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Exhibit 10.2  
 

 
AETNA INC.
2000 STOCK INCENTIVE PLAN

PERFORMANCE STOCK UNIT TERMS OF AWARD

Vesting Period – 24 month period following the Effective Date
Performance Period January 1, 2010 through December 31, 2010

Pursuant to its 2000 Stock Incentive Plan (the "Plan"), Aetna Inc. (the
"Company") hereby grants Performance Stock Units on the terms and conditions
hereinafter set forth.  The number of Performance Stock Units awarded is
included in the website of the designated broker, currently UBS Financial
Services, Inc., and in the Notice of the Performance Stock Unit Grant
Acknowledgement and Acceptance Form.  All capitalized terms used herein which
are not otherwise defined herein shall have the meaning specified in the Plan.

ARTICLE I

DEFINITIONS

(a)
“Affiliate" means an entity at least a majority of the total voting power of the
then-outstanding voting securities of which is held, directly or indirectly, by
the Company and/or one or more other Affiliates.

(b)
"Board" means the Board of Directors of Aetna Inc.

(c)           "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 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 Board (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.

 
 

 
Notwithstanding the foregoing, in no event shall a “Change in Control” be deemed
to have occurred (i) as a result of the formation of a Holding Company, or (ii)
with respect to Grantee, if Grantee is part of a “group,” within the meaning of
Section 13(d)(3) of the Exchange Act as in effect on the effective date, which
consummates the Change in Control transaction.  In addition,

 
 
 
 
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for purposes of the definition of “Change in Control” a person engaged in
business as an underwriter of securities shall not be deemed to be the
“Beneficial Owner” of, or to “beneficially own,” any securities 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.

 
(d)
"Committee" means the Board's Committee on Compensation and Organization or any
successor thereto.

(e)
"Common Stock" means the Company's Common Shares, $.01 par value per share.

(f)
"Company" means Aetna Inc.

(g)
"Effective Date" means the date of grant of this award of Performance Stock
Units.

(h)
“Fair Market Value" means the closing price of the Common Stock as reported by
the Consolidated Tape of the New York Stock Exchange Listed Shares on the date
such value is to be determined, or, if no shares were traded on such date, on
the next day on which the Common Stock is traded.

(i)
“Fundamental Corporate Event” shall mean any stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value, or
similar event.

(j)
"Grantee" means the person to whom this award has been granted.

(k)
“Holding Company” means an entity that becomes a holding company for the Company
or its businesses as a part of any reorganization, merger, consolidation or
other transaction, provided that the outstanding shares of common stock of such
entity and the combined voting power of the then outstanding voting securities
of such entity entitled to vote generally in the election of directors is,
immediately after such reorganization, merger, consolidation or other
transaction, beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the voting stock outstanding immediately prior to such
reorganization, merger, consolidation or other transaction in substantially the
same proportions as their ownership, immediately prior to such reorganization,
merger, consolidation or other transaction, of such outstanding voting stock.

 
(l)
"Long Term Disability" means long-term disability as defined under the terms of
the Company's applicable long-term disability plans or policies.

(m)
“Net Shares” means the number of shares of Common Stock which will be deposited
in a brokerage account in the Grantee’s name at the Company’s designated broker
after shares have been withheld to satisfy applicable tax and withholding
requirements upon vesting of the Performance Stock Units.

(n)
“Performance Period” means the one-year period ending December 31, 2010.

(o)
“Performance Stock Units” means the number of shares of Common Stock represented
by the number of units awarded or such other amount as may result by operation
of Article III of this Agreement.

(p)
“Plan” means the Aetna Inc. 2000 Stock Incentive Plan.

(q)
"Retirement" means the termination of employment of a Grantee from active
service with the Company, a Subsidiary or Affiliate provided the Grantee’s age
and completed years of service total 65 or more points at termination of
employment.

 
 
 
 
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(r)
“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as
amended, and the regulation issued thereunder, as may be amended from time to
time.

