Employment Agreement - John W. Rowe, M.D.

Amendment to Employment Agreement

 

 

                             EMPLOYMENT AGREEMENT

 

 

         EMPLOYMENT AGREEMENT ("AGREEMENT") dated as of September 6, 2000 by and

between Aetna Inc., a Connecticut corporation, and John W. Rowe, M.D.

("EXECUTIVE") (certain capitalized terms used herein being defined in Article

7).

 

         WHEREAS, the Board desires to employ Executive in the positions and on

the terms and conditions set forth below, and the Executive desires to accept

such employment; and

 

         WHEREAS, pursuant to the Merger Agreement Aetna Inc. will be selling

its financial services business and distributing to its shareholders both a cash

dividend and all of the equity securities of its health care business, Aetna

U.S. Healthcare Inc., a Pennsylvania corporation (the "HEALTH CARE BUSINESS")

which, following the consummation of the transactions contemplated by the Merger

Agreement (the "COMPLETION"), will change its name to Aetna Inc.

 

         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 September 15, 2000 (the "EFFECTIVE

DATE"), Executive shall commence service as the chief executive officer and

president of the Health Care Business and as a member of the Board.

 

          (b) (i) Upon Completion, Executive shall become the Chief Executive

Officer of the Public Company and, not later than December 31, 2001, shall

become Chairman of the Board.

 

              (ii) Failing Completion not later than June 30, 2001, Executive

shall become Chief Executive Officer of the Company and, not later than December

31, 2001, shall become Chairman of the Board.

<PAGE>   2

          (c) In such positions, Executive shall have such duties and authority,

consistent with such positions, as shall be determined from time to time by the

Board; provided, that after Executive becomes Chief Executive Officer of the

Company he shall be the highest ranking executive of the Company and shall

report only to the Board.

 

          (d) 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 and December 31, 2004, the Employment Term shall

automatically be extended for one additional year unless not later than 180 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 $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 (but not decrease) in the sole discretion of

the Board or the Committee, as the case may be.

 

         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 150% of

Base Salary, a threshold bonus opportunity of 75% of Base Salary and a maximum

bonus opportunity of 300% of Base Salary or such other greater amount as the

Committee may determine in its sole

 

 

                                       2

<PAGE>   3

discretion. 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 (x) for 2000 of $375,000 and (y) for 2001 of $1,000,000

subject, in each case, to Executive being employed by the Company on the last

day of such year.

 

          (b) Beginning in 2001, Executive shall be eligible to participate in

the Company's long-term incentive program, with a target long-term award

opportunity of 150% of Base Salary or such greater amount as the Committee may

determine in its sole discretion. As further compensation, Executive will be

eligible, beginning in 2001, 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 on or as soon as reasonably

practicable after the Effective Date a $2,000,000 sign-on bonus.

 

          (d) The Company shall pay to Executive on July 3, 2001 a retention

bonus of $1,400,000 (the "RETENTION AMOUNT").

 

         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 300,000 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") and (y) options to purchase 200,000

shares of the Company's common stock with a per share exercise price of 133% 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 option 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 (the exercisability of such awards not to be accelerated by

the Completion) (collectively, "PROVISIONS"). Such grants shall be equitably

adjusted in a manner consistent with the FASB Emerging Issues Task Force Issue

No. 90-9 to reflect the Completion (the adjustment ratio used therefore, the

"ADJUSTMENT RATIO") provided that if such adjustment and the Second Tranche

described in (ii) below would result in the aggregate number of shares

underlying such options exceeding 2,000,000, then a sufficient number of options

shall be cancelled for no consideration to eliminate such excess, such

cancellations, if any, to be first with respect to the Second Tranche, next to

the extent necessary with respect to the Premium Options and last with respect

to the Basic Options.

 

 

                                       3

<PAGE>   4

                  (ii) On the earlier of (A) immediately after Completion or (B)

         January 1, 2001, the Company shall cause the grant (or if such grant is

         to be made after Completion, shall use its best efforts to cause the

         grant) to Executive of options to purchase 100,000 shares of the

         Company's common stock (multiplied by the Adjustment Ratio if such

         earlier date is the date of the Completion) having the Provisions and

         having a per share exercise price equal to (x) the exercise price of

         the Premium Options (as adjusted in the case of the grant referred to

         in (A) above) or (y) if higher, the fair market value of the underlying

         shares on the grant date (the "SECOND TRANCHE"). Such Second Tranche

         may also include any additional equitable award as the Committee may,

         in its sole discretion, determine.

