KEY EXECUTIVE EMPLOYMENT PROTECTION AGREEMENT
Exhibit 10.06
THIS AGREEMENT, dated as of , 2008, by and between The Hartford Financial Services
Group, Inc., a Delaware corporation (the “Company”), and
(“Executive”).
WHEREAS, the Company and/or one or more subsidiaries thereof (the “Subsidiaries”) have
employed Executive in an officer position and has determined that Executive holds an important
position with the Company;
WHEREAS, the Company believes that, in the event it is confronted with a situation that could
result in a change in ownership or control of the Company, continuity of management will be
essential to its ability to evaluate and respond to such situation in the best interests of
shareholders;
WHEREAS, the Company understands that any such situation will present significant concerns for
Executive with respect to Executive’s financial and job security;
WHEREAS, the Company desires to assure itself of Executive’s services during the period in
which it is confronting such a situation, and to provide Executive with certain financial
assurances to enable Executive to perform the responsibilities of Executive’s position without
undue distraction and to exercise judgment without bias due to Executive’s personal circumstances;
and
WHEREAS, to achieve these objectives, the Company and Executive desire to enter into an
agreement providing the Company and Executive with certain rights and obligations upon the
occurrence of a Change of Control (as defined in Section 2 hereof).
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is
hereby agreed by and between the Company and Executive as follows:
1. Effective Date of Agreement.
The effective date of this Agreement (the “Effective Date”) shall be the date on which a Change of
Control occurs; provided that if Executive is not actively employed by the Company on the
Effective Date, this Agreement shall be void and without effect.
2. Certain Applicable Definitions.
(a) Beneficial Owner. For purposes of this Agreement, “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.
(b) Change of Control. For purposes of this Agreement, “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
forty 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) 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);
Page 2 of 23
(iii) any merger, consolidation, recapitalization or reorganization of the Company
approved by the stockholders of the Company shall be consummated, other than any
such transaction immediately following which the persons who were the Beneficial
Owners of the outstanding securities of the Company entitled to vote in the election
of directors of the Company immediately prior to such transaction are the Beneficial
Owners of at least 55% of the total voting power represented by the securities of
the entity surviving such transaction entitled to vote in the election of directors
of such entity (or the ultimate parent of such entity) in substantially the same
relative proportions as their ownership of the securities of the Company entitled to
vote in the election of directors of the Company immediately prior to such
transaction; provided that, such continuity of ownership (and preservation of
relative voting power) shall be deemed to be satisfied if the failure to meet such
threshold (or to preserve such relative voting power) is due solely to the
acquisition of voting securities by an employee benefit plan of the Company, such
surviving entity or any subsidiary of such surviving entity;
(iv) 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 approved
by the stockholders of the Company shall be consummated; or
(v) within any 24 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 of directors of the Company (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 (v), and (B) was not
designated by a person who has entered into an agreement with the Company to effect
a transaction described in clause (iii) or clause (iv) of Section 2(b) of this
Agreement.
(c) Person. For purposes of this Agreement, “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.
Page 3 of 23
3. Employment Period.
Subject to Section 7 of this Agreement, the Company agrees to continue Executive in the employ of
the Company and/or the Subsidiary, and Executive agrees to remain in the employ thereof, for the
period commencing on the Effective Date and ending on the second anniversary of the date on which a
Change of Control occurs (the “Employment
Period”). Notwithstanding the foregoing, if, prior to the Effective Date, Executive is demoted to
a position lower than the position held by Executive as of the date first above written, or is
otherwise determined by the chairman of the Company (the “Chairman”) prior to the Effective Date to
hold a position inappropriate for coverage under this Agreement, this Agreement shall be void and
without effect, unless the Board, any appropriate committee thereof, or the Chairman declares that
this Agreement shall continue in effect by written notice delivered to Executive within 60 days
following such demotion or determination.
