Exhibit 99.2
EMPLOYMENT CONTINUATION AGREEMENT
This Employment Continuation Agreement (this "AGREEMENT") is dated
January 1, 2003, and is between The Phoenix Companies, Inc., a Delaware
corporation (the "COMPANY"), and Dona D. Young (the "EXECUTIVE").
The Company or one of its Affiliates (as defined below) has employed
the Executive in an officer position and has determined that the Executive holds
a critical position with the Company and/or such Affiliate.
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 its shareholders.
The Company understands that any such situation will present
significant concerns for the Executive with respect to the Executive's financial
and job security. The Company desires to assure the Company and its Affiliates
of the Executive's services during the period in which it is confronting such a
situation, and to provide the Executive certain financial assurances to enable
the Executive to perform the responsibilities of the Executive's position
without undue distraction and to exercise the Executive's judgment without bias
due to the Executive's personal circumstances. To achieve these objectives, the
Company and the Executive desire to enter into an agreement providing the
Company and its Affiliates and the Executive with certain rights and obligations
upon the occurrence of a Change of Control.
The Company and the Executive therefore agree as follows:
1. Operation of Agreement. (a) Term. The initial term of this Agreement
shall commence on the date of this Agreement and continue until the third
anniversary of the date of this Agreement. Thereafter, the term of this
Agreement will automatically renew for up to two successive and consecutive
additional one-year periods following the end of its initial term and any
extended term, unless the Company or the Executive gives the other party written
notice at least 12 months prior to the date the term would otherwise renew that
it or the Executive does not want the term to be so extended; provided that the
Company may not deliver a notice of nonrenewal after a Change of Control (as
defined in below). At the option of the Company, which shall be exercised by the
affirmative action of its Board of Directors (the "BOARD") or a duly authorized
committee thereof, the term of this Agreement may also be extended after such
two renewal periods for such period or periods as the Board or such committee
shall specify. Notwithstanding anything to the contrary in this Agreement, the
term of this Agreement shall in all events expire (regardless of when the term
would otherwise have expired) on the second anniversary of a Change of Control;
provided that any payment obligations hereunder resulting from the Executive's
termination of employment prior to the expiration of the term or from an event
covered under Section 7(e) shall continue in full force and effect following the
expiration of the term.
(b) Effective Date. If a Change of Control occurs during the term of
this Agreement, this Agreement shall govern the terms and conditions of the
Executive's employment and the benefits and compensation to be provided to the
Executive commencing on the date on which a Change of Control occurs (the
"EFFECTIVE DATE") and ending on the second anniversary of the Effective Date;
provided that if the Executive is not employed by the Company or one of its
Affiliates on the Effective Date, this Agreement shall be void and without
effect, shall not constitute a contract of employment or a guarantee of
employment for any period of time, and shall not limit in any way the right of
the Company or its Affiliates to change the terms and conditions of the
Executive's employment or to terminate the Executive's employment.
Notwithstanding the preceding sentence, in the event that the Executive's
employment with the Company and its Affiliates is terminated in connection with
a Change of Control (which shall in all events be deemed the case if such
termination is within 90 days prior to the Effective Date and deemed not to be
the case if such termination is more than 180 days before the Effective Date)
without Cause or for Good Reason (as such terms are defined in Sections 6(c) and
6(d) below, but without regard to the requirement under Section 6(d) that such
termination occur after the Effective Date), the Executive shall be entitled to
receive the benefits provided under Section 7(c), but only to the extent that
such benefits are in excess of those previously received by the Executive as a
result of the Executive's prior termination, and amounts due under Section 7(e).
2. Definitions.
(a) Affiliate. An "AFFILIATE" shall mean any corporation, partnership,
limited liability company, trust or other entity which directly, or indirectly
through one or more intermediaries, controls, is under common control with, or
is controlled by, the Company.
