Document:

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

Exhibit 10.24

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) dated as of
December 5, 2003 by and between Aetna Inc., a Pennsylvania corporation,
(“the Company”) and Ronald A. Williams (“Executive”) (certain capitalized
terms used herein being defined in Article 7).

          WHEREAS, the Company and the Executive entered into an employment
agreement dated as of March 14, 2001 with an initial term ending on December
31, 2003;

          WHEREAS, the Board desires to continue to employ Executive in the
position and on the terms and conditions set forth below, and the Executive
desires to continue such employment; and

          WHEREAS, the Company and Executive desire to enter into this amended
and restated Agreement embodying the revised terms of such employment;

          NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, 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:

ARTICLE 1

POSITION; TERM OF AGREEMENT

          SECTION 1.01. Position. (a) On January 1, 2004 (the “Effective
Date”), Executive shall continue his duties as the Company’s President.

          (b) In such position, Executive shall have such duties and authority,
consistent with such position, as shall be determined from time to time by
the Chief Executive Officer or the Company’s Board of Directors (“Board”),
provided that Executive shall report only to the Chief Executive Officer.

          (c) During the Employment Term, Executive will devote substantially all
of his business time to the performance of his duties hereunder and will not
engage in any other business, profession or occupation for compensation or
otherwise which would conflict with the rendition of such services either
directly or indirectly, without the prior written consent of the Board;
provided that nothing herein shall be deemed to preclude Executive, subject
to the prior written consent of the Board, from serving on any business
board, or subject to the prior written consent of the Board or the Chairman,
from serving on any civic or charitable board, as long as such activities do
not materially interfere with the performance of Executive’s duties
hereunder. If the Company concludes that it is desirable, upon Company’s
request, Executive will resign from any boards of directors on which he
serves as soon as reasonably practicable considering his fiduciary duty.

 

 

          SECTION 1.02. Term. Executive shall continue to be employed by the
Company for a period commencing on the Effective Date and, subject to
earlier termination or extension as provided herein, ending on December 31,
2006 (the “Employment Term”). On December 31, 2006 and on December 31st of
each subsequent year up to and including December 31, 2012, the Employment
Term shall automatically be extended for one additional year (but not beyond
Executive’s sixty-fifth (65th) birthday) unless not later than 90 days prior
to such date the Company or Executive shall have given written notice of its
or his intention not so to extend the Employment Term. Unless earlier
terminated, the Employment Term shall end on Executive’s sixty-fifth (65th)
birthday.

ARTICLE 2

COMPENSATION AND BENEFITS

          SECTION 2.01. Base Salary. Starting on the Effective Date, the
Company shall pay Executive an annual base salary (the “Base Salary”) at the
initial annual rate of $1,000,000, payable in equal monthly installments or
otherwise in accordance with the payroll and personnel practices of the
Company from time to time. Base Salary shall be reviewed annually by the
Board or a committee thereof to which the Board may from time to time have
delegated such authority (the “Committee”) for possible increase in the sole
discretion of the Board or the Committee, as the case may be. Executive’s
Base Salary, as in effect from time to time, may not be reduced by the
Company without Executive’s consent, except in the event of a ratable
reduction affecting all senior officers of the Company.

          SECTION 2.02. Bonus. Subject in each case to Executive’s continued
employment as contemplated hereby:

          (a) With respect to each fiscal year all or part of which is contained
in the Employment Term, Executive shall be eligible to participate in the
Company’s annual incentive plan, with a target bonus opportunity of at least
120% of Base Salary, and a maximum bonus opportunity of at least 200% of
Base Salary. Except as may be payable pursuant to Article 3, Executive is
not guaranteed the payment of any annual bonus.

          (b) Executive shall be eligible to participate at a level commensurate
with his position in the Company’s current long-term incentive program and
in the new long-term incentive plan to be established (currently anticipated
to be established within six months). As further compensation, Executive
will be eligible to participate in the other compensation arrangements,
including equity-based programs, in which substantially all senior
executives of the Company are generally eligible to participate.

          SECTION 2.03. Employee Benefits. (a) Executive shall be eligible for
employee benefits (including fringe benefits, vacation, qualified and
non-qualified pension and profit sharing plan participation and life,
health, accident and disability insurance) no less favorable than those
benefits made available generally to senior executives of the Company.

          (b) Executive shall be eligible, upon any termination of employment
(including as a result of non-extension of the Employment Term by the
Company) other than by the

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Company for Cause or by the Executive without
Good Reason prior to January 1, 2006, for the Company’s retiree medical care
benefits under the Company’s Medical Plans as in effect from time to time
and, for purposes of eligibility for subsidized benefits thereunder, shall
be credited with two years of service for each full year of service of
Executive with the Company commencing on the Effective Date and during the
Payment Period referred to in Section 3.04 (b).

          (c) For each calendar year beginning in 2005 and through and including
2010, Executive’s end of year balance under the Company’s non-qualified
supplemental pension plan will be credited with an additional fully vested
amount equal to the Base Salary in effect for each such year, provided,
however, that this additional pension amount shall not be credited for any
period in which Executive is not actively employed, and provided further
that this additional pension amount shall be offset by the value of
Executive’s vested benefit in his prior employer’s defined benefit plan.

          (d) Executive shall vest in Company contributions and credits to the
Company’s qualified and non-qualified defined contribution and defined
benefit plans (solely in the non-qualified plans, if required) (the “Pension
Benefits”), subject to continued employment with the Company, in five (5)
equal annual installments commencing on April 2, 2001; provided that the
additional credit for the year 2005 described in Section 2.03.(c) above
shall fully vest on December 31, 2005. The Pension Benefit shall be payable
in the form and at the times provided, from time to time, in the Retirement
Plan.

          SECTION 2.04. Business Expenses; Travel; Office. (a) Reasonable
travel, entertainment and other business expenses incurred by Executive in
the performance of his duties hereunder shall be reimbursed by the Company
in accordance with Company policies as in effect from time to time. In the
course of performing Executive’s duties hereunder, Executive shall have
reasonable access to Company-provided ground and air transportation.

          (b) The Company shall provide Executive with appropriate office
facilities and support at the Company’s headquarters which shall be
Executive’s principal job location.