4. Position and Duties.
(a) No Reduction in Position. During the Employment Period, Executive’s position
(including titles and tier), authority and responsibilities shall be at least commensurate
with those held, exercised and assigned immediately prior to the Effective Date. It is
understood that, for purposes of this Agreement, such position, authority, and
responsibilities shall not be regarded as not commensurate merely by virtue of the fact that
a successor shall have acquired all or substantially all of the business and/or assets of
the Company as contemplated by Section 10(d) of this Agreement.
(b) Business Time. On and after the Effective Date, Executive agrees to devote
full attention during normal business hours to the business and affairs of the Company and
to use best efforts to perform faithfully and efficiently the responsibilities assigned to
Executive hereunder, to the extent necessary to discharge such responsibilities, except for:
(i) time spent (A) serving on the board of directors of any business corporation with the
consent of the Board, any appropriate committee of the Board, or the Chairman, (B) serving
on the board of, or working for, any charitable or community organization (with the consent
of the Board, any appropriate committee of the Board, or the Chairman if any such service or
work is to be performed during normal business hours), or (C) pursuing Executive’s personal
financial and legal affairs, so long as the foregoing activities, individually or
collectively, do not substantially interfere with the performance of Executive’s
responsibilities hereunder or violate any of the provisions of Section 9 hereof, and (ii)
periods of vacation, sick leave or other leave to which Executive is entitled under the
programs and policies of the Company that apply to similarly situated executives. It is
expressly understood and agreed that Executive’s continuing to serve on any boards and
committees on which Executive is serving or with which Executive is otherwise associated
immediately preceding the Effective Date shall not be deemed to interfere substantially with
the performance of Executive’s responsibilities hereunder.
Page 4 of 23
5. Compensation.
(a) Base Salary. During the Employment Period, the Company and/or the Subsidiaries
shall pay Executive a base salary at an annual rate no less than the annual rate in effect
immediately prior to the Effective Date. Such base salary shall be reviewed at least once
during each calendar year of the Employment Period, and may be increased at any time and
from time to time by action of the Board or any appropriate committee thereof or any
individual having authority to take such action in accordance with the Company’s regular
practices, but shall not be reduced below the annual rate in effect immediately prior to the
Effective Date. Executive’s base salary, as it may be increased from time to time, shall be
referred to herein as “Base Salary.” Neither the Base Salary nor any increase in Base
Salary after the Effective Date shall serve to limit or reduce any obligation of the Company
hereunder.
(b) Annual Bonus. For each calendar year ending during the Employment Period,
Executive shall have the opportunity to earn and receive an annual bonus, based on the
achievement of target levels of performance, equal to no less than the percentage of
Executive’s Base Salary used to calculate such bonus immediately prior to the Effective
Date. Executive’s annual bonus opportunity, as it may be increased from time to time during
the Employment Period, shall be referred to herein as “Target Bonus.” The actual bonus, if
any, payable for any calendar year during the Employment Period 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, deferred restricted
stock or savings plan or other similar arrangement maintained or established by the Company
or its affiliates and made available to Executive, any annual bonus payable under this
Section 5(b) shall be paid to Executive in accordance with the terms of the Annual Plan.
(c) Long-term Incentive Compensation. During the Employment Period, 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 Executive’s
participation in such programs immediately prior to the Effective Date, or, if more
favorable to the Executive, at the level made available to Executive or other similarly
situated executives at any time thereafter.
Page 5 of 23
6. Benefits, Perquisites and Expenses.
(a) Benefits. During the Employment Period, Executive (and, to the extent
applicable, his or her dependents) shall be entitled to participate in or be covered under:
(i) each welfare benefit plan 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 thereof, and (ii) each pension, retirement, savings, deferred
compensation, deferred restricted stock, 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 at a level commensurate with the Executive’s participation in such
plans or programs immediately prior to the Effective Date, or, if more favorable to the
Executive, at the level made available to Executive or other similarly situated executives
at any time thereafter.
(b) Perquisites. For each calendar year during the Employment Period, Executive
shall be entitled to no less than the number of paid vacation days per year that Executive
was entitled to immediately prior to the Effective Date, and shall also be entitled to
receive such other perquisites commensurate with those generally provided to Executive
immediately prior to the Effective Date, or, if more favorable to the Executive, at the
level made available from time to time to Executive or other similarly situated executives
at any time thereafter.