(s)
“Shares of Stock” or “Stock” means the Common Stock.

(t)
"Subsidiary" means an entity of which, at the time such subsidiary status is to
be determined, at least 50% of the total combined voting power of all classes of
stock of such entity is held by the Company and/or one or more other
subsidiaries.

(u)
"Successor" means the legal representative of the estate of a deceased Grantee
or the person or persons who shall acquire the right to the Performance Stock
Units by bequest or inheritance or by reason of the death of the Grantee.

(v)
“Vest Date” means the last day of the Vesting Period and is the date on which
this award of Performance Stock Units shall vest in accordance with the terms of
this Agreement and in the Notice of Performance Stock Unit Grant, if at all.

(w)
“Vesting Period” means the period beginning on the Effective Date and ending
twenty-four months thereafter (e.g., the second anniversary of the Effective
Date).

ARTICLE II

VESTING PERIOD

Subject to the terms of this Agreement, the Performance Stock Units will vest,
as of the Vest Date, in accordance with the terms of the Plan and this Terms of
Award Agreement, or on such earlier date as provided in Article IV.  If the
Committee determines that the performance goal set forth on Exhibit A is met, on
the Vest Date the Grantee shall vest to one share of Common Stock for each
vested Performance Stock Unit net of applicable taxes and withholding (or such
greater or lessor amount based on performance, as set forth on Exhibit A).  Such
Net Shares will be delivered to the Company’s designated broker, in a brokerage
account established in the Grantee’s name after the Vest Date.  If the Committee
determines that the performance goal set forth on Exhibit A is not met at the
minimum level, no shares will vest.

Any social security calculation or other adjustments discovered after the
payment of Net Shares will be settled in cash not in Common Stock.

ARTICLE III

CAPITAL CHANGES

In the event that the Committee shall determine that any Fundamental Corporate
Event affects the Common Stock such that an adjustment is required to preserve,
or to prevent enlargement of, the benefits or potential benefits made available
under this Plan, then the Committee shall, in such manner as the Committee may
deem equitable, adjust the number and kind of shares subject to the award of
Performance Stock Units.  Additionally, the Committee may make provision for
cash payment to a Grantee or the Successor of the Grantee.  However, the number
of Performance Stock Units shall always be a whole number.
 
 
 
 
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ARTICLE IV

CHANGE IN CONTROL

Notwithstanding any other provision of this Agreement to the contrary, upon the
occurrence of a Change in Control, the Performance Stock Units not previously
forfeited pursuant to this Terms of Award Agreement shall become immediately
vested at a level which equals the greater of the number of Performance Stock
Units that would have vested (x) at target-level 100% vesting, or (y) based on
the Company’s actual performance level using the date on which the Change in
Control occurs as the end of the Vesting Period.  Net Shares will be payable on
the Vest Date, provided however, if within the 24 month period following the
Change in Control the Company terminates Grantee’s employment without cause, the
Net Shares will become payable as of such termination of employment date.  If an
award is considered deferred compensation subject to Section 409A, the award
will vest but the Change in Control will not accelerate the payment of the
deferred Performance Stock Units unless the Change in Control also meets the
definition of change in control set forth in Treasury Regulation Section
1.409A-3(i)(5).

ARTICLE V

TERMINATION OF EMPLOYMENT

(a)
Except as provided in (c) below, if, during the Vesting Period, Grantee shall
cease to be employed by the Company, its Subsidiaries or Affiliates, for reason
of death, Long-term Disability, Retirement or involuntary termination of
employment by the Company, the portion of the Performance Stock Units that may
vest on the Vest Date, if any, shall be calculated in accordance with the
following formula:  (i) the number of completed months employed commencing on
the first day of the Vesting Period divided by the number of months in the
Vesting Period; multiplied by (ii) the number of Performance Stock Units, that
otherwise would have vested.

