Exhibit 10.60

 

February 24, 2004

 

Mark Hug

 

Dear Mark:

 

As a result of the decision by VeraVest Investments, Inc. to discontinue the
sale of non-proprietary products, First Allmerica Financial Life Insurance
Company (the “Company”) has concluded that your position will be eliminated.
This is formal notice that your position will be eliminated on February 29, 2004
(the “Position Elimination Date”). This letter agreement is a mutually
acceptable severance agreement which contains a release and waiver of any
potential claim arising out of your employment relationship or the termination
of your employment relationship (this Agreement is hereinafter referred to as
the “Separation Agreement” or “Agreement”). It is important that you read and
understand the following terms:

 

1. Resignation: You will resign as President of the Company and any other titles
or officer or director positions that you hold in subsidiaries or affiliates of
the Company. Your resignation will be effective as of the close of business on
February 27, 2004 and will be in the form of Exhibit B attached.

 

2. Termination Date and Compensation. At the close of business on February 27,
2004, in exchange for your execution of this Separation Agreement, you will
receive fifty-two (52) weeks of severance as a paid leave. During a paid leave
of absence, you will continue to receive your current compensation and existing
fringe benefits, except that after your Position Elimination Date you will not
be eligible for additional vacation accrual or be eligible to participate in the
Group Disability Plan. In addition, your participation in the Group Accidental
Death Plan and Group Life Insurance will continue for three (3) months from your
Position Elimination Date or until your paid leave ends, whichever occurs first.
Life conversion or portability is available once coverage ends. You will be
eligible for a Company 401(k) matching contribution while in a paid leave
status. At the close of business on the date your paid leave ends, your
employment will be terminated. This will be your “Termination Date”. If you do
not wish to receive fifty-two (52) weeks of severance as a paid leave and would
rather receive a lump sum payment equal to fifty-two (52) weeks of base
compensation, you must return Attachment A to Mary Eldridge at Mail Station No.
N106.

 

If you do not return Attachment A, you will receive your severance in the form
of a paid leave. Your additional weeks of paid leave or your lump sum payment,
if you so select, is hereinafter referred to as your “Severance Compensation”.
Your Severance Compensation

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will be paid to you following the Effective Date of this Separation Agreement
(as defined in Paragraph 22).

 

3. Bonus Payment. On the first payroll date after this Agreement becomes
effective, the Company will pay you a bonus payment of $100,000.00.

 

4. Vacation Entitlement. The Company will also pay you for any accrued unused
vacation time to which you are entitled as of your Position Elimination Date.
Signing this Agreement is not required for you to receive your accrued unused
vacation pay.

 

5. Outplacement. The Company will provide you with Executive outplacement
assistance as described in the enclosed materials.

 

6. 2003 Incentive Compensation. You shall receive a Short-Term Incentive
Compensation Award for 2003 payable on the first payroll date following the
Effective Date of this Agreement. This award shall be in the amount of
$281,250.00. You will not be a participant in the 2004 Short-Term Incentive
Compensation Plan.

 

7. Withholding. You acknowledge that any payments made pursuant to this
Agreement will be subject to appropriate Federal and State withholding.

 

8. Unvested Stock Options. Notwithstanding any provisions in the Allmerica
Financial Corporation Amended Long-Term Incentive Plan (the “Stock Plan”) or the
terms of any documentation you received upon the granting of options to you, you
hereby agree that any unvested options which you hold as of February 29, 2004,
shall be forfeited by you and returned to the Company for no consideration.

 

9. Confidentiality. The terms and conditions of this Separation Agreement shall
be held in confidence by the Company and by you, except as may be required by
law, by state or federal tax or regulatory agencies (including if the Company
determines that this Separation Agreement is required to be filed with, or
described in, any filing with the Securities and Exchange Commission), by an
order of a court of competent jurisdiction, or as may be necessary by either
party in connection with the enforcement of the terms hereof.

 

You agree not to directly or indirectly discuss with or provide information to
the news media, legislative or regulatory bodies, the brokerage, financial or
insurance communities, current employees or officers of the Company, or in any
form of communication reveal, in any way, information which is detrimental to
the best interest of Allmerica Financial Corporation, its direct and indirect
subsidiaries and its/their directors, officers and employees.

