period, Executive (and, to the extent
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applicable, his dependents) shall be eligible to participate in or be
covered under (i) each welfare benefit plan or program maintained or as
hereafter amended or established by the Company or its applicable
affiliates, including, without limitation, each group life,
hospitalization, medical, dental, health, accident or disability insurance
or similar plan or program of thereof, and (ii) each pension, retirement,
savings, deferred compensation, stock purchase or other similar plan or
program maintained or as hereafter amended or established by the Company or
its applicable affiliates, in each case to the extent that Executive is
eligible to participate in any such plan or program under the generally
applicable provisions thereof. Nothing in this Section 4(a) shall limit the
Company's right to amend or terminate any such plan or program in
accordance with the procedures set forth therein or as permitted by
applicable law.
(B) PERQUISITES. For each calendar year during the Employment Period,
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Executive shall be entitled to at least the number of paid vacation days
per year that Executive is entitled to as of the date hereof, and shall
also be entitled to receive such other perquisites as are generally
provided to him as of the date hereof or are hereafter provided to other
similarly situated senior executives of the Company in accordance with the
then current policies and practices of the Company.
(C) BUSINESS EXPENSES. During the Employment Period, the Company shall pay
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or reimburse Executive for all reasonable business expenses incurred or
paid by Executive in the performance of Executive's duties hereunder, upon
presentation of expense statements or vouchers and such other information
as the Company may require and in accordance with the generally applicable
policies and procedures of the Company.
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(D) OFFICE AND SUPPORT STAFF. During the Employment Period, Executive shall
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be entitled to an office with furnishings and other material appointments,
and to secretarial and other assistance, at a level that is at least
commensurate with the foregoing provided to him as of the date hereof or is
hereafter provided to other similarly situated senior executives of the
Company.
(E) INDEMNIFICATION. The Company shall indemnify Executive and hold
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Executive harmless from and against any claim, loss or cause of action,
regardless of whether asserted during or after the Employment Period,
arising from or out of Executive's performance as an officer, director or
employee of the Company or any of its affiliates or in any other capacity,
including any fiduciary capacity in which Executive serves at the request
of the Company, to the maximum extent permitted by applicable law and under
the Certificate of Incorporation and By-Laws of the Company, as may be
amended from time to time (the "Governing Documents"), provided that in no
event shall the protection afforded to Executive be less than that afforded
under the Governing Documents as in effect on the Commencement Date.
5. TERMINATION OF EMPLOYMENT.
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The provisions of this Section 5 shall apply prior to the occurrence of a Change
of Control and, if Executive is still in the Company's employ, shall again
become applicable upon the third anniversary of such Change of Control.
(A) EARLY TERMINATION OF THE EMPLOYMENT PERIOD. Notwithstanding
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Section 1(b) hereof, the Employment Period shall end upon the
earliest to occur of (i) a Termination For Cause, (ii) a
Termination Without Cause, (iii) a Voluntary Termination, (iv) a
Termination Due to Retirement, (v) a Termination Due to
Disability, or (vi) a Termination Due to Death.
(B) NOTICE OF TERMINATION. Communication of termination under this
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Section 5 shall be made to the other party by Notice of
Termination in the case of (i) a Termination For Cause, (ii) a
Termination Without Cause, or (iii) a Voluntary Termination.
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(C) BENEFITS PAYABLE UPON TERMINATION; RULES FOR DETERMINING REASON FOR
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TERMINATION.
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(I) BENEFITS PAYABLE UPON TERMINATION. Following the end
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of the Employment Period pursuant to Section 5(a),
Executive (or, in the event of his death, his surviving
spouse, if any, or if none, his estate) shall be paid the
type or types of compensation determined to be payable in
accordance with the following table, such payment to be
made in the form specified in such table and at the time
established pursuant to Section 7 hereof. Capitalized
terms used in such table shall have the meanings set
forth in Section 5(d) hereof.
(II) RULES FOR DETERMINING REASON FOR TERMINATION.
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(A) If a Voluntary Termination occurs on a date
that Executive is eligible for Retirement as
defined in The Hartford Investment and Savings
Plan, as may be amended from time to time, or
any successor plan thereof (the "Savings Plan"),
such Voluntary Termination shall instead be
treated as a Termination Due to Retirement
solely for purposes of this Section 5.
(B) No Termination Without Cause shall be
treated as a Termination Due to Retirement or a
Termination Due to Disability for purposes of
any Pro Rata Target Bonus, Severance Payment,
Equity Awards or Vested Benefits Enhancement
under this Section 5, notwithstanding the fact
that, either on, before or after the date of
termination of the Employment Period with
respect thereto, (I) Executive was eligible for
Retirement as defined in the Savings Plan, (II)
Executive requested to be treated as a retiree
for purposes of the Savings Plan or any other
plan or program of the Company or its
affiliates, or (III) Executive or the Company
could have terminated Executive's employment in
a Termination Due to Disability hereunder.
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=================================================================================================================
BENEFITS PAYABLE : NON-CHANGE OF CONTROL
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BENEFIT: Accrued Pro Rata Target Bonus Severance Equity Awards
Salary Payment
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FORM OF PAYMENT: Lump Sum Lump Sum Lump Sum Determined Under the
Applicable Plan
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Termination For Cause Payable Not Payable Not Payable Not Payable
------------------------ -------------- ------------------------ -------------- ---------------------------------
Termination Without Payable Payable Payable Options / Restricted Stock:
Cause Payable
Other Equity Awards:
Determined Under the Applicable
Plan
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Voluntary Payable Determined Under the Not Determined Under the Applicable
Termination Applicable Plan Payable Plan
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Termination Due to Payable Determined Under the Not Payable Determined Under the Applicable
Retirement Applicable Plan Plan
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Termination Due to Payable Payable Not Payable Determined Under the Applicable
Disability Plan
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Termination Due to Payable Payable Not Payable Determined Under the Applicable
Death Plan
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===========================================================================================
BENEFITS PAYABLE : NON-CHANGE OF CONTROL (Continued)
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BENEFIT: Vested Benefits Vested Benefits Welfare
Enhancement Benefits
Continuation
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FORM OF PAYMENT: Determined Under the Lump Sum Determined
Applicable Plan Under the
Applicable Plan
------------------------ ------------------------------ ------------------ ----------------
Termination For Cause Determined Under the Not Payable Not
Applicable Plan Available
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Termination Without Determined Under the Payable Available
Cause Applicable Plan
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Voluntary Determined Under the Not Payable Not Available
Termination Applicable Plan
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Termination Due to Determined Under the Not Payable Available
Retirement Applicable Plan
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Termination Due to Determined Under the Not Payable Available
Disability Applicable Plan
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Termination Due to Determined Under the Not Payable Not Available
Death Applicable Plan
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(D) DEFINITIONS.