(b)
Except as provided in (a) above, any Performance Stock Unit not vested as of the
date Grantee terminates employment shall be forfeited at the time of cessation
of employment; provided, however, that if Grantee’s employment is terminated by
the Company other than for cause and Grantee has not previously, or does not
subsequently, vest to any portion of the Performance Stock Unit in accordance
with its terms, then upon the forfeiture of the entire Performance Stock Unit,
the Company will pay Grantee an amount equal to the value of a single share of
Common Stock, whether or not the forfeited Performance Stock Unit related to
more than a single share of Common Stock, calculated as of the cessation of
employment, if requested by Grantee, within 30 days of such cessation of
employment.

(c) 
 No Performance Stock Unit will vest after the Company has terminated the
employment of the Grantee for cause, unless the Committee, in its sole
discretion, deems a payment to be warranted under the particular
circumstances.  In addition, the Performance Stock Units will not vest if
Grantee has willfully engaged in gross misconduct or other serious impropriety
which the Company determines is likely to be damaging or detrimental to the
Company, any Subsidiary or Affiliate.

 
 

(d)
Employment for purposes of determining the vesting rights of the Grantee and the
expiration of the grant under this Article V shall mean continuous active
full-time salaried employment with the Company, a Subsidiary or an Affiliate,
except that the period during which the Grantee is on vacation, sick leave, or
other pre-approved leave of absence (provided there is no actual termination of
employment), shall not interrupt the continuous employment of the
Grantee.  Employment shall also include service with Aetna Foundation,
Inc.  Notwithstanding any period during which Grantee receives salary
continuation or severance shall not be considered as part of the continuous
employment of the Grantee.

 

 
 
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ARTICLE VI

EMPLOYEE COVENANTS

(a)
As consideration for this grant of Performance Stock Units, without prior
written consent of the Company:

 
 
(i)
Grantee will not (except to the extent required by an order of a court having
competent jurisdiction or under subpoena from an appropriate government agency)
use or disclose to any third person, whether during or subsequent to Grantee’s
employment, any trade secrets, confidential information and proprietary
materials, which may include, but are not limited to, the following categories
of information and materials: customer lists and identities; provider lists and
identities; employee lists and identities; product development and related
information; marketing plans and related information; sales plans and related
information; premium or other pricing information; operating policies and
manuals; research; payment rates; methodologies; procedures; contractual forms;
business plans; financial records; computer programs; database; or other
financial, commercial, business or technical information related to the Company
or any Subsidiary or Affiliate unless such information has been previously
disclosed to the public by the Company or has become public knowledge other than
by a breach of this Agreement; provided, however, that this limitation shall not
apply to any such use or disclosure made while Grantee is employed by the
Company, any Subsidiary or Affiliate if such disclosure occurred in connection
with the performance of Grantee’s job as an employee of the Company, any
Subsidiary or Affiliate;

 
 
(ii)
Grantee will not, during and for a period of 12 months or 24 months for
executive tier employees (the executive tier status determined as of the
effective date of this grant) following Grantee’s termination of Employment,
directly or indirectly induce or attempt to induce any employee to be employed
or perform services elsewhere;

 
 

 
 
(iii)
Grantee will not, during and for a period of 12 months or 24 months for
executive tier employees (the executive tier status determined as of the
effective date of this grant) following Grantee's termination of Employment,
directly or indirectly, induce or attempt to induce any agent or agency, broker,
supplier or health care provider of the Company or any Subsidiary to cease or
curtail providing services to the Company or any Subsidiary; and

 
 
(iv)
Grantee will not, during and for a period of 12 months or 24 months for
executive tier employees (the executive tier status determined as of the
effective date of this grant) following Grantee’s termination of Employment,
directly or indirectly solicit or attempt to solicit the trade of any individual
or entity which, at the time of such solicitation, is a customer of the Company,
any Subsidiary or Affiliate, or which the Company, any Subsidiary or Affiliate
is undertaking reasonable steps to procure as a customer at the time of or
immediately preceding termination of Employment; provided, however, that this
limitation shall only apply to any product or service which is in competition
with a product or service of the Company, any Subsidiary or Affiliate and shall
apply only with respect to a customer or prospective customer with whom the
Grantee has been directly or indirectly involved.