ARTICLE 3

CERTAIN BENEFITS

          SECTION 3.01. Certain Events. (a) A “Qualifying Event” means any of
the following events:

               (i) The involuntary termination of Executive’s employment by the
Company, other than (x) for Cause, or (y) by reason of Executive’s death or
Disability; or

               (ii) Executive’s voluntary termination of employment for Good Reason,
provided that such termination occurs within 60 days after the occurrence of
any event constituting Good Reason.

          SECTION 3.02. Right to Certain Benefits. (a) In the event of any
termination of employment during the Employment Term, Executive shall be
entitled to receive from the

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Company either the Severance Benefits to the
extent and as described in Section 3.03 or the relevant Separation Benefits
to the extent and as described in Section 3.04, as the case may be.

          (b) (i) In the event that a Change in Control occurs during the
Employment Term, subject to Article 4, all unvested stock options,
restricted stock, restricted stock unit awards and other equity awards
(other than as provided in Section 3.02(b) (iii) below) (collectively,
“Awards”) shall become immediately vested, nonforfeitable and exercisable as
of the date of the Change in Control. All Awards, whether vested or
unvested prior to the date of the Change in Control, shall remain
exercisable until the earlier of (x) the expiration date of such Award, any
termination of employment notwithstanding, and (y) in the event of any
termination of Executive’s employment with the Company, the earlier of the
last date on which such Award would otherwise have been exercisable and two
years from termination of employment in the case of the Sign-On Awards (such
earlier date, the “Termination Date”).

          (ii) In the event that a Qualifying Event occurs during the Employment
Term, (A) all Sign-On Awards held by Executive shall become immediately
vested, nonforfeitable and exercisable as of the date of such Event and
shall remain exercisable until the earlier of the Termination Date or two
years from termination of employment and (B) with respect to all other
equity based awards (other than as provided in Section 3.02(b) (iii) below)
made to Executive during the Employment Term, Executive shall be credited
for vesting purposes with deemed service during the Continuation Period (as
hereinafter defined) as it occurs (in the case of a Qualifying Event
occurring during the 24 months following a Change in Control) or the Payment
Period (as hereinafter defined), as the case may be. Deemed vesting for
restricted stock shall be immediate and for all other Awards as the period
occurs. All such awards shall remain exercisable for such period as shall
be specified in the relevant plan and/or award document. Notwithstanding
the foregoing, if the Qualifying Event was in Contemplation of a Change in
Control (as defined below), upon the Change in Control Awards shall be
treated pursuant to (b)(i) above.

          (iii) In the case of any performance unit award held by Executive, the
treatment of vesting in connection with a Change in Control or termination
of employment shall be as specified in the award agreement and the plan.

          (iv) Each party hereto shall give to the other party 60 days prior
written notice of such party’s intent to terminate Executive’s employment
with the Company.

          SECTION 3.03. Benefits upon a Qualifying Event after, or in
Contemplation of, a Change in Control. Except to the extent provided in
Article 4, Section 6.07(b) and Section 6.08, Executive shall be entitled to
the following benefits (the “Severance Benefits”) upon (x) a Qualifying
Event within 24 months following a Change in Control or (y) if a Change in
Control occurs and a Qualifying Event occurs prior to the date on which a
Change in Control occurs, and it is reasonably demonstrated by the Executive
that such Qualifying Event (aa) was at the request of a third party who was
taking steps reasonably calculated to
effect the Change in Control or (bb) otherwise arose in connection with, or
in anticipation of, the Change in Control (“Contemplation of a Change in
Control”):

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          (a) The Company shall pay Executive as soon as practicable a lump sum,
in cash, equal to (i) Executive’s earned but unpaid Base Salary and other
vested but unpaid cash entitlements for the period through and including the
date of termination of Executive’s employment, including unused earned
vacation pay and unreimbursed documented business expenses (collectively,
“Accrued Compensation”) and (ii) an amount equal to the product of
Executive’s annual target bonus opportunity for the year in which
Executive’s employment terminates (the “Basic Bonus Amount”) times a
fraction, the numerator of which is the number of days in such year through
the date of termination and the denominator of which is 365 (the “Pro-Rata
Bonus Amount”). In addition, Executive shall be entitled to any other
vested benefits earned by Executive for the period through and including the
date of termination of Executive’s employment under any other employee
benefit plans and arrangements maintained by the Company, in accordance with
the terms of such plans and arrangements, except as modified herein
(collectively, “Accrued Benefits”).

          (b) The Company shall pay Executive as soon as practicable a lump sum
amount in cash equal to 3 times the sum of the amounts set forth in Clauses
(i) and (ii) below:

               (i) Executive’s Base Salary at its highest annual rate in effect during
the period beginning immediately prior to the date of the Change in Control
to which such Qualifying Event relates and ending on the date of such
Qualifying Event; and

               (ii) the Executive’s Basic Bonus Amount.

          (c) In addition, Executive shall be entitled to the benefits set forth
below through and in respect of the period ending on the second anniversary
of the Qualifying Event (the “Continuation Period”):

               (i) Continued participation in and service credit of one year of
service (which pursuant to Section 2.03(b) shall result in two years of
credit) for each full year in the Continuation Period under the Company’s
Medical Plans under the terms thereof and hereof; and

               (ii) Full vesting of the previously accrued Pension Benefits.

          SECTION 3.04. Separation Payments. Except to the extent provided in
Section 6.07 and Section 6.08, Executive shall be entitled to the benefits
set forth below (the “Separation Benefits”) upon termination of employment
other than as set forth in Section 3.03:

          (a) Upon any such termination of employment other than by reason of
death or Disability, including Executive’s voluntary termination of
employment with or without Good Reason or upon termination of Executive’s
employment with or without Cause, Executive shall be entitled to:

               (i) The Accrued Compensation; and

               (ii) The Accrued Benefits.