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"ACCRUED SALARY" means any Base Salary earned, but unpaid, for
services rendered to the Company on or prior to the date on which
the Employment Period ends pursuant to Section 5(a) (other than
Base Salary deferred pursuant to Executive's election, as
contemplated by Section 3(a) hereof), plus any vacation pay
accrued by Executive as of such date.
"AVAILABLE" means that the particular benefit shall be made
available to Executive to the extent specifically provided herein
or required by applicable law.
"DETERMINED UNDER THE APPLICABLE PLAN" means that the
determination of whether a particular benefit shall or shall not
be paid to Executive, and, where specifically required by this
Agreement, the timing or form of any benefit payment, shall be
made solely by application of the terms of the plan or program
providing such benefit, except to the extent that the terms of
such plan or program are expressly superseded or modified by this
Agreement.
"EQUITY AWARDS" means the outstanding stock option, restricted
stock, performance share and other equity or long-term incentive
compensation awards, if any, held by Executive as of the date of
his termination.
"ERPS" means any excess retirement plans maintained or as
hereafter amended or established by the Company or its applicable
affiliates.
"ESPS" means any excess investment and savings plans maintained or
as hereafter amended or established by the Company or its
applicable affiliates.
"LUMP SUM" means a single lump sum cash payment.
"NOT AVAILABLE" means that the particular benefit shall be not be
made available to Executive, except to the extent required by
applicable law.
"NOT PAYABLE" means (i) with respect to benefits other than Equity
Awards, such benefits shall not be paid or otherwise provided to
Executive, and (ii) with respect to Equity Awards, such Equity
Awards, to the extent unvested, unexercisable, or subject to
restrictions that have not yet lapsed, shall be forfeited and/or
canceled as of the date of termination of the Employment Period,
unless otherwise determined by the Board or the appropriate
committee of the Board in its discretion.
"NOTICE OF TERMINATION" means (i) in the case of a Termination For
Cause, a written notice given by the Company to Executive within
30 calendar days of the Company's having actual knowledge of the
events giving rise to such Termination For Cause, (ii) in the case
of a Termination Without Cause, a written
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notice given by the Company to Executive at least 30 calendar days
before the effective date of such Termination Without Cause, and
(iii) in the case of a Voluntary Termination, a written notice
given by Executive to the Company indicating the effective date of
Executive's termination of the Employment Period in such Voluntary
Termination, such effective date to be no earlier than 30 days
following the date such notice is received by the Company from
Executive.
"PAYABLE" means (i) with respect to benefits other than those
described in clause (ii) of this paragraph, such benefits shall be
paid to Executive in the amount, at the time, and in the form
specified herein, and (ii) with respect to benefits described in
this clause (ii), the following shall apply solely in the event of
a Termination Without Cause, notwithstanding anything in the
applicable plan or program to the contrary: (A) with respect to
any outstanding stock options not yet expired as of the date of
termination of the Employment Period, Executive shall be treated
as though he remained in the employ of the Company for the two
year period following such date, and except to the extent that any
such options first expire during such period under the applicable
plan or program, (I) any such options that would have become
vested over such two year period solely by reason of Executive
remaining in the employ of the Company during such period shall
become immediately vested and nonforfeitable, (II) with respect to
any options that by their terms would vest if the stock of the
Company or an affiliate were to reach a specified market price,
such options shall become vested and nonforfeitable if and when
such stock reaches such price during such two year period, and
(III) Executive shall have an additional two years to exercise any
vested options (beyond the time to exercise such options permitted
under the applicable plan or program), and (B) with respect to any
restricted stock subject to restrictions that have not yet lapsed
as of the date of termination of the Employment Period, such
restrictions shall be deemed to have lapsed and such restricted
stock shall become immediately vested and nonforfeitable as of
such date.
"PRO-RATA TARGET BONUS" means an amount equal to the product of:
(i) an amount equal to the Target Bonus Executive would have been
entitled to receive under Section 3(b) for the calendar year in
which the Employment Period terminates, and (ii) a fraction (the
"Service Fraction"), the numerator of which is equal to the number
of rounded months (rounded to the nearest number of whole months)
in such calendar year which have elapsed as of the date of such
termination, and the denominator of which is 12; provided that, if
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the Employment Period terminates in the last quarter of any
calendar year, the Pro-Rata Target Bonus shall be the amount
determined under the above formula or, if greater, the product of:
(A) the bonus that would have been paid to Executive based on
actual performance for such calendar year, and (B) the Service
Fraction.
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"SEVERANCE PAYMENT" means an amount equal to two times the sum of:
(i) Executive's Base Salary at the rate in effect as of the date
of termination of the Employment Period, and (ii) Executive's
Target Bonus amount under Section 3(b) hereof for the calendar
year in which the Employment Period terminates.
"TERMINATION DUE TO DEATH" means a termination of Executive's
employment due to the death of Executive.
"TERMINATION DUE TO DISABILITY" means (i) a termination of
Executive's employment by the Company as a result of a
determination by the Board or the appropriate committee thereof
that Executive has been incapable of substantially fulfilling the
positions, duties, responsibilities and obligations set forth in
this Agreement on account of physical, mental or emotional
incapacity resulting from injury, sickness or disease for a period
of (A) at least four consecutive months, or (B) more than six
months in any twelve month period, or (ii) Executive's termination
of employment on account of Disability as defined in The Hartford
Investment and Savings Plan, as may be amended from time to time.
"TERMINATION DUE TO RETIREMENT" means Executive's termination of
employment on account of Executive's Retirement as defined in The
Hartford Investment and Savings Plan, as may be amended from time
to time.
"TERMINATION FOR CAUSE" means a termination of Executive's
employment by the Company for any of the following reasons: (i)
Executive is convicted of or enters a plea of guilty or nolo
----
contendere to a felony, a crime of moral turpitude, dishonesty,
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breach of trust or unethical business conduct, or any crime
involving the business of the Company or its affiliates; (ii) in
the performance of his duties hereunder or otherwise to the
detriment of the Company or its affiliates, Executive engages in
(A) willful misconduct, (B) willful or gross neglect, (C) fraud,
(D) misappropriation, (E) embezzlement, or (F) theft; (iii)
Executive willfully fails to adhere to the policies and practices
of the Company or devote substantially all of his business time
and effort to the affairs thereof, or disobeys the directions of
the Board to do either of the foregoing; (iv) Executive breaches
this Agreement in any material respect; (v) Executive is
adjudicated in any civil suit to have committed, or acknowledges
in writing or in any agreement or stipulation his commission, of
any theft, embezzlement, fraud or other intentional act of
dishonesty involving any other person; or (vi) Executive violates
the Code of Corporate Conduct of the Company. Executive shall be
permitted to respond and defend himself before the Board within 30
days after delivery to Executive of written notification of any
proposed Termination For Cause that specifies in detail the
reasons for such termination. If the majority of the members of
the Board (excluding
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Executive) do not confirm that the Company had grounds for a
Termination For Cause within 30 days after Executive has had his
hearing before the Board, Executive shall have the option of
treating his employment as not having terminated or as having been
terminated in a Termination Without Cause.
