KEY EXECUTIVE EMPLOYMENT PROTECTION AGREEMENT
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THIS AGREEMENT, dated as of [date], by and between The
Hartford Financial Services Group, Inc., a Delaware corporation (the "Company"),
and [name] ("Executive").
W I T N E S S E T H :
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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
or Potential 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:
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1. OPERATION OF AGREEMENT.
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(a) EFFECTIVE DATE. The effective date of this Agreement (the
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"Effective Date") shall be the earlier of: (i) the date on which a
Potential Change of Control occurs, or (ii) the date on which a Change
of Control occurs; provided that if Executive is not actively employed
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by the Company on the Effective Date, this Agreement shall be void and
without effect.
(b) TERMINATION FOLLOWING A POTENTIAL CHANGE OF CONTROL. Consonant with
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Section 1(a), in the event that Executive's employment is terminated by
the Company or the Subsidiaries in a Termination Without Cause or is
terminated by Executive in a Termination For Good Reason (as defined
herein) after the occurrence of a Potential Change of Control, and a
Change of Control occurs within one year following the date of such
Termination Without Cause or Termination For Good Reason, then solely
for purposes of this Agreement, Executive shall be deemed to have
remained in the employ of the Company and/or the Subsidiaries until the
occurrence of such Change of Control and to have then been terminated
by the Company and/or the Subsidiaries in a Termination Without Cause,
and Executive shall be entitled to receive the benefits payable under
Section 7 of this Agreement, but reduced by any amounts paid to
Executive by the Company and/or the Subsidiaries on account of the
termination of Executive's employment prior to the occurrence of such
Change of Control.
2. CERTAIN APPLICABLE DEFINITIONS.
(a) BENEFICIAL OWNER. For purposes of this Agreement, "Beneficial
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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
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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
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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
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Control" means:
(i) a report on Schedule 13D shall be filed with the
Securities and Exchange Commission pursuant to Section 13(d)
of the Act disclosing that any Person, other than the Company
or a subsidiary of the Company or any employee benefit plan
sponsored by the Company or a subsidiary of the Company is the
Beneficial Owner of twenty percent or more of the outstanding
stock of the Company entitled to vote in the election of
directors of the Company;
(ii) any Person, other than the Company or a subsidiary of the
Company or any employee benefit plan sponsored by the Company
or a subsidiary of the Company shall purchase shares pursuant
to a tender offer or exchange offer to acquire any stock of
the Company (or securities convertible into stock) for cash,
securities or any other consideration, provided that after
consummation of the offer, the Person in question is the
Beneficial Owner of fifteen percent or more of the outstanding
stock of the Company entitled to vote in the election of
directors of the Company (calculated as provided in paragraph
(d) of Rule 13d-3 under the Act in the case of rights to
acquire stock);
(iii) 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;
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(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
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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.
(d) POTENTIAL CHANGE OF CONTROL. For purposes of this Agreement,
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"Potential Change of Control" means:
(i) a Person shall commence a tender offer, which if
successfully consummated, would result in such Person being
the Beneficial Owner of at least 15% of the stock of the
Company entitled to vote in the election of directors of the
Company;
(ii) the Company shall enter into an agreement, the
consummation of which shall constitute a Change of Control;
(iii) solicitation of proxies for the election of directors of
the Company by anyone other than the Company, which, if such
directors were elected, would result in the occurrence of a
Change of Control described in Section 2(b) of this Agreement;
or
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(iv) any other event shall occur which is deemed to be a
Potential Change of Control by the Board or the appropriate
committee thereof.
3. EMPLOYMENT PERIOD.
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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 of the Company, for the period commencing on the
Effective Date and ending on the third 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.
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(a) NO REDUCTION IN POSITION. During the Employment Period, Executive's
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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
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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
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the provisions of Section 10 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.
5. COMPENSATION.
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(a) BASE SALARY. During the Employment Period, the Company and/or the
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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
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Period, Executive shall have the opportunity to earn and receive an
annual bonus, based on the achievement of target levels of performance,
equal to 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,
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Executive shall participate in all of the Company's existing and future
long-term
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incentive compensation programs for key executives at a level
commensurate with
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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.
6. BENEFITS, PERQUISITES AND EXPENSES.
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(a) BENEFITS. During the Employment Period, Executive (and, to the
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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,
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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
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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
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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.
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(e) INDEMNIFICATION. The Company shall indemnify Executive and hold
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Executive harmless from and against any claim, loss or cause of action,
regardless 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
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Executive be less than that afforded under the Governing Documents as
in effect immediately prior to the Effective Date.