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          (b) Except as provided by Section 3.03 with regard to a Contemplation
of a Change in Control, upon a Qualifying Event prior to or more than 24
months after a Change in Control, the Company shall pay Executive:

               (i) Cash compensation through the second anniversary of such Qualifying
Event (the “Payment Period”) in equal installments during the Payment Period
in accordance with the applicable Company payroll system, in an amount equal
to two times the sum of (i) the highest Base Salary as in effect during the
six month period immediately prior to the time of such termination and (ii)
the Basic Bonus Amount, on the condition that Executive has delivered to the
Company a release substantially in the form as attached hereto as Attachment
A (with such changes as may be required under applicable law) of any
employment-related claims;

               (ii) The Pro-Rata Bonus Amount;

               (iii) Continued participation in and service credit of one year of
service (which pursuant to Section 2.03(b) shall result in two years of
credit) for each full year in the Payment Period under the Company’s Medical
Plans during the Payment Period;

               (iv) Full vesting of the previously accrued Pension Benefits and
service credit for the Payment Period for purposes of calculating the
Pension Benefits.

          (c) Upon termination of Executive’s employment by reason of death or
Disability, Executive shall be entitled to:

               (i) The Accrued Compensation;

               (ii) The Accrued Benefits; and

               (iii) Full vesting of the previously accrued Pension Benefits.

          SECTION 3.05. Non-Renewal Payments. In the event of the expiration of
the Employment Term as a result of delivery of the Company’s notice of its
intention not to extend the Employment Term pursuant to Section 1.02 and as
a result Executive elects to terminate his employment as of the end of the
Employment Term, Executive shall be entitled to the amounts and benefits
equal to those set forth in Section 3.03 or 3.04, as applicable (subject to
the same conditions); provided, however, that this Section 3.05 shall be
inapplicable to any termination of employment on or subsequent to the
Executive’s sixty-fifth (65th) birthday.

ARTICLE 4

CERTAIN TAX REIMBURSEMENT PAYMENTS

          SECTION 4.01. Initial Determinations by Accounting Firm. In the event
of a change in the ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company, as defined
Section 280G(a)(2) of the Internal Revenue Code of 1986, as amended (the
“Code”)(“Change in Ownership”) occurs

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or is expected to occur, the Company
shall retain a national accounting firm selected by the Company and
reasonably acceptable to Executive (the “Accounting Firm”) to perform the
calculations contemplated by this Article 4. The Accounting Firm shall have
discretion to retain an independent appraiser with adequate expertise (the
“Appraiser”) to provide any valuations necessary for the Accounting Firm’s
calculations hereunder. The Company shall pay all the fees and costs
associated with the work performed by the Accounting Firm and any Appraiser
retained by the Accounting Firm. If the Accounting Firm has performed
services for any person, entity or group in connection with the Change in
Ownership, Executive may select an alternative national accounting firm to
be the Accounting Firm. If the Appraiser otherwise performs work for any of
the entities involved in the Change in Ownership or their affiliates (or has
performed work for any such entity within the three years preceding the
calculations hereunder), then Executive may select an alternative appraiser
of national stature with adequate expertise to be the Appraiser. The
Accounting Firm shall provide promptly to both the Company and Executive a
written report setting forth the calculations required under this Agreement,
together with a detail of all relevant supportive data, valuations and
calculations. All determinations of the Accounting Firm shall be binding on
Executive and the Company subject to the provisions below. When making the
calculations required hereunder, Executive shall be deemed to pay: (x)
Federal income taxes at the highest applicable marginal rate of Federal
income taxation for the taxable year for which any such calculation is made;
and (y) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the taxable year for which any such
calculation is made, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local taxes.

          The Accounting Firm shall determine (the “Initial Determination”):

          (a) the aggregate amount of all payments, benefits and distributions
provided to Executive or for Executive’s benefit, whether paid or payable or
distributed or distributable pursuant to the terms of the Agreement or any
other agreement, plan or arrangement of the Company or otherwise (other than
any payment pursuant to this Article 4) which are in the nature of
compensation and contingent upon a Change in Ownership (valued pursuant to
Section 280G of the Code) (collectively the “Payments”); and

          (b) the maximum amount of the Payments Executive would be entitled to
receive without being subject to the excise tax imposed by Section 4999 of
the Code (the “Payment Cap”) (such excise tax, together with any interest or
penalties with respect to such excise tax, are hereinafter collectively
referred to as the “Excise Tax”).

          SECTION 4.02. Initial Treatment of Payments.

          (a) If the amount of the Payments does not exceed the Payment Cap,
Executive shall be entitled to receive the full amount of the Payments.

          (b) If the amount of the Payments exceeds the Payment Cap by less than
10% of the Payment Cap amount, then, notwithstanding anything to the
contrary, the amount of the Payments payable to Executive shall be reduced
to the amount of the Payment Cap. In the event that the Payments are
subject to reduction hereunder, Executive shall have the right to designate
which of the Payments will be reduced or eliminated.

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          (c) If the amount of the Payments exceeds the Payment Cap by 10% or
more of the Payment Cap amount, then the amount of the Payments Executive is
entitled to receive shall not be reduced and the Company shall pay to
Executive an additional payment (a “Gross-Up Payment”) in an amount such
that after payment by Executive of all taxes (including any interest and
penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. All
determinations required to be made as to whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment shall be made by the
Accounting Firm.

          SECTION 4.03. Redeterminations Based on IRS or Court Ruling. If after
the date of the Initial Determination (A) Executive becomes entitled to
receive additional Payments (including, without limitation, severance)
contingent upon the same Change in Ownership, or (B) Executive becomes
subject to the terms of any final binding agreement between Executive and
the Internal Revenue Service or any decision of a court of competent
jurisdiction which is not appealable or for which the time to appeal has
lapsed (a “Final Determination”) and which is contrary the Initial
Determination, then based upon such additional Payments or such Final
Determination (as the case may be), the Accounting Firm shall recalculate:
(i) the aggregate Payments (such recalculated amount, the “Redetermined
Payments”); and (ii) the maximum amount of the Redetermined Payments
Executive would be entitled to receive without being subject to the excise
tax imposed by Section 4999 of the Code (the “Redetermined Payment Cap”)
(such excise tax, together with any interest or penalties with respect to
such excise tax, are hereinafter referred to as the “Redetermined Excise
Tax”).

          SECTION 4.04. Reconciliations Based on Redeterminations.

          (a) If the Redetermined Payment Cap is greater than the Payment Cap
(and Executive’s Payments were reduced pursuant to Section 4.02(b)), then
the Company shall promptly pay Executive the amount by which the
Redetermined Payment Cap exceeds the Payment Cap, together with interest on
such difference at the applicable Federal rate (as defined in Section
1274(d) of the Code)(the “Federal Rate”) from the original Payment due date
to the date of actual payment of the difference by the Company.

