Document:

EMPLOYMENT AGREEMENT DATED AS OF MARCH 14, 2001

 

EXHIBIT 10.31

EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT (“AGREEMENT”) dated as of March 14, 2001 by and
between Aetna Inc., a Pennsylvania corporation, (“THE COMPANY”) and Ronald
Williams (“EXECUTIVE”) (certain capitalized terms used herein being defined in
Article 7).

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

         WHEREAS, the Company and Executive desire to enter into this Agreement
embodying the 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 April 2, 2001 (or such earlier date if
employment begins sooner) (the “EFFECTIVE DATE”), Executive shall commence his
duties as the Company’s Executive Vice President and Chief of Health Operations.

         (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)  Starting on the Effective Date, 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, 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.

         SECTION 1.02. Term. Executive shall 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, 2003 (the “EMPLOYMENT
TERM”). On December 31, 2003, the Employment Term shall automatically be
extended for one additional year 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.

 

 

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 $800,000, 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)  (i) 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 100% of
Base Salary, and a maximum bonus opportunity of 200% of Base Salary. Except as
provided in Section 2.02(a)(ii) or as may be payable pursuant to Article 3,
Executive is not guaranteed the payment of any annual bonus.

                  (ii) Notwithstanding the foregoing, Executive shall be
entitled to a minimum annual bonus for 2001 of $600,000 subject to Executive
being actively employed by the Company on the last day of such year.

         (b)  Executive shall be eligible to participate in the Company’s
long-term incentive program (currently anticipated to be established within
twelve months) with a target long-term award opportunity of $1,000,000 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.

         (c)  The Company shall pay to Executive a retention bonus of $750,000
(the “RETENTION AMOUNT”) 33 1/3% of which will be payable on or before the
Effective Date (which amount is not for services but is a sign-on payment and
not subject to forfeiture), 33 1/3% of which will be payable six months from the
Effective Date and the remainder payable one year from the Effective Date.

         SECTION 2.03. Initial Option and Restricted Stock Unit Grants. (a) (i)
The Company shall cause the grant on the Effective Date to Executive of (x)
options to purchase 400,000 shares of the Company’s common stock with a per
share exercise price equal to 100% of the fair market value of such shares on
the Effective Date (the “BASIC OPTIONS”), (y) options to purchase 100,000 shares
of the Company’s common stock with a per share exercise price of 115% of the
fair market value of such shares on the Effective Date and (z) options to
purchase 100,000 shares of the Company’s common stock with a per share

2

 

exercise price of 130% of the fair market value of such shares on the Effective
Date (the “PREMIUM OPTIONS”), which options shall, in each case, have a ten (10)
year term, post-termination exercise provisions that, except as otherwise
provided herein, are comparable to such provisions in the form of the Company’s
option agreement previously provided to Executive, and become exercisable in 3
equal annual installments commencing on the first anniversary of the Effective
Date subject to the Executive’s continued employment hereunder (collectively,
“PROVISIONS”).

         (b)  Company shall cause the grant to Executive of 40,000 restricted
stock units on the Effective Date in the form of the Company’s restricted stock
unit award agreement previously provided to Executive, which units shall vest,
subject to Executive’s continued employment with the Company, in three equal
annual installments commencing on the first anniversary of the Effective Date.
Such grant shall include dividend equivalent rights and shall be subject to
mandatory deferral until one year following termination of employment.

         SECTION 2.04. Next Option Grant. The Company shall cause the grant to
Executive of options to purchase 200,000 shares of the Company’s common stock on
such terms and at such time as the 2001 regular grant of options is made to
other senior executives under the executive option program.

         SECTION 2.05. Employee Benefits. (a) On the Effective Date, 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)  On the Effective Date, Executive shall be eligible, upon
termination of employment other than by the Company for Cause or by the
Executive without Good Reason, 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.

         (c)  For each calendar year beginning 2006 through and including 2011,
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 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 the Effective Date. The Pension Benefit shall be
payable in the form and at the times provided, from time to time, in the
Retirement Plan.

3

 

         SECTION 2.06. 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.