(b) Change of Control. For the purposes of this Agreement, a "CHANGE OF
CONTROL" shall mean the first occurrence of:
(i) any Person acquires "beneficial ownership" (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), directly or indirectly, of securities of
the Company representing 25% or more of the combined Voting Power of
the Company's securities;
(ii) within any 24-month period, the persons who were
directors of the Company at the beginning of such period (the
"INCUMBENT DIRECTORS") shall cease to constitute at least a majority of
the Board or the board of directors of any successor to the Company;
provided that any director elected or nominated for election to the
Board by a majority of the Incumbent Directors then still in office
shall be deemed to be an Incumbent Director for purposes of this
subclause 2(b)(ii);
(iii) the effective date of any merger, consolidation, share
exchange, division, sale or other disposition of all or substantially
all of the assets of the Company which is consummated (a "CORPORATE
EVENT"), if immediately
2
following the consummation of such Corporate Event the stockholders of
the Company immediately prior to such Corporate Event do not hold,
directly or indirectly, a majority of the Voting Power, in
substantially the same proportion as prior to such Corporate Event, of
(x) in the case of a merger or consolidation, the surviving or
resulting corporation or (y) in the case of a division or a sale or
other disposition of assets, each surviving, resulting or acquiring
corporation which, immediately following the relevant Corporate Event,
holds more than 25% of the consolidated assets of the Company
immediately prior to such Corporate Event;
(iv) the approval by stockholders of the Company of a plan of
liquidation with respect to the Company; or
(v) any other event occurs which the Board declares to be a
Change of Control.
(c) Person. For purposes of the definition of Change of Control,
"PERSON" shall have the same meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act, and
shall include any group (within the meaning of Rule 13d-5(b) under the Exchange
Act); provided that "Person" shall not include (i) the Company or any of its
Affiliates, or (ii) any employee benefit plan (including an employee stock
ownership plan) sponsored by the Company or any of its Affiliates.
(d) Voting Power. "VOTING POWER" shall mean such number of Voting
Securities as shall enable the holders thereof to cast all the votes which could
be cast in an annual election of directors of a company, and "VOTING SECURITIES"
shall mean all securities entitling the holders thereof to vote in an annual
election of directors of a company.
3. Employment Period. The period during which the Executive remains
employed with the Company or any Affiliate following the Effective Date through
the expiration of the term of this Agreement shall be referred to herein as the
"EMPLOYMENT PERIOD."
4. Business Time. During the Employment Period, the Executive shall
devote substantially Executive's full business time and efforts to the
performance of Executive's duties on behalf of the Company, except for (i) time
spent in managing the Executive's personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each case
only if and to the extent not substantially interfering with the performance of
such responsibilities, and (ii) periods of vacation and sick leave to which the
Executive is entitled. It is expressly understood and agreed that the
Executive's continuing to serve on any boards and committees on which the
Executive is serving or with which the Executive is otherwise associated
immediately preceding the Effective Date shall not be deemed to interfere with
the performance of the Executive's services to the Company and its Affiliates.
Moreover, so long as the following activities do not (individually or in the
aggregate) materially interfere with the performance of the Executive's duties
with the Company and are conducted in
3
compliance with the Company's Code of Conduct (as in effect from time to time),
the Executive may (i) participate in charitable, civic, educational,
professional, community or industry affairs or serve on the boards of directors
or advisory boards of other companies; provided, however, that the Executive
shall not serve as a director on more than three (3) boards of directors or
advisory boards of other for-profit companies (in addition to those described in
the preceding sentence) without the prior written approval of the Board, and
(ii) manage her and her family's personal investments.
5. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive a base salary at a monthly rate at least equal to the
monthly salary paid to the Executive immediately prior to the Effective Date.
The base salary may be increased (but not decreased) at any time and from time
to time by action of the Board or any committee thereof, the board of directors
of any Affiliate or any committee thereof in the event the Executive is employed
by an Affiliate, and any individual having authority to take such action in
accordance with the Company's or any Affiliate's regular practices. The
Executive's base salary, as it may be increased from time to time, shall
hereafter be referred to as the "BASE SALARY".
(b) Total Compensation. During the Employment Period, the total
compensation opportunities made available to the Executive in such year in the
form of short-term incentive compensation and long-term incentive compensation
("TOTAL COMPENSATION") shall not be less than the Total Compensation made
available to the Executive immediately prior to the Effective Date. For purposes
of this Section 5(b), the amount of Total Compensation made available to the
Executive, whether prior to or after a Change of Control, shall be conclusively
determined by an independent compensation consultant selected by the Company
prior to the occurrence of a Change of Control (or, if that entity is no longer
able to serve or declines to serve in such capacity, such other independent
compensation consultant that has no existing client relationship with the
Company and its Affiliates as shall be selected by the designated consultant and
reasonably acceptable to the Board (either such consultant hereinafter referred
to as the "COMPENSATION CONSULTANT")), using methods of valuation and comparison
commonly used in competitive compensation practices, which shall be consistently
applied. The Company shall provide the Compensation Consultant with any and all
data that the consultant shall reasonably request in order to make its
evaluations hereunder.