"TERMINATION WITHOUT CAUSE" means any involuntary termination of
Executive's employment by the Company other than a Termination For
Cause, a Termination Due to Disability or a Termination Due to
Death.
"VESTED BENEFITS" means amounts that are vested or that Executive
is otherwise entitled to receive, without the performance by
Executive of further services or the resolution of a contingency,
under the terms of or in accordance with any investment and
savings plan or retirement plan (including any plan providing
retiree medical benefits) of the Company or its affiliates, and
any ERPs or ESPs related thereto, and any deferred compensation or
employee stock purchase plan or similar plan or program of the
Company or its affiliates.
"VESTED BENEFITS ENHANCEMENT" means (i) a cash amount equal to the
present value, calculated using a discount rate equal to the then
prevailing applicable Federal rate as determined under Section
1274(d) of the Internal Revenue Code of 1986, as amended (the
"Code"), of the additional retirement benefits that would have
been payable or available to Executive under any ERPs, based on
(A) the age and service Executive would have attained or completed
had Executive continued in the Company's employ until the second
anniversary of the date of termination of the Employment Period,
and (B) where compensation is a relevant factor, his pensionable
compensation as of such date, such compensation to include, on the
same terms as apply to other executives, any Severance Payment
made to Executive, and (ii) solely for purposes vesting in any
benefits under any ESPs, Executive shall be treated as having
continued in the Company's employ until the second anniversary of
the date of termination of the Employment Period.
"VOLUNTARY TERMINATION" means any voluntary termination of
Executive's Employment by Executive pursuant to this Section 5,
other than a Termination Due to Retirement or a Termination Due to
Disability by Executive.
"WELFARE BENEFITS CONTINUATION" means that until the second
anniversary of the date of termination of the Employment Period,
Executive and, if applicable, his dependents shall be entitled to
continue participation in the life and health insurance benefit
plans of the Company or its affiliates in which Executive and/or
such dependents were participating as of the date of termination
of the Employment Period, and such other welfare benefit plans
thereof in which the Company is required by law to permit the
participation of Executive and/or his dependents, (collectively,
the "Welfare Benefit Plans"). Such participation shall be on the
same terms and conditions (including the requirement that
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Executive pay any premiums generally paid by an employee) as would
apply if Executive were still in the employ of the Company;
provided that the continued participation of Executive and/or his
dependents in such Welfare Benefit Plans shall cease on such
earlier date as Executive may become eligible for comparable
welfare benefits provided by a subsequent employer. To the extent
that Welfare Benefits Continuation cannot be provided under the
terms of the applicable plan, policy or program, the Company shall
provide a comparable benefit under another plan or from the
Company's general assets.
6. TERMINATION FOLLOWING A CHANGE OF CONTROL OR POTENTIAL CHANGE OF CONTROL.
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This Section 6 shall apply (instead of Section 5) during the period commencing
upon a Change of Control and continuing until the third anniversary thereof;
provided that, in the event that Executive's employment is terminated by the
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Company in a Termination Without Cause after the occurrence of a Potential
Change of Control and a Change of Control occurs within one year following the
date of such termination, then solely for purposes of this Agreement, Executive
shall be deemed to have remained in the Company's employ until the occurrence of
the Change of Control and thereafter to have then been terminated by the Company
in a Termination Without Cause. As a result, Executive shall be entitled to
receive the excess of (i) the benefits payable in the event of a Termination
Without Cause under this Section 6, over (ii) the amount of any benefits payable
to Executive under Section 5.
(A) EARLY TERMINATION OF THE EMPLOYMENT PERIOD. Notwithstanding Section
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1(b) hereof, the Employment Period shall end upon the earliest to occur of
(i) a Termination For Cause, (ii) a Termination Without Cause, (iii) a
Voluntary Termination Within 180 Days, (iv) a Voluntary Termination After
180 Days, (v) a Termination For Good Reason, (vi) a Termination Due to
Retirement, (vii) a Termination Due to Disability, or (viii) a Termination
Due to Death.
(B) NOTICE OF TERMINATION. Communication of termination under this Section
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6 shall be made to the other party by Notice of Termination in the case of
(i) a Termination For Cause, (ii) a Termination Without Cause, (iii) a
Voluntary Termination Within 180 Days, (iv) a Voluntary Termination After
180 Days, or (v) a Termination For Good Reason.
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(C) BENEFITS PAYABLE UPON TERMINATION; RULES FOR DETERMINING REASON FOR
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TERMINATION.
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(I) BENEFITS PAYABLE UPON TERMINATION.
---------------------------------
(A) Following the end of the Employment Period,
Executive (or, in the event of his death, his surviving
spouse, if any, or if none, his estate) shall be paid
the type or types of compensation determined to be
payable in accordance with the following table, such
payment to be made in the form specified in such table
and at the time established pursuant to Section 7
hereof. Capitalized terms used in such table (and
otherwise in this Section 6) that are defined in Section
5, and not specifically defined in Section 6(d) hereof,
shall have the meanings ascribed thereto under Section
5. Where such a capitalized term is defined solely in
Section 6(d), or in both Section 5 and Section 6(d),
such term shall have the meaning ascribed to it in
Section 6(d).
(B) The Company's obligation to make the payments
provided for in this Section 6 and otherwise to perform
its obligations under this Section 6 shall not be
affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the
Company may have against Executive or others. In no
event shall Executive be obligated to seek other
employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the
provisions of this Section 6 and such amounts shall not
be reduced whether or not Executive obtains other
employment.
(II) RULES FOR DETERMINING REASON FOR TERMINATION.
--------------------------------------------
(A) No Termination Without Cause, Voluntary Termination
Within 180 Days or Termination For Good Reason shall be
treated as a Termination Due to Retirement or a
Termination Due to Disability for purposes of any Pro
Rata Target Bonus, Severance Payment, Equity Awards or
Vested Benefits Enhancement under this Section 6,
notwithstanding the fact that, either on, before or
after the Date of Termination with respect thereto, (I)
Executive was eligible for Retirement as defined in the
Savings Plan, (II) Executive requested to be treated as
a retiree for purposes of the Savings Plan or any other
plan or program of the Company or its affiliates, or
(III) Executive or the Company could have terminated
Executive's employment in a Termination Due to
Disability hereunder.
