EX-10.12



 






Exhibit 10.12




AMENDMENT 2 TO EMPLOYMENT AGREEMENT




     AMENDMENT dated as of January 3, 2006 (“Amendment”) to that certain Employment Agreement
(“Agreement”) dated as of September 6, 2000 by and between Aetna Inc., a Pennsylvania corporation,
and John W. Rowe, M.D. (“Executive”) as amended as of June 27, 2003 (certain capitalized terms used
herein being defined in Article 7 of the Agreement).



     WHEREAS, the Board and the Executive desire to plan for a successful transition of
responsibilities and to amend the Agreement on the terms and conditions set forth below;



     WHEREAS, the Company and Executive desire to enter into this Amendment embodying the terms of
such extension and amendment;



     NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of
the parties set forth in this Amendment, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:



     1. Section 1.01 of the Agreement shall be deleted and replaced in its entirety as follows:




“SECTION 1.01. Position. On February 14, 2006 Executive’s title and job
responsibilities shall be that of an executive officer Chairman of the Board.”



     2. Section 2 of the Amendment dated as of June 27, 2003 shall be deleted and replaced in its
entirety as follows:




“Effective July 7, 2003, Executive’s Base Salary as referred to in Section 2.01 shall
be increased by $100,000 to the annual rate of $1,100,000, payable in accordance with
the payroll and administrative practices of the Company from time to time; provided,
however, that such increase and any future increases shall be mandatorily deferred
(but nevertheless remain eligible for benefits) until the later of (i) the date on
which said amounts would be deductible by the Company under IRC Section 162(m), and
(ii) the date or dates elected by Executive prior to the effective date of such
increase (subject to the requirements of IRC Section 409A as applicable), but with
respect to any salary above $1,000,000 earned on or after January 1, 2005, no date
earlier than six months following Executive’s termination of employment, and said
deferrals shall earn a rate of return in accordance with the Company’s deferral
program applicable to the Company’s senior executive officers in effect from time to
time.”



     3. Section 6.15(b) of the Employment Agreement shall be modified as follows: each reference
to “two years after the termination of the Employment Term” shall be replaced with the phrase
“three years after the termination of the Employment Term”, so that the two year nonsolicitation
provisions contained therein shall be extended to three years. Similarly, Section 6.15(c)(i) of
the Employment Agreement shall be modified to replace the reference to “one year after the
termination of the Employment Term” with the phrase “three years after the termination of the
Employment Term”, so that the one year non-compete provision contained therein shall be extended to
three years. In consideration of these extensions, the Company shall pay the Executive on each of
first, second and third anniversaries of his termination of employment due to “Retirement” the
amount of $150,000. The phrase “Retirement” as used herein shall mean termination of employment by
Executive provided that the Executive’s age and completed years of service total 65 or more points
at such termination. In addition, if Executive’s Consultancy pursuant to Section 5 of the
Consulting Agreement (described below) is extended for either one or two years past the initial
three-year term of the consultancy, the Executive shall be entitled to an additional $150,000
(payable on the fourth and fifth anniversary of his termination of employment due to Retirement) in consideration for each year in which the nonsolicitation and non-compete covenants contained in



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Section 6.15(b) and 6.15(c)(i) of the Employment Agreement are renewed concurrent with
the renewal (if any) of the Consultancy term. Notwithstanding anything herein to the contrary,
should the non-compete agreement described in this Section 3 be terminated prior to the time any
annual $150,000 payment is due, the Company shall pay the Executive a pro-rated amount for each
full month for which the Executive was subject to the non-compete during such annual period. For
avoidance of doubt, the parties agree that this Section 3 of the Amendment 2 to the Employment
Agreement, together with Sections 6.15 and 6.16 of the Employment Agreement, shall survive the
Executive’s termination of employment and expiration of the Employment Term.



     4. Effective upon the termination of the Executive’s employment due to Retirement, the
Company agrees to enter into a Consulting Agreement on the terms, conditions and in the form
attached hereto as Exhibit A which is incorporated herein and made a part hereof.



     5. In the event the Executive terminates his employment due to Retirement prior to the end of
a fiscal year, he shall be entitled to a pro-rata annual bonus for performance related to such
fiscal year, calculated (consistent with historical practices) and paid at the same time as the
Company makes such calculations and payments to other senior executives of the Company.