6. Termination. (a) Death, Disability or Retirement. This Agreement
shall terminate automatically upon the Executive's death, termination due to
"Disability" (as defined below), or voluntary retirement (other than for Good
Reason, as defined below) under any of the retirement plans of the Company or
its Affiliates applicable to the Executive as in effect from time to time. For
purposes of this Agreement, "DISABILITY" shall mean the Executive's inability to
perform his or her material duties for six consecutive months due to a physical
or mental incapacity.
(b) Voluntary Termination. Notwithstanding anything in this Agreement
to the contrary, the Executive may voluntarily terminate employment for any
reason (including early retirement pursuant to any retirement plan of the
Company or any of its Affiliates as in effect from time to time and applicable
to the Executive), upon not less
4
than 60 days' written notice (or such lesser period of notice as the Company
shall specify) to the Company or the entity employing the Executive, as
applicable; provided that any termination by the Executive pursuant to Section
6(d) hereof on account of Good Reason (as defined below) shall not be treated as
a voluntary termination under this Section 6(b).
(c) Cause. The Company and each of its Affiliates that employs the
Executive may terminate the Executive's employment for Cause. For purposes of
this Agreement, "CAUSE" means (i) the Executive's conviction or plea of nolo
contendere to a felony (other than with respect to a traffic violation or an
incident of vicarious liability); (ii) an act of willful misconduct (including,
without limitation, a willful material violation of the Company's Code of
Conduct) on Executive's part with regard to the Company or its Affiliates having
a material adverse impact on the Company or its Affiliates, and (iii) the
Executive's failure in good faith to attempt or refusal to perform legal
directives of the Board or executive officers of the Company, as applicable,
which directives are consistent with the scope and nature of the Executive's
employment duties and responsibilities and which failure or refusal is not
remedied by the Executive within thirty (30) days after notice of such
non-performance is given to the Executive. The Executive shall be provided an
opportunity, together with his or her counsel, to be heard before the Board
prior to termination and after such notice. If the majority of the members of
the Board do not confirm, through a duly-adopted resolution following such
opportunity, that the Company had grounds for a "Cause" termination, the
Executive shall have the option to treat his or her employment as not having
terminated or as having been terminated pursuant to a termination without Cause.
No event shall constitute grounds for a "Cause" termination in the event that
the Company fails to take action within 90 days after the Company's Chairman or
the Chairman of the Company's Audit Committee obtains knowledge of the
occurrence of such event. Additionally, for purposes of clause (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that the Executive's act, or failure to act, was
in the best interest of the Company and its subsidiaries.
(d) Good Reason. After the Effective Date, the Executive may resign
from employment at any time for Good Reason. For purposes of this Agreement,
"GOOD REASON" means the occurrence after the Effective Date of any of the
following, without the express written consent of the Executive:
(i) the assignment to the Executive of duties inconsistent
with the Executive's position or any reduction in the Executive's title
or any material reduction in the Executive's position, duties or
responsibilities from the title, position, duties or responsibilities
held or exercised by the Executive prior to the Effective Date;
(ii) any requirement that the Executive change the location
where the Executive regularly provides services to the Company outside
of the Hartford, Connecticut metropolitan area (i.e., the area within a
thirty five (35) mile radius of downtown Hartford);
5
(iii) a reduction by the Company of the Executive's Base
Salary or Total Compensation opportunity or a reduction in the employee
benefits provided to the Executive under the Company's employee benefit
plans (unless the Executive is provided with substantially equivalent
replacement benefits);
(iv) any termination of employment by the Executive within the
30 day period following the first anniversary of the Effective Date;
(v) any failure to obtain the assumption and agreement to
perform this Agreement by a successor as contemplated by Section 12(b);
or
(vi) any other Good Reason (or similar) provision contained in
any other employment or severance arrangement in effect between the
Company and the Executive.