 
 
 
 
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In addition:

(v)  
Following the termination of Grantee’s Employment, Grantee shall provide
assistance to and shall cooperate with the Company or a Subsidiary or Affiliate,
upon its reasonable request and without additional compensation, with respect to
matters within the scope of Grantee’s duties and responsibilities during
Employment, provided that any reasonable out-of-pocket expenses Grantee incurs
in connection with any assistance Grantee has been requested to provide under
this provision for items including, but not limited to, transportation, meals,
lodging and telephone, shall be reimbursed by the Company.  The Company agrees
and acknowledges that it shall, to the maximum extent possible under the then
prevailing circumstances, coordinate, or cause a Subsidiary or Affiliate to
coordinate, any such request with Grantee’s other commitments and
responsibilities to minimize the degree to which such request interferes with
such commitments and responsibilities; and

 
(vi)
Grantee shall promptly notify the Company’s General Counsel if Grantee is
contacted by a regulatory or self-regulatory agency with respect to matters
pertaining to the Company or by an attorney or other individual who informs the
Grantee that he/she has filed, intends to file, or is considering filing a claim
or complaint against the Company.

 
(vii)
Grantee acknowledges that all original works of authorship that are created by
Grantee (solely or jointly with others) within the scope of Grantee’s employment
which are protectable by copyright are “works made for hire” as that term is
defined in the United States Copyright Act (17 U.S.C. Section 101).  Grantee
further acknowledges that while employed by the Company, Grantee may develop
ideas, inventions, discoveries, innovations, procedures, methods, know-how or
other works which relate to the Company’s current or are reasonably expected to
relate to the Company’s future business that may be patentable or subject to
trade secret protection.  Grantee agrees that all such works of authorship,
ideas, inventions, discoveries, innovations, procedures, methods, know-how and
other works shall belong exclusively to the Company, and the Grantee hereby
assigns all right, title, and interest therein to the Company.

To the extent any of the foregoing works may be patentable, Grantee agrees that
the Company may file and prosecute any application for patents for such works
and that the Grantee will, on request, execute assignments to the Company
relating to (and take all such further steps as may be reasonably necessary to
perfect the Company’s sole and exclusive ownership of) any such application and
any patents resulting there from.
 
(b)
If any provision of Article VI (a) is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth herein, the Company
and Grantee agree that it is the intention of the parties that such provision
should be enforceable to the maximum extent possible under applicable law and
that such court shall reform such provision to make it enforceable in accordance
with the intent of the parties.

(c)    
Grantee acknowledges that a material part of the inducement for the Company to
grant the Performance Stock Units is Grantee’s covenants set forth in Article VI
(a) and that the covenants and obligations of Grantee with respect to
nondisclosure, non-solicitation and cooperation 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, Grantee agrees that, if Grantee
shall breach any of those covenants or obligations, Grantee shall not be
entitled to vest in the Performance Stock or be entitled to retain any income
therefrom and the Company shall be entitled to an injunction, restraining order
or such other equitable relief (without the requirement to post bond)
restraining Grantee from committing any violation of the covenants and
obligations contained in Article VI.  The remedies in the preceding sentence are
cumulative and are in addition to any other rights and remedies the Company may
have at law or in equity as a court or arbitrator shall reasonably determine.

 
 
 
 
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(d)
Employment Dispute Arbitration Program - Mandatory Binding Arbitration of
Employment Disputes.

