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EXHIBIT 10.26
SPECIAL RETENTION AGREEMENT
This Agreement is dated March 27, 1996, and is between Xxxxxx X.
Xxxxxxxx, who resides at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
(referred to as "Executive") and CIGNA Corporation, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, a Delaware corporation (referred to as
"CIGNA").
Executive and CIGNA, intending to be legally bound and in
consideration of the promises in this Agreement, mutually agree as follows:
1. RETENTION CONDITIONS. CIGNA shall provide Executive (or Executive's
surviving spouse) with the benefits and payments described in paragraphs 2 or 3
below if Executive:
(a) Complies with the provisions of paragraphs 4, 5 and 6 below;
and
(b) Remains continuously employed by CIGNA or one of its
subsidiaries, affiliates or successors (collectively, the
"Company") until the Executive's Vesting Date.
(c) For purposes of this Agreement, Executive's "Vesting Date"
shall be the first of the following dates:
(1) The Executive's 55th birthday;
(2) The date Executive dies;
(3) The date Executive's employment with the Company
terminates on account of his total and permanent
disability;
(4) The date Executive's employment with the Company
terminates, if the termination is at the Company's
initiative and is not a termination for Cause, as
defined in the CIGNA Corporation Severance Benefits
Plan for Members of the Executive Group (the
"Executive Severance Plan"); or
(5) The date Executive's employment with the Company
otherwise terminates, but only if:
(A) The People Resources Committee of CIGNA's
Board of Directors (the "Committee")
determines that, despite the Executive's
termination, his right to the benefits and
payments under this Agreement should vest; or
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(B) The termination is a Termination Upon a
Change of Control as described in
subparagraph 1.10(ii) of the Executive
Severance Plan.
2. SUPPLEMENTAL RETIREMENT BENEFITS.
(a) If Executive meets the conditions in paragraph 1, CIGNA shall
pay Executive a supplemental retirement benefit equal to the
amount by which (1) exceeds (2), with:
(1) equal to the benefits Executive would be entitled to
receive under the CIGNA Pension Plan and the CIGNA
Supplemental Pension Plan (the "Pension Plans") if:
(A) the Pension Plans permitted the accrual of
benefits up to a maximum of 35, instead of
30, Years of Credited Service (as that term
is defined in the CIGNA Pension Plan);
(B) Executive had 30 Years of Credited Service on
his 55th birthday; and
(C) the Pension Plans treated as Eligible
Earnings (as defined in the CIGNA Pension
Plan) any compensation payable to Executive
but mandatorily deferred by the Committee in
order to avoid nondeductibility under Section
162(m) of the Internal Revenue Code, to the
extent that such compensation would have been
Eligible Earnings under the CIGNA
Supplemental Pension Plan had it been
deferred under the Deferred Compensation Plan
of CIGNA Corporation and Participating
Subsidiaries; and
(2) equal to the benefits Executive will actually be
entitled to receive under the Pension Plans.
(b) For purposes of determining Executive's Years of Credited
Service under subparagraphs 2(a)(1), 2(d) and 2(e):
(1) the Executive shall be deemed to have accrued 2% of
his Final Average Eligible Earnings (as defined in
the CIGNA Pension Plan) for each Year of Credited
Service before reaching age 55; and
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(2) the accrual of Credited Service from and after
Executive's 55th birthday, shall be based on the U.S.
Department of Labor's elapsed time rules, and
Executive shall accrue one month of Credited Service
for each month that he remains continuously employed
by the Company.
(c) Any supplemental retirement benefit payable to Executive under
this paragraph 2 shall be paid at the same time and in the
same manner as benefit payments to Executive under the CIGNA
Supplemental Pension Plan.
(d) In the event of a termination of Executive's employment under
subparagraph 1(c)(4), the amount computed under subparagraph
2(a)(1) will be based upon the assumption that Executive had
accrued 35 Years of Credited Service as of his termination of
employment date.
(e) In the event of a termination of Executive's employment under
subparagraphs 1(c)(2), (3) or (5), the amount computed under
subparagraph 2(a)(1) will be based upon these assumptions:
(1) Executive had 30 Years of Credited Service on his
55th birthday;
(2) Executive accrued additional Credited Service under
subparagraph 2(b) after his 55th birthday; and
(3) If Executive's termination of employment occurs
before he reaches age 55, then Executive will be
deemed to have 30 Years of Credited Service on his
termination of employment date.