         (c)  The Company shall provide Executive with the Company’s regular
relocation benefits for senior executives, including but not limited to packing,
unpacking, travel expenses for Executive and his family, and temporary living
expenses.

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 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, the stock options and restricted stock
unit awards referred to in Section 2.03 above (collectively, “AWARDS”) shall
become immediately vested, nonforfeitable and exercisable as of the date of the
Change in Control and 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 (such earlier
date, the “TERMINATION DATE”).

                  (ii) In the event that a Qualifying Event occurs during the
Employment Term, (A) all 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
made to Executive during the Employment Term, Executive shall

4

 

be credited for vesting purposes with deemed service during the Continuation
Period (as hereinafter defined) (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, and such awards shall remain
exercisable for such period as shall be specified in the relevant plan and/or
award document.

                  (iii) 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 a Change in
Control. Except to the extent provided in Article 4, Section 6.07 and Section
6.08, Executive shall be entitled to the following benefits (the “SEVERANCE
BENEFITS”) upon a Qualifying Event within 24 months following a Change in
Control:

         (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 2-1/2 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 for each full year in the Continuation Period under the Company’s
Medical Plans under the terms thereof and hereof;

                  (ii) Payment of the Retention Amount, if not previously paid
to Executive; and

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

5

 

         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.

         (b)  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 Base Salary as in effect at the time of
such termination and (ii) the Basic Bonus Amount, on the condition that
Executive has delivered to the Company a release (in a form reasonably
acceptable to Executive) of any employment-related claims;

                  (ii) The Pro-Rata Bonus Amount;

                  (iii) Continued participation in and service credit of one
year of service 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; and

                  (v) The Retention Amount, if not previously paid to Executive.

         (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.

6

 

ARTICLE 4

CERTAIN TAX REIMBURSEMENT PAYMENTS

         SECTION 4.01. Initial Determinations by Accounting Firm. In the event
that a Change in Control occurs 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 Control, 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
Control 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. 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 Control (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.

7

 

         (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.

         (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 Control, 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 deemed for all purposes to be a

8

 

loan to Executive made on the date of receipt of such excess Payments, which
Executive shall have an obligation to repay to the Company on demand, together
with interest on such amount at the applicable Federal rate (as defined in
Section 1274(d) of the Code) from the date of Executive’s receipt of such excess
Payments to the date of repayment by Executive. 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, and interest payable to the Company shall not exceed interest
received or credited to Executive by such tax authority for the period it held
such portion. In addition, if, pursuant to a Final Determination, any such
excess Payments are not deemed a loan and as a result Executive is 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 deemed for all purposes to be a loan to
Executive made on the date of receipt of such excess Gross-Up Payment, which
Executive shall have an obligation to repay to the Company on demand, together
with interest on such amount at the applicable Federal rate (as defined in
Section 1274(d) of the Code) from the date of Executive’s receipt of such excess
Gross-Up Payment to the date of repayment by Executive. 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, and interest payable to the Company shall
not exceed interest received or credited to Executive by such tax authority for
the period it held such portion. 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.

         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

9

 

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,

                  (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, on an interest-free basis, 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

10

 

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 such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of the
Supplemental Gross-Up Payment required to be paid hereunder. The forgiveness of
such advance shall be considered part of the Supplemental Gross-Up Payment and
subject to gross-up for any taxes (including interest or penalties) associated
therewith.

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.

         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

11

 

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 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, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of any conflict between the parties
pertaining to this Agreement which arises within the 24 month period following a
Change in Control or in connection with the termination of Executive’s
employment during such period.

         SECTION 6.03. Arbitration. Except as provided in Section 6.16,
Executive shall have the right and option to elect (in lieu of litigation) to
have any dispute or controversy arising under or in connection with this
Agreement 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. Executive’s
election to arbitrate, as herein provided, and 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

12

 

Benefits or Separation Benefits, if any. Executive shall also have the right to
terminate his 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.

         (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 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 supersedes all prior
discussions, negotiations, and agreements concerning such rights; 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.