(e) Notice of Termination. Any termination by the Company and/or its
Affiliates for Cause or by the Executive for Good Reason shall be communicated
by Notice of Termination to the other party hereto given in accordance with
Section 13(e). For purposes of this Agreement, a "NOTICE OF TERMINATION" means a
written notice given, (i) in the case of a termination for Cause, within 10
business days of the Company and any Affiliate that employs the Executive having
actual knowledge of the events giving rise to such termination, or (ii) in the
case of a termination for Good Reason, within 10 business days of the
Executive's having actual knowledge of the events giving rise to such
termination. Any such Notice of Termination shall (x) indicate the specific
termination provision in this Agreement relied upon, (y) set 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 (z) if the
termination date is other than the date of receipt of such notice, specify the
termination date of this Agreement (which date shall be not more than 15 days
after the giving of such notice).
(f) Date of Termination. For the purpose of this Agreement, the term
"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, and (ii) in all
other cases, the actual date on which the Executive's employment terminates
during the Employment Period.
7. Obligations of the Company or an Affiliate upon Termination. (a)
Death or Disability. If the Executive's employment is terminated during the
Employment Period by reason of the Executive's death or Disability, this
Agreement shall terminate without further obligations to the Executive or the
Executive's legal representatives under this Agreement other than those
obligations accrued hereunder at the Date of Termination, and the Company or the
Affiliate that employs the Executive shall pay to the Executive (or the
Executive's beneficiary or estate), at the times determined below (i) the
Executive's full Base Salary through the Date of Termination (the "EARNED
SALARY"), (ii) any vested amounts or benefits owing to the Executive under or in
accordance with the terms and conditions of any otherwise applicable employee
benefit plans, agreements and programs and any accrued vacation pay not yet paid
(the
6
"ACCRUED OBLIGATIONS"), and (iii) any other benefits payable in such situation
under the plans, agreements, policies or programs of the Company and its
Affiliates (the "ADDITIONAL BENEFITS").
Any Earned Salary shall be paid in cash in a single lump sum as soon as
practicable, but in no event more than 30 days (or at such earlier date required
by law), following the Date of Termination. Accrued Obligations and Additional
Benefits shall be paid in accordance with the terms of the applicable plan,
program or arrangement.
(b) Cause and Voluntary Termination. If, during the Employment Period,
the Executive's employment shall be terminated for Cause or voluntarily
terminated by the Executive (other than on account of Good Reason), the Company
or the Affiliate that employs the Executive shall pay the Executive (i) the
Earned Salary in cash in a single lump sum as soon as practicable, but in no
event more than 30 days (or at such earlier date required by law), following the
Date of Termination, and (ii) the Accrued Obligations and Additional Benefits in
accordance with the terms of the applicable plan, program or arrangement.
(c) Termination by the Company or the Affiliate that employs the
Executive other than for Cause and Termination by the Executive for Good Reason.
If, during the Employment Period, the Company or the Affiliate that employs the
Executive terminates the Executive's employment other than for Cause or the
Executive terminates his or her employment for Good Reason:
(i) Pension Service Credit and Payment. The Executive's accrued
benefit under any qualified or nonqualified defined benefit type
pension plan or arrangement of the Company, including, without
limitation, the Employee Pension Plan or any successor plan and/or the
Supplemental Executive Retirement Plan or any successor plan (all such
plans, the "PENSION PLANS") shall, to the extent not previously
vested, be deemed vested as of the Date of Termination. In addition,
the Company shall pay to the Executive an amount equal to the lump sum
value (based on the actuarial assumptions used under the respective
plan) of three years of additional service and age credit for pension
purposes under the Pension Plans (with the Base Salary used as the
salary component of "final average earnings" for purposes of this
calculation), which payments shall be made within thirty (30) days
after termination of employment.
(ii) Additional Lump Sum Payments. In lieu of (and not in
addition to) any severance benefits payable to the Executive under any
other plan, policy or program of the Company or any Affiliate (each, a
"Severance Policy") or under any agreement, whether written or oral,
between the Executive and the Company (each, a "Prior Agreement"), the
Company shall pay to the Executive (or cause the Executive to be
paid), at the times determined below, the following amounts:
(A) the Executive's Earned Salary;
7
(B) a cash amount (the "SEVERANCE AMOUNT") equal to three times
the sum of (x) the Executive's annual rate of Base Salary as then in
effect and (y) the greater of (1) an amount equal to the average of
the Executive's annual incentive compensation earned under the
Company's Mutual Incentive Plan (or any successor plan) or similar
annual incentive plan applicable to the Executive (collectively, the
"MIP") in respect of the Executive's services performed in the last
three full fiscal years completed prior to the Change of Control, and
(2) the MIP target applicable to the Executive for the year in which
the Executive's employment terminates; and
(C) the Accrued Obligations and Additional Benefits.
