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EXHIBIT 10.22
[AETNA LETTERHEAD]
INTEROFFICE COMMUNICATION
ELEASE E. WRIGHT
Senior Vice President
Corporate Human Resources, RC3A
(860) 273-8371
Fax: (860) 560-8721
To Alan J. Weber
Date September 6, 2000
Subject Special Severance Arrangements
This memorandum is to outline severance arrangements for you. The severance
benefits described below replace paragraphs 11 and 12 of the Company's letter
agreement with you dated June 11, 1998. Notwithstanding the provisions in this
memorandum, you remain an employee-at-will of Aetna Inc. or one of its
subsidiaries or affiliates ("the Company") and the Company may terminate your
employment at any time with or without cause or notice.
In the event that a Change in Control (as defined below) occurs and during the
two year period following such Change in Control (i) your employment is
involuntarily terminated by the Company for any reason other than gross
misconduct in the performance of your duties, or (ii) you terminate your
employment for any reason (other than in circumstances of gross misconduct in
the performance of your duties) subsequent to the later of April 1, 2001 or the
close of the calendar quarter ending subsequent to the Change in Control, you
will be entitled to 156 weeks continuation of your cash compensation (calculated
for these purposes at 200% of your base salary) in lieu of any severance or
salary continuation benefit to which you may otherwise have been entitled and
without any duplication of benefits upon delivery to the Company of a release of
any employment-related claims in the Company's customary form. For these
purposes, a Change in Control is described in Attachment A and incorporated
herein. In addition, all sign-on stock option awards and sign-on restricted
stock awards not previously vested will vest effective on the date of
termination.
In consideration of the foregoing, you agree that you will be subject to the
Company's Change in Control Excise Tax Policy for Selected Officers (the
"Policy"). You have received a memorandum describing the Policy and understand
and agree that application of this Policy may cause a reduction in the amount
payable to you hereunder and/or a cancellation or delay in the vesting of awards
you have received or may receive under the Company's compensation plans and
programs (e.g., stock options, ACEShares, etc.) (collectively, the "Compensation
Plans"). The terms of the Policy are incorporated herein by reference and shall
have the effect of amending any contrary terms of this agreement, any
Compensation Plan and any agreement under any Compensation Plan.
During the period you receive severance payments under either of the
arrangements described above, you will be eligible for the same employee
benefits, if any, as are provided under the severance plan or program in which
you otherwise would have been eligible to participate but for this special
arrangement.
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Page 2
Alan J. Weber
September 6, 2000
Upon the consummation of the Agreement and Plan of Restructuring and Merger
among ING America Insurance Holdings, Inc., Aetna Inc., et. al. dated as of July
19, 2000, all undertakings by the Company hereunder shall be obligations of
Aetna U.S. Healthcare, Inc. and its subsidiaries and you shall have no right to
bring any claim or action against ING America Insurance Holdings, Inc. or any of
its subsidiaries or affiliates.
Please signify your receipt and agreement to the foregoing by signing and
returning a copy of this memorandum to me.
Aetna Inc. Agreed:
By: /s/ Elease E. Wright /s/ Alan J. Weber
------------------------------ ------------------------------
Alan J. Weber
Date: 9/6/2000
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Att: 1 (Definition of Change in Control)
Enc: 1 (Excise Tax Policy for Selected Officers)
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ATTACHMENT A
"Change in Control" means the happening of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as used in Sections
13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) of the
Exchange Act but excluding Aetna Inc. (the "Company") and any subsidiary thereof
and any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time), of securities of the Company
representing 20 percent or more of the combined voting power of the Company's
then outstanding securities;
(ii) When, during any period of 24 consecutive months, the individuals
who, at the beginning of such period, constitute the Company's Board of
Directors (the "Incumbent Directors") cease for any reason other than death to
constitute at least a majority thereof, provided that a director who was not a
director at the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected 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 (because they were directors at the beginning of such 24-month
period) or by prior operation of this Paragraph (ii); or
(iii) The occurrence of a transaction requiring stockholder approval for
the acquisition of the Company by an entity other than the Company or a
subsidiary through purchase of assets, or by merger, or otherwise.
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ENCLOSURE 1
INTEROFFICE COMMUNICATION
JAMES H. GOULD
Vice President
Compensation, Benefits & HR Services, RW2A
(860) 273-8588
Fax: (860) 273-2030
To: Alan J. Weber
Date: September 6, 2000
Subject: Change in Control Excise Tax Policy for Selected Officers
Pursuant to the memorandum agreement (the "Agreement") provided to you by Aetna
Inc. (together with any successor, "Aetna") as of the date hereof setting forth
your severance protection in the event of a change in control, you have agreed
that you will be subject to the Aetna Change in Control Excise Tax Policy for
Selected Officers. This memorandum sets forth the terms of that policy as it
applies to you.