         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

13

 

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, 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, 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

14

 

following a Change in Control, the Executive shall not, directly or indirectly,
solicit or attempt to solicit the trade of any individual or entity which, at
the time of such solicitation, is a customer of the Company, any Subsidiary or
Affiliate, or which the Company, any Subsidiary or Affiliate is undertaking
reasonable steps to procure as a customer at the time of or immediately
preceding termination of employment; provided, however, that this limitation
shall only apply to any product or service which is in competition with a
product or service of the Company, any Subsidiary or Affiliate;

         (c)  (i) 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, 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
or contractor to, any Competitor (as defined below);

                  (ii) 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 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.

         For purposes of Section 6.15(c)(i), 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).

         (d)  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, or take any other action 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.

         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

15

 

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 and the Company shall have
no further obligation to pay Executive any benefits otherwise payable hereunder,
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. The remedies in the preceding sentence are cumulative and are in
addition to any other rights and remedies the Company may have at law or in
equity as an arbitrator (or court) shall reasonably determine.

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.

16

 

         “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 substantially to perform
the duties of his position (other than as a result of incapacity due to physical
or mental illness) which failure is not remedied within fifteen business days of
written notice from the Company;

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

         (c)  Executive’s commission of an act constituting fraud, embezzlement,
or any other act constituting a felony.

         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.

17

 

         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.

         “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.

         “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)  Executive’s failure to be appointed President and assigned duties
consistent with that position within 15 months of the Effective Date (or someone
else is appointed to that position prior to such date);

18

 

         (b)  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

         (c)  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.

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

19

 

         “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.

         “Retention Amount” has the meaning accorded such term in Section 2.02.

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

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

         “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 Williams	 	
By:
	 	/s/ John W. Rowe
	
	 	 	 	

	Ronald Williams	 	
Name:

Title:
	 	John W. Rowe, M.D.

President and CEO

20<PAGE>

                                                                     Exhibit 4.1

                         THIRD AMENDMENT TO AMENDED AND
                         ------------------------------
                     RESTATED MULTICURRENCY CREDIT AGREEMENT
                     ---------------------------------------

     THIS THIRD AMENDMENT TO AMENDED AND RESTATED MULTICURRENCY CREDIT
AGREEMENT, dated as of January 15, 2002 (this "Amendment"), amends the Amended
                                               ---------
and Restated Multicurrency Credit Agreement, dated as of May 15, 2001 (as
heretofore amended, the "Credit Agreement"), among APW Ltd., a Bermuda
                         ----------------
corporation (the "Borrower"), the various financial institutions parties thereto
                  --------
(collectively, the "Banks"), Bank One, NA, as syndication agent, The Chase
                    -----
Manhattan Bank, as documentation agent and Bank of America, N.A., as
administrative agent. Terms defined in the Credit Agreement are, unless
otherwise defined herein or the context otherwise requires, used herein as
defined therein.

     WHEREAS, the parties hereto have entered into the Credit Agreement, which
provides for the Banks to extend certain credit facilities to the Borrower from
time to time; and

     WHEREAS, the parties hereto desire to amend the Credit Agreement in certain
respects as hereinafter set forth;

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:

     SECTION 1. CONSENT. The Banks hereby agree that notwithstanding the
provisions of Section 2.12(b) of the Credit Agreement, the interest payments set
forth in the attached Schedule 1 due prior to February 15, 2002 (the "Deferral
Date"), shall not be payable until the earliest date of: (i) the Deferral Date,
(ii) the date three business days following the receipt by the Borrower of the
proceeds of the sale of the Specified Business Unit or (iii) the first date
after the date of this Amendment on which the lenders under the UK Facility
receive any payment in respect of interest or commissions under the UK Facility.
This consent shall be limited to its terms and shall not constitute a waiver of
any other rights the Banks may have from time to time, including the right, upon
the occurrence of an Event of Default other than the failure to pay such
interest prior to the Deferral Date, to accelerate the maturity of the Loans and
all payments , including said interest payments, with respect thereto.

     SECTION 2. AGREEMENT. The Borrower hereby agrees:

     2.1 The Borrower will meet with members of a working group representing the
Banks and will cause its advisor CS First Boston to meet with such working group
as soon as practicable.