 

                  (iii) In the event that, in connection with the Completion,

         the equitable adjustment of the Basic and Premium Options does not

         result in the aggregate amount of such adjusted grants and the Second

         Tranche relating to, after Completion, at least 1,000,000 shares of the

         Company's common stock, the Company shall cause a supplemental grant of

         Company stock options to be made to Executive having the Provisions and

         having an exercise price as to half of such options which is the same

         as for the adjusted Basic Options (or, if higher, the fair market value

         of the underlying shares on the grant date) and as to the other half of

         such options which is the same as for the Second Tranche, such that the

         aggregate number of shares of Company common stock underlying (x) the

         adjusted Basic and Premium Options, (y) the Second Tranche and (z) such

         supplemental option grant shall equal 1,000,000.

 

          (b) Company shall cause the grant to Executive of 25,000 restricted

stock units on the Effective Date, 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 (the

vesting of such award not to be accelerated by the Completion). Such grant,

which shall include dividend equivalent rights and shall be subject to elective

deferral, shall be equitably adjusted entirely into restricted stock units of

Public Company stock to reflect the Completion and shall not entitle the

Executive to a cash distribution upon Completion.

 

         SECTION 2.04. Life Insurance. During the Employment Term, Company shall

pay an annual premium of $63,000 on life insurance covering Executive and

payable to beneficiaries designated by Executive.

 

         SECTION 2.05. Employee Benefits. (a) During the Employment Term

Executive shall be eligible for employee benefits (including fringe benefits,

vacation, 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.

 

 

                                       4

<PAGE>   5

          (b) On the Effective Date, Executive shall be eligible, upon

termination of employment other than for Cause, 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) Upon attaining age 65, Executive shall be entitled to a single

life annuity for his lifetime under the Company's supplemental non-qualified

defined benefit plan of not less than $300,000, offset by the single life

annuity equivalent amount, using the factors identified in said supplemental

non-qualified defined benefit plan, attributable to Company contributions to the

Company's qualified and non-qualified defined contribution and defined benefit

plans (the "PENSION BENEFITS"). Executive shall vest in 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.

 

         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. Executive shall

have access to Company-provided ground and air transportation including, without

limitation, helicopter flights between Hartford, Connecticut and New York, New

York.

 

          (b) In addition to providing Executive with appropriate office

facilities and support at the Company's headquarters, which shall be Executive's

principal job location, the Company shall make available to Executive office

facilities and support in New York, N.Y.

 

                                    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 90 days after the

         occurrence of any event constituting Good Reason.

 

 

                                       5

<PAGE>   6

         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 later of the first anniversary of the date of such termination and

the last date on which such Award would otherwise have been exercisable (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 Termination Date and (B) with respect to all other equity

based awards made to Executive during the Employment Term, Executive shall be

credited for vesting purposes with deemed service during the Continuation Period

(in the case of a Qualifying Event occurring during the 24 months following a

Change in Control) or the Payment Period, 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 30 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

 

 

                                       6

<PAGE>   7

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 three 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 third 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 and other welfare benefits 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 Pension Benefits, if any, and of the

         Executive's previously accrued benefits under the Company's qualified

         and non-qualified defined benefit and defined contribution plans (the

         "RETIREMENT ACCRUALS").

 

         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.

 

 

                                       7

<PAGE>   8

          (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;

 

                  (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 and other welfare benefit plans during the

         Payment Period;

 

                  (iv) Full vesting of the Retirement Accruals and service

         credit for the Payment Period for purposes of calculating the Pension

         Benefits, if any; 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 Retirement Accruals.

 

         SECTION 3.05. Non-Renewal Payments. In the event of the expiration of

the Employment Term on December 31, 2003 or 2004 as a result of the delivery of

the Company's notice of its intention not to extend the Employment Term pursuant

to Section 1.02, Executive shall be entitled to:

 

          (a) The Accrued Compensation;

 

          (b) The Accrued Benefits;

 

          (c) A lump sum cash payment of $3,000,000 if such expiration shall

occur on December 31, 2003 or $1,500,000 if such expiration shall occur on

December 31, 2004; and

 

          (d) Full vesting of the Pension Benefits, if any, and of the

Retirement Accruals.