1. Initial Determinations by Accounting Firm.
In the event that a change in "the ownership or effective control" of Aetna
or "the ownership of a substantial portion of the assets" of Aetna (a
"Change in Ownership") occurs or is expected to occur (in either case
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")), Aetna shall retain a national accounting firm
selected by Aetna and reasonably acceptable to you (the "Accounting Firm")
to perform the calculations necessary under this memorandum. The Accounting
Firm shall have discretion to retain an independent appraiser with adequate
expertise (the "Appraiser") to provide any valuations necessary for the
Accounting Firm's calculations hereunder. Aetna shall pay all the fees and
costs associated with the work performed by the Accounting Firm and any
Appraiser retained by the Accounting Firm. If the Accounting Firm has
performed services for any person, entity or group in connection with the
Change in Ownership, you may select an alternative national accounting firm
to be the Accounting Firm. If the Appraiser otherwise performs work for any
of the entities involved in the Change in Ownership or their affiliates (or
has performed work for any such entity within the three years preceding the
calculations hereunder), then you may select an alternative appraiser of
national stature with adequate expertise to be the Appraiser. The
Accounting Firm shall provide promptly to both Aetna and you a written
report setting forth the calculations required under this memorandum,
together with a detail of all relevant supportive data, valuations and
calculations. All determinations of the Accounting Firm shall be binding on
you and Aetna. When making the calculations required hereunder, you shall
be deemed to pay:
- Federal income taxes at the highest applicable marginal rate of Federal
income taxation for the taxable year for which any such calculation is
made, and
- any applicable state and local income taxes at the highest applicable
marginal rate of taxation for the taxable year for which any such
calculation is made, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local taxes.
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The Accounting Firm shall determine (the "Initial Determination"):
(i) the aggregate amount of all payments, benefits and distributions
provided by Aetna to you or for your benefit, whether paid or payable
or distributed or distributable pursuant to the terms of the Agreement
or any other agreement, plan or arrangement of Aetna or otherwise
(other than any payment pursuant to this memorandum) which are in the
nature of compensation and contingent upon a Change in Ownership
(valued pursuant to Section 280G of the Code) (collectively the
"Payments"); and
(ii) the maximum amount of the Payments you would be entitled to receive
without being subject to the excise tax imposed by Section 4999 of the
Code (the "Payment Cap") (such excise tax, together with any interest
or penalties with respect to such excise tax, are hereinafter
collectively referred to as the "Excise Tax").
2. Initial Treatment of Payments.
(a) If the amount of the Payments does not exceed the Payment Cap, you
shall be entitled to receive the full amount of the Payments.
(b) If the amount of the Payments exceeds the Payment Cap by less than 10%
of the Payment Cap amount, then, notwithstanding anything to the
contrary, the amount of the Payments payable to you shall be reduced
to the amount of the Payment Cap. In the event that the Payments are
subject to reduction hereunder, you shall have the right to designate
which of the Payments will be reduced or eliminated.
(c) If the amount of the Payments exceeds the Payment Cap by more than 10%
of the Payment Cap amount, then the amount of the Payments you are
entitled to receive shall not be reduced and Aetna shall pay to you an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by you of all taxes (including any interest and penalties
imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. All determinations
required to be made as to whether a Gross-Up Payment is required and
the amount of such Gross-Up Payment shall be made by the Accounting
Firm.
3. Redeterminations Based on IRS or Court Ruling.
If after the date of the Initial Determination (A) you become entitled to
receive additional Payments (including, without limitation, severance)
contingent upon the same Change in Ownership, or (B) you become subject to
the terms of any final binding agreement between you and the Internal
Revenue Service or any decision of a court of competent jurisdiction which
is not appealable or for which the time to appeal has lapsed (a "Final
Determination") and which is contrary to the Initial Determination, then
based upon such additional Payments or such Final Determination (as the
case may be), the Accounting Firm shall recalculate:
(i) the aggregate Payments (such recalculated amount, the "Redetermined
Payments"); and
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(ii) the maximum amount of the Redetermined Payments you would be entitled
to receive without being subject to the excise tax imposed by Section
4999 of the Code (the "Redetermined Payment Cap") (such excise tax,
together with any interest or penalties with respect to such excise
tax, are hereinafter referred to as the "Redetermined Excise Tax").
4. Reconciliations Based on Redeterminations.
(a) If the Redetermined Payment Cap is greater than the Payment Cap (and
your Payments were reduced pursuant to paragraph 2(b)), then Aetna
shall promptly pay you the amount by which the Redetermined Payments
Cap exceeds the Payment Cap, together with interest on such difference
at the applicable Federal rate (as defined in Section 1274(d) of the
Code) (the "Federal Rate") from the original Payment due date to the
date of actual payment of the difference by Aetna.
(b) If the aggregate value of the Redetermined Payments exceeds the
Redetermined Payment Cap by less than 10%, then, notwithstanding
anything to the contrary, the amount of the Redetermined Payments that
you are entitled to receive and retain shall be reduced to the amount
of the Redetermined Payment Cap. In the event that the Redetermined
Payments are subject to reduction under this paragraph and any such
portion of the Redetermined Payments have no yet been paid to you, you
shall have the right to designate which portion of such unpaid
Redetermined Payments should be reduced or eliminated. If you have
previously received any Payments in excess of the Redetermined Payment
Cap, such excess Payments shall be deemed for all purposes to be a
loan to you made on the date of receipt of such excess Payments, which
you shall have an obligation to repay to Aetna 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 your receipt
of such excess Payments to the date of repayment by you.
