Exhibit 10.3
SPECIAL INCENTIVE AGREEMENT
This Special Incentive Agreement ("Agreement") is dated as of March 17,
1998, and is between Xxxxxx X. Xxxxxxxx, who resides at________________________
("Executive") and CIGNA Corporation, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx, 00000, a Delaware corporation ("CIGNA").
Executive and CIGNA, intending to be legally bound and in consideration
of the promises in this Agreement, mutually agree as follows:
1. Effective as of the date of this Agreement:
a. 1,000 restricted shares of CIGNA Common Stock held by the
Executive, for which restrictions described in the CIGNA
Corporation Stock Plan ("Plan") are scheduled to lapse on
February 23, 1999, will be surrendered to CIGNA, and
Executive, on his own behalf and on behalf of his heirs,
waives any rights regarding such shares; and
b. CIGNA grants Executive 1,000 incentive compensation units
("Units") as described in paragraph 2.
2. Each Unit is a right to receive a payment of the Unit value on the Payment
Date, subject to the conditions in this Agreement. The "Payment Date" shall be
as described in paragraph 4.
3. Each Unit shall have a value equal to the total of:
a. The Fair Market Value (as defined in the Plan) on the Payment
Date of one (1) share of CIGNA Common Stock (adjusted as
needed in accordance with the antidilution provisions in
Article 5 of the Plan);
b. The total cash value of any dividends that would have been
paid on one (1) share of CIGNA Common Stock (as adjusted in
accordance with paragraph 2.a.) from the Date of this
Agreement until the Payment Date; and
c. The total cash value of any interest that would have been paid
on any dividends under paragraph 2.b. as if the dividends had
actually been paid to the Executive and invested with an
annual rate of return for any year equal to either (i) one
hundred twenty percent (120%) of the applicable federal
long-term rate for the month of January of the calendar year
for which the interest will be credited, with compounding on a
monthly basis or (ii) the return provided by hypothetical
investment fund(s) under the Deferred Compensation Plan of
CIGNA Corporation
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and Participating Subsidiaries (the "Deferred Plan"), to the
extent Executive has elected one or more of the available
hypothetical investment funds, other than the fixed income
fund, under the Deferred Plan.
4. The Unit value under this Agreement shall be paid only as follows:
a. The share component (paragraph 2.a.) shall be paid entirely in
shares of CIGNA Common Stock. This Agreement is a Qualifying
Incentive Plan, and any shares shall be paid out of the Plan.
b. The dividend-equivalent component (paragraph 2.b.) and the
interest-equivalent component (paragraph 2.c.) shall be paid
in cash.
c. The Payment Date for the Units shall be no earlier than the
January following the date of Executive's termination of
employment with CIGNA and its affiliates ("Termination of
Employment") and shall otherwise be determined in accordance
with Executive's Deferred Plan payment election as in effect
on the date of Executive's Termination of Employment. However,
any change made by the Executive in any payment election under
the Deferred Plan after the date of this Agreement will not
apply to the share component of the Units unless such change
has been approved by the People Resources Committee of CIGNA's
Board of Directors and otherwise meets the requirements of the
Deferred Plan. If no payment election is in effect on the date
of Executive's Termination of Employment, the Payment Date for
all Units shall be the January following the year of
Executive's Termination of Employment.
d. If Executive dies before his Termination of Employment,
however, any Unit value otherwise payable to the Executive
under this Agreement will be paid within ninety (90) days of
his death to his surviving spouse or, if she does not survive
him, to his estate.
5. The Executive shall forfeit all of the Units, and shall have no right to
receive any payments under this Agreement, if his Termination of Employment
occurs before February 23, 1999. Nevertheless, if Executive's Termination of
Employment before that date is due to the Executive's death, Disability or
Retirement or is a Termination Upon a Change of Control, the forfeiture
described above shall not apply and the Executive's right to a payment of the
Unit value shall immediately vest. ("Disability," "Retirement" and "Termination
Upon a Change of Control" shall have the meanings set forth in Section 2.1 of
the Plan.)
6. This Agreement is not a contract of employment for any specified term, and
nothing herein is intended to change, nor shall be construed as changing, the
nature of Executive's employment from an at-will relationship. This Agreement is
limited to the terms and conditions
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set forth herein and does not otherwise address Executive's compensation or
benefits, the duties and responsibilities of his position, or any of the
Company's other rights as employer.
7. The Agreement is made and entered into in the Commonwealth of Pennsylvania,
and at all times and for all purposes shall be interpreted, enforced and
governed under its laws without regard to principles of conflict of laws.
8. It is agreed that any controversy or claim arising out of or relating to this
Agreement shall be settled exclusively by arbitration in Philadelphia,
Pennsylvania, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
9. CIGNA's rights and obligations under this Agreement will inure to the benefit
of and be binding upon CIGNA's successors and assigns. Executive's rights under
this Agreement, including the right to receive Common Stock or any other
payment, shall not be assignable or transferable by the Executive except by will
or by the laws of descent and distribution. Any other attempted assignment or
alienation shall be void and of no force or effect.
10. The Company's obligations under this Agreement shall be unfunded and
unsecured and shall be paid when due out of the general assets of the Company.
However, the Company's obligations may be funded through the CIGNA Corporation
Benefits Protection Trust or other "rabbi trust" arrangement which is a grantor
trust the assets of which are not subject to the claims of creditors of the
Company, except in the case of bankruptcy or insolvency of the Company.
11. This Agreement contains the entire agreement between Executive and CIGNA
with respect to the matters addressed herein and fully replaces and supersedes
any and all prior agreements or understandings between them related to such
matters. Any amendment to this Agreement must be in writing and signed by both
CIGNA and Executive.
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