     2.2 The Borrower will not sell the Specified Business Unit, without the
consent of the Required Banks, unless the Net Proceeds of such sale received by
the Borrower shall be equal to at least $24,000,000.

<PAGE>

     SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become effective when
each of the conditions precedent set forth in this Section 3 shall have been
                                                   ---------
satisfied, and notice thereof shall have been given by the Agent to the Borrower
and the Lenders.

     3.1  Receipt of Documents. The Administrative Agent shall have received all
          --------------------
of the following documents duly executed, dated the date hereof or such other
date as shall be acceptable to the Administrative Agent, and in form and
substance satisfactory the Administrative Agent:

          (a)  Amendment. This Amendment, duly executed by the Borrower, the
               ---------
Administrative Agent and the Lenders.

          (b)  Consents. Consents of all Guarantors hereto.
               --------

          (c)  UK Facility. Amendments to the UK Facility providing that
               -----------
interest on the UK Facility shall not be payable prior to the Deferral Date.

          (d)  Fees. The Borrower shall have paid all accrued and unpaid fees,
               ----
costs and expenses to the extent then due and payable, together with Attorney
Costs of Bank of America to the extent invoiced, and fees and expenses of the
Administrative Agent's Consultant including such additional amounts as shall be
necessary to ensure any such costs, fees and expenses arising under or
referenced in Sections 2.13 and 10.5 of the Credit Agreement plus $150,000 to
              -------------     ----
the Administrative Agent's Consultant and $150,000 to Mayer, Brown & Platt on
retainer for further fees and expenses.

     SECTION 4. REPRESENTATIONS AND WARRANTIES. To induce the Banks and the
Administrative Agent to enter into this Amendment, the Borrower hereby
reaffirms, as of the date hereof, its representations and warranties contained
in the Credit Agreement and the other Loan Documents, and the Borrower
additionally represents and warrants to the Administrative Agent and each Bank
as follows:

     4.1  Due Authorization, Non-Contravention, etc. The execution, delivery and
          -----------------------------------------
performance by the Borrower of this Amendment are within the Borrower's
corporate powers, have been duly authorized by all necessary corporation action,
and do not

          (a)  contravene the Borrower's Organic Documents;

          (b)  contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting the Borrower; or

          (c)  result in, or require the creation or imposition of, any Lien on
any of the Borrower's properties.

     4.2  Governmental Approval, Regulation, etc. No authorization or approval
          --------------------------------------
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or other Person is required for the due execution, delivery
or performance by the Borrower of this Amendment.

                                      -2-

<PAGE>

     4.3 Validity, etc. This Amendment constitutes the legal, valid and binding
         -------------
obligation of the Borrower enforceable in accordance with its terms, except to
the extent enforceability thereof is limited by bankruptcy, insolvency or other
laws relating to, or affecting enforcement of, creditors' rights in general, and
general principles of equity.

     SECTION 5. MISCELLANEOUS.

     5.1 Continuing Effectiveness, etc. This Amendment shall be deemed to be an
         -----------------------------
amendment to the Credit Agreement, and the Credit Agreement, as amended hereby,
shall remain in full force and effect and is hereby ratified, approved and
confirmed in each and every respect. After the effectiveness of this Amendment
in accordance with its terms, all references to the Credit Agreement in the Loan
Documents or in any other document, instrument, agreement or writing shall be
deemed to refer to the Credit Agreement as amended hereby.

     5.2 Payment of Costs and Expenses. The Borrower agrees to pay on demand all
         -----------------------------
expenses of the Administrative Agent (including the fees and out-of-pocket
expenses of counsel to the Administrative Agent) in connection with the
negotiation, preparation, execution and delivery of this Amendment.

     5.3 Severability. Any provision of this Amendment which is prohibited or
         ------------
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provision in any other
jurisdiction.

     5.4 Headings. The various headings of this Amendment are inserted for
         --------
convenience only and shall not affect the meaning or interpretation of this
Amendment or any provisions hereof.

     5.5 Execution in Counterparts. This Amendment may be executed by the
         -------------------------
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.

     5.6 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE
         -------------
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.