(c) Business Expenses. During the Employment Period, the Company shall pay or
reimburse Executive for all reasonable business expenses incurred or paid by Executive in
the performance of Executive’s duties, 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 as in effect immediately prior to the Effective Date, or, if more favorable to the
Executive, in accordance with the policies and procedures in effect at any time thereafter.
(d) Office and Support Staff. During the Employment Period, Executive shall be
entitled to an office with furnishings and other material appointments, and to secretarial
and other assistance, at a level commensurate with the foregoing provided immediately prior
to the Effective Date, or, if more favorable to the Executive, in accordance with the
policies and procedures in effect at any time thereafter.
(e) Indemnification. The Company shall indemnify Executive and hold Executive
harmless from and against any claim, loss or cause of action, regardless 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 immediately
prior to the Effective Date.
Page 6 of 23
7. Early Termination of the Employment Period.
(a) Termination. Notwithstanding Section 3 hereof, the Employment Period shall end
upon the earliest to occur of: (i) a Termination For Cause, (ii) a Termination Without
Cause, (iii) a Termination For Good Reason, (iv) a Voluntary Termination, (v) a Termination
Due to Retirement, (vi) a Termination Due to Disability, or (vii) a Termination Due to
Death.
(b) Notice of Termination. Communication of termination of the Employment Period
shall be made to the other party by Notice of Termination (as defined in this Section 7) in
the case of: (i) a Termination For Cause, (ii) a Termination Without Cause, (iii) a
Termination For Good Reason, or (iv) a Voluntary Termination.
(c) Benefits Payable Upon Termination; Rules for Determining Reason for
Termination.
(i) Benefits Payable Upon Termination.
(A) Following the end of the Employment Period, Executive (or in the event
of the Executive’s death, his or her surviving spouse, if any, or if none,
his or her 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 8 hereof. Capitalized terms used in such
table shall have the meanings set forth in Section 7(d) hereof.
(B) The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations under this Agreement
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 Agreement and such amounts
shall not be reduced whether or not Executive obtains other employment.
Page 7 of 23
(ii) Rules for Determining Reason for Termination.
(A) No Termination Without Cause 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, 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 Hartford Investment and Savings Plan, as may be
amended from time to time, or any successor plan thereof (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.
(C) Notwithstanding any provision in this Agreement to the contrary, if the
employment of Executive involuntarily terminates on or after the date of a
shareholder approval described in either of Section 2(b)(iii) or Section
2(b)(iv) hereof, but before the date of a consummation described in either
of such Sections, and the consummation occurs within 75 days of such date
of termination, then for purposes of this Agreement, Executive’s Date of
Termination shall be deemed to be the day following the date of the
applicable consummation.
Page 8 of 23
| BENEFITS PAYABLE | ||||||||||||||
| Vested Benefits | ||||||||||||||
| Enhancement (only | ||||||||||||||
| applicable in the | ||||||||||||||
| event that | ||||||||||||||
| Executive’s | ||||||||||||||
| employment by the | ||||||||||||||
| Company and/or the | ||||||||||||||
| Subsidiaries | Welfare | |||||||||||||
| Pro Rata | Severance | terminates prior to | Benefits | |||||||||||
| BENEFIT | Accrued Salary | Target Bonus | Payment | Equity Awards | Vested Benefits | July 1, 2009) | Continuation | |||||||
FORM OF PAYMENT
|
Lump Sum | Lump Sum | Lump Sum |
Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Lump Sum | Determined Under the Applicable Plan |
|||||||
Termination For Cause
|
Payable | Not Payable | Not Payable | Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Not Payable | Not Available | |||||||
Termination Without Cause
|
Payable | Payable | Payable | Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Payable | Available | |||||||
Termination For Good Reason
|
Payable | Payable | Payable | Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Payable | Available | |||||||
Voluntary Termination
|
Payable | Not Payable | Not Payable | Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Not Payable | Not Available | |||||||
Termination Due to Retirement
|
Payable | Determined Under the Applicable Plan |
Not Payable | Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Not Payable | Available | |||||||
Termination Due to Disability
|
Payable | Payable | Not Payable | Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Not Payable | Available | |||||||
Termination Due to Death
|
Payable | Payable | Not Payable | Determined Under the Applicable Plan |
Determined Under the Applicable Plan |
Not Payable | Not Available | |||||||
Page 9 of 23
(d) Definitions. For purposes of this Agreement, the following capitalized terms used
herein shall have the following meanings:
“Accrued Salary” means Base Salary earned, but unpaid, for services rendered to the Company and/or
the Subsidiaries on or prior to the Date of Termination (other than Base Salary deferred pursuant
to Executive’s election under the terms of any applicable Company plan or program), plus any
vacation pay accrued by Executive as of such date.