Notwithstanding the foregoing, if any portion of such excess Payments
which is to be refunded to Aetna 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 you, and
interest payable to Aetna shall not exceed interest received or
credited to you by such tax authority for the period it held such
portion. In addition, if, pursuant to a Final Determination, any such
excess Payments are not deemed a loan and as a result you are subject
to Redetermined Excise Tax, then you shall be treated as if the
aggregate value of the Redetermined Payments exceeds the Redetermined
Payment Cap by more than 10% under paragraph 3(c) and you shall be
entitled to the Supplemental Gross-Up Payment, subject to all the
attendant conditions set forth below.
(c) If the aggregate value of the Redetermined Payments exceeds the
Redetermined Payment Cap by more than 10%, then the amount of the
Redetermined Payments you are entitled to receive and retain shall not
be reduced and Aetna shall pay to you an additional payment (a
"Supplemental Gross-Up Payment") in an amount such that after payment
by you of all taxes (including any interest and penalties imposed with
respect to such taxes), including any Redetermined Excise Tax, imposed
on the Supplemental Gross-Up Payment you retain an amount of the
Supplemental Gross-Up Payment; provided that if you have previously
received a Gross-Up Payment, the amount of the Supplemental Gross-Up
Payment shall be reduced by the amount of the Gross-Up Payment you
previously received, so that you will be
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fully reimbursed, but will not receive duplicative reimbursements. If,
however, the Excise Tax exceeds the Redetermined Excise Tax, the excess
Gross-Up Payment that has been paid to you shall be deemed for all
purposes to be a loan to you made on the date of receipt of such excess
Gross-Up Payment, which you shall have an obligation to repay to Aetna
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 your receipt of such excess Gross-Up Payment to the date of
repayment by you. Notwithstanding the foregoing, in the event any
portion of the Gross-Up Payment to be refunded to Aetna 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 you, and interest payable to Aetna shall not exceed interest
received or credited to you by such tax authority for the period it
held such portion. You and Aetna shall mutually agree upon the course
of action to be pursued (and the method of allocating the expenses
thereof) if your good faith claim for refund or credit is denied.
5. Procedures With Respect to IRS Claims.
You shall notify Aetna in writing of any claim by the Internal Revenue
Service relating to any unpaid excise tax applicable to the Payments. Such
notification shall be given as soon as practicable but no later than twenty
business days after you know of such claim and shall apprise Aetna of the
nature of such claim, any assessment under such claim and the date on which
such assessment is requested to be paid. You shall not pay such claim prior
to the expiration of the thirty day period following the date on which you
give such notice to Aetna (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If Aetna notifies
you in writing prior to the expiration of such period that it desires to
contest such claim, you shall:
(a) give Aetna any information reasonably requested by Aetna relating to
such claim,
(b) take such action in connection with contesting such claim as Aetna
shall reasonably request in writing from time to time including,
without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Aetna,
(c) cooperate with Aetna in good faith in order effectively to contest
such claim, and
(d) permit Aetna to participate in any proceedings relating to such claim;
provided, however, that Aetna shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold you harmless, on
an after-tax basis, for any Excise Tax, Redetermined Excise Tax or income
tax, including interest and penalties with respect thereto, imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing, Aetna shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego
any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole
option, either direct you to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and you agree to prosecute
such contest to a determination before any administrative tribunal, in a
court
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of initial jurisdiction and in one or more appellate courts, as Aetna shall
determine; provided, however, that if Aetna directs you to pay such claim
and sue for a refund, Aetna shall advance the amount of such payment to
you, on an interest-free basis, and shall indemnify and hold you harmless,
on an after-tax basis, from any Excise Tax, Redetermined Excise Tax or
income tax, including interest and penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
you with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, Aetna's control of
the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and you shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
If after the receipt by you of an amount advanced by Aetna pursuant to the
foregoing, you become entitled to receive any refund with respect to such
claim, you shall (subject to Aetna's complying with the requirements of
above with respect to any contestation of an excise tax claim) promptly pay
to Aetna the amount of such refund (together with any interest paid or
credited thereon by the taxing authority after deducting any taxes
applicable thereto). If, after the receipt by you of an amount advanced by
Aetna hereunder, a determination is made that you shall not be entitled to
any refund with respect to such claim and Aetna does not notify you in
writing of its intent to contest such denial of refund prior to the
expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of the Supplemental
Gross-Up Payment required to be paid hereunder. The forgiveness of such
advance shall be considered part of the Supplemental Gross-Up Payment and
subject to gross-up for any taxes (including interest or penalties)
associated therewith.
Upon the consummation of the Agreement and Plan of Restructuring and Merger
among ING America Insurance Holdings, Inc., Aetna Inc., et. al. dated as of
July 19, 2000, all undertakings by the Company hereunder shall be
obligations of Aetna U.S. Healthcare, Inc. and its subsidiaries and you
shall have no right to bring any claim or action against ING America
Insurance Holdings, Inc. or any of its subsidiaries or affiliates.
The terms of this document shall not be amended, modified or curtailed
without your written consent.