7. EARLY TERMINATION OF THE EMPLOYMENT PERIOD.
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(a) TERMINATION. Notwithstanding Section 3 hereof, the Employment
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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
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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.
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(c) BENEFITS PAYABLE UPON TERMINATION; RULES FOR DETERMINING REASON FOR
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TERMINATION.
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(i) BENEFITS PAYABLE UPON TERMINATION.
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(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.
(ii) RULES FOR DETERMINING REASON FOR TERMINATION.
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(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, in the event of a Change of Control
as described in Section 2(b)(iii) or Section
2(b)(iv) hereof, if the employment of Executive
involuntarily terminates on or after the date of a
shareholder approval described in either of such
Sections but before the date of a consummation
described in either of such Sections, the date of
termination of Executive's employment shall be
deemed for purposes of this Agreement to be the day
following the date of the applicable consummation.
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====================================================================================================================================
BENEFITS PAYABLE
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Accrued Pro Rata Severance Equity Awards Vested Benefits Vested Benefits Welfare
BENEFIT Salary Target Payment Enhancement Benefits
Bonus Continuation
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FORM OF PAYMENT Lump Sum Lump Sum Lump Determined Under the Determined Under Lump Sum Determined Under
Sum Applicable Plan the Applicable Plan the Applicable
Plan
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Termination For Payable Not Payable Not Payable Determined Under the Determined Under Not Payable Not Available
Cause Applicable Plan the Applicable Plan
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Termination Payable Payable Payable Determined Under the Determined Under Payable Available
Without Cause Applicable Plan the Applicable Plan
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Termination For Payable Payable Payable Determined Under the Determined Under Payable Available
Good Reason Applicable Plan the Applicable Plan
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Voluntary Payable Not Payable Not Payable Determined Under the Determined Under Not Payable Not Available
Termination Applicable Plan the Applicable Plan
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Termination Due Payable Determined Not Determined Under the Determined Under Not Payable Available
to Retirement Under the Payable Applicable Plan the Applicable Plan
Applicable
Plan
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Termination Due Payable Payable Not Payable Determined Under the Determined Under Not Payable Available
to Disability Applicable Plan the Applicable Plan
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Termination Due Payable Payable Not Payable Determined Under the Determined Under Not Payable Not Available
to Death Applicable Plan the Applicable Plan
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(d) DEFINITIONS. For purposes of this Agreement, the following
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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.
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"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,
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.
"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
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such notice, specifies such Date of Termination (which date shall be
not more than 15 days after the giving of such notice), provided that
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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
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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.
"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.
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"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 Potential Change of Control or a
Change of Control:
(i) (A) the assignment to Executive of any duties inconsistent
in any material adverse respect with Executive's position,
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 or Potential
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 or
Potential Change of Control, except for travel reasonably
required in the performance of Executive's responsibilities;
(iv) any failure by the Company to obtain the assumption and
agreement to perform this Agreement by a successor as
contemplated by Section 11(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
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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.
"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.
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"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 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.
(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:
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(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.
(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.
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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.
8. TIMING OF PAYMENTS.
------------------
Accrued Salary, Severance Payments and Vested Benefits Enhancements shall be
paid no later than 10 days following the Date of Termination. Pro-Rata Target
Bonus 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 31 of the calendar year following the end of such
fourth calendar quarter. Vested Benefits and Equity Awards shall be paid no
later than the time for payment Determined Under the Applicable Plan except as
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otherwise expressly superseded or modified by this Agreement. Tax Reimbursement
Payments shall be paid at the time specified in Section 7 hereof.
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.
(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
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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 or a
Potential 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 10, 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.
(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 Bill 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
- 20 -
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. This Agreement supersedes and replaces any prior or subsequent
severance plan or arrangement that otherwise would apply to Executive
following a Change of Control or a Potential Change of Control. 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.
(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
- 21 -
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):
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If to the Company: The Hartford Financial Services Group, Inc.
Executive Row, Home Office
Hartford Plaza
690 Asylum Avenue
Hartford, CT 06115
Attention: General Counsel
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attn: Lawrence K. Cagney, Esq.
If to Executive: The home address of Executive
shown on the records of the Company
(j) AMENDMENTS. This Agreement may not be altered, modified or amended
----------
except by a written instrument signed by each of the parties hereto.
(k) HEADINGS. 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.
- 23 -
(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.
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.
THE HARTFORD FINANCIAL
SERVICES GROUP, INC.
WITNESSED:
____________________________________
By: Ann M. de Raismes
Title: Group Senior Vice President,
Human Resources
__________________________
EXECUTIVE
WITNESSED:
_________________________
[Name]
___________________________
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