(B) No Termination Due to Retirement shall be treated as
a Voluntary Termination After 180 Days for purposes of
this Section 6, notwithstanding the fact that the Date
of Termination for such Termination Due to Retirement
may occur within 180 days following a Change of Control.
- 13 -
====================================================================================================
BENEFITS PAYABLE - CHANGE OF CONTROL
======================== ================ ================== =============== =======================
BENEFIT Accrued Salary Pro Rata Target Severance Equity Awards
Bonus Payment
======================== ================ ================== =============== =======================
FORM OF PAYMENT Lump Sum Lump Sum Lump Sum Determined Under the
Applicable Plan
Termination For Cause Payable Not Payable Not Payable Determined Under the
Applicable Plan
------------------------ ---------------- ------------------ --------------- -----------------------
Termination Without Payable Payable Payable Determined Under the
Cause Applicable Plan
------------------------ ---------------- ------------------ --------------- -----------------------
Voluntary Termination Payable Payable Payable Determined Under the
Within Applicable Plan
180 Days
------------------------ ---------------- ------------------ --------------- -----------------------
Voluntary Payable Not Payable Not Payable Determined Under the
Termination Applicable Plan
After
180 Days
------------------------ ---------------- ------------------ --------------- -----------------------
Termination For Good Payable Payable Payable Determined Under the
Reason Applicable Plan
------------------------ ---------------- ------------------ --------------- -----------------------
Termination Due to Payable Determined Under Not Payable Determined Under the
Retirement the Applicable Applicable Plan
Plan
------------------------ ---------------- ------------------ --------------- -----------------------
Termination Due to Payable Payable Not Payable Determined Under the
Disability Applicable Plan
------------------------ ---------------- ------------------ --------------- -----------------------
Termination Due to Payable Payable Not Payable Determined Under the
Death Applicable Plan
------------------------ ---------------- ------------------ --------------- -----------------------
=================================================================================================
BENEFITS PAYABLE - CHANGE OF CONTROL (Continued)
======================== ======================== =================== ===========================
BENEFIT Vested Benefits Vested Benefits Welfare
Enhancement Benefits Continuation
======================== ======================== =================== ===========================
FORM OF PAYMENT Determined Under the Lump Sum Determined Under the
Applicable Plan Applicable Plan
Termination For Cause Determined Under the Not Payable Not Available
Applicable Plan
------------------------ ------------------------ ------------------- ---------------------------
Termination Without Determined Under the Payable Available
Cause Applicable Plan
------------------------ ------------------------ ------------------- ---------------------------
Voluntary Termination Determined Under the Payable Available
Within Applicable Plan
180 Days
------------------------ ------------------------ ------------------- ---------------------------
Voluntary Determined Under the Not Payable Not Available
Termination Applicable Plan
After
180 Days
------------------------ ------------------------ ------------------- ---------------------------
Termination For Good Determined Under the Payable Available
Reason Applicable Plan
------------------------ ------------------------ ------------------- ---------------------------
Termination Due to Determined Under the Not Payable Available
Retirement Applicable Plan
------------------------ ------------------------ ------------------- ---------------------------
Termination Due to Determined Under the Not Payable Available
Disability Applicable Plan
------------------------ ------------------------ ------------------- ---------------------------
Termination Due to Determined Under the Not Payable Not Available
Death Applicable Plan
------------------------ ------------------------ ------------------- ---------------------------
- 14 -
(D) DEFINITIONS.
-----------
"BENEFICIAL OWNER" means any Person who, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" (within the
meaning of Rule 13d-3 under the Securities and Exchange Act of 1934, as
amended (the "Act")) of any securities of a company, including any such
right pursuant to any agreement, arrangement or understanding (whether or
not in writing), provided that: (i) a Person shall not be deemed the
Beneficial Owner of any security as a result of an agreement, arrangement
or understanding to vote such security (A) arising solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Act and the
applicable rules and regulations thereunder, or (B) made in connection
with, or to otherwise participate in, a proxy or consent solicitation made,
or to be made, pursuant to, and in accordance with, the applicable
provisions of the Act and the applicable rules and regulations thereunder,
in either case described in clause (A) or (B) above, whether or not such
agreement, arrangement or understanding is also then reportable by such
Person on Schedule 13D under the Act (or any comparable or successor
report); and (ii) a Person engaged in business as an underwriter of
securities shall not be deemed to be the Beneficial Owner of any security
acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the date
of such acquisition.
"CHANGE OF CONTROL" means:
(I) a report on Schedule 13D shall be filed with the Securities
and Exchange Commission pursuant to Section 13(d) of the Act
disclosing that any Person, other than the Company or a subsidiary
of the Company or any employee benefit plan sponsored by the
Company or a subsidiary of the Company is the Beneficial Owner of
twenty percent or more of the outstanding stock of the Company
entitled to vote in the election of directors of the Company;
(II) any Person, other than the Company or a subsidiary of the
Company or any employee benefit plan sponsored by the Company or a
subsidiary of the Company shall purchase shares pursuant to a
tender offer or exchange offer to acquire any stock of the Company
(or securities convertible into stock) entitled to vote in the
election of directors of the Company for cash, securities or any
other consideration, provided that after consummation of the
offer, the Person in question is the Beneficial Owner of fifteen
percent or more of the outstanding stock of the Company entitled
to vote in the election of directors of the Company (calculated as
provided in paragraph (d) of Rule 13d-3 under the Act in the case
of rights to acquire stock);
(III) the stockholders of the Company shall approve (A) any
consolidation or merger in which the Company is not the continuing
or surviving corporation or pursuant to which shares of stock of
the Company entitled to vote in the
- 15 -
election of directors of the Company would be converted into cash,
securities or other property, other than a consolidation or merger
of the Company in which holders of stock of the Company entitled
to vote in the election of directors of the Company immediately
prior to the consolidation or merger have the same proportionate
ownership of stock of the surviving corporation stock entitled to
vote in the election of directors immediately after the
consolidation or merger as immediately before, or (B) any sale,
lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all the assets of
the Company; or
(IV) within any 12 month period, the persons who were directors of
the Company immediately before the beginning of such period (the
"Incumbent Directors") shall cease (for any reason other than
death) to constitute at least a majority of the Board or the board
of directors of any successor to the Company, provided that any
director who was not a director at the beginning of such period
shall be deemed to be an Incumbent Director if such director (A)
was elected to the Board by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually or by prior
operation of this clause (iv), and (B) was not designated by a
person who has entered into an agreement with the Company to
effect a transaction described in the immediately preceding
paragraph (iii).