The Earned Salary and Severance Amount shall be paid in cash in a
single lump sum as soon as practicable, but in no event more than 30
days (or at such earlier date required by law), following the Date of
Termination. Accrued Obligations shall be paid in accordance with the
terms of the applicable plan, program or arrangement. Notwithstanding
the foregoing, the Executive may elect in writing to receive the
benefits payable under any Severance Policy that would otherwise be
available to her, or the termination benefits under any Prior
Agreement to which she is a party, in each case in lieu of receiving
the benefits payable hereunder.
(iii) Continuation of Benefits. The Executive (and, to the extent
applicable, the Executive's dependents) shall be entitled, after the
Date of Termination until the third anniversary of the Date of
Termination (the "END DATE"), to continue participation in all of the
employee and executive plans providing medical, dental and long-term
disability benefits that the Executive participated in prior to the
Date of Termination (collectively, the "CONTINUING BENEFIT Plans");
provided that the participation by the Executive (and, to the extent
applicable, the Executive's dependents) in any Continuing Benefit Plan
shall cease on the date, if any, prior to the End Date on which the
Executive becomes eligible for comparable benefits under a similar
plan, policy or program of a subsequent employer ("PRIOR DATE"). The
Executive's participation in the Continuing Benefit Plans will be on
the same terms and conditions that would have applied had the
Executive continued to be employed by the Company or the Affiliate
that employs the Executive through the End Date or the Prior Date. To
the extent any such benefits cannot be provided under the terms of the
applicable plan, policy or program, the Company shall provide (or
shall cause to be provided) a comparable benefit under another plan or
from its general assets; provided that the Company shall pay the
Executive additional cash payments to the extent necessary for the
Executive to receive the same net after-tax benefits that the
Executive would have received under such plans if the Executive had
continued to receive such plan benefits while employed with the
Company.
8
(iv) Deemed Vesting for Certain Benefits. The Executive shall be
deemed to have met all service and other requirements for full vesting
of benefits under all stock option or other stock or equity
compensation plans of the Company in which the Executive participates
and the stock options held by the Executive shall remain exercisable
for the lesser of two years or the duration of their normal terms.
(v) Pro-Rata Payment of MIP and Long-Term Incentive Plan. The
Company shall pay to the Executive a cash amount equal to a pro rata
portion of (i) the higher of the Executive's target or actually earned
annual incentive award under the MIP for the fiscal year in which the
Executive's Date of Termination occurs and (ii) any awards made to the
Executive under the Company's long-term incentive plan (or any
successor plan) determined as if the targets applicable to such awards
were achieved. The pro-rata portion of each award shall be determined
by multiplying the value of the award (i.e., in the case of the MIP,
the amount actually earned, and in the case of the long term incentive
awards, the target amounts) times a fraction, the numerator of which
is the number of days during the performance period applicable to each
such award prior to the Date of Termination and the denominator of
which is the number of days in the performance period applicable to
each such award. Notwithstanding the foregoing, any amount payable
under this subparagraph in respect of the annual incentive award or in
respect of any long-term incentive plan shall be inclusive of the
amounts, if any, otherwise payable to the Executive under the MIP and
long-term incentive plans for the year in which the Date of
Termination occurs.
(vi) Savings and Investment Plans. If and to the extent the
Executive is a participant in the Savings and Investment Plans or any
successor plan thereto ("SIP") and/or the Excess Investment Plan or
any successor plan thereto ("EIP"), the Company shall pay the
Executive a lump sum amount equal to the amount that the Company would
have contributed to the SIP or credited to the EIP, over the three
years following the Executive's Date of Termination assuming that the
Executive were contributing to each such plan during such period at
the rate in effect immediately prior to the Date of Termination (or,
if greater, at the rate in effect immediately prior to the Change of
Control).
(vii) Outplacement, Office and Secretarial Support. The Company
shall provide the Executive with outplacement services at a level
commensurate with the Executive's position and, for a period of six
months after the Executive's termination, office space and secretarial
support at a level commensurate with the Executive's position.
