Document:

ex10_12.htm

    
      

    

    Exhibit
10.12

     

    Amended
12/5/08

    AETNA
INC.

    2001
ANNUAL INCENTIVE PLAN

    (EFFECTIVE
AS OF JANUARY 1, 2001)

    

    SECTION
1.   PURPOSE.

     

    The
purpose of this Plan is to provide a general incentive for designated key
executive employees of the Companies in order to improve operating results of
the Companies and to reward such employees for the accomplishment of financial
and strategic objectives of the Companies.

     

    SECTION
2.   DEFINITIONS.

     

    Unless
the context requires otherwise, the following words as used in the Plan shall
have the meanings ascribed to each below, it being understood that masculine,
feminine and neuter pronouns are used interchangeably and that each comprehends
the others.

     

    
      	
                
      (a)

            	
              “Aetna”
      means Aetna Inc., a Pennsylvania
corporation.

            

    

     

    
      	
                
      (b)

            	
              “Board”
      means the Board of Directors of
Aetna.

            

    

     

    
      	
                
      (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 Aetna and any subsidiary thereof and any
      employee benefit plan sponsored or maintained by Aetna 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 Aetna
      representing 20 percent or more of the combined voting power of Aetna’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 Aetna by an entity other than Aetna or a Subsidiary through
      purchase of assets, or by merger, or
otherwise.

            

    

     

    
      	
                
      (d)

            	
              “Committee”
      means the Committee on Compensation and Organization of the Board (or such
      other committee of the Board that the Board shall designate from time to
      time) or any subcommittee thereof consisting of two or more directors each
      of whom is an “outside director” within the meaning of Section 162 (m) and
      a “non-employee director” within the meaning of Rule 16b-3 under the
      Securities Exchange Act of 1934, as
amended.

            

    

     

    
      	
                 (e)

            	
              “Common
      Stock” means the common stock, $.01 par value, of
  Aetna.

            

    

     

    
      	
                 (f)

            	
              “Companies”
      means one or more of Aetna, any of Aetna’s affiliated companies, and any
      other entity as to which (i) Aetna or any of Aetna’s affiliated companies
      holds or is seeking to acquire an ownership interest, and (ii) has been
      included in the Plan by the
Committee.

            

    

     

    
      
        
           

        

        
          1

          
            

          

        

         

      

    

    

    
      	
                 (g)

            	
              “Covered
      Employee” shall have the meaning set forth in Section
    162(m).

            

    

     

    
      	
                 (h)

            	
              “Deferral
      Period” means the period of time during which payment of any amount
      otherwise payable under the Plan is deferred (i) at the direction of the
      Committee pursuant to Section 6(b) or (ii) at the election of a
      Participant pursuant to Section
6(c).

            

    

     

    
      	
                 (i)

            	
              “Disability”
      means the occurrence of an event that would entitle a Participant to the
      payment of disability income under a specific long-term disability income
      plan approved by the Companies and under which the Participant is
      enrolled, as such plan may be amended from time to time, or if such
      Participant is not enrolled in a specific plan, as defined in a plan
      covering similarly situated executive officers of
  Aetna.

            

    

     

    
      	
                 (j)

            	
              “Fair
      Market Value” means on any date, with respect to a share of Common Stock,
      the closing price of a share of Common Stock as reported by the
      Consolidated Tape of New York Stock Exchange Listed Shares on such date,
      or, if no shares were traded on such Exchange on such date, on the next
      date on which the Common Stock is
traded.

            

    

     

    
      	
                 (k)

            	
              “Participant”
      means (i) each Covered Employee and (ii) each other executive officer of
      Aetna as defined in Rule 3b-7 of the Securities Exchange Act of 1934 whom
      Aetna designates as a participant under the
  Plan.

            

    

     

    
      	
                 (1)

            	
              “Performance
      Period” means the calendar year or such other period as may be designated
      by the Committee.

            

    

     

    
      	
                 (m)

            	
              “Plan”
      means the Aetna Inc. 2001 Annual Incentive Plan, as set forth herein and
      as may be amended from time to
time.

            

    

     

    
      	
                 (n)

            	
              “Retirement”
      means the retirement of a Participant from active service with the
      Companies at or after the age at which full pension benefits are provided
      under a specific retirement plan maintained or contributed to by any of
      the Companies and under which the Participant has an accrued benefit, as
      such plan may be amended from time to time, or if such Participant does
      not have an accrued benefit under any such plan, the age at which full
      pension benefits are provided under a retirement plan covering similarly
      situated executive officers of
Aetna.

            

    

     

    
      	
                 (o)

            	
              “Section
      162(m)” means Section 162 (m) of the Internal Revenue Code of 1986, as
      amended, and any regulations promulgated
  thereunder.

            

    

     

    
      	
                 (p)

            	
              “Section
      409A” means Section 409A of the Internal Revenue Code of 1986, as amended,
      and any regulations promulgated
thereunder.

            

    

     

    
      	
                 (q)

            	
              “Share”
      means a share of Common Stock.

            

    

     

       (r)   “Stock
Unit” means a unit representing the contractual right to receive the value of
one Share.

     

    
      	
                 (s)

            	
              “Stock
      Unit Account” means, with respect to any Participant who has elected to
      have deferred amounts deemed invested in Stock Units, a bookkeeping
      account established to record such Participant’s interest under the Plan
      related to such Stock Units.

            

    

     

    
      	
                 (t)

            	
              “Subsidiary”
      means any entity of which the Company possesses directly or indirectly
      fifty percent (50%) or more of the total combined voting power of all
      classes of stock of such entity.

            

    

     

    SECTION
3.   ADMINISTRATION.

     

    The Plan
shall be administered by the Committee.  The Committee shall have the
responsibility of construing and interpreting the Plan, provided that, in no
event shall the Plan be interpreted in a manner which would cause any award to a
Covered Employee to fail to qualify as performance-based compensation under
Section 162(m). The Committee shall establish the performance objectives for any
Performance Period in accordance with Section 5 and certify whether such
performance objectives have been obtained. Any determination made or decision or
action taken or to be taken by the Committee, arising out of or in connection
with the construction, administration, interpretation and effect of the Plan and
of its rules and regulations, shall, to the fullest extent permitted by law (but
subject to the limitations on the discretion of the Committee applicable to
awards intended to be qualified as

     

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    performance-based
compensation under Section 162(m)), be within the Committee’s absolute
discretion and shall be conclusive and binding on any and all Participants, any
person claiming under or through a Participant and each of the Companies. The
Committee may employ such legal counsel, consultants and agents (including
counsel or agents who are employees of any Company) as it may deem desirable for
the administration of the Plan and may rely upon any opinion received from any
such counsel or consultant or agent and any computation received from such
consultant or agent. All expenses incurred in the administration of the Plan,
including, without limitation, for the engagement of any counsel, consultant or
agent, shall be paid by the Companies. No member or former member of the Board
or the Committee shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan other than as a
result of such individual’s willful misconduct.