"DATE OF TERMINATION" means (i) in the case of a termination of the
Employment Period for which a Notice of Termination is required, the date
of receipt of such Notice of Termination or, if later, the date specified
therein, as the case may be, or (ii) in all other cases, the actual date on
which Executive's employment terminates during the Employment Period.
"NOT PAYABLE" means that a particular benefit shall not be paid or
otherwise provided to Executive.
"NOTICE OF TERMINATION" means (i) in the case of a Termination For Cause, a
written notice given by the Company to Executive, within 30 calendar days
of the Company's having actual knowledge of the events giving rise to such
termination, (ii) in the case of a Termination Without Cause, a written
notice given by the Company to Executive at least 30 calendar days before
the effective date of such Termination Without Cause, (iii) in the case of
a Voluntary Termination Within 180 Days or a Voluntary Termination After
180 Days, a written notice given by Executive to the Company at least 30
calendar days before the effective date of such termination, and (iv) in
the case of a Termination For Good Reason, a written notice given by
Executive to the Company within 180 days of Executive's having actual
knowledge of the events giving rise to such Termination For Good Reason,
and which (A) indicates the specific termination provision in this
Agreement relied upon, (B) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
- 16 -
the Executive's employment under the provision so indicated, and (C) if the
termination date is other than the date of receipt of such notice,
specifies the termination date of this Agreement (which date shall be not
more than 15 days after the giving of such notice). The failure by
Executive to set forth in such Notice of Termination any fact or
circumstance that contributes to a showing of Good Reason shall not waive
any right of Executive hereunder or preclude Executive from asserting such
fact or circumstance in enforcing his rights hereunder.
"PAYABLE" means that a particular benefit shall be paid to Executive in the
amount, at the time, and in the form specified herein.
"PERSON" has the meaning ascribed to such term in Section 3(a)(9) of the
Act, as supplemented by Section 13(d)(3) of the Act; provided, however,
that Person shall not include (i) the Company, any subsidiary of the
Company or any other Person controlled by the Company, (ii) any trustee or
other fiduciary holding securities under any employee benefit plan of the
Company or of any subsidiary of the Company, or (iii) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of securities of the Company.
"POTENTIAL CHANGE OF CONTROL" means:
(I) a Person shall commence a tender offer, which if successfully
consummated, would result in such Person being the Beneficial
Owner of at least 15% of the voting securities of the Company;
(II) the Company shall enter into an agreement the consummation of
which shall constitute a Change of Control of the Company;
(III) proxies for the election of directors of the Company shall
be solicited by anyone other than the Company; or
(IV) any other event shall occur which is deemed to be a Potential
Change of Control by the Board or the appropriate Committee
thereof.
"SEVERANCE PAYMENT" means a cash amount equal to three times the sum of (i)
Executive's Base Salary at the rate in effect as of the date on which the
Employment Period terminates, and (ii) Executive's Target Bonus for such
year.
"TERMINATION FOR CAUSE" means the Company's termination of Executive's
employment due to (i) Executive's conviction of a felony; (ii) an act or
acts of extreme dishonesty or gross misconduct on Executive's part which
result or are intended to result in material damage to the Company's
business or reputation; or (iii) repeated material violations by Executive
of his obligations under Section 2 of this Agreement, which violations are
demonstrably willful and deliberate on Executive's part and which result in
material damage to the Company's business or reputation.
- 17 -
Executive shall be permitted to respond and defend himself before the Board
within 30 days after delivery to Executive of written notification of any
proposed Termination for Cause which specifies in detail the reasons for
such termination. If the majority of the members of the Board (excluding
Executive) do not confirm that the Company had grounds for a Termination
For Cause within 30 days after Executive has had his hearing before the
Board, Executive shall have the option of treating his employment as not
having terminated or as having been terminated pursuant to a Termination
Without Cause.
"TERMINATION FOR GOOD REASON" means the occurrence of any of the following
after the occurrence of a Potential Change of Control or a Change of
Control:
(I) (A) the assignment to Executive of any duties inconsistent in
any material adverse respect with Executive's position, duties,
authority or responsibilities as contemplated by Section 2 of this
Agreement, or (B) any other material adverse change in such
position, including titles, authority or responsibilities;
(II) any failure by the Company to comply with any of the
provisions of Sections 3 and 4 of this Agreement at a level of
least equal to that in effect immediately preceding the Change of
Control or a Potential Change of Control, other than an
insubstantial or inadvertent failure remedied by the Company
promptly after receipt of notice thereof given by Executive;
(III) the Company's requiring Executive to be based at any office
or location more than 25 miles from the location at which he
performed his services specified under Section 2 hereof
immediately prior to the Change of Control or a Potential Change
of Control, except for travel reasonably required in the
performance of Executive's responsibilities;
(IV) any failure by the Company to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated
by Section 10(d) hereof; or
(V) any attempt by the Company to terminate the Executive's
employment in a Termination For Cause that is determined by the
Board pursuant to Section 5 hereof, or in a proceeding pursuant to
Section 9 or Section 10 hereof, not to constitute a Termination
For Cause.
Notwithstanding the foregoing, a termination of Executive's employment
shall not be treated as a Termination For Good Reason (I) if Executive
shall have consented in writing to the occurrence of the event giving rise
to the claim of Termination For Good Reason, or (II) if Executive shall
have delivered a Notice of Termination to the Company, and the facts and
circumstances specified therein as providing a basis for such Termination
For Good Reason are cured by the Company within 10 days of its receipt of
such Notice of Termination.
- 18 -
"VESTED BENEFITS ENHANCEMENT" means (i) a cash amount equal to the present
value, calculated using a discount rate equal to the then prevailing
applicable Federal rate as determined under Section 1274(d) of the Internal
Revenue Code of 1986, as amended (the "Code"), of the additional retirement
benefits that would have been payable or available to Executive under any
ERPs, based on (A) the age and service Executive would have attained or
completed had Executive continued in the Company's employ until the third
anniversary of the occurrence of the Change of Control, and (B) where
compensation is a relevant factor, his pensionable compensation as of the
Date of Termination, such compensation to include, on the same terms as
apply to other executives, any Severance Payment made to Executive, (ii)
solely for purposes of vesting in any benefits under any ESPs, Executive
shall be treated as having continued in the Company's employ until the
third anniversary of the occurrence of such Change of Control, and (iii)
solely for purposes of determining eligibility for retiree medical benefits
under any retirement plan or any retiree welfare benefit plan, policy or
program of the Company or its affiliates, and any ERPs related thereto,
Executive shall be treated as having continued in the Company's employ
until the third anniversary of the occurrence of such Change of Control and
to have retired on the last day of such period.