          (b) If the aggregate value of the Redetermined Payments exceeds the
Redetermined Payment Cap by less than 10%, then, notwithstanding anything to
the contrary, the amount of the Redetermined Payments that Executive is
entitled to receive and retain shall be reduced to the amount of the
Redetermined Payment Cap. In the event that the Redetermined Payments are
subject to reduction under this paragraph and any such portion of the
Redetermined Payments have not yet been paid to Executive, Executive shall
have the right to designate which portion of such unpaid Redetermined
Payments should be reduced or eliminated. If Executive has previously
received any Payments in excess of the
Redetermined Payment Cap, such excess Payments shall be refunded to the
Company. Notwithstanding the foregoing, if any portion of such excess
Payments which is to be refunded to the Company has been paid to any
Federal, state or local tax authority, repayment thereof shall not be
required until actual refund or credit of such portion has been made to
Executive. In addition, if, pursuant to a Final Determination, any such
excess

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Payments are not refunded to the Company and as a result cause the
Executive to be subject to Redetermined Excise Tax, then Executive shall be
treated as if the aggregate value of the Redetermined Payments exceeds the
Redetermined Payment Cap by more than 10% under Section 4.04(c) and
Executive shall be entitled to the Supplemental Gross-Up Payment, subject to
all the attendant conditions set forth below.

          (c) If the aggregate value of the Redetermined Payments exceeds the
Redetermined Payment Cap by more than 10%, then the amount of the
Redetermined Payments Executive is entitled to receive and retain shall not
be reduced and the Company shall pay to Executive an additional payment (a
“Supplemental Gross-Up Payment”) in an amount such that after payment by
Executive of all taxes (including any interest and penalties imposed with
respect to such taxes), including any Redetermined Excise Tax, imposed on
the Supplemental Gross-Up Payment Executive retains an amount of the
Supplemental Gross-Up Payment equal to the Redetermined Excise Tax imposed
upon the Redetermined Payments; provided that if Executive has previously
received a Gross-Up Payment, the amount of the Supplemental Gross-Up Payment
shall be reduced by the amount of the Gross-Up Payment Executive previously
received, so that Executive will be fully reimbursed, but will not receive
duplicative reimbursements. If, however, the Excise Tax exceeds the
Redetermined Excise Tax, the excess Gross-Up Payment that has been paid to
Executive shall be refunded to the Company on demand. Notwithstanding the
foregoing, in the event any portion of the Gross-Up Payment to be refunded
to the Company has been paid to any Federal, state or local tax authority,
repayment thereof shall not be required until actual refund or credit of
such portion has been made to Executive. Executive and the Company shall
mutually agree upon the course of action to be pursued (and the method of
allocating the expenses thereof) if Executive’s good faith claim for refund
or credit is denied.

          (d) No provision of this Section 4.04 is intended to violate the
Sarbanes-Oxley Act, and in the event any such provision would constitute a
violation, such provision shall be null, void and of no effect.

          SECTION 4.05. Procedures with Respect to IRS Claims.

          (a) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service relating to any unpaid excise tax applicable to the
Payments. Such notification shall be given as soon as practicable but no
later than twenty business days after Executive knows of such claim and
shall apprise the Company of the nature of such claim, any assessment under
such claim and the date on which such assessment is requested to be paid.
Executive shall not pay such claim prior to the expiration of the thirty day
period following the date on which Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due).

          (b) If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive
shall:

               (i) give the Company any information reasonably requested by the
Company relating to such claim,

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               (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order effectively to
contest such claim, and

               (iv) permit the Company to participate in any proceedings relating to
such claim;

provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax, Redetermined Excise Tax
or income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses.

Without limitation on the foregoing, the Company shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct Executive to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Executive agree to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that if the Company directs Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to Executive
and shall indemnify and hold Executive harmless, on an after-tax basis, from
any Excise Tax, Redetermined Excise Tax or income tax, including interest
and penalties with respect thereto, imposed with respect to such advance or
with respect to any imputed income with respect to such advance; and further
provided that any extension of the statue of limitations relating to payment
of taxes for the taxable year of Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

(c)  If after the receipt by Executive of an amount advanced by the
Company pursuant to the foregoing, Executive becomes entitled to receive any
refund with respect to such claim, Executive shall (subject to the Company’s
complying with the requirements of above with respect to any contest of an
excise tax claim) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon by the taxing authority
after deducting any taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company hereunder, a determination is
made that Executive
shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty days after such
determination, then the Executive shall not be required to refund any such
amount to the Company but the amount thereof shall offset, to the extent

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thereof, the amount of the Supplemental Gross-Up Payment required to be paid
hereunder. The forgiveness to refund such amount shall be considered part
of the Supplemental Gross-Up Payment and subject to gross-up for any taxes
(including interest or penalties) associated therewith.

     (d)  No provision of this Section 4.05 is intended to violate the
Sarbanes-Oxley Act, and in the event any such provision would constitute a
violation, such provision shall be null, void and of no effect.

ARTICLE 5

SUCCESSORS AND ASSIGNMENTS

          SECTION 5.01. Successors. The Company will require any successor
(whether by reason of a Change in Control, direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. The Company’s rights hereunder shall not
otherwise be assignable without the Executive’s consent.

          SECTION 5.02. Assignment by Executive. This Agreement shall inure to
the benefit of and be enforceable by Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If Executive should die or become disabled while
any amount is owed but unpaid to Executive hereunder, all such amounts,
unless otherwise provided herein, shall be paid to Executive’s devisee,
legatee, legal guardian or other designee, or if there is no such designee,
to Executive’s estate. Executive’s rights hereunder shall not otherwise be
assignable.

ARTICLE 6

MISCELLANEOUS

          SECTION 6.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed

          if to the Company, to:

	 
	Aetna Inc.
	151 Farmington Avenue
	Hartford, CT 06156
	Fax: 860-273-8340
	Attn: General Counsel

if to Executive, to Executive’s last known address as reflected on the books
and records of the Company or such other address as such party may hereafter
specify for the purpose by written notice to the other party hereto. Any
such notice shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of receipt

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and such day
is a business day in the place of receipt. Otherwise, any such notice shall
be deemed not to have been received until the next succeeding business day
in the place of receipt.