     5.7 Successors and Assigns. This Amendment shall be binding upon and shall
         ----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns.

                                      -3-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                        APW LTD.

                                        By:/s/Richard D. Carroll
                                           -------------------------------------
                                        Name:  Richard D. Carroll
                                        Title: Vice President and Chief
                                               Financial Officer

                                        BANK OF AMERICA, N.A.
                                        as Administrative Agent and as a Bank

                                        By:/s/M. Duncan McDuffie
                                           -------------------------------------
                                        Name:  M. Duncan McDuffie
                                        Title: Managing Director

                                        THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                        CHICAGO BRANCH

                                        By:/s/Shinichiro Munechika
                                           -------------------------------------
                                        Name:  Shinichiro Munechika
                                        Title: Deputy General Manager

                                        BANK ONE, NA (Main Office Chicago) as
                                        Syndication Agent and as a Bank

                                        By:/s/Thomas T. Bower
                                           -------------------------------------
                                        Name:  Thomas T Bower
                                        Title: Senior Vice President

                                        BNP PARIBAS

                                        By:/s/Edward V. Canall
                                           -------------------------------------
                                        Name:  Edward V. Canall
                                        Title: Managing Director

                                        By:/s/Kathryn Quinn
                                           -------------------------------------
                                        Name:  Kathryn Quinn
                                        Title: Vice President

                                         Third Amendment to Amended and Restated
                                                  Multicurrency Credit Agreement

<PAGE>

                                        CREDIT LYONNAIS CHICAGO BRANCH

                                        By: /s/ Richard Teitelbaum
                                           --------------------------
                                        Name:   Richard Teitelbaum
                                        Title:  Vice President

                                        THE DAI-ICHI KANGYO BANK, LTD.

                                        By: /s/ Nobuyasu Fukatsu
                                           --------------------------
                                        Name:   Nobuyasu Fukatsu
                                        Title:  General Manager

                                        FIRST UNION NATIONAL BANK

                                        By: /s/ William W. Teegarden
                                           --------------------------
                                        Name:   William W. Teegarden
                                        Title:  Senior Vice President

                                        JPMORGAN CHASE BANK, as Documentation
                                        Agent and a Bank

                                        By: /s/ Michael Lancia
                                           --------------------------
                                        Name:   Michael Lancia
                                        Title:  Vice President

                                        M&I MARSHALL & ILSLEY BANK

                                        By: /s/ Michael Vellon
                                           --------------------------
                                        Name:   Michael Vellon
                                        Title:  Vice President

                                        By: /s/ Thomas R. Johnson
                                           --------------------------
                                        Name:   Thomas R. Johnson
                                        Title:  Senior vice President

                                         Third Amendment to Amended and Restated
                                                  Multicurrency Credit Agreement

<PAGE>

                                       THE MITSUBISHI TRUST AND BANKING
                                       CORPORATION

                                       By:  /s/ Thomas A. Pennington
                                           ---------------------------
                                       Name:    Thomas A. Pennington
                                       Title:   Executive Vice President

                                       OCM PRINCIPAL OPPORTUNITIES FUND II, L.P.

                                       By:  Oaktree Capital Management
                                            LLC, its general original

                                       By:  /s/ Christopher S. Betheus
                                           ---------------------------
                                       Name:    Christopher S. Betheus
                                       Title:   Managing Director

                                       By:  /s/ Jordan Kruse
                                          ----------------------------
                                       Name:    Jordan Kruse
                                       Title:

                                       OCM OPPORTUNITIES FUND III, L.P.

                                       By: Oaktree Capital Management
                                           LLC, its general original

                                       By:  /s/ Lowell W. Hill
                                           ---------------------------
                                       Name:    Lowell W. Hill
                                       Title:   Managing Director

                                       By: /s/ [Illegible in original]

                                       PERRY PRINCIPALS, L.L.C.