"VOLUNTARY TERMINATION WITHIN 180 DAYS" means a termination of employment
by Executive for any reason within the first 180 days following a Change of
Control, and "VOLUNTARY TERMINATION AFTER 180 DAYS" means a termination of
employment by Executive other than a Termination For Good Reason, a
Termination Due to Disability by Executive, or a Termination Due to Death
within the remaining 2 years and 6 months following a Change of Control.
"WELFARE BENEFITS CONTINUATION" shall have the same meaning as that
described in Section 5 hereof, except that the entitlement of Executive
and/or his dependents to participation in the Welfare Benefit Plans shall
continue until the third anniversary of the Date of Termination.
(E) OUT-PLACEMENT SERVICES. If the Employment Period terminates because of a
-----------------------
Termination Without Cause or a Termination For Good Reason, Executive shall be
entitled to out-placement services, provided by the Company or its designee at
the Company's expense, for twelve months following the Date of Termination, or
such lesser period as the Executive may require such services.
(F) CERTAIN FURTHER PAYMENTS BY COMPANY.
-----------------------------------
(i) TAX REIMBURSEMENT PAYMENT. In the event that any amount or benefit paid
-------------------------
or distributed to Executive pursuant to this Agreement, taken together with
any amounts or benefits otherwise paid or distributed to Executive by the
Company or any affiliate (collectively, the "Covered Payments"), are or
become subject to the tax (the "Excise Tax") imposed under Section 4999 of
the Code, or any similar tax that
- 19 -
may hereafter be imposed, the Company shall pay to the Executive at the
time specified in this Section an additional amount (the "Tax Reimbursement
Payment") such that the net amount retained by the Executive with respect
to such Covered Payments, after deduction of any Excise Tax on the Covered
Payments and any Federal, state and local income tax and other tax on the
Tax Reimbursement Payment provided for by this Section, but before
deduction for any Federal, state or local income or employment tax
withholding on such Covered Payments, shall be equal to the amount of the
Covered Payments.
(ii) APPLICABLE RULES. For purposes of determining whether any of the
-----------------
Covered Payments will be subject to the Excise Tax and the amount of such
Excise Tax,
(A) such Covered Payments will be treated as "parachute payments"
within the meaning of Section 280G of the Code, and all "parachute
payments" in excess of the "base amount" (as defined under Section
280G(b)(3) of the Code) shall be treated as subject to the Excise
Tax, unless, and except to the extent that, in the good faith
judgment of the Company's independent certified public accountants
appointed prior to the earlier of: (I) the date on which a
Potential Change of Control occurs, or (II) the date on which a
Change of Control occurs, or tax counsel selected by such
accountants (the "Accountants"), the Company has a reasonable
basis to conclude that such Covered Payments (in whole or in part)
either do not constitute "parachute payments" or represent
reasonable compensation for personal services actually rendered
(within the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the "base amount," or such "parachute payments" are
otherwise not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Accountants in accordance with
the principles of Section 280G of the Code.
(iii) ADDITIONAL RULES. For purposes of determining the amount of the Tax
-----------------
Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal
income taxes at the highest applicable marginal rate of Federal income
taxation for the calendar year in which the Tax Reimbursement Payment is to
be made, and (B) any applicable state and local income and other taxes at
the highest applicable marginal rate of taxation for the calendar year in
which the Tax Reimbursement Payment is to be made, net of the maximum
reduction in Federal incomes taxes which could be obtained from the
deduction of such state or local taxes if paid in such year.
(iv) REPAYMENT OR ADDITIONAL PAYMENT IN CERTAIN CIRCUMSTANCES.
--------------------------------------------------------
(A) REPAYMENT. In the event that the Excise Tax is subsequently
---------
determined by the Accountants or pursuant to any proceeding or
negotiations with the Internal Revenue Service to be less than the
amount taken into account hereunder in calculating the Tax
Reimbursement Payment made, Executive shall repay to the Company,
at the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Tax Reimbursement
Payment that would not have been paid if such lesser Excise Tax
had been applied in initially calculating such Tax Reimbursement
Payment, plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the
foregoing, in the event any portion of the Tax Reimbursement
Payment to be repaid to the Company has been paid to any Federal,
state or local tax authority, repayment thereof shall not be
required until actual refund or credit of such portion has been
made to Executive by the applicable tax authority, and interest
payable to the Company shall not exceed interest received or
credited to the Executive by such tax authority for the period it
held such portion. Executive and the Company shall mutually agree
upon the course of action to be pursued (and the method of
allocating the expenses thereof) if Executive's good faith claim
for refund or credit is denied.
(B) ADDITIONAL TAX REIMBURSEMENT PAYMENT. In the event that the
--------------------------------------
Excise Tax is later determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service
to exceed the amount taken into account hereunder at the time the
Tax Reimbursement Payment is made (including, but not limited to,
by reason of any payment the existence or amount of which cannot
be determined at the time of the Tax Reimbursement Payment), the
Company shall make an additional Tax Reimbursement Payment in
respect of such excess (plus any interest or penalty payable with
respect to such excess) at the time that the amount of such excess
is finally determined.
(V) TIMING FOR TAX REIMBURSEMENT PAYMENT. The Tax Reimbursement Payment (or
------------------------------------
portion thereof) provided for in this Section 6 shall be paid to Executive
not later than 10 business days following the payment of the Covered
Payments; provided, however, that if the amount of such Tax Reimbursement
Payment (or portion thereof) cannot be finally determined on or before the
date on which payment is due, the Company shall pay to Executive by such
date an amount estimated in good faith by the Accountants to be the minimum
amount of such Tax Reimbursement Payment and shall pay the remainder of
such Tax Reimbursement Payment (together with interest at the rate provided
in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than 45 calendar days after payment of
the related Covered Payment. In the event that the amount of the estimated
Tax Reimbursement Payment exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to
Executive, payable on the fifth business day after written demand by the
Company for payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
- 21 -
7. TIMING OF PAYMENTS.
------------------
Accrued Salary, Severance Payments and Vested Benefits Enhancements shall be
paid no later than 10 days following the termination of the Employment Period.
Pro-Rata Target Bonus shall be paid as follows: (a) if the Employment Period
terminates in the first, second or third calendar quarter of any particular
calendar year, then the Pro-Rata Target Bonus shall be paid no later than 10
days following the termination of the Employment Period, or (b) if the
Employment Period terminates in the fourth calendar quarter of any particular
calendar year, then the Pro-Rata Target Bonus shall be paid no later than the
same time as similar awards are paid to other executives participating in the
plans or programs under which the awards are paid, but in no event later than
March 31 of the calendar year following the end of such fourth calendar quarter.