“Available” means that a particular benefit shall be made available to Executive to the extent
specifically provided herein or required by applicable law.
“Date of Termination” means: (i) in the case of a termination 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.
“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 provided 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, restricted stock unit,
deferred restricted stock, performance share, performance unit, and other equity or long-term
incentive compensation awards, if any, held by Executive as of the Date of 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 not be made available to Executive, except
to the extent required by applicable law.
“Not Payable” means that the particular benefit shall not be paid or otherwise provided to
Executive.
Page 10 of 23
“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 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 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 the
Executive’s employment under the provision so indicated, and (C) if the applicable Date of
Termination is other than the date of receipt of such notice, specifies such Date of Termination
(which date shall be not more than 15 days after the giving of such notice), provided that
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 or her rights
hereunder, or (iv) in the case of a Voluntary Termination, a written notice given by Executive to
the Company at least 30 calendar days before the Date of Termination specified therein.
“Payable” means that a particular benefit shall be paid to Executive in the amount, at the time,
and in the form specified herein.
“Pro-Rata Target Bonus” means an amount equal to the product of: (i) Executive’s Target Bonus
under Section 5(b) for the calendar year in which the Date of Termination occurs, multiplied by
(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 such Date of Termination, and the denominator of which is 12; provided that, if the
Date of Termination occurs in the last quarter of any calendar year, Pro-Rata Target Bonus shall
mean the amount determined under the foregoing 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,
multiplied by (B) the Service Fraction.
“Severance Payment” means a cash amount equal to two times the sum of: (i) Executive’s Base Salary
at the rate in effect as of the Date of Termination, plus (ii) Executive’s Target Bonus amount
under Section 5(b) hereof for the calendar year in which the Date of Termination occurs.
“Termination Due to Death” means a termination of Executive’s employment due to the death of
Executive.
Page 11 of 23
“Termination Due to Disability” means: (i) a termination of Executive’s employment by the Company
as a result of a determination by the Board, the appropriate committee thereof or the Chairman 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 Savings Plan.
“Termination Due to Retirement” means Executive’s termination of employment on account of
Executive’s Retirement as defined in the Savings Plan.
“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 or her
obligations under Section 4 of this Agreement, which violations are demonstrably willful and
deliberate on the Executive’s part and which result in material damage to the Company’s business or
reputation.
“Termination For Good Reason” means the occurrence of any of the following after the occurrence of
a Change of Control:
(i) (A) the assignment to Executive of any duties inconsistent in any material adverse
respect with Executive’s position, including titles, duties, authority or responsibilities
as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in
such position, including titles, duties, authority or responsibilities;
(ii) any failure by the Company and/or the Subsidiaries to comply with any of the
provisions of Sections 5 and 6 of this Agreement at a level of least equal to that in
effect immediately preceding such Change of Control, other than an insubstantial or
inadvertent failure remedied by the Company and/or the Subsidiaries 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 Executive performed the services specified under Section 4
hereof immediately prior to such Change of Control, except for travel reasonably required
in the performance of Executive’s responsibilities;
Page 12 of 23
(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); or
(v) any attempt by the Company and/or the Subsidiaries to terminate Executive’s employment
in a Termination For Cause that is determined 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.