(i)   
Except as otherwise specified in this Agreement, the Grantee and the Company
agree that all employment-related legal disputes between them will be submitted
to and resolved by binding arbitration, and neither the Grantee nor the Company
will file or participate as an individual party or member of a class in a
lawsuit in any court against the other with respect to such matters.  This shall
apply to claims brought on or after the date the Grantee accepts this Agreement,
even if the facts and circumstances relating to the claim occurred prior to that
date and regardless of whether the Grantee or the Company previously filed a
complaint/charge with a government agency concerning the claim.

For purposes of Article VI (d) of this Agreement, “the Company” includes Aetna
Inc., its Subsidiaries and Affiliates, their predecessors, successors and
assigns, and those acting as representatives or agents of those entities.  THE
GRANTEE UNDERSTANDS THAT, WITH RESPECT TO CLAIMS SUBJECT TO THE ARBITRATION
REQUIREMENT, ARBITRATION REPLACES THE RIGHT OF THE GRANTEE AND THE COMPANY TO
SUE OR PARTICIPATE IN A LAWSUIT.  THE GRANTEE ALSO UNDERSTANDS THAT IN
ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY,
AND THE DECISION OF THE ARBITRATOR IS FINAL AND BINDING.

 
(ii)
THE GRANTEE UNDERSTANDS THAT THE ARBITRATION PROVISIONS OF THIS AGREEMENT AFFECT
THE LEGAL RIGHTS OF THE GRANTEE AND THE COMPANY AND ACKNOWLEDGES THAT THE
GRANTEE HAS BEEN ADVISED TO, AND HAS BEEN GIVEN THE OPPORTUNITY TO, OBTAIN LEGAL
ADVICE BEFORE SIGNING THIS AGREEMENT.

 
(iii)
Article VI (d) of this Agreement does not apply to workers’ compensation claims,
unemployment compensation claims, and claims under the Employee Retirement
Income Security Act of 1974 (“ERISA”) for employee benefits.  A dispute as to
whether Article VI (d) of this Agreement applies must be submitted to the
binding arbitration process set forth in this Agreement.

 
(iv)
The Grantee and/or the Company may seek emergency or temporary injunctive relief
from a court (including with respect to claims arising out of Article VI (a) in
accordance with applicable law).  However, except as provided in Article VI (c)
of this Agreement, after the court has issued a ruling concerning the emergency
or temporary injunctive relief, the Grantee and the Company shall be required to
submit the dispute to binding arbitration pursuant to this Agreement.

 
(v)
Unless otherwise agreed, the arbitration will be administered by the American
Arbitration Association (the “AAA”) and will be conducted pursuant to the AAA’s
Employment Arbitration Rules and Mediation Procedures (the “Rules”), as modified
in this Agreement, in effect at the time the request for arbitration is
filed.  The AAA’s Rules are available on the AAA’s website at www.adr.org. THE
GRANTEE ACKNOWLEDGES THAT THE COMPANY HAS ENCOURAGED THE GRANTEE TO READ THESE
RULES PROMPTLY AND CAREFULLY AND THAT THE GRANTEE HAS BEEN AFFORDED SUFFICIENT
OPPORTUNITY TO DO SO.

 
(vi)
If the Company initiates a request for arbitration, the Company will pay all of
the administrative fees and costs charged by the AAA, including the arbitrator’s
compensation and charges for hearing room rentals, etc.  If the Grantee
initiates a request for arbitration or submits a counterclaim to the Company’s
request for arbitration, the Grantee shall be required to contribute One Hundred
Dollars ($100.00) to those administrative fees and costs, payable to the AAA at
the time the Grantee's request for arbitration or counterclaim is
submitted.  The Company may increase the contribution amount in the future
without amending this Agreement, but not to exceed the maximum permitted under
the AAA rules then in effect. In all cases, the Grantee and the Company shall be
responsible for payment

 
 
 
 
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of any fees assessed by the arbitrator as a result of that party’s delay,
request for postponement, failure to comply with the arbitrator’s rulings and
for other similar reasons.