Vested Benefits and Equity Awards shall be paid no later than the time for
payment Determined Under the Applicable Plan except as otherwise expressly
superseded or modified by this Agreement. Tax Reimbursement Payments shall be
paid at the time specified in Section 6 hereof. Notwithstanding the foregoing,
solely for purposes of amounts payable pursuant to Section 5 hereof, if any
amount payable to Executive pursuant to Section 5 would be nondeductible by the
Company under Section 162(m) of the Code if paid in the year of Executive's
termination, the Company shall have the option of paying such nondeductible
amount, with interest at the one-year treasury xxxx rate as in effect on the
date of such termination as reported in the Wall Street Journal, on the first
day of the second calendar quarter in the year following such termination.
8. FULL DISCHARGE OF COMPANY OBLIGATIONS.
-------------------------------------
Except in the case of amounts payable to Executive in the event of a termination
of employment following a Potential Change of Control as described in the first
paragraph of Section 6, and except as expressly provided in the last sentence of
this Section 8, the amounts payable to Executive pursuant to Section 5 following
termination of his employment (including amounts payable with respect to Vested
Benefits) shall be in full and complete satisfaction of Executive's rights under
Section 5 of this Agreement and any other claims he may have in respect of his
employment by the Company or any of its affiliates. Such amounts shall
constitute liquidated damages with respect to any and all such rights and claims
and, upon Executive's receipt of such amounts, the Company shall be released and
discharged from any and all liability to Executive in connection with Section 5
of this Agreement or otherwise in connection with Executive's employment with
the Company and its affiliates. In no event shall Executive be obligated to seek
other employment or take any action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not Executive obtains other employment. Nothing
in this Section 8 shall be construed to release the Company from its obligation
to indemnify Executive as provided in Section 4(e) hereof.
- 22 -
9. NONCOMPETITION, CONFIDENTIALITY AND OTHER COVENANTS.
---------------------------------------------------
By and in consideration of the compensation and benefits to be provided by the
Company hereunder, including the severance arrangements set forth herein,
Executive agrees to the following:
(A) NONCOMPETITION. During the Employment Period and until the earlier of:
--------------
(i) the last day of the one year period following any Voluntary Termination
of the Employment Period by Executive pursuant to Section 5 hereof, or (ii)
the date a Change of Control occurs (the "Restriction Period"), Executive
shall not become associated with any entity, whether as a principal,
partner, employee, agent, consultant, shareholder (other than as a holder,
or a member of a group which is a holder, of not in excess of 1% of the
outstanding voting shares of any publicly traded company) or in any other
relationship or capacity, paid or unpaid, that is actively engaged in any
geographic area in any business which is in competition with the business
of the Company. Notwithstanding anything herein to the contrary, the terms
of this Section 9(a) shall not apply in the event of any termination of
employment following a Change of Control as provided for in Section 6 of
this Agreement, including any termination following a potential Change of
Control as described in the first paragraph of Section 6.
(B) CONFIDENTIALITY. Without the prior written consent of the Company,
---------------
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from an appropriate government agency,
Executive shall not disclose to any third person, or permit the use of for
the benefit of any person or any entity other than The Company or its
affiliates, any trade secrets, customer lists, information regarding
product development, marketing plans, sales plans, management organization
information (including data and other information relating to members of
the Board and management), operating policies or manuals, business plans,
financial records, or other financial, organizational, commercial,
business, sales, marketing, technical, product or employee information
relating to the Company or its affiliates or information designated as
confidential, proprietary, and/or a trade secret, or any other information
relating to the Company or its affiliates that Executive knows from the
circumstances, in good faith and good conscience, should be treated as
confidential, or any information that the Company or its affiliates may
receive belonging to customers, agents or others who do business with the
Company or its affiliates, except to the extent that any such information
previously has been disclosed to the public by the Company or is in the
public domain (other than by reason of Executive's violation of this
Section 9(b)).
(C) NON-SOLICITATION OF EMPLOYEES. During the Employment Period and until
-----------------------------
the earlier of: (i) the last day of the one year period following any
Voluntary Termination of the Employment Period by Executive pursuant to
Section 5 hereof, (ii) the first anniversary of the date this Agreement
expires by reason of either party delivering to the other a notice of
non-renewal pursuant to Section 1(b) hereof, or (iii)
- 23 -
the date a Change of Control occurs, Executive shall not directly or
indirectly solicit, encourage or induce any employee of the Company or its
affiliates to terminate employment with such entity, and shall not directly
or indirectly, either individually or as owner, agent, employee, consultant
or otherwise, employ or offer employment to any person who is or was
employed by the Company or an affiliate thereof unless such person shall
have ceased to be employed by such entity for a period of at least six
months. Notwithstanding anything herein to the contrary, the terms of this
Section 9(c) shall not apply in the event of any termination of employment
following a Change of Control as provided for in Section 6 of this
Agreement, including any termination following a potential Change of
Control as described in the first paragraph of Section 6.
(D) NON-SOLICITATION OF CLIENTS AND CUSTOMERS. During the Employment Period
------------------------------------------
and until the earlier of (i) the last day of the one year period following
any Voluntary Termination of the Employment Period by Executive pursuant to
Section 5 hereof, (ii) the first anniversary of the date this Agreement
expires by reason of either party delivering to the other a notice of
non-renewal pursuant to Section 1(b) hereof, or (iii) the date a Change of
Control occurs, Executive shall not directly or indirectly solicit,
encourage or induce any person or entity which is (or, at the date of
Executive's termination of employment, or at the date of the expiration of
this Agreement, or at the date a Change of Control occurs, as applicable,
was) a client or customer of the Company or any of its affiliates to
terminate or reduce in any material way its relationship with the Company
or any such affiliate, or otherwise attempt to divert the business of any
such client or customer from the Company or any of its affiliates.
Notwithstanding anything herein to the contrary, the terms of this Section
9(d) shall not apply in the event of any termination of employment
following a Change of Control as provided for in Section 6 of this
Agreement, including any termination following a potential Change of
Control as described in the first paragraph of Section 6.
(E) COMPANY PROPERTY. Except as expressly provided herein, promptly
-----------------
following any termination of the Employment Period, Executive shall return
to the Company all property of the Company, and all copies thereof in
Executive's possession or under his control.
(F) INJUNCTIVE RELIEF AND OTHER REMEDIES WITH RESPECT TO COVENANTS.