          SECTION 6.02. Legal Fees and Expenses. The Company shall pay all
legal fees, costs of litigation, arbitration (i.e., American Arbitration
Association and arbitrator fees), prejudgment interest, and other expenses
which are reasonably incurred by Executive as a result of any conflict
between the parties pertaining to this Agreement or in connection with the
termination of Executive’s employment if either (a) the dispute arises
within the 24 month period following a Change in Control or connection with
a termination in Contemplation of a Change in Control or (b) the Executive
is the prevailing party as determined by the arbitrator.

          SECTION 6.03. Arbitration. Except as provided in Section 6.16, any
dispute or controversy arising under or in connection with this Agreement
shall be settled by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by Executive within 50 miles from
the location of Executive’s principal place of employment with the Company,
in accordance with the rules of the American Arbitration Association then in
effect. The decision of the arbitrators in that proceeding, shall be
binding on the Company and Executive. Judgment may be entered on the award
of the arbitrator in any court having jurisdiction. Except as provided in
Section 6.02, each party shall pay its own expenses of such arbitration and
all common expenses of such arbitration shall be borne equally by Executive
and the Company.

          SECTION 6.04. Unfunded Agreement. The obligations of the Company
under this Agreement represent an unsecured, unfunded promise to pay
benefits to Executive and/or Executive’s beneficiaries, and shall not
entitle Executive or such beneficiaries to a preferential claim to any asset
of the Company.

          SECTION 6.05. Non-Exclusivity of Benefits. Unless specifically
provided herein, neither the provisions of this Agreement nor the benefits
provided hereunder shall reduce any amounts otherwise payable, or in any way
diminish Executive’s rights as an employee of the Company, whether existing
now or hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify; provided, however, that the Separation Benefits
and the Severance Benefits shall be in lieu of any severance benefits under
any such plans, programs, policies or practices. Vested benefits or other
amounts which Executive is otherwise entitled to receive under any plan,
policy, practice, or program of the Company (i.e., including, but not
limited to, vested benefits under any qualified or nonqualified retirement
plan), at or subsequent to the date of termination of Executive’s employment
shall be payable in accordance with such plan, policy, practice, or program
except as expressly modified by this Agreement.

          SECTION 6.06. Employment Status. Nothing herein contained shall
interfere with the Company’s right to terminate Executive’s employment with
the Company at any time, with or without Cause, subject to the Company’s
obligation to provide Severance Benefits or Separation Benefits, if any.
Executive shall also have the right to terminate his

12

 

employment with the
Company at any time without liability, subject only to his obligations
hereunder.

          SECTION 6.07. Mitigation. (a) In no event shall Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to Executive under any of the provisions
of this Agreement nor, except as provided below, shall the amount of any
payment or benefit hereunder be reduced by any compensation earned by
Executive as a result of employment by another employer, including, but not
limited to, Executive’s eligibility for any retiree health benefits.

          (b) In the event that, during a Continuation Period or Payment Period,
as the case may be, Executive becomes eligible for health or other welfare
benefits from a new employer which are comparable to and of substantially
equivalent value to Executive’s benefits under the Company’s Medical Plans
or other welfare plans, Executive’s benefits hereunder (other than retiree
health benefits) shall be appropriately reduced or terminated, in the
Company’s sole discretion, to the extent of such comparable benefits
available to Executive.

          SECTION 6.08. Entire Agreement. This Agreement represents the entire
agreement between Executive and the Company and its affiliates with respect
to Executive’s employment and/or severance rights, and, as of the Effective
Date, supersedes all prior discussions, negotiations, and agreements
concerning such rights, including but not limited to that certain employment
agreement dated March 14, 2001 between the parties; provided, however, that
any amounts payable to Executive hereunder shall be reduced by any amounts
paid to Executive as required by any applicable local law in connection with
any termination of Executive’s employment.

          SECTION 6.09. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as are
legally required to be withheld.

          SECTION 6.10. Waiver of Rights. The waiver by either party of a
breach of any provision of this Agreement shall not operate or be construed
as a continuing waiver or as a consent to or waiver of any subsequent breach
hereof.

          SECTION 6.11. Severability. In the event any provision of the
Agreement shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Agreement, and the
Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included.

          SECTION 6.12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut without
reference to principles of conflict of laws.

          SECTION 6.13. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were on the same instrument.

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          SECTION 6.14. Indemnification. The Company shall indemnify Executive
(and Executive’s legal representatives or other successors) to the fullest
extent permitted by the Certificate of Incorporation and By-Laws of the
Company, as in effect at such time or on the Effective Date, and Executive
shall be entitled to the protection of any insurance policies the Company
may elect to maintain generally for the benefit of its directors and
officers (and to the extent the Company maintains such an insurance policy
or policies, Executive shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company officer or director), against all costs, charges
and expenses whatsoever incurred or sustained by Executive or Executive’s
legal representatives at the time such costs, charges and expenses are
incurred or sustained, in connection with any action, suit or proceeding to
which Executive (or Executive’s legal representatives or other successors)
may be made a party by reason of Executive’s being or having been a
director, officer or employee of the Company, or any Subsidiary or
Executive’s serving or having served any other enterprise as a director,
officer, employee or fiduciary at the request of the Company.

          SECTION 6.15. Nondisclosure, Nonsolicitation, Noncompete, Cooperation
and Nondisparagement.

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

               (ii) Executive agrees that upon termination of his employment with the
Company for any reason, he will return to the Company immediately all
memoranda, books, papers, plans, information, letters and other data, and
all copies thereof or therefrom, in any way relating to the business of the
Company and its Affiliates. Executive further agrees that he will not
retain or use for his account at any time any trade names, trademark or
other proprietary business designation used or owned in connection with the
business of the Company or its Affiliates.