                                       By:  /s/ William J. Vernon
                                           ---------------------------
                                       Name:    William J. Vernon
                                       Title:   Managing Director and Chief
                                                Financial Officer

                                       ROYAL BANK OF SCOTLAND, PLC

                                       By:  /s/ T.J. Smith
                                          ----------------------------
                                       Name:    T.J. Smith
                                       Title:

                                       SOCIETE GENERALE

                                       By:  /s/ Eric E.O. Siebert Jr
                                          ----------------------------
                                       Name:    Eric E.O. Siebert Jr
                                       Title:   Director

                                         Third Amendment to Amended and Restated
                                                  Multicurrency Credit Agreement

<PAGE>

                                            SUMITOMO MITSUI BANKING CORPORATION

                                            By: /s/ William M. Ginn
                                               ---------------------------------
                                            Name:   William M. Ginn
                                            Title:  General Manager

                                            U.S. BANK NATIONAL ASSOCIATION

                                            By: /s/ Greg Wilson
                                               ---------------------------------
                                            Name:   Greg Wilson
                                            Title:  A.V.P

                                            WILLIAM E. SIMON & SONS SPECIAL
                                            SITUATIONS PARTNERS II, L.P.

                                            By: /s/ Dale Leshaw
                                               ---------------------------------
                                            Name:   Dale Leshaw
                                            Title:  Principal

                                         Third Amendment to Amended and Restated
                                                  Multicurrency Credit Agreement

<PAGE>

                              AGREEMENT AND CONSENT
                              ---------------------

     The undersigned Guarantors hereby agree and consent, as of the date and
year first above written, to the terms and provisions of the foregoing Third
Amendment to Credit Agreement and to the terms and provisions of the Amendment
Agreement amending the UK Facility, dated January 18, 2002, and agree that the
Loan Documents, guarantee documents and facility agreements executed by the
undersigned Guarantors shall remain in full force and effect notwithstanding the
provisions of the foregoing Third Amendment to Credit Agreement and the
Amendment Agreement amending the UK Facility.

APW NORTH AMERICA, INC.

By: /s/ James Maxwell
    -----------------
Name: James Maxwell
Title: Treasurer

APW ENCLOSURE SYSTEMS, INC.
APW ENCLOSURE SYSTEMS HOLDING, INC.
APW WRIGHT LINE LLC
APW-ERIE, INC.
ASPEN MOTION TECHNOLOGIES INC.
CAMBRIDGE AEROFLO, INC.
EDER INDUSTRIES INC.
ELECTRONIC SOLUTIONS
INNOVATIVE METAL FABRICATION, INC.
MCLEN WEST INC.
MCLEAN MIDWEST CORPORATION
METAL ARTS MANUFACTURING, INC.
PRECISION FABRICATION TECHNOLOGIES INC.
VERO ELECTRONICS, INC.
ZERO-EAST DIVISION, ZERO CORPORATION

By: /s/ James Maxwell
    -----------------
Name: James Maxwell
Title: Treasurer, Assistant Treasurer or CFO, as applicable

APW ENCLOSURES SYSTEMS, LP by APW ENCLOSURE
SYSTEMS HOLDING, INC., its General Partner

By: /s/ James Maxwell
    -----------------
Name: James Maxwell
Title: Treasurer

                                        1

<PAGE>

APPLIED POWER LIMITED
APW ELECTRONICS OVERSEAS INVESTMENTS
 LIMITED
APW ELECTRONICS LIMITED
APW ENCLOSURE SYSTEMS HOLDINGS LIMITED

By: /s/ Samantha Kirby
    ----------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

APW ENCLOSURE SYSTEMS (UK) LIMITED

By: /s/ Samantha Kirby
    ----------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

WRIGHT LINE LIMITED

By: /s/ Samantha Kirby
    ----------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

APW ENCLOSURES (DUBLIN) LIMITED

By: /s/ Samantha Kirby
    ----------------------------------
Name:   Samantha Kirby
Title:

APW GALWAY LIMITED

By: /s/ Samantha Kirby
    ----------------------------------
Name:   Samantha Kirby
Title:

HOERMANN SECURITY SYSTEMS LTD.