     6. Upon Executive’s Retirement, the parties agree that all rights and obligations contained
in the Agreement shall be extinguished, except as provided in this Amendment 2 and as provided in
Sections 5.01 (Successors), 5.02 (Assignment by Executive), 6.02 (Legal Fees and Expenses), 6.03
(Arbitration), 6.05 (Non-Exclusivity of Benefits), 6.07 (Mitigation), 6.12 (Governing Law), 6.14
(Indemnification), 6.15 (Nondisclosure, Nonsolicitation, Noncompete, and Nondisparagement) and 6.15
(Material Inducement; Specific Performance), all of which shall survive the Executive’s termination
of employment and expiration of the Employment Term until the later of (i) the three year
anniversary from date of Executive’s termination of employment, and (ii) the expiration of the
Consultancy term.



     7. Notwithstanding anything to the contrary, to the extent necessary to comply with Section
409A of the Internal Revenue Code, payments to be made following termination of employment and
entry into the Consulting Agreement shall not be paid until the six month anniversary of the
Consultant’s termination of employment.



     Except as modified above, all of the provisions, terms and conditions of the Agreement remain
in full force and effect.



     IN WITNESS WHEREOF, the Company and Executive have executed this Amendment, to be effective as
of the day and year first written above.



	 	 	 	 	 	 	 	 	 
	JOHN W. ROWE, M.D.	 	 	 	AETNA INC.
	 
	 	 	 	 	 	 	 	 
	/s/ John W. Rowe
 


	 	 
	 	By:
	 	/s/ Elease E. Wright
 

Elease E. Wright
	 	 
	 

	 	 	 	 	 	Title: Senior Vice President HR	 	 






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Exhibit A: Form of Consulting Agreement




Exhibit A




CONSULTING AGREEMENT




     This Consulting Agreement (this “Agreement”) is made as of the                      day of                     , 2006,
by and between Aetna Inc. (“Company”) and John W. Rowe, M.D. (“Consultant”). The parties hereto
agree as follows:



     1. Engagement. Company hereby engages Consultant and Consultant hereby agrees to
render at the request of the Company’s Chief Executive Officer or Board of Directors, upon
reasonable notice, independent consulting services for Company on matters of an executive and/or
high level nature, including but not limited to design and analysis of Company’s experience with
various products and strategies including consumer-directed health plans, Aexcel networks, Chairman
initiatives, Medicare, pharmaceutical programs, wellness programs, and other business matters as
agreed by the parties. At the Company’s request, Consultant will collaborate with the Company on
presentation and publication of the results of these analyses for use by the Company, internally or
externally. In addition, at the Company’s request, Consultant shall serve as a director of the
Aetna Foundation, Inc. and continue to participate in specific community activities, including
Board-related service, as requested by Company and agreed to by Consultant. In this engagement and
all activities hereunder, Consultant shall serve as an independent contractor and not an employee
of Company, as further explained in Section 6 below.



     2. Term. The term of this Agreement shall begin as of [                    , 2006] and
shall terminate on [                    , 2009], unless terminated earlier or extended pursuant to
Section 5 of this Agreement.



     3. Compensation. As compensation for all services rendered by Consultant under this
Agreement, Company shall pay Consultant at a per diem rate of $4,000 per day and at $2,000 per
half-day for consulting services excluding any community-related efforts or service as a board
director of a charitable or not-for-profit entity, subject to the provisions of Section 5 of this
Agreement. All such compensation shall be payable without deduction, including no deduction for
federal income, social security, or state income taxes. All applicable taxes shall be the
responsibility of Consultant. Company also shall pay all travel-related expenses of Consultant for
such consulting services including all community-related efforts performed at Company’s and/or
Aetna Foundation Inc.’s request. In connection with any consulting assignment hereunder, (i)
Consultant shall have full access (on the same basis then applicable to senior executives of the
Company) to the Company’s travel facilities (e.g., car, driver, aircraft and helicopter services),
(ii) Company shall provide an office with appropriate support services for Consultant at Company’s
facilities in either New York or Boston (at Consultant’s election), unless Consultant assumes
another professional position that provides office and support services, provided, however, that if
Company does not maintain facilities in the city in which Consultant desires to work, it shall
provide Consultant facilities at another location in such city, and (iii) Company shall provide
Consultant with computers (including upgrades), software, printers, monitors and access to
information technology and communications support staff (on the same basis as such items and
support are made available to senior executives of the Company) in his office and at his two
principal residences.