          (b) (i) While employed by the Company and for two years thereafter, the
Executive shall not, directly or indirectly, induce or attempt to induce any
employee of the Company, any Subsidiary or any Affiliate to be employed or
perform services elsewhere;

               (ii) While employed by the Company and for two years thereafter, the
Executive shall not, directly or indirectly, induce or attempt to induce any
agent or agency,

14

 

broker, supplier or health care provider of the Company,
any Subsidiary or Affiliate to cease or curtail providing services to the
Company, any Subsidiary or Affiliate;

               (iii) While employed by the Company and for two years after thereafter,
unless the termination of Executive’s employment occurs during the 24 month
period following a Change in Control or in Contemplation of a Change in
Control, the Executive shall not, directly or indirectly, on behalf of a
Competitor (as defined below) solicit or attempt to solicit the trade of any
individual or entity which, at the time of such solicitation, is a customer
of the Company, any Subsidiary or Affiliate, or which the Company, any
Subsidiary or Affiliate is undertaking reasonable steps to procure as a
customer at the time of or immediately preceding termination of employment;
provided, however, that this limitation shall only apply to any product or
service which is in competition with a product or service of the Company,
any Subsidiary or Affiliate;

          (c) While employed by the Company and for one year thereafter (to the
extent such restriction is not prohibited by law), unless the termination of
Executive’s employment occurs during the 24 month period following a Change
in Control or in Contemplation of a Change in Control, the Executive shall
not, directly or indirectly, (x) engage in the ownership of (except less
than 1% of the outstanding capital stock of any publicly traded company),
(y) become an employee of or (z) act as a consultant, director or contractor
to, any Competitor (as defined below). In the event of (xx) an involuntary
termination of Executive’s employment by the Company other than for Cause,
(yy) a termination by the Executive for Good Reason or (zz) in any event,
any termination of any kind whatsoever on or after January 1, 2006, the
limitation in this Section 6.15(c)(i) shall be modified so that Competitor
shall only mean the four companies on a list provided by the Company to the
Executive (the “Specified Entities”). The initial list of Specified
Entities shall be provided simultaneous with execution of this Agreement.
The Specified Entities may be changed by the Company from time to time (but
shall never be more than four) by delivering a new list, provided that any
change in the list delivered to Executive within 90 days prior to or at any
time after termination of his employment with the Company shall be null and
void.

          (d) For purposes of this Section 6.15 a “Competitor” is any company or
organization that develops, administers, operates, offers or solicits offers
regarding managed care, health, life, long-term care or disability
coverages, networks, insurance or plans to employers, employees or
individuals; and does not include any hospital, private medical practice or
academic institution that does not own a controlling or material interest in
and does not operate (directly or indirectly), and is not otherwise an
affiliate of, a health insurance company, a managed care company or a health
benefit plan (including an HMO, POS or PPO plan).

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

15

 

Subsidiary or Affiliate to coordinate
any such request with the Executive’s other commitments and responsibilities
to minimize the degree to which such request interferes with such
commitments and responsibilities.

          (f) Neither party will at any time (whether during or after termination
of Executive’s employment with the Company) knowingly make any statement,
written or oral, relating to the other party that would disparage or
otherwise harm such party, its business or his reputation or, in the case of
the Company, the reputation of any of its officers and directors.
Notwithstanding the foregoing, the foregoing shall not apply to normal
competitive type statements as to products or services not made based on
Executive’s employment with or special knowledge of the Company.

SECTION 6.16. Material Inducement; Specific Performance.

          (a) If any provision of Section 6.15 is determined by a court of
competent jurisdiction not to be enforceable in the manner set forth in this
Agreement, the Company and Executive agree that it is the intention of the
parties that such provision should be enforceable to the maximum extent
possible under applicable law and that such court shall reform such
provision to make it enforceable in accordance with the intent of the
parties.

          (b) Executive acknowledges that a material part of the inducement for
the Company to provide the salary and benefits evidenced hereby is
Executive’s covenants set forth in Section 6.15 and that the covenants and
obligations of Executive with respect to nondisclosure and nonsolicitation
relate to special, unique and extraordinary matters and that a violation of
any of the terms of such covenants and obligations will cause the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, Executive agrees that, if Executive shall materially breach any
of those covenants following termination of employment, the Company shall be
entitled to an injunction, restraining order or such other equitable relief
(without the requirement to post a bond) restraining Executive from
committing any violation of the covenants and obligations contained in
Section 6.15. In addition, in the event of a willful, material violation of
Section 6.15(a), (b) or (c), other than any such breach which occurs during
the 24 month period following a Change in Control or following the
termination of Executive’s employment during such period or in Contemplation
of a Change in Control, the Company shall have no further obligation (i) to
pay Executive benefits otherwise due and payable after the violation
pursuant to Section 3.04(b)(i) or (ii); (ii) to honor the exercise of any
options not yet exercised; (iii) to pay the portion of the pension benefits
attributable to the enhanced pension benefit service credit granted under
Section 2.03(c) and recognized under Section 3.04(b)(iv) for the period
beginning one year prior to the breach; or (iv) to provide the extra service
credit for purposes of retiree medical provided granted under Section
3.04(b)(iii) for retiree medical benefits provided after the breach. For
these purposes, amounts calculated with reference to Section 3.04(b) also
shall include amounts payable pursuant to Section 3.05. The remedies in
this paragraph are cumulative and are in addition to any other rights
and remedies the Company may have at law or in equity (including but not
limited to the award of damages) as an arbitrator (or court) shall
reasonably determine.

          (c) The non-solicitation and non-competition provisions set forth in
Sections 6.15(b) and (c) shall supercede all similar agreements between the
parties, including any limitation in any equity plan or grant. Accordingly,
no such similar limitation in any other

16

 

agreement, including any limitation
in any equity plan or grant, shall be deemed violated if the provisions of
Section 6.15(b) or (c) hereof are not violated.

ARTICLE 7

DEFINITIONS

          SECTION 7. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below.

          “Accounting Firm” has the meaning accorded such term in Section 4.01.

          “Accrued Benefits” has the meaning accorded such term in Section 3.03.

          “Accrued Compensation” has the meaning accorded such term in Section
3.03.

          “Affiliate”
and “Associate” have the respective meanings accorded to
such terms in Rule 12b-2 under the Exchange Act as in effect on the
Effective Date.

          “Agreement” has the meaning accorded such term in the introductory
paragraph of this Agreement.

          “Appraiser” has the meaning accorded such form in Section 4.01.

          “Awards” has the meaning accorded such term in Section 3.02.

          “Base Salary” has the meaning accorded such term in Section 2.01.