3. SUPPLEMENTAL SURVIVING SPOUSE BENEFITS.
(a) If Executive (1) meets the conditions set forth in
subparagraphs 1(a) and (b); (2) dies while employed by the
Company; and (3) is survived by a spouse to whom he has been
married for at least the 12-month period ending on his date of
death (his "Spouse"), then CIGNA shall pay his Spouse a
supplemental surviving spouse benefit as described in
subparagraphs 3(b) or (c) below. Any supplemental surviving
spouse benefit payable to Executive's Spouse under this
paragraph 3 shall be paid at the same time and in the same
manner as any benefit payments to the Spouse under the CIGNA
Supplemental Pension Plan.
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(b) If Executive dies before his 55th birthday, then CIGNA shall
pay his Spouse a supplemental surviving spouse benefit equal
to the amount, if any, by which (1) exceeds (2), with:
(1) equal to the pre-retirement surviving spouse benefits
his Spouse would receive under the Pension Plans if
Executive had accrued 30 Years of Credited Service on
the date of his death (in accordance with
subparagraph 2(f)(3)); and
(2) equal to the pre-retirement surviving spouse benefits
his Spouse will actually be entitled to receive under
the Pension Plans.
(c) If Executive dies on or after his 55th birthday and has not
made an election to receive his CIGNA Supplemental Pension
Plan benefits in the optional, annuity form, then CIGNA shall
pay his Spouse a supplemental surviving spouse benefit equal
to the amount, if any, by which (1) exceeds (2), with:
(1) equal to the benefits Executive would receive under
the Pension Plans and paragraph 2 of this Agreement
if (A) Executive had retired from the Company on the
day before he died and (B) his retirement date had
been a Vesting Date; and
(2) equal to the benefits the Spouse will actually be
entitled to receive under the Pension Plans.
4. NON-DISCLOSURE.
(a) Executive shall not at any time during or after the term of
his employment with the Company (other than in the good faith
performance of the duties and responsibilities of his position
with the Company) reveal or make known to any person (other
than the Company) or use for his own benefit (or for the
benefit of any other person or entity unrelated to the
Company) any Company Information made known (whether or not
with the knowledge and permission of the Company) to Executive
by reason of his employment by the Company; provided however,
that after such knowledge, information and materials have
become public knowledge, Executive shall have no further
obligation under this paragraph 4 with respect to same so long
as Executive was in no manner responsible, directly or
indirectly, for permitting such information to become public
knowledge without the consent of the Company.
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(b) For purposes of subparagraph 4(a) the term "Company
Information" shall mean any knowledge, information or
materials about the Company's products, services, know-how,
customers, business plans, or confidential information about
financial, marketing, pricing, compensation and other
proprietary matters relating to the Company, whether or not
subject to trademark, copyright, trade secret or other
protection, whether or not developed, devised or otherwise
created in whole or in part by the efforts of Executive, and
whether or not a matter of public knowledge (unless as a
result of authorized disclosure).
(c) Executive shall retain all Company Information which he may
acquire or develop during the term of his employment with the
Company in trust for the sole benefit of the Company.
5. COVENANT TO REPORT. All written materials, records and documents made
by Executive or coming into his possession during the term of his employment
with the Company and concerning the business or affairs of the Company or any
of its affiliates shall be and remain the property of the Company and, upon the
termination of Executive's employment with the Company or upon the request of
the Company, Executive shall promptly deliver the same to the Company.
Executive agrees to render to the Company such reports of the activities
undertaken by Executive or conducted under Executive's direction pursuant
hereto during the term of his employment as the Company may request.
6. COVENANT NOT TO COMPETE.
(a) Executive agrees that, during the term of his employment with
the Company and, if he meets the conditions in subparagraphs
1(c)(1), (3), (4) or (5), for a period of twenty-four (24)
months following the termination of his employment with the
Company, he will not, within any part of the United States
where the Company is doing business or has, within the twelve
(12) month period before the termination of his employment,
been actively planning to do business:
(1) engage directly or indirectly, in any capacity
(including but not limited to owner, sole proprietor,
partner, shareholder (unless his holding is for
investment purposes only and is limited to less than
1% of the total combined voting power of all shares),
employee, agent,
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consultant, officer or director) in any business
which competes with the Company;
(2) solicit or attempt to solicit any customers of the
Company on behalf of such competing businesses,
without prior written consent of the President of the
Company; or
(3) employ, engage for hire, solicit the employment or
engagement for hire, or otherwise attempt to employ
or engage for hire, by or on behalf of any such
competing businesses, without the prior written
consent of the Company, any person who within the
prior twelve (12) month period has been an officer or
employee of the Company, unless such officer or
employee has been terminated by the Company.