     

    SECTION
4.   DETERMINATION OF PARTICIPANTS.

     

    In
addition to the Covered Employees, the Committee may designate as a Participant
in the Plan any executive officer of Aetna as defined in Rule 3b-7 of the
Securities Exchange Act of 1934. Members of the Board who are not employees of
any of the Companies shall not be eligible to participate in the
Plan.

     

    SECTION
5.   BONUSES.

     

    (a)
 Performance
Criteria.  On or before the end of the first 90 days of each
Performance Period (or such other date as may be required or permitted under
Section 162(m)), the Committee shall establish the performance objective or
objectives that must be satisfied in order for a Participant to receive a bonus
for such Performance Period. Any such performance objectives will be based upon
the relative or comparative achievement of one or more of the following
criteria, as determined by the Committee: (i) net income, (ii) earnings before
income taxes, (iii) earnings per share, (iv) return on shareholders equity, (v)
expense management, (vi) profitability of an identifiable business unit or
product, (vii) ratio of claims to revenues, (viii) revenue growth, (ix) earnings
growth, (x) total shareholder return, (xi) cash flow, (xii) return on assets,
(xiii) pretax operating income, (xiv) net economic profit (operating earnings
minus a charge for capital), (xv) customer satisfaction, (xvi) provider
satisfaction, (xvii) employee satisfaction, (xviii) quality of networks, (xix)
strategic innovation or (xx) any combination of the foregoing.

     

    (b)  Maximum Amount
Payable.  If the Committee certifies in writing that any one of
the performance objectives established for the relevant Performance Period under
Section 5(a) has been satisfied, each Participant who is employed by the
Companies on the last day of the Performance Period for which the bonus is
payable shall be entitled to receive a bonus in an amount not to exceed
$3,000,000.

     

    (c)  Negative
Discretion.  Notwithstanding anything else contained in Section
5(b) to the contrary, the Committee shall have the right, in its discretion, (i)
to reduce or eliminate the amount otherwise payable to any Participant under
Section 5(b) and (ii) to establish rules or procedures that have the effect of
limiting the amount payable to each Participant to an amount that is less than
the maximum amount otherwise authorized under Section 5(b).

     

    (d)  Affirmative
Discretion.  Notwithstanding any other provision in the Plan to
the contrary, (i) the Committee shall have the right, in its discretion, to pay
to any Participant who is not a Covered Employee a bonus for a Performance
Period in an amount up to the maximum bonus payable under Section 5(b), based on
individual performance or any other criteria that the Committee, in its
discretion, deems to warrant the payment of such a bonus, and (ii) in connection
with the hiring of any person who is or becomes a Covered Employee, the
Committee may provide for a minimum bonus amount for such Covered Employee with
respect to the Performance Period in which such Covered Employee is hired and/or
for the next following Performance Period, which would be payable to such
Covered Employee regardless of whether the relevant performance objectives are
attained with respect to the relevant Performance Period.

     

    (e)  Methodology for
Determinations.  In making any determination under Section 5(c)
or 5(d), the Committee shall give consideration to such factors as it deems
appropriate, including, without limitation, the degree to which the established
performance objectives have been obtained and whether the Participant has
materially contributed to the overall results of the Companies. To assist it in
making its determination under such Sections, the Chairman of Aetna will furnish
the Committee with specific recommendations (except with respect to the
Chairman’s own award) and the Committee may request such other advice and
recommendations as it deems appropriate.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    SECTION
6.   PAYMENT OF AWARDS.

     

    (a)  General
Rule.   Except as otherwise expressly provided hereunder,
payment of any bonus amount determined under Section 5 shall be made to each
Participant as soon as practicable after the Committee certifies that one or
more of the applicable performance objectives have been attained (or, in the
case of any bonus payable under the provisions of Section 5(d), after the
Committee determines the amount of any such bonus), provided, however, that
payment shall be made during the first 21⁄2 months of the calendar year following
the end of the Performance period.  Any such payments shall be made in
cash or, at the discretion of the Committee in awards under the Aetna Inc. 2001
Stock Incentive Plan.

     

    (b)  Mandatory
Deferral.  Notwithstanding Section 6(a), the Committee may
specify that a percentage of the bonus payable with respect to any Participant,
all Participants or any class of Participants for any Performance Period be
mandatorily deferred for a Deferral Period specified by the Committee. The
percentage to be so deferred shall be determined by the Committee in its
discretion. Unless otherwise determined by the Committee at or after the date of
such deferral, any amount payable in respect of an amount mandatorily deferred
pursuant to this Section 6(b) shall be forfeited by the Participant
if

     

    
      	
               
      

            	
              (i)

            	
              the
      Participant’s employment with each of the Companies is terminated for
      cause (as determined in the discretion of the Committee under the
      generally applicable practices and policies of whichever of the Companies
      employs the Participant);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Participant voluntarily terminates employment, other than by reason of
      death, Disability or Retirement, prior to the end of the Deferral Period
      specified by the Committee with respect to such mandatorily deferred
      amount; or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Participant engages in any activity or conduct which, in the reasonable
      opinion of the Committee, is inimical to the best interest of the
      Companies.

            

    

     

    (c)  Voluntary
Deferral.  Notwithstanding Section 6(a), the Committee may
permit a Participant to defer payment of any portion of an award that is not
mandatorily deferred pursuant to Section 6(b) or to defer payment of an amount
mandatorily deferred to a date or event later than that specified by the
Committee. Any such election shall be made in the calendar year prior to the
start of the Performance period during which it will be earned or, if permitted
under Section 409A, at least six months prior to the end of such Performance
Period.

     

    (d)  Accounting for Deferrals. Any
amount deferred under this Section 6 shall be credited to one or more
bookkeeping accounts for the benefit of such Participant on the books and
records of whichever of the Companies employs the Participant. Unless a
Participant otherwise elects to have such amounts deemed invested in Stock Units
in accordance with Section 6(e), such amounts shall be deemed held in cash and
shall be credited with such rate of interest or such deemed rate of earnings as
the Committee shall specify from time to time; provided that, unless the
Committee otherwise determines, no interest or earnings shall be credited during
the Deferral Period specified by the Committee in respect of amounts mandatorily
deferred.