     4. Performance of Duties. Consultant shall render services conscientiously and shall
devote his best efforts and abilities thereto, at such times during the term hereof, and in such
manner, as Company and Consultant shall mutually agree, not to exceed 25 full days per calendar
quarter, it being acknowledged that Consultant’s services shall be performed at such places and at
such times as are reasonably convenient to Consultant, upon reasonable notice. Consultant shall
observe all policies and directives promulgated from time to time by Company.



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     5. Termination. This Agreement will terminate by either party upon reasonable notice
to the other. This Agreement also will terminate on Consultant’s death or, upon Consultant’s
acceptance of an academic or government position, upon Consultant’s request. The term of this
Agreement may be extended for two additional one-year periods on the same terms and conditions upon
mutual agreement of Consultant and Company. Consultant’s obligations under Section 7 (Confidential
Information), Section 8 (Return of Confidential Information and Other Company Property), Section 9
(Rights of Authorship), Section 10 (Remedy), Section 11 (Arbitration) and Section 12
(Miscellaneous) shall survive termination hereof.



     6. Independent Contractor. It is expressly agreed that Consultant is acting as an
independent contractor in performing services hereunder. Company shall carry no workers’
compensation insurance or any health or accident insurance (other than standard Aetna retiree
medical care benefits to which the Consultant is otherwise entitled) to cover Consultant. Company
shall not pay any contributions to Social Security, unemployment insurance, federal or state
withholding taxes, nor provide any other contributions or benefits that might be expected in an
employer-employee relationship. Company shall, however, pay all expenses associated with the
arrangement contemplated herein, including but not limited to advice, consulting, negotiation and
preparation of documents memorializing such arrangement.



     7. Confidential Information. Consultant desires to act as a consultant to Company
and he understands and agrees that his duties for the Company in the past have required, and his
consulting duties may require, access to Confidential Information of a competitive nature, which
Company makes available only to select persons who have a need to know such confidential
information, and/or information subject to the attorney-client and work product privileges.
Consultant understands and agrees that for purposes of this Agreement, “Confidential Information”
includes all trade secrets and all information furnished by Company to Consultant, or to which
Consultant gains access during the course of his or her consulting relationship with Company, which
is either non-public, confidential or proprietary in nature, including, but not limited to
financial statements, client lists or information, supplier lists or information, subcontractor
lists or information, prospect lists or information, information pertaining to Company’s channels
of distribution, marketing, work product, pricing policy and records, sales representative
commission policy, sales volume by products, customer or geographic area, personnel history,
accounting procedures, invoice forms, contracts, leases, business plan, information about the
structure and marketing of the Company’s products and policies, revenue and/or commission
information, commission percentages, rating discounts and/or client costs, products, inventions,
services, pricing, databases, lead generation sources, debt information, employment manuals,
employee benefit cards, employee benefit statements, computer systems, software, computer hardware,
computer codes, passwords, programs and formula, technology, designs, secret processes, proprietary
or technical information, procedures or manuals, trademarks or copyrighted material in use or under
consideration for use, together with analyses, proposals, compilations, forecasts, studies, or
other documents or work product prepared by Company, its agents, representatives (including
attorneys, accountants and financial advisors) or employees which contain or otherwise reflect such
information. Consultant will not retain, use or disclose, directly or indirectly, any of Company’s
Confidential Information. Consultant recognizes that this Confidential Information is a unique
asset of Company, developed and perfected over a considerable time and at substantial expense to
Company and the disclosure of which may cause injury, loss of profits and loss of goodwill to
Company. Consultant agrees to protect the confidentiality of all Confidential Information during
the term of this Agreement and thereafter. Consultant agrees to keep all documents containing or
referring to Confidential Information in secure locations and not to duplicate, use or reveal to
third parties any Confidential Information except as necessary for the business purposes of
Company. Consultant agrees to inform all other persons to whom the Confidential Information might
be disclosed or made available of Company’s proprietary interest and of the recipient’s obligations
under this Agreement and to take such other protective measures as may be or become reasonably
necessary to preserve the confidentiality of such Confidential Information. Notwithstanding the
foregoing, however, “Confidential Information” shall not include such information that the
Consultant is required by law or a governmental agency to disclose, or information that has come
into the public domain by means other than breach of this Agreement.