(b) The provisions of subparagraph 6(a) will be of no force or
effect in the event of Executive's Termination upon a Change
of Control, as defined in the CIGNA Corporation Severance
Benefits Plan for Members of the Executive Group.
7. JUDICIAL REMEDIES.
(a) Executive acknowledges that the Company or its affiliates will
have no adequate remedy at law if Executive violates the terms
of paragraphs 4, 5 and 6. In such event, the Company shall
have the right, in addition to any other rights it may have,
to obtain in any court of competent jurisdiction injunctive
relief to restrain any breach or threatened breach of specific
performance of this Agreement.
(b) If the scope of the restrictions on the Executive under
paragraph 6 are found by a court of competent jurisdiction to
be unreasonably broad and unenforceable, it is the intent of
the parties that the court not void the restrictions but
reformulate them so they are reasonable and enforceable, while
adhering as closely as possible to the original scope of the
restrictions.
8. RECOVERY. If the Executive violates any of the provisions of
paragraphs 4, 5 or 6:
(a) CIGNA shall have no obligation to pay Executive (or
Executive's surviving spouse) any amounts described in
paragraphs 2 or 3 of the Agreement; and
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(b) If Executive has already received any payments under paragraph
2, Executive agrees that the amount of such payments shall be
repaid to CIGNA as follows:
(1) CIGNA shall immediately offset such amounts from any
payments which may be owing to the Executive; and
(2) If such offset is insufficient, Executive agrees to
repay any remaining amounts to CIGNA within thirty
(30) days of receipt of CIGNA's written demand for
such repayment. If CIGNA must commence any
arbitration or other legal action to enforce
Executive's obligations under this subparagraph 8(b),
Executive further agrees to pay CIGNA its costs and
attorneys' fees in such action.
9. LIMITED SCOPE. This Agreement is not a contract of employment for any
specified term, and nothing herein is intended to, nor shall be construed as,
changing the nature of Executive's employment from an at-will relationship.
This Agreement is limited to the terms and conditions set forth herein and does
not otherwise address Executive's compensation or benefits, the duties and
responsibilities of his position, or any of the Company's other rights as
employer.
10. The Agreement is made and entered into in the Commonwealth of
Pennsylvania, and at all times and for all purposes shall be interpreted,
enforced and governed under its laws.
11. Without in any way affecting the terms of paragraph 7 above, it is
agreed that any controversy or claim arising out of or relating to this
Agreement shall be settled exclusively by arbitration in Philadelphia,
Pennsylvania, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
12. References in this Agreement to the Executive Severance Plan shall
mean such plan as amended through March 1, 1996, and shall not mean any
subsequent versions of such plan, or any successor plan, unless the Executive
agrees in writing that such subsequent version or successor shall be
applicable.
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13. CIGNA's rights and obligations under this Agreement will inure to the
benefit of and be binding upon CIGNA's successors and assigns.
14. The Company's obligations under this Agreement shall be unfunded and
unsecured and shall be paid when due out of the general assets of the Company.
However, the Company's obligations may be funded through the CIGNA Corporation
Benefits Protection Trust or other "rabbi trust" arrangement which is a grantor
trust the assets of which are not subject to the claims of creditors of the
Company, except in the case of bankruptcy or insolvency of the Company.
15. This Agreement contains the entire agreement between Executive and
CIGNA with respect to the matters addressed herein and fully replaces and
supersedes any and all prior agreements or understandings between them related
to such matters. Any amendment to this Agreement must be in writing and signed
by both CIGNA and Executive.
IN WITNESS WHEREOF, the persons named below have signed this Agreement
and Release on the dates shown below.
CIGNA Corporation
3-27-96 /s/ X. X. Xxxxxx
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By Xxxxxx X. Xxxxxx
Date President and
Chief Executive Officer
3-27-96 /s/ X. X. Xxxxxxxx
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Date Xxxxxx X. Xxxxxxxx
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