     

    (e)  Stock Units.  The
Committee may permit any Participant, all Participants or any class of
Participants to elect that any or all amounts deferred under the Plan (including
amounts mandatorily deferred pursuant to Section 6(b)) be deemed invested, in
whole or in part, in a number of whole or fractional Stock Units. Any such Stock
Units shall be credited to a Stock Unit Account for the benefit of such
Participant. The number of whole and fractional Stock Units credited to a Stock
Unit Account in respect of any amount deferred under this Section 6 shall be
equal to the quotient of (i) the amount deferred divided by (ii) the Fair Market
Value of a Share on the date such amount would have been paid under the Plan but
for such deferral. Whenever a dividend other than a dividend payable in the form
of Shares is declared with respect to the Shares, the number of Stock Units in
the Participant’s Stock Unit Account shall be increased by the number of Stock
Units determined by dividing (i) the product of (A) the number of Stock Units in
the Participant’s Stock Unit Account on the related dividend record date and (B)
the amount of any cash dividend declared by the Company on a Share (or, in the
case of any dividend distributable in property other than Shares, the per share
value of such dividend, as determined by the Company for purposes of income tax
reporting) by (ii) the Fair Market Value of a Share on the related dividend
payment date. In the case of any dividend declared on Shares which is payable in
Shares, each Participant’s Stock Unit Account shall be increased by the number
of Stock Units equal to the product of (i) the number of Units credited to the
Participant’s Stock Unit Account on the related dividend record date and (ii)
the number of Shares (including any fraction thereof)

     

    
      
        
           

        

        
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     distributable
as a dividend on a Share. In the event of any stock split, recapitalization,
reorganization or other corporate transaction affecting the capital structure of
Aetna, the Committee shall make such adjustments to the number of Stock Units
credited to each Participant’s Stock Unit Account as the Committee shall deem
necessary or appropriate to prevent the dilution or enlargement of such
Participant’s rights.

     

    (f)   Payment of Deferred Amounts.  Payment
of any amounts deferred under Section 6(b) or 6(c) shall be made in a lump sum
on the date the Participant experiences a “separation from service” within the
meaning of Section 409A unless another time and form of payment is elected or
otherwise established at the time of the mandatory or elective deferral,
consistent with the requirements of Section 409A.  The Participant may
elect payment in a lump sum or in five, ten or such other number of annual
installments as shall be permitted by the Committee.  The Committee
may, in its discretion, accelerate the payment of all or any portion of any
Participant’s deferred amounts (regardless of whether the applicable Deferral
Period or period have terminated) in the event of an “unforeseeable emergency”
within the meaning of Section 409A.

     

    Any
payment to be made in respect of deferred amounts shall be made in cash. For
purposes of any cash distribution in respect of a Participant’s Stock Units, the
cash payable shall equal the product of (i) the number of whole and fractional
Stock Units being distributed and (ii) the Fair Market Value of a Share on the
date as of which the distribution is to be made.

     

    (g)  Change in
Control.  Upon the occurrence of a Change in Control, all
performance objectives for the then current Performance Period shall be deemed
to have been achieved at target levels of performance and the Committee shall
cause each Participant to be paid an amount in cash based on such assumed
performance for the entire Performance Period as soon as practicable but in no
event later than 10 business days following the occurrence of such Change in
Control.

     

    SECTION
7.  AMENDMENT AND TERMINATION.

     

    Notwithstanding
Section 8(a), the Board or the Committee may at any time amend, suspend,
discontinue or terminate the Plan; provided, however, that no such action shall
be effective without approval by the shareholders of Aetna to the extent
necessary to continue to qualify the amounts payable to Covered Employees as
performance-based compensation under Section 162(m). Notwithstanding the
foregoing, no amendment, suspension, discontinuance or termination of the Plan
shall adversely affect the rights of any Participant or beneficiary in respect
of any award that the Committee has determined to be payable to a Participant in
accordance with the terms hereof or as to any amounts awarded, but payment of
which has been deferred, in accordance with Section 6.

     

    SECTION
8. GENERAL PROVISIONS.

     

    (a)  Effectiveness of the
P1an.  Subject to the approval of Aetna’s shareholders and the
shareholders of Aetna Inc., a Connecticut corporation, the Plan shall be
effective with respect to calendar years beginning on or after January 1, 2001
and ending on or before December 31, 2010, unless the term hereof is extended by
action of the Board or the Committee.

     

    (b)  Designation of
Beneficiary.  Each Participant may designate a beneficiary or
beneficiaries (which beneficiary may be an entity other than a natural person)
to receive any payments which may be made following the Participant’s death.
Such designation may be changed or canceled at any time without the consent of
any such beneficiary. Any such designation, change or cancellation must be made
in a form approved by the Committee and shall not be effective until received by
the Committee. If no beneficiary has been named, or the designated beneficiary
or beneficiaries shall have predeceased the Participant, the beneficiary shall
be the Participant’s spouse or, if no spouse survives the Participant, the
Participant’s estate. If a Participant designates more than one beneficiary, the
rights of such beneficiaries shall be payable in equal shares, unless the
Participant has designated otherwise.

     

    
      (c)  No Right of Continued
Employment.  Nothing contained in this Plan shall create any
rights of employment in any Participant or in any way affect the right and power
of any of the Companies to discharge any Participant or otherwise terminate the
Participant’s employment at any time with or without cause or to change the
terms of employment in any way.

       

      (d)  No Limitation on Corporate
Actions.  Nothing contained in the Plan shall be construed to
prevent any of the Companies from taking any corporate action (including,
without limitation, making provision for the payment of 

    

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

     

    other incentive
compensation, whether payable in cash or otherwise, or whether pursuant to a
plan or otherwise) which is deemed by it to be appropriate or in its best
interest, whether or not such action would have an adverse effect on any awards
made under the Plan.  No employee, beneficiary or other person shall
have any claim against any of the Companies as a result of any such
action.

     

    (e)  No Right to Specific
Assets.  Nothing contained in the Plan (including, without
limitation, the provisions of Section 6 hereof) shall be construed to create in
any Participant or beneficiary any claim against, right to or lien on any
particular assets of any of the Companies or to require any of the Companies to
segregate or otherwise set aside any assets or create any fund to meet any of
its obligations hereunder.

     

    (f)   No Contractual Right to
Bonus.  Nothing in this Plan shall be construed to give any
Participant any right, whether contractual or otherwise, to receive any bonus
with respect to any Performance Period unless and until the Committee shall have
expressly determined that such a Participant is entitled to receive such an
award pursuant to the terms of the Plan.

     

    (g)  Nonalienation of
Benefits.  Except as expressly provided herein, no Participant
or beneficiary shall have the power or right to transfer, anticipate, or
otherwise encumber the Participant’s interest under the Plan.

     

    (h)  Withholding.  Any
amount payable to a Participant or a beneficiary under this Plan shall be
subject to any applicable Federal, state and local income and employment taxes
and any other amounts that any of the Companies is required at law to deduct and
withhold from such payment.