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     8. Return of Confidential Information and Other Company Property. Consultant
acknowledges that all papers, photographs and apparatus related to the business of Company,
including those prepared or made by Consultant, including but not limited to the Confidential
Information, shall be and remain at all times the property of Company. When the consulting
relationship with the Company terminates for any reason, or upon request by Company, Consultant
will promptly deliver (within five calendar days) to Company all of Consultant’s files and copies
thereof and other property of Company in the Consultant’s possession, including but not limited to
any security pass or ID card, pagers, voice mail passwords or passcodes, company credit card, keys,
computer disks and software, work product, brochures or customer data, all originals and copies of
the Confidential Information and all originals and copies of documents relating to the Confidential
Information.



     9. Rights of Authorship. Consultant acknowledges that all original works of
authorship that are made by him (solely or jointly with others) within the scope of this Agreement
and 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).



     10. Remedy. Consultant understands that Company would not have any adequate remedy at
law for the material breach or threatened breach by the Consultant of Sections 7 (Confidential
Information), 8 (Return of Confidential Information and Other Company Property) or 9 (Rights of
Authorship) of this Agreement, and agrees that in the event of any such material breach or
threatened breach, Company may, in addition to the other remedies which may be available to it,
file a suit in equity to enjoin Consultant from the breach or threatened breach of such
covenant(s).



     11. Arbitration. Any matter, controversy or claim arising out of or relating to this
Agreement or to any breach of this Agreement, except claims set forth in Section 10 of this
Agreement, as to which Company has elected to seek a court remedy, shall be settled by arbitration
before one arbitrator in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgments on the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. Each party shall pay: the fees of his or its attorneys;
the expenses of his or its witnesses; and all other expenses connected with presenting his or its
case. Other costs of the arbitration, including the cost of any record or transcripts of the
arbitration hearing, administrative fees, the fees of the arbitrator, and all other fees and costs
shall be borne equally by the parties.



     12. Miscellaneous.



          (a) Notices. Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing and if sent by registered or certified mail to Company or Consultant at
the address set forth below to such other address as they shall notify each other in writing.



If to Company:



Chief Executive Officer

Aetna Inc.

151 Farmingdale Avenue

Hartford, CT 06156



With a copy to:



General Counsel

Aetna Inc.

151 Farmington Avenue

Hartford, CT 06156




          If to Consultant: at Consultant’s last known address as reflected on the books and records of
the Company




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With a copy to:



Pearl Meyer & Partners

445 Park Avenue

New York, NY 10022




          (b) Assignment. This Agreement shall be binding upon and inure to the benefit of
Company and its successors and assigns. This Agreement shall not be assignable by Consultant.




          (c) Applicable Law. This Agreement shall be construed in accordance with the laws of
the State of Connecticut in every respect, without regard to its rules regarding conflicts of law.




          (d) Headings. Section headings and numbers herein are included for convenience of
reference only and this Agreement is not to be construed with reference thereto. If there is any
conflict between such numbers and headings and the text hereof, the text shall control.




          (e) Severability. If for any reason any portion of this Agreement shall be held
invalid or unenforceable, the parties agree that it is their intent that such provision shall be
enforced to the maximum extent possible under applicable law, and that the court or arbitrator
shall reform such provision to make it enforceable in accordance with the intent of the parties,
and that notwithstanding such invalidity, unenforceability or reformation of any provision, the
remaining provisions of this Agreement shall remain in full force and effect.




          (f) Entire Agreement. This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof and supersedes all previous agreements between the
parties, provided, however, that the parties acknowledge that certain provisions of the Employment
Agreement dated as of September 6, 2000, as amended, may remain in effect as provided in such
agreement and amendments thereto, during all or a portion of the term of this Agreement. No
officer, employee, or representative of Company has any authority to make any representation or
promise in connection with this Agreement or the subject matter hereof that is not contained
herein, and Consultant represents and warrants that he has not executed this Agreement in reliance
upon any such representation or promise. No modification, extension or renewal of this Agreement
shall be valid unless made in writing and signed by the parties hereto.




          (g) Waiver of Breach. The waiver by Company of a breach of any provision of this
Agreement by Consultant shall not operate or be construed as a waiver of any subsequent breach by
Consultant.




          (h) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute one agreement.




	 	 	 	 	 	 	 	 	 	 	 
	Aetna Inc.	 	 	 	John W. Rowe, M.D.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Its:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 

	 	 
	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 






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