(d) Discharge of the Company's and its Affiliates' Obligations. Except
as expressly provided in the last sentence of this Section 7(d), the amounts
payable to the Executive pursuant to this Section 7 (whether or not reduced
pursuant to Section 7(e)) following termination of the Executive's employment
shall be in full and complete satisfaction of the Executive's rights under this
Agreement and any other claims the Executive may have in respect of the
Executive's employment by the Company and its
9
Affiliates. Such amounts shall constitute liquidated damages with respect to any
and all such rights and claims and, upon the Executive's receipt of such
amounts, the Company and its Affiliates shall be released and discharged from
any and all liability to the Executive in connection with this Agreement or
otherwise in connection with the Executive's employment by the Company and its
Affiliates. Notwithstanding the foregoing, (i) the Executive shall retain all
rights with respect to the Company's continuing obligations to indemnify the
Executive as a former officer or director of the Company or its Affiliates, and
to provide directors and officers liability insurance, to the fullest extent
permitted under the Company's certificate of incorporation and by-laws or any
other arrangement, and (ii) to the extent the Executive is entitled to greater
rights with respect to any category of severance payments or benefits in any
similar situation under any other arrangement with the Company, the Executive
shall be entitled to such greater rights.
(e) Modification of Payments by the Company and its Affiliates.
(i) Application of Section 7(e). In the event that any amount or
benefit paid or distributed to, or on behalf of, the Executive
pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to, or on behalf of, the
Executive by the Company, its Affiliates and their successors,
including any acquiror of the Company or its Affiliates (or any person
or entity required to be aggregated with the Company or its Affiliates
for purposes of Section 280G of the Internal Revenue Code of 1986, as
amended (the "CODE")) under any other plan, agreement, or arrangement
(collectively, the "COVERED PAYMENTS"), would be an "excess parachute
payment" as defined in Section 280G of the Code, and would thereby
subject the Executive to the tax (the "EXCISE TAX") imposed under
Section 4999 of the Code (or any similar tax that may hereafter be
imposed), the Company shall pay (or cause to be paid) to the Executive
at the time specified in Section 7(e)(iv) below 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 (including foreign) income tax, payroll tax and Excise Tax on
the Tax Reimbursement Payment provided for by this Section 7(e), but
before deduction for any Federal, state or local (including foreign)
income or employment tax withholding on such Covered Payments, shall
be equal to the amount of the Covered Payments; provided that if the
aggregate value of all Covered Payments exceeds the maximum amount
which can be paid to the Executive without the Executive incurring an
Excise Tax (the "CAP AMOUNT") by less than 10% (ten per cent) of the
Cap Amount, the amounts payable to the Executive under this Section 7
shall be reduced (but not below zero) to the maximum amount which may
be paid hereunder without the Executive becoming subject to such an
Excise Tax as a result of all Covered Payments (such reduced payments
to be referred to as the "PAYMENT CAP"). In the event that Executive
receives reduced payments and benefits hereunder, Executive shall have
the right to designate which of the payments and benefits otherwise
provided for in this Agreement that the Executive will receive in
connection with the application of the Payment Cap.