     

    (i)   Severability.  If
any provision of this Plan is held unenforceable, the remainder of the Plan
shall continue in full force and effect without regard to such unenforceable
provision and shall be applied as though the unenforceable provision were not
contained in the Plan.

     

    (j)   Governing Law.  The
Plan shall be construed in accordance with and governed by the laws of the State
of Connecticut, without reference to the principles of conflict of
laws.

     

    (k)  Headings.  Headings
are inserted in this Plan for convenience of reference only and are to be
ignored in a construction of the provisions of the Plan.

     

    (l)   Compliance with Section
409A.  The payment of bonuses under this Plan is intended to be
exempt from the requirements of Section 409A as short-term
deferrals.  To the extent not exempt (i.e., in the case of deferrals
permitted under Section 6(b) and (c)), payment is intended to satisfy the
requirements of Section 409A.  The provisions of this Plan shall be
construed in a manner consistent with such intent.  The Company will
not pay or accelerate the payment of any deferred compensation in violation of
Section 409A.  To the extent an amount that constitutes “deferred
compensation” within the meaning of Section 409A would otherwise vest and become
payable upon a Change in Control, such amount shall vest as so provided but
payment shall not be accelerated unless the Change in Control also satisfies the
broadest definition of change in control permitted under Section
409A.

     

    Any
amount that constitutes “deferred compensation” within the meaning of Section
409A and is payable under this Plan solely by reason of a Participant’s
termination of employment or separation from service shall be payable as soon
as, and no later than, the Participant experiences a “separation from service”
within the meaning of Section 409A, provided that if the Participant is a
“specified employee” within the meaning of Section 409A at the time of such
separation from service, as determined by the Company in accordance with Section
409A, no payments shall be made before the six-month anniversary of the
Participant’s separation from service, at which time all payments that would
otherwise have been made during such six-month period shall be paid to the
Participant in a lump sum.

     

    6ex10_13.htm

    
      
        
          

        

      

      Exhibit
10.13

      
        

        Adopted
on

        September
29, 2000

        Amended
on January 25, 2002

        Restated
on March 11, 2005 as a

        result of
two-for-one stock split

        Amended
on December 2, 2005

        Restated
on February 17, 2006

        as a
result of two-for-one

        stock
split

        Amended
on January 26, 2007

        Corrected
March 30, 2007

        Amended
December 5, 2008

      

       

       

      AETNA
INC.

      NON-EMPLOYEE
DIRECTOR COMPENSATION PLAN

      

      

      SECTION
1.       ESTABLISHMENT OF PLAN;
PURPOSE.

       

      The Plan
is hereby established to permit Eligible Directors of the Company, in
recognition of their contributions to the Company, to receive Shares in the
manner described below.  The Plan is intended to enable the Company to
attract, retain and motivate qualified Directors and to enhance the long-term
mutuality of interest between Directors and stockholders of the
Company.

       

      SECTION
2.       DEFINITIONS.

       

      When used
in this Plan, the following terms shall have the definitions set forth in this
Section:

       

      “Accounts” shall mean an
Eligible Director’s Stock Unit Account and Interest Account, as described in
Section 9.

       

      “Affiliate” shall mean any
corporation or other entity (other than the Company or one of its Subsidiaries)
in which the Company directly or indirectly owns at least twenty percent (20%)
of the combined voting power of all classes of stock of such entity or at least
twenty percent (20%) of the ownership interests in such entity.

       

      “Board of Directors” shall
mean the Board of Directors of the Company.

       

      “Code” shall mean the Internal
Revenue Code of 1986, as amended, and the regulations thereunder.

       

      “Committee” shall mean the
Nominating and Corporate Governance Committee of the Board of Directors or such
other committee of the Board as the Board shall designate from time to
time.

       

      “Company” shall mean Aetna
U.S. Healthcare Inc., a Pennsylvania corporation.  Following
consummation of the transactions contemplated by the Merger Agreement, Aetna
U.S. Healthcare Inc. will change its name to Aetna Inc.

       

      “Compensation” shall mean the
annual retainer fees earned by an Eligible Director for service as a Director,
the annual retainer fee, if any, earned by an Eligible Director for service as a
member of a committee of the Board of Directors; and any fees earned by an
Eligible Director for attendance at meetings of the Board of Directors and any
of its committees.

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      

       

      “Director” shall mean any
member of the Board of Directors, whether or not such member is an Eligible
Director.

       

      “Disability” shall mean an
illness or injury that lasts at least six months, is expected to be permanent
and renders a Director unable to carry out his/her duties.

       

      “Effective Date” shall mean
the date on which the transactions contemplated by the Merger Agreement are
consummated.

       

      “Eligible Director” shall mean
a member of the Board of Directors who is not an employee of the
Company.

       

      “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.

       

      “Fair Market Value” shall mean
on any date, with respect to a Share, the closing price of a Share as reported
by the Consolidated Tape of the New York Stock Exchange Listed Shares on such
date, or if no shares were traded on such Exchange on such date, on the next
date on which the Common Stock is traded.

       

      “Government Service” shall
mean the appointment or election of the Eligible Director to a position with the
federal, state or local government or any political subdivision, agency or
instrumentality thereof.

       

      “Grant” shall mean a grant of
Units under Section 5, Options under Section 7 and Other Stock Based Awards
under Section 12.

       

      “Interest Account” shall mean
the bookkeeping account established to record the interests of an Eligible
Director with respect to deferred Compensation that is not deemed invested in
Units.

       

       “Merger Agreement” shall mean
the Agreement and Plan of Restructuring and Merger among ING America Insurance
Holdings, Inc., ANB Acquisition Corp., the Former Parent and for limited
purposes only, ING Groep N.V., dated as of July 19, 2000.

       

      “Option” shall mean the right
granted under Section 7 to purchase the number of shares of Stock specified by
the Board of Directors, at a price and for the term fixed by the Board of
Directors in accordance with the Plan and subject to any other limitations and
restrictions as this Plan and the Board of Directors shall impose, which such
option is not intended to qualify as an “incentive stock option” under Section
422 of the Code.

       

      “Other Stock Based Awards”
means any right granted under Section 12.

       

      “Prior Plan” shall mean the
Aetna Inc. Non-Employee Director Deferred Stock and Deferred Compensation
Plan.

       

      “Retirement” shall mean (i)
with respect to Units outstanding on January 26, 2007 and (ii) with respect to
Units issued after January 26, 2007, termination of service as a Director on or
after age 72.

       

      “Section 409A” shall mean
Section 409A of the Code and the regulations issued thereunder, as amended from
time to time.

       

      “Shares” shall mean shares of
Stock.