 
 
(vii)
The Grantee and the Company may choose to be represented by legal counsel in the
arbitration process and shall be responsible for their own legal fees, expenses
and costs.  However, the arbitrator shall have the same authority as a court to
order the Grantee or the Company to pay some or all of the other’s legal fees,
expenses and costs, in accordance with applicable law.

 
(viii)
Unless otherwise agreed, there shall be a single arbitrator, selected by the
Grantee and the Company from a list of qualified neutrals furnished by the
AAA.  If the Grantee and the Company cannot agree on an arbitrator, one will be
selected by the AAA.

 
(ix)
Unless otherwise agreed, the arbitration hearing will take place in the city
where the Grantee works or last worked for the Company.  If the Grantee and the
Company disagree as to the proper locale, the AAA will decide.

 
(x)
The Grantee and the Company shall be entitled to conduct limited pre-hearing
discovery.  Each may take the deposition of one person and anyone designated by
the other as an expert witness.  The party taking the deposition shall be
responsible for all associated costs, such as the cost of a court reporter and
the cost of an original transcript.  Each party also has the right to submit one
set of ten written questions (including subparts) to the other party, which must
be answered under oath, and to request and obtain all documents on which the
other party relies in support of its answers to the written
questions.  Additional discovery may be permitted by the arbitrator upon a
showing that it is necessary for that party to have a fair opportunity to
present a claim or defense.

 
(xi)
The arbitrator shall apply the same substantive law that would apply if the
matter were heard by a court and shall have the authority to order the same
remedies (but no others) as would be available in a court proceeding.  The time
limits for requesting arbitration or submitting a counterclaim and the
administrative prerequisites for filing an arbitration claim or counterclaim are
the same as they would be in a court proceeding.  The arbitrator shall consider
and decide any dispositive motions (motions seeking a decision on some or all of
the claims or counterclaims without an arbitration hearing) filed by any party.

 
(xii)
All proceedings, including the arbitration hearing and decision, are private and
confidential, unless otherwise required by law.  Arbitration decisions may not
be published or publicized without the consent of both the Grantee and the
Company.

            (xiii)
 Unless otherwise agreed, the arbitrator’s decision will be in writing with a
brief summary of the arbitrator’s opinion.

 
(xiv)
The arbitrator’s decision is final and binding on the Grantee and the
Company.  After the arbitrator’s decision is issued, the Grantee or the Company
may obtain an order of judgment from a court and may obtain a court order
enforcing the decision.  The arbitrator’s decision may be appealed to the courts
only under the limited circumstances provided by law.

 
(xv)
If the Grantee previously signed an agreement, including but not limited to an
employment agreement, containing arbitration provisions, those provisions are
superseded by the arbitration provisions of this Agreement.

 
(xvi)
If any provision of Article VI (d) is found to be void or otherwise
unenforceable, in whole or in part, this shall not affect the validity of the
remainder of Article VI (d) and the remainder of the Agreement.  All other
provisions shall remain in full force and effect.

 
 
 
 
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For purposes of this Article VI, the term “Employment” shall refer to active
employment with the Company, any Subsidiary or Affiliate, and shall not include
salary continuation or severance periods.

ARTICLE VII

OTHER TERMS

(a)
Nothing in this Agreement shall interfere with or limit in any way the right of
the Company or any Subsidiary or Affiliate to terminate the Grantee’s employment
at any time.  Neither the execution and delivery hereof nor the granting of the
Award shall constitute or be evidence of any agreement or understanding, express
or implied, on the part of the Company or any of its Subsidiaries to employ or
continue the employment of the Grantee for any period.

(b)
Until the Performance Stock Units have become vested, Grantee shall not have any
rights as a stockholder (including the right to payment of dividends) by virtue
of this grant of Performance Stock Units.

(c)
During the Vesting Period, the Performance Stock Units shall be nontransferable
and non-assignable except by will or the laws of descent and distribution.