10
(ii) Application of Section 280G. 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 Effective Date or tax counsel selected by such
accountants (the "ACCOUNTANTS"), it is more likely than not
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 portion of the "base amount allocable to such Covered
Payments," 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) Adjustments in Respect of the Payment Cap. If the Executive
receives reduced payments and benefits under this Section 7(e) (or
this Section 7(e) is determined not to be applicable to the Executive
because the Accountants conclude that Executive is not subject to any
Excise Tax) and it is established pursuant to a final determination of
a court or an Internal Revenue Service proceeding (a "FINAL
DETERMINATION") that, notwithstanding the good faith of the Executive
and the Company in applying the terms of this Agreement, the aggregate
"parachute payments" within the meaning of Section 280G of the Code
paid to the Executive or for the Executive's benefit are in an amount
that would result in the Executive being subject to an Excise Tax,
then the Accountants shall determine whether the Executive should have
received the Tax Reimbursement Payment described in Section 7(e)(i),
or whether the amounts payable to the Executive hereunder would still
have been reduced pursuant to Section 7(e)(i). If the Tax
Reimbursement Payment would have been due, the Accountants shall
determine the amount of any interest and penalties that may be imposed
on the Executive by reason of having failed to have timely paid any
Excise Tax (the "PENALTY AMOUNT"), and the amount of the Tax
Reimbursement Payment due, treating the Penalty Amount as a Covered
Payment. In the event a Tax Reimbursement Payment is due, the Company
shall promptly (but in no event later than 10 business days after the
Accountants have determined and informed the Company) pay the
Executive such Tax Reimbursement Payment (as calculated in accordance
with the immediately preceding sentence) and the Penalty Amount. If
the Executive would still be subject to a reduction in the
11
Covered Payments due hereunder, the Accountants shall determine the
amount by which the Covered Payments exceeded the Cap Amount and the
Executive shall have an obligation (to the extent permitted under
applicable law) to repay such excess to the Company on demand,
together with interest on such amount at the applicable Federal rate
(as defined in Section 1274(d) of the Code) from the date of the
payment hereunder to the date of repayment by the Executive. It is
expressly understood that such excess is not in the nature of a
personal loan to the Executive, but rather a payment made to the
Executive as a "mistake in fact." If the Executive receives reduced
payments and benefits by reason of this Section 7(e) and it is
established pursuant to a Final Determination that the Executive could
have received a greater amount without exceeding the Cap Amount, then
the Company shall promptly thereafter pay the Executive the aggregate
additional amount which could have been paid without exceeding the Cap
Amount, together with interest on such amount at the applicable
Federal rate (as defined in Section 1274(d) of the Code) from the
original payment due date to the date of actual payment by the
Company. For greater clarity, if the Executive receives a Tax
Reimbursement Payment under Section 7(e)(i), then this Section
7(e)(iii) shall not apply.
(iv) Timing. The Tax Reimbursement Payment (or portion thereof)
provided for in Section 7(e)(i) above shall be paid to the Executive
not later than ten (10) business days following the payment of the
Covered Payments; provided 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 the 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, the Executive shall repay
such excess to the Company (to the extent permitted under applicable
law), payable as of 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). It is expressly understood that
such excess is not in the nature of a personal loan to the Executive.
(v) Survival. The provisions of this Section 7(e) of the
Agreement shall survive the termination of the Executive's employment
hereunder and the termination of this Agreement with regard to any
event that occurred prior thereto.
8. Non-exclusivity of Rights. Except as expressly provided herein,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other plan or program
provided by the Company or any of its Affiliates and for which the Executive may
qualify, nor shall anything herein
12
limit or otherwise prejudice such rights as the Executive may have under any
other agreements with the Company or any of its Affiliates, including employment
agreements, stock option agreements, and other stock or equity compensation
agreements. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company or any
Affiliate at or subsequent to the Date of Termination shall be payable in
accordance with such plan or program.
9. No Offset. The obligation of the Company or any of its Affiliates to
make the payments provided for in this Agreement and otherwise to perform the
obligations hereunder shall not be diminished or otherwise affected by any
circumstances, including, but not limited to, any set-off, counterclaim,
recoupment, defense or other right which the Company or any of its Affiliates
may have against the Executive or others, whether by reason of the subsequent
employment of the Executive or otherwise.
10. Legal Fees and Expenses. If the Executive asserts any claim in any
contest (whether initiated by the Executive or by the Company or any of its
Affiliates) as to the validity, enforceability or interpretation of any
provision of this Agreement or to enforce and/or collect any payment or benefit
payable hereunder, the Company shall pay the Executive's legal expenses (or
cause such expenses to be paid) including, but not limited to, the 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 the Executive
shall reimburse the Company for such amounts (to the extent permitted under
applicable law), plus simple interest thereon at the 90-day United States
Treasury Bill rate as in effect from time to time, compounded annually, if the
arbitrator determines that the Executive's claims were substantially frivolous
or brought in bad faith.
11. Surviving Agreements. This Agreement provides for certain payments
and benefits to the Executive to be determined by the employee benefit plans and
programs, incentive plans, stock option, and other stock or equity compensation
plans of the Company and its Affiliates. To the extent so provided, such
programs and plans constitute part of the agreement and understanding between
the Executive and the Company and are incorporated herein and made a part
hereof. The Executive and the Company hereby reaffirm their respective
commitments under such programs and plans, and again agree to be bound by each
of the covenants contained therein for the benefit of the Company in
consideration of the benefits made available to the Executive hereby.