       

      “Stock” shall mean the Common
Shares, $.01 par value, of the Company.

       

      
        
           

        

        
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      “Stock Unit Account” shall
mean, with respect to an Eligible Director who has elected to have deferred
amounts deemed invested in Units, a bookkeeping account established to record
such Eligible Director’s interest under the Plan related to such
Units.

       

      “Subsidiary” shall mean any
entity of which the Company possesses directly or indirectly fifty percent (50%)
or more of the total combined voting power of all classes of stock of such
entity.

       

      “Unit” shall mean a
contractual obligation of the Company to deliver a Share or pay cash based on
the Fair Market Value of a Share to an Eligible Director or the beneficiary or
estate of such Eligible Director as provided herein.

       

      “Year of Service as a
Director” shall mean a period of 12 months of service as a Director,
measured from the effective date of a Unit.

       

      SECTION
3.       ADMINISTRATION.

       

      The Plan
shall be administered by the Board of Directors. The Board of Directors shall
have the responsibility of construing and interpreting the Plan and of
establishing and amending such rules and regulations as it deems necessary or
desirable for the proper administration of the Plan. Any decision or action
taken or to be taken by the Board of Directors, arising out of or in connection
with the construction, administration, interpretation and effect of the Plan and
of its rules and regulations, shall, to the maximum extent permitted by
applicable law, be within its absolute discretion (except as otherwise
specifically provided herein) and shall be conclusive and binding upon all
Eligible Directors and any person claiming under or through any Eligible
Director.

       

      Subject
to the terms of the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Board of Directors by the Plan, the
Board of Directors shall have full power and authority to: (i) determine the
number of Shares to be covered by, or with respect to which payments, rights, or
other matters are to be calculated in connection with, Units and Options; (ii)
determine the terms and conditions of any Option; (iii) interpret and administer
the Plan and any instrument or agreement relating to, or Grant made under, the
Plan; (iv) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (v) make any other determination and take any other action that
the Board of Directors deems necessary or desirable for the administration of
the Plan.

       

      The Plan
shall be administered such that awards under the Plan shall be deemed to be
exempt under Rule 16b-3 of the Securities and Exchange Commission under the
Exchange Act (“Rule 16b-3”), as such Rule is in effect on the Effective Date of
the Plan and as it may be subsequently amended from time to time.

       

      SECTION
4.       SHARES AUTHORIZED FOR
ISSUANCE.

       

      4.1           Maximum Number of
Shares.  The aggregate number of Shares with respect to which
Grants may be awarded to Eligible Directors under the Plan shall not exceed
250,000 Shares, subject to adjustment as provided in Section 4.2 below, plus
that number of Shares equal to the aggregate number of Shares credited to each
Eligible Director’s Stock Unit Account as a result of transfers of stock units
from the Prior Plan pursuant to Section 9.10.  If any Unit or Option
is settled in cash or is forfeited without a distribution of Shares, the Shares
otherwise subject to such Unit or Option shall again be available for Grants
hereunder.  [As of March 11, 2005, the shares available for issuance
under the Plan were adjusted  pursuant to Section 4.2 as a result of
the Company’s 2005 2-for-1 stock split.  As of February 17, 2006, the
shares available 

      
        
           

        

        
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      for issuance under the Plan were adjusted pursuant to
Section 4.2 as a result of the Company’s 2006 2-for-1 stock split.]

       

      4.2           Adjustment for Corporate
Transactions.  In the event that any stock dividend,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Stock at a price substantially below Fair Market
Value, or other similar event affects the Stock such that an adjustment is
required to preserve, or to prevent enlargement of, the benefits or potential
benefits made available under the Plan, then the Board of Directors shall adjust
the number and kind of shares which thereafter may be awarded under the Plan and
the number of Units and Options and the exercise price thereof that have been,
or may be, granted under the Plan.  Additionally, the Board of
Directors may make provisions for a cash payment to an Eligible Director; to the
extent any amount constitutes “deferred compensation” within the meaning of
Section 409A, no such provision shall change the timing or form of payment of
such amount unless such changes are permitted under Section 409A.

       

      SECTION
5.       UNIT GRANTS.

       

      5.1           Unit Awards.  Each
Eligible Director (other than any Eligible Director who has received an award
under the Prior Plan) who is first elected or appointed to the Board of
Directors on or
after the Effective Date of the Plan shall be awarded 6,000 Units on such date
(or such other number of Units as the Board shall determine).  In
addition, on the date of each Annual Meeting of Shareholders of the Company
occurring after 2000 and during the term of the Plan an eligible Director
serving as a Director on such date shall be awarded such number of Units as the
Board shall
determine.

       

      5.2           Delivery of
Shares.  Subject to satisfaction of the applicable vesting
requirements set forth in Section 6 and except as otherwise provided in Section
8 or in the award agreement, all Shares that are subject to any Units shall be
delivered to an Eligible Director and transferred on the books of the Company on
the date which is the first business day of the month immediately following the
termination of such Eligible Director’s service as a
Director.  Notwithstanding the foregoing, an Eligible Director may
elect that all or a portion of his or her Units shall be payable in cash on the
first business day of the month immediately following the termination of such
Eligible Director’s service as a Director.  Any fractional Shares to
be delivered in respect of Units shall be settled in cash based upon the Fair
Market Value on the date any whole Shares are transferred on the books of the
Company to the Eligible Director or the Eligible Director’s
beneficiary.  The amount of any cash payment shall be determined by
multiplying the number of Units and the number of Units subject to a cash
payment election by the Fair Market Value on the last business day preceding the
payment date.  Upon the delivery of a Share (or cash with respect to a
whole or fractional Share) pursuant to the Plan, the corresponding Unit (or
fraction thereof) shall be canceled and be of no further force or
effect.  If an award agreement provides for accelerated payment upon
acceptance of a position in Government Service, such acceleration shall be made
only to the extent permitted under Section 409A (including those provisions
relating to compliance with ethics agreements with the Federal Government,
ethics laws and conflict of interest laws).

       

      5.3           Dividend
Equivalents.  An Eligible Director shall have no rights as a
shareholder of the Company with respect to any Units until Shares are delivered
to the Director pursuant to this Section 5 hereof; provided that, each Eligible
Director shall have the right to receive an amount equal to the dividend per
Share for the applicable dividend payment date (which, in the case of any
dividend distributable in property other than Shares, shall be the per Share
value of such dividend, as determined by the Company for purposes of income tax
reporting) times the number of Units held by such Eligible Director on the
record date for the payment of such dividend (a “Dividend
Equivalent”).  Each Eligible Director may elect, prior to any calendar
year, whether the Dividend Equivalent will be (i) paid in cash, on each date on
which dividends are paid to shareholders with respect to Shares; (ii) treated as
reinvested in an additional 

      
        
           

        

        
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      number of Units determined by dividing (A) the cash
amount of any such dividend by (B) the Fair Market Value on the related dividend
payment date (in which case, such additional Units shall be payable as provided
herein); or (iii) deferred and credited to the Eligible Director’s Interest
Account pursuant to Section 9.4.