          “Basic Bonus Amount” has the meaning accorded such term in Section
3.03.

          “Basic Options” has the meaning accorded such term in Section 2.03.

          “Beneficial Ownership.” A Person shall be deemed the “Beneficial Owner”
of, and shall be deemed to “beneficially own,” securities pursuant to Rule
13d-3 under the Exchange Act as in effect on the Effective Date.

          “Board” means, the Board of Directors of Aetna Inc. (a Pennsylvania
corporation).

          “Cause” means the occurrence of any one or more of the following:

          (a) Executive’s willful and continued failure to attempt in good faith
to perform the duties of his position (other than as a result of incapacity
due to physical or mental
illness or injury) which failure is not remedied within fifteen business
days of written notice from the Company;

          (b) Executive’s material gross negligence or willful malfeasance in the
performance of Executive’s duties hereunder;

17

 

          (c) With respect to the Company, Executive’s commission of an act
constituting fraud, embezzlement, or any other act constituting a felony; or

          (d) Executive’s commission of any act constituting a felony (other than
a speeding violation or by virtue of vicarious liability) which has or is
likely to have a material adverse economic or reputational impact on the
Company.

          For purposes of this definition, no act or failure to act shall be
deemed “willful” unless effected by Executive without reasonable belief that
such action or failure to act was lawful and in the best interests of the
Company.

          “Change in Control” means, and shall be deemed to have occurred upon
any occurrence of any of the following events:

          (a) When any “person” as defined in Section 3(a)(9) of the Exchange Act
and as used in Section 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;

          (b) 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
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 (b); or

          (c) 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 Executive, if Executive is part of a
“group,” within the meaning of Section 13(d)(3) of the Exchange Act as in
effect on the Effective Date, which consummates the Change in Control
transaction. In addition, for purposes of the definition of “Change in
Control” a Person
engaged in business as an underwriter of securities shall not be deemed to
be the “Beneficial Owner” of, or to “beneficially own,” any securities
acquired through such Person’s participation in good faith in a firm
commitment underwriting until the expiration of forty days after the date of
such acquisition.

          “Code” means the Internal Revenue Code of 1986, as amended.

18

 

          “Committee” has the meaning accorded such term in Section 2.01.

          “Company” means, Aetna Inc. (a Pennsylvania corporation) which is the
renamed successor to Aetna U.S. Healthcare Inc.

          “Competitor” has the meaning accorded such term in Section 6.15(d).

          “Contemplation of a Change in Control” has the meaning accorded such
term in Section 3.03.

          “Continuation Period” has the meaning accorded to such term in Section
3.03.

          “Disability” means Long-Term Disability, as such term is defined in the
Disability Plan.

          “Disability Plan” means the long-term disability plan (or any successor
disability and/or survivorship plan adopted by the Company) in which
Executive participates, as in effect immediately prior to the relevant event
(subject to changes in coverage levels applicable to all employees generally
covered by such Plan).

          “Effective Date” has the meaning accorded such term in Section 1.01.

          “Employment Term” has the meaning accorded such term in Section 1.02.

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

          “Excise Tax” has the meaning accorded such term in Section 4.01.

          “Executive” has the meaning accorded such term in the introductory
paragraph of this Agreement.

          “Final Determination” has the meaning accorded such term in Section
4.03.

          “Good Reason” means, without Executive’s express written consent, the
occurrence of any one or more of the following:

          (a) Succession of the current chief executive officer of the Company by
anyone other than the Executive;

          (b) Removal of Executive as director of the Company other than in
connection with the termination of Executive’s employment for Cause;
provided, however, that if the
failure to be elected a director of the Company by its shareholders solely
related to regulatory requirements limiting the number of Company executives
serving on the Company’s Board of Directors to one, then such failure to be
elected shall not constitute “Good Reason”);

19

 

          (c) A reduction by the Company of Executive’s Base Salary or total
annual target cash compensation from the level in effect immediately prior
thereto, except in the event of a ratable reduction affecting all senior
officers of the Company; or

          (d) Any failure of a successor of the Company to assume and agree to
perform the Company’s entire obligations under this Agreement, as required
by Section 5.01 herein, provided that such successor has received at least
ten (10) days written notice from the Company or the Executive of the
requirements of Section 5.01.

          “Gross-Up Payment” has the meaning accorded such term in Section 4.02.

          “Health Care Business” has the meaning accorded such term in the second
whereas clause.

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

          “Initial Determination” has the meaning accorded such term in Section
4.01.

          “Medical Plans” means the medical care plans (or any successor medical
plans adopted by the Company) in which Executive participates, as in effect
immediately prior to the relevant event (subject to changes in coverage
levels applicable to all employees generally covered by such Plans).

          “Payment Cap” has the meaning accorded such term in Section 4.01.

          “Payment Period” has the meaning accorded such term in Section 3.04.

          “Payments” has the meaning accorded such term in Section 4.01.

          “Pension Benefits” has the meaning accorded such term in Section 2.05.

          “Person” means an individual, corporation, partnership, association,
trust or any other entity or organization.

          “Premium Options” has the meaning accorded such term in Section 2.03.

          “Pro-Rata Bonus Amount” has the meaning accorded such term in Section
3.03.

20

 

          “Provisions” has the meaning accorded such term in Section 2.03

          “Public Company” means the Company, having become an independent
publicly traded corporation with a class of equity securities registered
under Section 12 of the Exchange Act.

          “Qualifying Event” has the meaning accorded such term in Section 3.01.

          “Redetermined Excise Tax” has the meaning accorded such term in Section
4.03.

          “Redetermined Payments” has the meaning accorded such term in Section
4.03.

          “Redetermined Payment Cap” has the meaning accorded such term in
Section 4.03.

          “Separation Benefits” has the meaning accorded such term in Section
3.04.

          “Severance Benefits” has the meaning accorded such term in Section
3.03.

          “Sign-On Awards” means initial sign-on option grants of 600,000 shares
of the Company’s common stock and 40,000 restricted stock units.

          “Specified Entities” has the meaning accorded such term in Section
6.15.

          “Subsidiary” of any Person means any other Person of which securities
or other ownership interests having voting power to elect a majority of the
board of directors or other Persons performing similar functions are at the
time directly or indirectly owned by such Person.