12. Successors. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives and his or her estate.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and shall be assignable, in writing, by the Company only to the
acquiror of all or substantially all, of the assets of the Company. 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,
13
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 if no such
succession had taken place.
13. Miscellaneous. (a) Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Connecticut,
applied without reference to principles of conflict of laws.
(b) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved by binding arbitration. The
arbitration shall be held in Hartford, Connecticut and except to the extent
inconsistent with this Agreement, shall be conducted in accordance with the
Expedited Employment Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration (or such other rules as the
parties may agree to in writing), and otherwise in accordance with principles
which would be applied by a court of law or equity. The arbitrator shall be
acceptable to both the Company and the Executive. If the parties cannot agree on
an acceptable arbitrator, the dispute 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.
(c) Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein, and
completely supersedes and replaces any prior agreement between the Executive and
the Company concerning the subject matter herein, other than the Executive
Employment Agreement dated as of January 1, 2003 between the Company and the
Executive. No other agreement relating to the terms of the Executive's
employment by the Company or any of its Affiliates, oral or otherwise, shall be
binding between the parties unless it is in writing and signed by the party
against whom enforcement is sought. Except as expressly provided herein, nothing
in this Agreement shall be construed or interpreted to enhance, increase, reduce
or diminish any rights, duties or obligations of the Executive under any
individual agreement between the Executive and the Company or any of its
affiliates, or under any employee benefit plan program or procedure established
by the Company or any of its affiliates. There are no promises, representations,
inducements or statements between the parties other than those that are
expressly contained herein. The Executive acknowledges that the Executive is
entering into this Agreement of the Executive's own free will and accord, and
with no duress, that the Executive has read this Agreement and that the
Executive understands it and its legal consequences. Without limiting the
generality of the foregoing, the Executive hereby waives any and all rights that
the Executive may have under the agreement, dated November 6, 2000 and the
letter dated November 20, 2000, between Phoenix Home Life Mutual Insurance
Company and the Executive. In no event shall the limitations herein with regard
to the Executive or the obligations of the Executive hereunder be greater than
those set forth in the Executive Employment Agreement dated as of January 1,
2003 between the Company and the Executive.
14
(e) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive: at the home address of the Executive noted on the
records of the Company
If to the Company: The Phoenix Companies, Inc.
One American Row
PO Box 5056
Hartford, CT 06120-5056
Attn.: Tracy L. Rich, General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(f) Tax Withholding. The Company shall withhold (or cause such
withholding) from any amounts payable under this Agreement such Federal, state
or local taxes as shall be required to be withheld pursuant to any applicable
law or regulation.
(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.
(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 the Executive's rights hereunder on any
occasion or series of occasions.
(i) Confidentiality. The Executive, after termination of the
Executive's employment, shall retain in confidence any confidential or
proprietary information known to the Executive concerning the Company and its
Affiliates and their business so long as such information is not publicly
disclosed and shall not use such information in any way injurious to the Company
or its Affiliates except for any disclosure to which an authorized officer of
the Company or such Affiliate has consented or any disclosure or use required by
any order of any governmental body or court (including legal process). If
requested, the Executive shall return to the Company and its Affiliates any
memoranda, documents or other materials possessed by the Executive and
containing confidential or proprietary information of the Company and its
Affiliates. Notwithstanding the preceding sentence, the Executive shall not be
required to return to the Company or its Affiliates, any memoranda, documents or
other materials containing confidential or proprietary information of the
Company or its Affiliates, if such materials were provided to the Executive in
his or her capacity as a director of the Company or its Affiliates.
15
(j) 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.
(k) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
16
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and the Company has caused this Agreement to be executed in its
name on its behalf, and its corporate seal to be hereunto affixed and attested
by its Secretary, all as of the day and year first above written.
PHOENIX COMPANIES, INC.
/s/ Bonnie J. Malley /s/ Tracy L. Rich
-------------------------- --------------------------
By: Bonnie J. Malley
-----------------------
Title: SVP
WITNESSED:
- --------------------
PHOENIX LIFE INSURANCE COMPANY
/s/ Bonnie J. Malley /s/ Tracy L. Rich
-------------------------- --------------------------
By: Bonnie J. Malley
-----------------------
Title: SVP
WITNESSED:
- --------------------
EXECUTIVE:
/s/ Dona D. Young
-----------------------------------
WITNESSED:
/s/ Christian Rodriguez
- -----------------------
Christian Rodriguez
17