       

       

      SECTION
6.       UNIT VESTING.

       

      6.1           Service
Requirements.  Except as otherwise provided in this Section 6
or Section 8, an Eligible Director shall vest in his or her Units as provided in
this Section 6.1.  If an Eligible Director terminates service prior to
the completion of three Years of Service as a Director, the number of Shares to
be delivered to such Eligible Director in respect of Units granted upon his or
her election to the Board shall equal the amount obtained by multiplying 6,000
by a fraction, the numerator of which is the number of full months of service
completed by such Director from the applicable date of Unit grant (counting any
partial month of service as a full month) and the denominator of which is
36.  If an Eligible Director terminates service prior to the
completion of

      one Year
of Service as a Director from the date of Unit grant with respect to any annual
grant of Units made hereunder, the number of Shares to be delivered to such
Eligible Director in respect of such Unit grant shall equal the amount obtained
by multiplying the number of Units subject to such Unit grant by a fraction, the
numerator of which is the number of full months of service completed by such
Director from the applicable date of the Unit grant (counting any partial month
of service as a full month) and the denominator of which is
12.  Notwithstanding the foregoing, and except as provided in Section
6.2, if the Eligible Director terminates service by reason of his/her death,
Disability, Retirement, or acceptance of a position in Government Service prior
to the completion of the period of service required to be performed to fully
vest in any Unit grant, all Shares that are the subject of such Unit grant (or,
if elected by the Eligible Director, the value thereof in cash) shall be
delivered to such Eligible Director (or the Eligible Director’s beneficiary or
estate).

      

      6.2           Six Months’ Minimum
Service.  If an Eligible Director has completed less than six
consecutive months of service as a Director, all Units held by such Eligible
Director shall be immediately forfeited.  If an Eligible Director has
completed less than six consecutive months of service from any date on which any
annual grant of Units is made, all Units held by such Eligible Director that
relate to such annual grant of units shall be immediately
forfeited.

       

      6.3           Distribution on
Death.  Except as provided in Section 6.2, in the event of the
death of an Eligible Director, the Shares corresponding to such Units or, at the
election of the Eligible Director’s beneficiary or estate, the Fair Market Value
thereof in cash shall be delivered to the beneficiary designated by the Eligible
Director on a form provided by the Company, or, in the absence of such
designation, to the Eligible Director’s estate.

       

      SECTION
7.       STOCK OPTIONS.

       

      (a)  Grant.  Subject to
the provisions of the Plan, the Board of Directors shall have the authority to
award Options to an Eligible Director and to determine (i) the number of Shares
to be covered by each Option, (ii) subject to Section 7(b), the exercise price
of the Option and (iii) the conditions and limitations applicable to the
exercise of the Option.

       

      (b)  Exercise
Price.  The exercise price of an Option shall not be less than
100% of the Fair Market Value on the date of grant.

       

      (c)  Exercise.  Each
Option shall be exercised at such times and subject to such terms and conditions
as the Board of Directors may specify at the time of the award of such Option or
thereafter. No shares shall be delivered pursuant to any exercise of an Option
unless arrangements satisfactory to the Board of Directors have been made to
assure full payment of the exercise price therefor. Without limiting the
generality of the foregoing, payment of the exercise price may be made in cash
or its equivalent or, if and to the extent permitted by the Board of Directors
by 

      
        
           

        

        
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      exchanging Shares owned by the Eligible Director
(which are not the subject of any pledge or other security interest) either
actually or by attestation, or by a combination of the foregoing, provided that
the combined value of all cash and cash equivalents and the Fair Market Value of
any such Shares so tendered to the Company, valued as of the date of such
tender, is at least equal to such exercise price.

       

      (d) No
Eligible Director shall have any rights as a shareholder with respect to any
Shares to be issued pursuant to any Option under the Plan prior to the issuance
thereof.

       

      SECTION
8.       CHANGE IN CONTROL.

       

      8.1           Immediate
Vesting.  Upon the occurrence of a Change in Control, each
Eligible Director’s right and interest in Units and Options which have not
previously vested shall become vested and nonforfeitable.

       

      8.2           Cash
Settlement.  (a) (i) Upon the occurrence of a Change in
Control, in lieu of delivering Shares with respect to the Units then held by an
Eligible Director, the Company shall pay such Eligible Director, not later than
60 days after the Change in Control occurs, cash in an aggregate amount equal to
the product of (x) the number of Shares that are subject to all Units credited
to such Eligible Director at the time of the Change in Control multiplied by (y)
the Fair Market Value on the date of the Change in Control.

       

      (ii)           Upon
the occurrence of a Change in Control, the Company shall pay to each Eligible
Director cash in an amount equal to the accrued value of such Eligible
Director’s Interest Account.

       

      (b)           Upon
the occurrence of a Change in Control, in lieu of delivering Shares with respect
to each Option then held by an Eligible Director, the Company shall pay such
Eligible Director, not later than 60 days after the Change in Control occurs,
cash in an aggregate amount equal to the product of (i) the number of Shares
that are subject to each Option held by such Eligible Director at the time of
the Change in Control multiplied by (ii) the amount by which the Fair Market
Value on the date of the Change of Control exceeds the exercise price of such
Option.

       

      (c)           Notwithstanding
(a) and (b) above, payment of any amount that constitutes “deferred
compensation” under Section 409A shall vest as provided above but payment shall
not be accelerated due to the Change in Control unless the Change in Control
also satisfies the broadest definition of change in control permitted under
Section 409A.

       

      8.3           Definition.  “Change
in Control” shall mean the occurrence of any of the following
events:

       

      (i)           When
any “person” as defined in Section 3(a)(9) of 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 

      
        
           

        

        
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      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 a
Director if the Director is part of a “group”, within the meaning of Section
13(a)(3) of the Exchange Act as in effect on the effective date of the Change in
Control transaction.  In addition, for purposes of the definition of
“Change in Control” a person engaged in the business as an underwriter of
securities shall not be deemed to be a “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.

      

      For
purposes of this Section 8.3, the term Holding Company means an entity that
becomes a holding company for the Company or its business as 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 of the outstanding shares of Common
Stock and the combined voting power of the outstanding voting securities,
respectively, of the Company 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.

      

      SECTION
9.       DEFERRED COMPENSATION
PROGRAM.