By: /s/ Samantha Kirby
    ----------------------------------
Name:   Samantha Kirby
Title:

                                       2

<PAGE>

APW POWER SUPPLIES AS

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

APW NEW FOREST LIMITED

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

TOWERFLAME LIMITED

By: /s/ David Pumphrey
   --------------------------------
Name:   David Pumphrey
Title:  Company Secretary

APW ELECTRONICS GROUP PLC

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

APW ENCLOSURE PRODUCTS AND SYSTEMS LIMITED

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

APW ENCLOSURE SYSTEMS PLC

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

                                       3

<PAGE>

AIR CARGO EQUIPMENT (UK) LIMITED

By: /s/ David Pumphrey
   --------------------------------
Name:   David Pumphrey
Title:

APW ENCLOSURES LIMITED

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

HOERMANN ELECTRONICS LIMITED

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

WRIGHT LINE EUROPE B.V.

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

APW NETHERLANDS B.V.

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

APW HOLDING B.V.

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

                                       4

<PAGE>

APW PRODUCTS AND SYSTEMS B.V.

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

CIPRESMAD HUNGARY GROUP FINANCING LLC

By: /s/ Richard D. Carroll
   --------------------------------
Name:   Richard D. Carroll
Title:

APW ELECTRONICS GMBH

By: /s/ John Stephenson
   --------------------------------
Name:   John Stephenson
Title:  Geschaftsfuhrer

CIPRESMAD-CONSULTORES E SERVICOS, LTD.

By: /s/ Richard D. Carroll
   --------------------------------
Name:   Richard D. Carroll
Title:

APW FINANCE LIMITED

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:

                                       5

<PAGE>

ZERO MCLEAN EUROPE LTD

By: /s/ David Pumphrey
   --------------------------------
Name:   David Pumphrey
Title:  Company Secretary

ZERO CASES EUROPE LTD

By: /s/ David Pumphrey
   --------------------------------
Name:   David Pumphrey
Title:  Company Secretary

MCLEAN EUROPE LTD

By: /s/ David Pumphrey
   --------------------------------
Name:   David Pumphrey
Title:  Company Secretary

RUBICON FINANCE LIMITED

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

APW HOLDINGS (UK) LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

EAST ANGLIAN METAL MERCHANTS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

                                       6

<PAGE>

ELECTRONICS PACKAGING LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

VERO CONNECTORS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

VERO ELECTRONICS (EXPORTS) LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

VERO CIRCUITBOARDS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

IMHOF-BEDCO LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

IMHOF-BEDCO STANDARD PRODUCTS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

IMHOF-BEDCO SPECIAL PRODUCTS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

                                       7

<PAGE>

INSTANT FINISHERS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

MALCOE ENCLOSURES LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

MALCOE SECURITY PRODUCTS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

MALCOE TELECOMMUNICATIONS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

APW HOLDINGS (EUROPE) LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

HIGH SPEED PRODUCTION (HOLDINGS) LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

BEELEY WOOD HOLDINGS LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

                                       8

<PAGE>

HSP SHEFFIELD LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

HIGH SPEED PRODUCTION (SCOTLAND) LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

HSP STRATHCLYDE LTD

By: /s/ Samantha Kirby
   --------------------------------
Name:   Samantha Kirby
Title:  Company Secretary

                                       9

<PAGE>

         APW INVESTMENTS UK LTD

         By: /s/ Samantha Kirby
             ----------------------------------
         Name:   Samantha Kirby
         Title:  Company Secretary

         APW POWER SUPPLIES LTD

         By: /s/ Samantha Kirby
             ----------------------------------
         Name:   Samantha Kirby
         Title:

         C FAB DEVELOPMENT LTD

         By: /s/ Samantha Kirby
             ----------------------------------
         Name:   Samantha Kirby
         Title:

         J HIGGINS MANUFACTURING (IRELAND) LTD

         By: /s/ Samantha Kirby
             ----------------------------------
         Name:   Samantha Kirby
         Title:

                                       10

<PAGE>

APW MAYVILLE Ltd

By: /s/ James Maxwell
   --------------------------------
Name:   James Maxwell
Title:  Treasurer

APW MAYVILLE LLC

By: /s/ James Maxwell
   --------------------------------
Name:   James Maxwell
Title:  Treasurer

                                       10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}]]