 

Should you breach the provisions of this section, the Company shall have the
right to the return of the Severance Compensation set forth in Paragraph 1 and
the bonus payment set forth in Paragraph 3.

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10. Non-Solicitation: You agree for a period of two years following the
termination of your employment with the Company that you will not directly or
indirectly solicit any client or policyholder of the Company or its affiliates
or assist any other person or entity to do so or solicit, recruit or hire or
assist or encourage a third party to solicit, recruit or hire the services of
any then current employee, agent or broker of the Company or its affiliates.

 

11. Proprietary Information: You acknowledge that your position with the Company
has been one of high trust and confidence and that in the course of your
services to the Company you have had access to and contact with Proprietary
Information. You agree not to disclose to others, or use for your benefit or the
benefit of others, any Proprietary Information. For purposes of this Agreement,
“Proprietary Information” shall mean confidential information concerning the
business, prospects and goodwill of Allmerica Financial Corporation, the Company
and/or their respective subsidiaries /affiliates including, by the way of
illustration and not limitation, all confidential information (whether or not
patentable and whether or not copyrightable) owned, possessed or used by
Allmerica Financial Corporation, the Company and/or their respective
subsidiaries/affiliates including, without limitation, any confidential vendor
information, policyholder information, potential policyholder lists, trade
secrets, reports, new product information, technical data, software, software
documentation, software development, marketing or business plans, unpublished
financial information, budgetary/price/cost information, agent, broker,
reinsurer, employee or insured lists or confidential information involving
policy forms, litigation or claim matters, including potential claim matters.

 

12. Remedies: You acknowledge that any breach of the provisions of Sections 9,
10, and 11 of this Agreement shall result in serious and irreparable injury to
Allmerica Financial Corporation, the Company and/or their respective
subsidiaries or affiliates (hereinafter in the aggregate referred to as “AFC”)
for which AFC cannot be adequately compensated by monetary damage alone. You
agree, therefore, that in addition to any other remedy which it may have, the
Company shall be entitled to specific performance of Sections 9, 10 and 11 of
this Agreement by you and to seek both temporary and permanent injunctive relief
(to the extent permitted by law) without the necessity of proving actual
damages.

 

13. Removal from Continuity Plan: You hereby are removed as a participant in the
Allmerica Financial Corporation Employment Continuity Plan as of February 29,
2004.

 

14. Cooperation with the Company. You agree to be generally available to respond
to questions and/or inquiries and provide other information concerning matters
that were within the scope of your responsibilities during your employment with
the Company. It is anticipated that most matters can be addressed through phone
calls and/or e-mails. Certain matters, however, may require meetings at mutually
acceptable times and places. You also agree to cooperate fully with the Company
in connection with any existing or future litigation against the Company to the
extent the Company deems your cooperation necessary. The Company will attempt to
minimize the disruption in your life in such event.

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15. Return of Company Property. You agree to promptly return all Company
property of any kind whatsoever in your possession.

 

16. Rehire. If you are subsequently rehired by the Company, its subsidiaries or
affiliates after your receipt of the Severance Compensation, you understand and
acknowledge that some of your benefits upon your rehire, including possible
future severance compensation, will be based on your rehire date.

 

17. Group Insurance Continuation/COBRA benefits. At the end of your employment,
you may elect to extend coverage of existing health care benefits for an
additional eighteen (18) months in accordance with the provisions of the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”) by paying 102% of the
Company’s group rate for coverage. Additional details concerning COBRA coverage
will be provided separately.

 

18. Cash Balance Plan. You are eligible to receive a Cash Balance Plan award for
2003. You will receive this award when the award is made to employees. You are
not eligible for a Cash Balance Plan award for 2004.

 

19. New Employment. If you are in a paid leave and you commence new employment
with an entity other than the Company during your paid leave, the Company will
commute and pay you in a lump sum the unpaid balance of your paid leave. If you
accept re-employment with the Company, you will not be entitled to any unpaid
Severance Compensation due or payable after your acceptance. New employment
shall mean full-time employment wherein you are eligible for group medical
benefits, the providing of consulting services on a full time basis, or the
engaging on a full time basis, in a sole proprietorship or partnership. Full
time basis shall mean an average of 30 hours or more a week.