(d)
The award, when vested, will be settled on a net basis.  Prior to issuing any
Common Shares, the Company will withhold an amount sufficient to satisfy
federal, state, local, social security and Medicare withholding tax requirements
relating to award.  Any social security calculation or other adjustments
discovered after net share payment will be settled in cash, not in Shares of
Common Stock.  Vesting will result in taxable compensation reportable on the
Grantee’s W-2 in year of vesting.

(e)
The Company may from time to time adopt stock ownership requirements applicable
to Grantees who are senior managers of the Company.  In connection with and for
the purpose of implementing those ownership requirements, the Company may adopt
certain restrictions on the ability of a Grantee to sell shares issued under
this Agreement when such ownership requirements have not been satisfied.  Any
such restriction on sale will be communicated generally to affected Grantees and
the restriction may be modified by the Company from time to time, at its
discretion.  Neither the Company nor its Board of Directors shall have any
obligation or liability to a Grantee in connection with any such restriction.

(f)
This Performance Stock Unit is an unfunded obligation of the Company and nothing
in this Agreement shall be construed to create any claim against particular
assets or require the Company to segregate or otherwise set aside any assets or
create any fund to meet its obligations hereunder.

(g)
Anything herein to the contrary notwithstanding, a Grantee whose Performance
Stock Units have been forfeited as a result of termination of employment due to
U.S. Military Service and who is later re-employed (in a full-time active
status) after discharge within the time period set in 38 U.S.C. Section 4312
will be eligible to have the forfeited Performance Stock Units reinstated as
follows: (i) if such Grantee is re-employed during the Vesting Period, all
forfeited Performance Stock Units shall be reinstated; or (ii) if such Grantee
is re-employed after the Vesting Period, a cash payment will be made to the
Grantee, minus applicable taxes, for the value of the forfeited Performance
Stock Units on the Vest Date pursuant to procedures established by the Company
for this purpose.

(h)
It is the intention of the Company and Grantee that this Agreement not result in
unfavorable tax consequences to Grantee under Section 409A and the Agreement
shall be interpreted as to so comply.  Notwithstanding anything to the contrary
herein, the Company and Grantee agree to the provisions set forth below in order
to comply with the requirements of Section 409A.

 
 
 
 
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(i)
If Grantee is a “specified employee” (within the meaning of Section 409A) with
respect to the Company, any non-qualified deferred compensation otherwise
payable to or in respect of Grantee in connection with Grantee’s termination of
employment shall be delayed until the earliest date upon which such amounts may
be paid without being subject to taxation under Section 409A.  Any amount, the
payment or benefit of which is delayed by application of the preceding sentence,
shall be paid as soon as possible following the expiration of such period.

 
(ii)
Unless deferred pursuant to this agreement, all payments shall be paid to
Grantee, to the extent earned, in no event later than the last day of the
“applicable 2 ½ month period,” as such term is defined in Treasury Regulation
Section 1.409A-1(b)(4)(i)(A) with respect to such payment’s treatment as a
“short-term deferral” for purposes of Section 409A.

 
(iii)
The Company and Grantee agree to cooperate in good faith in an effort to comply
with Section 409A.  Under no circumstances shall the Company be responsible for
any taxes, penalties, interest or other losses or expenses incurred by the
Grantee due to any failure to comply with Section 409A.

(i)
This Agreement is subject to the 2000 Stock Incentive Plan heretofore adopted by
the Company and approved by its shareholders.  The terms and provisions of the
Plan (including any subsequent amendments thereto) are hereby incorporated
herein by reference.  In the event of a conflict between any term or provision
contained herein and a term or provision of the Plan, the applicable terms and
provisions of the Plan will govern and prevail.

(j)
At such times and upon such terms and conditions as the Company shall determine,
the Company may permit eligible Grantees to elect to defer the distribution of
an Award otherwise payable to the Grantee under this Agreement until termination
of the Grantee’s Employment or such other date Company shall permit.

 
 

 
10

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