       

      9.1           Election to
Defer.  On or before December 31 of any calendar year, an
Eligible Director may elect to defer receipt of all or any part of any
Compensation payable in respect of the calendar year following the year in which
such election is made, and to have such amounts credited, in whole or in part,
to a Stock Unit Account or an Interest Account.  Any person who shall
become an Eligible Director during any calendar year may elect, not later than
the 30th day
after his or her term as a Director begins, to defer payment of all or any part
of his or her Compensation payable for the portion of such calendar year
following such election period.

       

      9.2           Method of
Election.  A deferral election shall be made by written notice
filed with the Corporate Secretary of the Company.  Such election
shall continue in effect (including with respect to Compensation payable for
subsequent calendar years) unless and until the Eligible Director revokes or
modifies such election by written notice filed with the Corporate Secretary of
the Company.  Any such revocation or modification of a deferral
election shall become effective as of the end of the calendar year in which such
notice is given and only with respect to Compensation payable for services
rendered thereafter. Amounts credited to the Eligible Director’s Stock Unit
Account prior to the effective date of any such revocation or modification of a
deferral election shall not be affected by such revocation or modification and
shall be distributed only in accordance with the otherwise applicable terms of
the Plan.  An Eligible Director who has revoked an election to
participate in the Plan may file a new election to defer Compensation payable
for services to be rendered in the calendar year following the year in which
such election is filed.

       

      
        
           

        

        
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      9.3           Investment
Election.  At the time an Eligible Director elects to defer
receipt of Compensation pursuant to Section 9.1, the Eligible Director shall
designate in writing the portion of such Compensation, stated as a whole
percentage, to be credited to the Interest Account (or such other account as may
be established from time to time by the Committee) and the portion to be
credited to the Stock Unit Account.  If an Eligible Director fails to
notify the Corporate Secretary as to how to allocate any Compensation between
the Accounts, 100% of such Compensation shall be credited to the Interest
Account.  By written notice to the Corporate Secretary of the Company,
an Eligible Director may change the manner in which the Compensation payable
with respect to services rendered after the end of such calendar year are
allocated among the Accounts.

       

      9.4           Dividend
Equivalents.  In addition to the deferral of Compensation
permitted under Section 9.1, an Eligible Director may elect, in the manner and
at the time described in Section 5.3, to have Dividend Equivalents payable in
respect of his or her Units credited to his or her Interest Account in the
manner and at the time described in such Section 5.3.

       

      9.5           Interest
Account.  Any Compensation allocated to the Interest Account
shall be credited to the Interest Account as of the date such Fees would have
been paid to the Eligible Director.  Any amounts credited to the
Interest Account shall be credited with interest at the same rate and in the
manner in which interest is credited under the Fixed Investment Fund (or, if
such fund no longer exists, the fund with the investment criteria most clearly
comparable to that of such Fund) under the Aetna Inc. Incentive Savings Plan (or
any successor thereto).

       

      9.6           Stock Unit
Account.  Any Compensation allocated to the Stock Unit Account
shall be deemed to be invested in a number of Units equal to the quotient of (i)
such Compensation divided by (ii) the Fair Market Value on the date the Fees
then being allocated to the Stock Unit Account would otherwise have been
paid.  Fractional Units shall be credited, but shall be rounded to the
nearest hundredth percentile, with amounts equal to or greater than .005 rounded
up and amounts less than .005 rounded down.  Whenever a dividend other
than a dividend
payable in the form of Shares is declared with respect to the Shares, the number
of Units in the Eligible Director’s Stock Unit Account shall be increased by the
number of Units determined
by dividing (i) the product of (A) the number of Units in the Eligible
Director’s Stock Unit Account on the related dividend record date, and (B) the
amount of any cash dividend declared by the Company on a Share (or, in the case
of any dividend distributable in property other than Shares, the per share value
of such dividend, as determined by the Company for purposes of income tax
reporting), by (ii) the Fair Market Value on the related dividend payment
date.  In the case of any dividend declared on Shares which is payable
in Shares, the Eligible Director’s Stock Unit Account shall be increased by the
number of Units equal to the product of (i) the number of Units credited to the
Eligible Director’s Stock Unit Account on the related dividend record date, and
(ii) the number of Shares (including any fraction thereof) distributable as a
dividend on a Share.

       

      9.7           Distribution
Election.  At the time an Eligible Director makes a deferral
election pursuant to Section 9.1, the Eligible Director shall also file with the
Corporate Secretary of the Company a written election ( a “Distribution
Election”) with respect to whether:

       

      (i) the
aggregate amount, if any, credited to the Interest Account at any time and the
value of any Units credited to the Stock Unit Account shall be distributed in
cash, in Shares or in a combination thereof at the election of the
Director;

       

      (ii) such
distribution shall commence on the first business day of the calendar month
following the date the Eligible Director ceases to be a Director or on the first
business day of any calendar year following the calendar year in which the
Eligible Director ceases to be a Director; and

       

      
        
           

        

        
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      (iii)
such distribution shall be in one lump sum payment or in such number of annual
installments (not to exceed ten) as the Eligible Director may
designate.

       

      The
amount of any installment payment shall be determined by multiplying the amount
credited to the Accounts of an Eligible Director immediately prior to the
distribution by a fraction, the numerator of which is one and the denominator of
which is the number of installments (including the current installment)
remaining to be paid.  An Eligible Director may change the timing or
form of distribution under (ii) or (iii) above only if such
change:  (I) is made at least twelve (12) months before the
distribution otherwise would be made, (II) does not take effect until twelve
(12) months after it is made, (III) delays commencement of the distribution by
at least five (5) years, and (IV) otherwise complies with the requirements of
Section 409A.

       

      9.8           Financial Hardship
Withdrawal.  If an Eligible Director experiences an
“unforeseeable emergency” as defined in Section 409A, the Eligible Director may
submit to the Corporate Secretary of the Company a written request for a
distribution, including such documentation as the Committee may
request.  The Committee shall review the request and make a
determination approving or denying the requested distribution.  If
approved, distribution shall be made on the first business day of the month
following the approval and shall be limited to such amount as is reasonably
necessary to alleviate the Eligible Director’s emergency need, taking into
account other assets available to the Director to the extent required by Section
409A.

       

      9.9           Timing and Form of
Distributions.  Any distribution to be made hereunder, whether
in the form of a lump sum payment or installments, following the termination of
an Eligible Director’s service as a Director shall commence in accordance with
the Distribution Election made by the Eligible Director pursuant to Section
9.7.  If an Eligible Director fails to specify a form of payment for a
distribution in accordance with Section 9.7, the distribution from the Interest
Account shall be made in cash and the distribution from the Stock Unit Account
shall be made in Shares.  If an Eligible Director fails to specify in
accordance with Section 9.7 a commencement date for a distribution or whether
such distribution shall be made in a lump sum payment or a number of
installments, such distribution shall be made in a lump sum payment and commence
on the first business day of the month immediately following the date on which
the Eligible Director ceases to be a Director.  In the case of any
distribution being made in annual installments, each installment after the first
installment shall be paid on the first business day of each
subsequent calendar year until the entire amount subject to such Distribution
Election shall have been paid.