 

20. By-Law Indemnification. The Company hereby confirms that you are entitled to
indemnification pursuant to the terms and conditions of Section 8 of the
Company’s By-Laws, as said terms and conditions may exist from time to time. A
copy of the existing By-Laws is attached to this Agreement as Exhibit C.

 

21. General Release. In consideration for the amounts paid in Paragraph 1 and 3,
and for other good and sufficient consideration contained herein and otherwise,
the receipt of which is hereby acknowledged, you hereby release and discharge
the Company and its past or present officers, directors, stockholders,
employees, agents and attorneys, whether directly or indirectly, and whether
individually or in their official capacities (collectively, the “Releasees”),
from all actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, claims and demands whatsoever, including without
limitation, all claims in law or in equity (collectively, “Claims”) which you
ever had, now have or hereafter may have against the Releasees to the date of
your execution of this Agreement, including any claims for any alleged violation
of any federal, state, or local law, regulation or public policy relating to or
having any bearing, directly or indirectly, on the operations or practices of
Company, the terms and conditions of your employment with Company or the ending
of your employment with Company. You confirm and warrant that you have not

 

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caused or permitted to be filed, nor will you cause or permit to be filed in the
future, any pending charge, complaint or action against the Releasees and that
you have not assigned any claim you have or may have against the Releasees to
any person or entity. You agree not to make, assert or maintain any charge,
claim, demand or cause of action, which is released by this Agreement.

 

In addition, you understand and acknowledge that there are various federal,
state and local laws that prohibit employment discrimination on the basis of
age, sex, race, color, marital status, national origin, religion, disability,
sexual orientation and other categories, and that these laws are enforced by the
courts and various government agencies. You intend to give up any rights you may
have under these laws or any other laws with respect to your affiliation with
the Releasees, employment by the Company, or the ending of your employment with
the Company. You hereby release and forever discharge the Releasees from any and
all actions, causes of action and claims whatsoever for wages, severance, stock
options, bonuses, damages, including pain and suffering and emotional harm
arising out of any promise, agreement or contract, known or unknown, suspected
or unsuspected, you ever had, now have, or shall have against the Releasees with
respect to any matter, event or condition occurring or arising on or prior to
the date of your execution of this Agreement, including, but not limited to,
claims for breach of an implied or expressed employment contract, claims for
unlawful discharge, claims alleging a violation of federal and state wage and
hour laws, Title VII of the Civil Rights Act, as amended, the Age Discrimination
in Employment Act of 1967, as amended, Section 1981 of the Civil Rights Act of
1991, The Americans with Disabilities Act, The Equal Pay Act, The Family Medical
and Leave Act, federal and state Wage and Hour Laws, the Employee Retirement
Income Security Act of 1974, federal and state whistle blower laws and other
claims pursuant to federal, state or local law regarding discrimination based on
race, age, sex, religion, marital status, disability, sexual orientation, or
national origin, claims for alleged violation of any other local, state, and
federal law, regulations, ordinance or public policy having any bearing
whatsoever on the terms or conditions of your employment with the Company, the
ending of such employment, as well as all claims pursuant to common law, or
claims arising directly or indirectly out of your employment by or separation
from employment with the Company. You further agree to release and discharge the
Releasees not only from any and all claims which you could have made on your own
behalf but also from those which may or could be brought by any person,
governmental authority or organization and waives any right to become, and
promises not to become, a member of any class in any proceeding or case in which
a claim against the Releasees arises, in whole or in part, from any event which
occurred on or prior to the date of this Agreement. Not withstanding the
foregoing, nothing in this Agreement shall preclude you from (a) participating
in any manner in an investigation, hearing or proceeding conducted by the Equal
Employment Opportunity Commission or state civil rights agency, but you hereby
waive any and all rights to recover under, or by virtue of, any such
investigation, hearing or proceeding, or (b) exercising your rights under COBRA.