          “Supplemental Gross-up Payment” has the meaning accorded such term in
Section 4.04.

          “Termination Date” has the meaning accorded such term in Section 3.02.

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

	 	 	 	 	 
	EXECUTIVE	 	 	 	AETNA INC.
	 	 	 	 	 
	    /s/ Ronald A. Williams	 	
By:
	 	    /s/ John W. Rowe
	
	 	 	 	

	Ronald A. Williams	 	
 
	 	Name: John W. Rowe, M.D.

Attachment A: Form of Release

21

 

Attachment A

RELEASE AGREEMENT

     In consideration of the severance and other benefits payable to me
pursuant to that certain Employment Agreement dated as of December 5, 2003 by
and between Aetna Inc. (the Company) and me and other valuable consideration,
the undersigned, Ronald A. Williams, hereby agrees to the following:

     1.     DEFINITION. In this agreement the word “Company” means collectively
Aetna Inc., a Pennsylvania corporation, and any subsidiaries or affiliates
(including any company by which I was or am employed), the employees, agents,
officers, directors and shareholders of all such entities and any person or
entity which may succeed to the rights and liabilities of such entities by
assignment, acquisition, merger or otherwise.

     2.     RELEASE. I hereby release and hold harmless (on behalf of myself and
my family, heirs, executors, successors and assigns) now and forever, the
Company from and waive any claim, known or unknown, that I have presently, may
have or have had in the past, against the Company arising out of, directly or
indirectly, my employment with the Company, the cessation of such employment or
any act, omission, occurrence or other matter related to such employment or
cessation of employment, other than claims I may have to the payment of amounts
due and payable in accordance with the terms of the Employment Agreement.
Notwithstanding the foregoing, there shall not be a release of any rights of
indemnification I may have, any rights to directors and officers liability
insurance coverage, any rights to vested benefits or any rights with regard to
vested equity.

1

 

     3.     EXTENT OF RELEASE. This agreement is valid whether any claim arises
under any federal, state or local statute (including, without limitation, Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, the Equal Pay Act, the Americans with
Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974
and all other statutes regulating the terms and conditions of my employment),
regulation or ordinance, under the common law or in equity (including any
claims for wrongful discharge or otherwise), or under any policy, agreement,
understanding or promise, written or oral, formal or informal, between the
Company and myself.

     4.     CONSIDERATION. The consideration hereby provided to me under the
Employment Agreement is not required under the Company’s standard policies and
I know of no circumstances other than my agreeing to the terms of this
agreement which would require the Company to provide such consideration.

     5.     RESTRICTIONS. I have not filed, nor will I initiate or cause to be
initiated on my behalf, any complaint, charge, claim or proceeding against the
Company before any local, state or federal agency, court or other body relating
to my employment or the termination thereof (each individually a “Proceeding”),
nor will I participate in any Proceeding. I waive any right I may have to
benefit in any manner from any relief (whether monetary or otherwise) arising
out of any Proceeding, including any EEOC proceeding. I understand that by
entering into this agreement, I will be limiting the availability of certain
remedies that I may have against the Company and limiting also my ability to
pursue certain claims against the Company. The

2

 

foregoing will not be used to justify interfering with any right I may have to
file a charge or participate in an investigation or proceeding conducted by the
EEOC.

     6.     PENALTIES. If I initiate or participate in any legal actions, as
described above (other than a class action in which I opt out of when first
given the opportunity), the Company shall have the right, but shall not be
obligated, to deem this agreement void without effect and to require me to
repay to the Company any amounts payment of which was conditioned on the
execution of this agreement, and to terminate any benefit or payments (other
than with respect to vested benefits) that are otherwise payable under the
Employment Agreement.

     7.     RIGHT TO COUNSEL. The Company advises me that I should consult with an
attorney prior to execution of this agreement. I understand that it is in my
best interest to have this document reviewed by an attorney of my own choosing
and at my own expense, and I hereby acknowledge that I have been afforded a
period of at least twenty-one days during which to consider this agreement and
to have this agreement reviewed by my attorney.

     8.     SEVERABILITY CLAUSE. Should any provision or part of this agreement be
found to be invalid or unenforceable, only that particular provision or part so
found and not the entire agreement shall be inoperative.

     9.     EVIDENCE. This document may be used as evidence in any proceeding
relating to my employment or the termination thereof. I waive all objections
as to its form.

3

 

     10.     FREE WILL. I am entering into this agreement of my own free will.
The Company has not exerted any undue pressure or influence on me in this
regard. I have had reasonable time to determine whether entering into this
agreement is in my best interest. I understand that if I request additional
time to review the provisions of this agreement, a reasonable extension of time
will be granted.

     11.     REVOCATION. This agreement may be revoked by me within seven days
after the date on which I sign this agreement and I understand that this
agreement is not binding or enforceable until such seven day period has
expired. Any such revocation must be made in a signed letter executed by me
and received by the Company at 151 Farmington Avenue, Hartford, Connecticut,
Attention: General Counsel, no later than 5 p.m. Eastern Standard Time on the
seventh day after I have executed this agreement. I further understand that
the payments described above will not be paid to me if I revoke this agreement.

     12.     NON-ADMISSION. Nothing contained in this agreement shall be deemed or
construed as an admission of wrongdoing or liability on the part of the
Company.

     13.     GOVERNING LAW. This agreement and the Agreement shall be construed in
accordance with the laws of the State of Connecticut, applicable to contracts
made and entirely to be performed therein.

	 	 	 
	
	 	

	Ronald A. Williams	 	
Date

4LETTER

 

Exhibit 10.25

151 Farmington Avenue

Hartford, CT 06156

John W. Rowe, M.D.

Chairman & CEO

860-273-4455

Fax: 860-273-6872

December 5, 2003

Ronald A. Williams

Re: Specified Entities

Dear Ron:

In connection with the execution of
your Amended and Restated Employment Agreement of even date (the
“Agreement”), the names of the four Specified Entities, as
defined in the Agreement, currently are as follows:

	 	1.	 	Anthem Inc.
	 	2.	 	CIGNA Corporation
	 	3.	 	UnitedHealth Group Incorporated
	 	4.	 	Wellpoint Health Networks Inc.

Sincerely,

Aetna Inc.

	By:	 	/s/ John W. Rowe

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