“Termination Without Cause” means any involuntary termination of Executive’s employment by the
Company and/or the Subsidiaries, other than a Termination For Cause, a Termination Due to
Disability by the Company 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
employ of the Company and/or the Subsidiaries until the second anniversary of the Date of
Termination, and (B) where compensation is a relevant factor, Executive’s pensionable compensation
as of such 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 employ of the
Company and/or the Subsidiaries until the second anniversary of such Date of Termination, 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 employ of the Company and/or the Subsidiaries until the second anniversary of the
occurrence of such Change of Control and to have retired on the last day of such period. A Vested
Benefits Enhancement shall only be applicable in the event that Executive’s employment by the
Company and/or the Subsidiaries terminates prior to July 1, 2009.
Page 13 of 23
“Voluntary Termination” means any voluntary termination of Executive’s employment by Executive,
other than a Termination For Good Reason, 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,
Executive and, if applicable, his or her 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, and such other welfare
benefit plans thereof in which the Company or its affiliates are required by law to permit the
participation of Executive and/or such dependents, (collectively, the “Welfare Benefit Plans”).
Such participation shall be on the same terms and conditions (including the requirement that
Executive pay any premiums generally paid by an employee) as would apply if Executive were still in
the employ of the Company and/or the Subsidiaries; provided that the continued
participation of Executive and/or the dependents of Executive 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.
(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 12 months following
the Date of Termination, or such lesser period as 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 Internal Revenue Code of 1986, as amended (the “Code”),
or any similar tax that may hereafter be imposed, the Company shall pay to 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.
Page 14 of 23
(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 shall 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 Effective Date 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 income taxes which could be obtained from the deduction of such state or local
taxes if paid in such year.
Page 15 of 23
(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. 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. 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 7 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. To the extent that the amount
of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to
have been due, Executive shall pay such excess to the Company on the fifth business day
after written demand by the Company for payment.
Page 16 of 23
8. Timing of Payments.
Accrued Salary shall be paid no later than 10 days following the Date of Termination. Severance
Payments and Vested Benefits Enhancements shall be paid (i) if the event that constitutes a Change
of Control also constitutes a change in ownership or effective control, or a sale of substantially
all of the assets, of the Company, in each case within the meaning of Section 409A of the Code and
the regulations promulgated thereunder (a “Section 409A Change Event”), in a single lump sum
payment, during the 10-day period following Executive’s Date of Termination and (ii) if the event
that constitutes a Change of Control is not a Section 409A Change Event, at the same time and in
the same manner as severance benefits would be payable under The Hartford Senior Executive
Severance Pay Plan, as in effect on January 1, 2009. Notwithstanding the foregoing, if at the Date
of Termination, Executive is a “specified employee” as determined under the practices and policies
of the Company as established in accordance with Section 409A of the Code, then in no event shall
payment of the Severance Payments or Vested Benefits Enhancement commence earlier than six months
and one-day after Executive’s Date of Termination; in the case of such a delay, the first payment
made shall include interest on any delayed amount determined based on prevailing short-term rates
for the period between the date of payment and the Date of Termination. A Pro-Rata Target Bonus,
which payment is attributable to services performed by Executive during the calendar year in which
the Date of Termination occurs, shall be paid as follows: (a) if the Date of Termination occurs 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 Date of Termination, or (b) if the
Date of Termination occurs 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 15 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 7 hereof.
In applying the provisions of Section 7, continued participation in the health insurance benefit
plans shall be in two parts: (i) the first part shall continue from the date of termination to the
end of the 18-month period during which Executive would have been eligible for continuation
coverage under Section 601 et. seq. of the Employee Retirement Income Security Act of 1974, as
amended, and (ii) the second part shall commence on the first day after the end of the period
described in subclause (i) and shall end on the second anniversary of the Date of Termination. To
the extent Welfare Benefits Continuation consists of reimbursement of expenses, such reimbursement
shall be paid within 60 days of
the submission of reasonably satisfactory evidence of such expenses, in accordance with the
generally applicable requirements under the applicable arrangement, but in no event later than the
end of the calendar year following the calendar year in which such expenses are incurred. Any
amount of expenses eligible for reimbursement of welfare benefits or in-kind benefits provided
during any calendar year shall not affect the expenses eligible for reimbursement or in-kind
benefits to be provided in any other calendar year.