       

      9.10         
Effect on Prior
Plan.  Subject to approval of the Company’s sole shareholder
and the consummation of the transactions contemplated by the Merger Agreement,
the amounts standing to the credit of each Eligible Director’s stock unit
account under the Prior Plan shall be transferred to the Plan and credited to
the Eligible Director’s Stock Unit Account.  Any elections in effect
under such Prior Plan shall be deemed to be an election made pursuant to and in
accordance with the terms of this Section 9 unless and until the Eligible
Director elects to change such elections in accordance with the provisions of
this Section 9.

       

      SECTION
10.     UNFUNDED STATUS.

       

      The
Company shall be under no obligation to establish a fund or reserve in order to
pay the benefits under the Plan.  A Unit represents a contractual
obligation of the Company to deliver Shares or pay cash to a Director as
provided herein.  The Company has not segregated or earmarked any
Shares or any of the Company’s assets for the benefit of a Director or his/her
beneficiary or estate, and the Plan does not, and shall not be construed to,
require the Company to do so.  The Director and his/her beneficiary or
estate shall have only an unsecured, contractual right against the Company with
respect to any Units granted or amounts credited to a Director’s Accounts
hereunder, and such right shall not be deemed superior to the right of any other
creditor.  Units shall not be deemed to constitute options or rights
to purchase Stock.

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      

       

      SECTION
11.     AMENDMENT AND TERMINATION.

       

      The Plan
may be amended at any time by the Board of Directors, provided that, except as
provided in Section 4.2, the Board of Directors may not, without approval of the
shareholders of the Company increase the number of Shares which may be awarded
under the Plan.  The Plan shall terminate on April 30,
2010.  Notwithstanding the foregoing, no amendment or termination of
the Plan shall materially and adversely affect any rights of any Director under
any Grant made pursuant to the Plan.  Unless the Board otherwise
specifies at the time of such termination, a termination of the Plan will not
result in the distribution of the amounts credited to an Eligible Director’s
Accounts.

       

      SECTION
12.     OTHER STOCK-BASED AWARDS.

       

      The Board
of Directors shall have authority to grant to Eligible Directors an “Other
Stock-Based Award”, which shall consist of any right which is (i) not a Grant
described in Sections 5 or 7 above and (ii) a Grant of Shares or a Grant
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares ), as deemed by the Board of Directors to be
consistent with the purposes of the Plan; provided that any such rights
must comply, to the extent deemed desirable by the Board of Directors, with Rule
16b-3 and applicable law. Subject to the terms of the Plan and any applicable
award agreement, the Board of Directors shall determine the terms and conditions
of any such Other Stock-Based Award.

       

      SECTION
13.     GENERAL PROVISIONS.

       

      13.1          No Right to Serve as a
Director.  This Plan shall not impose any obligations on the
Company to retain any Eligible Director as a Director nor shall it impose any
obligation on the part of any Eligible Director to remain as a Director of the
Company.

       

      13.2           Construction of the
Plan.  The validity, construction, interpretation,
administration and effect of the Plan, and the rights relating to the Plan,
shall be determined solely in accordance with the laws of the State of
Connecticut.

       

      13.3           No Right to Particular
Assets.  Nothing contained in this Plan and no action taken
pursuant to this Plan shall create or be construed to create a trust of any kind
or any fiduciary relationship between the Company and any Eligible Director, the
executor, administrator or other personal representative or designated
beneficiary of such Eligible Director, or any other persons.  Any
reserves that may be established by the Company in connection with Units granted
under this Plan shall continue to be treated as the assets of the Company for
federal income tax purposes and remain subject to the claims of the Company’s
creditors.  To the extent that any Eligible Director or the executor,
administrator, or other personal representative of such Eligible Director,
acquires a right to receive any payment from the Company pursuant to this Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company.

       

      13.4           Listing of Shares and Related
Matters.  If at any time the Board of Directors shall determine
that listing, registration or qualification of the Shares covered by this Plan
upon any national securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary as a
condition of, or in connection with, the delivery of Shares under this Plan, no
Shares will be delivered unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for.

       

      13.5           Severability of
Provisions.  If any provision of this Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not effect
any other provisions hereof, and this Plan shall be construed and enforced as if
such provision had not been included.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      

       

      13.6           Incapacity.  Any
benefit payable to or for the benefit of a minor, an incompetent person or other
person incapable of receipting therefor shall be deemed paid when paid to such
person’s guardian or to the party providing or reasonably appearing to provide
for the care of such person, and such payment shall fully discharge any
liability or obligation of the Board of Directors, the Company and all other
parties with respect thereto.

       

      13.7           Nontransferability.  No
Grant may be assigned or transferred, in whole or in part, either directly or by
operation of law (except in the event of an Eligible Director’s death by will or
applicable laws of descent and distribution), including, but not by way of
limitation, by execution, levy, garnishment, attachment, pledge, bankruptcy or
in any other manner, and no such right or interest of any Eligible Director in
the Plan shall be subject to any obligation or liability of such Eligible
Director.

       

      13.8           Headings and
Captions.  The headings and captions herein are provided for
reference and convenience only, shall not be considered part of this Plan, and
shall not be employed in the construction of this Plan.

       

      13.9           409A
Compliance.  All awards granted under the Plan are intended to
be exempt from the requirements of Section 409A or, if not exempt, to satisfy
the requirements of Section 409A and the provisions of the Plan, and any awards
granted under the Plan shall be construed in a manner consistent
therewith.  In addition, notwithstanding any other provision of this
Plan or an award agreement to the contrary, the Company will not pay or
accelerate the payment of any amount that constitutes “deferred compensation”
within the meaning of Section 409A, in violation of Section 409A.  To
the extent any amount of “deferred compensation” as defined in Section 409A
would otherwise vest and become payable upon a Change in Control or upon a
Disability, as provided herein or in an award agreement, any such award shall
vest as so provided but payment shall not be accelerated unless the Change in
Control or the Disability also satisfies the broadest definition of change in
control or disability (as the case may be) permitted under Section
409A.

       

      Any
amount that constitutes “deferred compensation” within the meaning of Section
409A and is payable under the Plan solely by reason of an Eligible Director’s
termination or cessation of service as a Director shall be payable as soon as,
and no later than, the Eligible Director experiences a “separation from service”
within the meaning of Section 409A.

       

       

       

       

       

       
11

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