---------------------------------------------------------------------
Executive acknowledges and agrees that the covenants and obligations of
Executive with respect to noncompetition, confidentiality, nonsolicitation
of employees, nonsolicitation of clients and customers, and Company
property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause
the Company irreparable injury for which adequate remedies are not
available at law. Therefore, Executive agrees that the Company (i) shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post bond) restraining Executive from
committing any violation of the covenants and obligations contained in this
Section 9, and (ii) shall have no further
- 24 -
obligation to make any payments to Executive hereunder following any
material violation of the covenants and obligations contained in this
Section 9. These remedies are cumulative and are in addition to any other
rights and remedies the Company may have at law or in equity. In connection
with the foregoing provisions of this Section 9, Executive represents that
his economic means and circumstances are such that such provisions will not
prevent him from providing for himself and his family on a basis
satisfactory to him. Notwithstanding the foregoing, in no event shall an
asserted violation of the provisions of this Section constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive
under this Agreement following a Change of Control.
10. MISCELLANEOUS.
-------------
(A) SURVIVAL. All of the provisions of Sections 5 (relating to termination
--------
of the Employment Period prior to a Change of Control), 6 (relating to
termination of the Employment Period following a Change of Control or a
Potential Change of Control), 9 (relating to noncompetition,
confidentiality, nonsolicitation of employees, nonsolicitation of clients
and customers, and Company property), 10(b) (relating to arbitration),
10(c) (relating to legal fees and expenses) and 10(n) (relating to
governing law) of this Agreement shall survive the termination of this
Agreement.
(B) ARBITRATION. Except as provided in Section 9, any dispute or
-----------
controversy arising under or in connection with this Agreement shall be
resolved by binding arbitration. Such arbitration shall be held in the city
of Hartford, Connecticut and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association in effect at the time of the
arbitration, and otherwise in accordance with the principles that would be
applied by a court of law or equity. The arbitrator shall be acceptable to
both the Company and Executive. If the parties cannot agree on an
acceptable arbitrator, the dispute or controversy shall be heard by a panel
of three arbitrators; one appointed by each of the parties and the third
appointed by the other two arbitrators. The Company and Executive further
agree that they will abide by and perform any award or awards rendered by
the arbitrators and that a judgment may be entered on any award or awards
rendered by any state or federal court having jurisdiction over the Company
or Executive or any of their respective property.
(C) LEGAL FEES AND EXPENSES. In any contest (whether initiated by Executive
-----------------------
or by the Company) as to the validity, enforceability or interpretation of
any provision of this Agreement, the Company shall pay Executive's legal
expenses (or cause such expenses to be paid) including, without limitation,
his reasonable attorney's fees, on a quarterly basis, upon presentation of
proof of such expenses in a form acceptable to the Company, provided that
-------------
Executive shall reimburse the Company for such amounts, plus simple
interest thereon at the 90-day United States Treasury Xxxx rate as in
effect from time to time, compounded annually, if Executive shall not
prevail, in
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whole or in part, as to any material issue as to the validity,
enforceability or interpretation of any provision of this Agreement.
(D) SUCCESSORS; BINDING EFFECT. This Agreement shall inure to the benefit
---------------------------
of and be binding upon the Company and its successors. The Company shall
require any successor to all or substantially all of the business and/or
assets of the Company, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form
and substance satisfactory to Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the
Company would be required to perform the Agreement if no such succession
had taken place. This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by
Executive otherwise than by will or the law of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by
Executive's legal representatives.
(E) ASSIGNMENT. Except as provided in Section 10(d), neither this Agreement
----------
nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the
other party.
(F) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
-----------------
between the parties hereto with respect to the matters referred to herein.
This Agreement supersedes and replaces any prior employment or severance
agreement or arrangement between the Company and Executive. No other
agreement relating to the terms of Executive's employment by the Company,
oral or otherwise, shall be binding between the parties unless it is in
writing and signed by the party against whom enforcement is sought. There
are no promises, representations, inducements or statements between the
parties other than those that are expressly contained herein. Executive
acknowledges that he is entering into this Agreement of his own free will
and accord, and with no duress, and that he has read this Agreement and
that he understands it and its legal consequences.
(G) SEVERABILITY; REFORMATION. In the event that one or more of the
--------------------------
provisions of this Agreement shall become invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event of
a determination that any of the provisions of Section 9(a), Section 9(b),
Section 9(c), or Section 9(d) are not enforceable in accordance with their
terms, Executive and the Company agree that such Section shall be reformed
to make such Section enforceable in a manner that provides the Company the
maximum rights permitted at law.
(H) WAIVER. Waiver by any party hereto of any breach or default by the
------
other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from
the breach or default waived. No waiver of any provision of this Agreement
shall be implied from any course of
- 26 -
dealing between the parties hereto or from any failure by either party
hereto to assert its or his rights hereunder on any occasion or series of
occasions.
(I) NOTICES. Any notice required or desired to be delivered under this
-------
Agreement shall be in writing and shall be delivered personally, by courier
service, by registered mail, return receipt requested, or by telecopy and
shall be effective upon actual receipt by the party to which such notice
shall be directed, and shall be addressed as follows (or to such other
address as the party entitled to notice shall hereafter designate in
accordance with the terms hereof):
If to the Company: The Hartford Financial Services Group, Inc.
Law Department, XX-0-00
Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Corporate Secretary
with a copy to: Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
If to Executive: The home address of Executive
shown on the records of the Company
(J) AMENDMENTS. This Agreement may not be altered, modified or amended
----------
except by a written instrument signed by each of the parties hereto.
(K) HEADINGS. Headings to provisions of this Agreement are for the
--------
convenience of the parties only and are not intended to be part of or to
affect the meaning or interpretation hereof.
(L) COUNTERPARTS. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original but all of which together shall
constitute one and the same instrument. (M) WITHHOLDING. Any payments
provided for herein shall be reduced by any amounts required to be withheld
by the Company from time to time under applicable Federal, State or local
income or employment tax laws or similar statutes or other provisions of
law then in effect.
(N) GOVERNING LAW. This Agreement shall be governed by the laws of the
--------------
State of Connecticut, without reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and Executive has hereunto set his
hand, as of the day and year first above written.
THE HARTFORD FINANCIAL SERVICES
GROUP, INC.
WITNESSED:
/s/ Xxxxxxx X. Kivia
--------------------------------------
By: Xxxxxxx X. Xxxxxx
Title: Group Senior Vice President,
Human Resources
/s/ Xxxxx X. Xxxxxxx
-----------------------------
EXECUTIVE:
WITNESSED:
/s/ Xxxxx X. Xxxxxxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
/s/ Xxxx Xxxxxxx
-----------------------------
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