Page 17 of 23
Notwithstanding anything else in this Agreement to the contrary, for purposes of Section 7,
Executive shall not be deemed to have had a termination of employment unless Executive shall have
also had a separation from service, as determined in accordance with any policies or practices that
the Company shall adopt in accordance with, or as otherwise determined pursuant to, Section 409A of
the Code and the regulations and guidance promulgated thereunder.
9. 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) 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(a)).
(b) 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 or her control.
Page 18 of 23
(c) Injunctive Relief and Other Remedies with Respect to Covenants. Executive
acknowledges and agrees that the covenants and obligations of Executive with respect to
confidentiality 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 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. These remedies are cumulative and are in addition to any other
rights and remedies the Company may have at law or in equity. 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 7 (relating to termination of the
Employment Period following a Change of Control), 9 (relating to confidentiality 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 (excluding employment related disputes
that do not involve 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.
Page 19 of 23
(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, Executive’s 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 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 together with the employment relationship
between the parties constitutes the entire agreement between the parties hereto with
respect to the matters referred to herein. In consideration of the mutual covenants herein
contained and Executive’s continued participation in certain incentive compensation plans
pursuant to which the level, if any, of participation is determined by the administrators
of such plans, this Agreement supersedes and replaces any prior or subsequent severance
plan or arrangement that otherwise would apply to Executive following a Change of Control,
including any prior Key Executive Employment Protection Agreement. 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 or she is entering into this Agreement of his or her own free will and
accord, and with no duress, and that he or she has read this Agreement and that he or she
understands it and its legal consequences.
Page 20 of 23
(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) 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 dealing
between the parties hereto or from any failure by either party hereto to assert its or his
or her 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. | |
| Executive Row, Home Xxxxxx | ||
| Xxx Xxxxxxxx Xxxxx | ||
| Xxxxxxxx, XX 00000 | ||
| Attention: General Counsel | ||
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 |
Page 21 of 23
(j) Amendments. This Agreement may not be altered, modified or amended except by
a written instrument signed by each of the parties hereto, provided however that the
Company (i) may unilaterally amend this Agreement at any time as may be necessary, in its
reasonable judgment, to comply with law or to avoid payments to Executive under the
Agreement being subject to an additional tax under Section 409A of the Code, and (ii) may
terminate this Agreement at any time prior to a Change of Control by written notice to
Executive given at least six months prior to the date of termination of the Agreement,
provided that a Change of Control is not threatened at the time the notice is given. For
purposes of the preceding sentence, a Change of Control shall be deemed to be threatened
for the period beginning on the date of any Potential Change of Control (as defined in The
Hartford 2005 Incentive Stock Plan, as it may be amended from time to time) and ending upon
the earlier of (i) the second anniversary of the date of such Potential Change of Control,
(ii) the date a Change of Control occurs, or (iii) the date the Board determines in good
faith that a Change of Control is no longer threatened. This Agreement is intended to
comply with Section 409A of the Code, and no action taken by the Company shall be construed
in a manner that would result in the imposition of an additional tax on Executive under
Section 409A of the Code.
(k) Headings. Except as expressly provided herein, 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.
Page 22 of 23
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and Executive has hereunto set his or her hand, as of the day and year first
above written.
| Executive | The Hartford Financial Services Group, Inc. | |||||||
| Employee Name | Xxxxxx Xxxxxxx | |||||||
| Executive Vice President | ||||||||
| Human Resources | ||||||||
Date:
|
Date: | |||||||
Witness
|
Witness | |||||||
| Witness Signature | Witness Signature | |||||||
| Printed Name | Printed Name | |||||||
Page 23 of 23