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THIS MEANS THAT, BY SIGNING THIS AGREEMENT, YOU HAVE WAIVED ANY RIGHTS YOU MAY
HAVE OR HAD TO BRING A LAWSUIT OR MAKE A CLAIM AGAINST THE RELEASEES BASED ON
ANY ACTS OR OMISSIONS TAKEN BY THE COMPANY UP TO THE DATE OF THE SIGNING OF THIS
AGREEMENT.

 

22. Period for Review and Revocation. You acknowledge and agree that you have
been given a reasonable period of time within which to consider this letter
Agreement, up to and including forty-five (45) days. If you fail to return this
letter Agreement within 45 days of the date you receive this Separation
Agreement or within 45 days of your Position Elimination Date, which ever is
later, the Company will consider you to have rejected its offer of the payment
and benefits provided herein. You also represent that you have read carefully
and fully understand the terms of this Agreement, and that you have had the
opportunity to consult with an attorney, and that you have been advised by the
Company to consult with an attorney, prior to signing this Agreement. You
acknowledge that any changes to this Agreement, material or otherwise, will not
restart the 45-day review period. You agree and understand that you may accept
and sign this Agreement prior to the expiration of the 45-day Review Period,
provided your acceptance is knowing and voluntary. You further acknowledge that
you are executing this letter agreement voluntarily and knowingly and that
notwithstanding your voluntary and knowing execution, you may revoke your
consent to this Agreement at any time within seven (7) days of the date of its
execution and shall not become effective until this 7 day period has expired.
Whether you sign this Agreement at or prior to the execution of the 45-day
review period, the 7-day revocation period may not be shortened or waived. The
“Effective Date” will be the eighth (8th) day after you sign it. If you do not
notify the Company in writing, within the seven (7) day revocation period that
you are exercising your right of revocation, the Agreement will automatically
become effective.

 

The Company’s Human Resources Department has assembled data concerning the
individuals eligible for consideration as well as those affected by this
reduction in force, their job titles and ages. This data is attached to this
Agreement. You should be aware that employees whose positions are eliminated or
whose employment is terminated are not entitled to any Severance Compensation if
they do not execute this Agreement.

 

23. Arbitration. If any dispute shall arise between you and the Company with
reference to the interpretation of this Agreement or the rights of any party
with respect to any transaction under this Agreement, the dispute shall be
referred to arbitration and/or mediation under National Rules for the Resolution
of Employment Disputes of the American Arbitration Association. The arbitration
shall take place in the Commonwealth of Massachusetts and the arbitration
proceedings are to be governed by the rules of the American Arbitration
Association, as applicable. The decision of the arbitrator shall be final and
binding upon you and the Company and judgement upon the award rendered by the
arbitrator may be entered into any court having jurisdiction thereof.

 

The expense of the arbitrator and of the arbitration shall be equally divided
between you and the Company. Arbitration is the sole remedy for disputes arising
under this Agreement.

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24. Voluntary Execution. Your signature below is an acknowledgment that you have
read this Agreement, understand it, and that you are entering into it
voluntarily.

 

25. Successors and Assigns. This Agreement shall be binding upon you, your
heirs, executors, administrators and assigns and upon the Company, its
successors and assigns.

 

26. Completeness of Agreement. This Agreement contains all the terms and
conditions agreed upon by the parties with reference to the subject matter
contained in this Agreement. No other agreement, oral or otherwise, will be
deemed to exist or to bind either of the parties to this Agreement. This
Agreement cannot be modified except by a written instrument signed by both
parties.

 

27. Severability: The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
Wherever possible, each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
hereof shall be prohibited by or be invalid under such law, that provision shall
be ineffective only to the extent of such prohibition or invalidity without
invalidating or nullifying the remainder of that provision or any other
provision of this Agreement.

 

28. Massachusetts Law: This Agreement shall be executed as an agreement under
seal and it shall be governed by the laws of the Commonwealth of Massachusetts.

 

Very truly yours,

FIRST ALLMERICA FINANCIAL

LIFE INSURANCE COMPANY

 

By:    /s/    Mary M. Eldridge

Assistant Vice President

 

I knowingly understand and voluntarily agree, and accept the terms and
conditions set forth above.

 

/s/    Mark Hug

Mark Hug

 

Date: 02/27/04