 

 

                                       8

<PAGE>   9

                                    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").

 

 

                                       9

<PAGE>   10

         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

5% 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 5% 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

 

 

                                       10

<PAGE>   11

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 5%, 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 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 5% 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 5%, 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 

 

 

                                       11

<PAGE>   12

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 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.

 

 

                                       12

<PAGE>   13

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 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. Except as provided in Section 5.03, 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

 

 

                                       13

<PAGE>   14

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.

 

         SECTION 5.03. Completion. Upon Completion, all undertakings by the

Company hereunder shall cease to be obligations of Aetna Inc., a Connecticut

corporation, and shall become obligations of Aetna U.S. Healthcare Inc., a

Pennsylvania corporation (which is to be renamed Aetna Inc.), and its

Subsidiaries and Executive shall have no right to bring any claim or action

hereunder against ING America Insurance Holdings, Inc. or any of its

Subsidiaries or Affiliates.

 

                                    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;

 

         Copies to:

 

              Davis Polk & Wardwell

              450 Lexington Avenue

              New York, NY 10017

              Fax:   212-450-4800

              Attn:  Lewis B. Kaden

 

         if to Executive, to Executive's last known address as reflected on the

         books and records of the Company

 

 

                                       14

<PAGE>   15

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.

 

 

 

                                       15

<PAGE>   16

         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 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.

 

 

                                       16

<PAGE>   17

         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 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

 

 

                                       17

<PAGE>   18

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 after the

termination of the Employment Term, 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 after the

termination of the Employment Term, the Executive shall not, directly or

indirectly, induce or attempt to induce any agent or agency, broker,

broker-dealer, financial supplier, registered principal or representative,

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 the

termination of the Employment Term, 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, 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 after the

termination of the Employment Term, 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.

 

 

                                       18

<PAGE>   19

         For purposes of Section 6.15(c)(i), a "COMPETITOR" is any company or

organization that (x) if Executive becomes Chief Executive Officer of the

Company prior to Completion, is a direct and substantial competitor of the

Company in its financial services and international businesses or (y) 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 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.

 

 

                                       19

<PAGE>   20

                                    ARTICLE 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, prior to Completion, the Board of Directors of Aetna

Inc. (a Connecticut corporation) and, following Completion, 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;

 

 

                                       20

<PAGE>   21

          (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 not in good faith and without

reasonable belief that such action or failure to act was 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 Broad (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, (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, or (iii) as

a result of the Completion. 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

 

 

                                       21

<PAGE>   22

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, prior to Completion, Aetna Inc. (a Connecticut

corporation) and, following Completion, Aetna Inc. (a Pennsylvania corporation)

which is the renamed successor to Aetna U.S. Healthcare Inc.

 

         "Completion" has the meaning accorded such term in the second "Whereas"

clause of this Agreement.

 

         "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 or elected to, removal from,

or failure to be reappointed or reelected to, the positions as specified in

Article 1;

 

          (b) Any change in Executive's reporting responsibilities, the

assignment to Executive of duties materially inconsistent with Executive's

status, or a material

 

 

                                       22

<PAGE>   23

reduction or alteration in the nature thereof, in each case excluding any

designated acting or temporary authorities, responsibilities and status;

provided, however, that, other than during the 24 months following a Change in

Control, any insubstantial or inadvertent act that is remedied by the Company

promptly after receipt of notice thereof given by Executive shall not constitute

Good Reason;

 

          (c) A reduction by the Company of Executive's Base Salary or total

annual target compensation from the level in effect immediately prior thereto;

 

          (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 days

written notice from the Company or Executive of the requirements of Section

5.01; or

 

          (e) The Company's requiring Executive without his consent to be based

at a location in excess of [75] miles from Executive's principal job location

immediately prior thereto; except for required travel on the Company's business

to an extent consistent with Executive's business travel obligations immediately

prior thereto;

 

         "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).

 

 

 

                                       23

<PAGE>   24

         "Merger Agreement" means the Agreement and Plan of Restructuring and

Merger among ING America Insurance Holdings, Inc., ANB Acquisition Corp., Aetna

Inc. and, for limited purposes only, ING Groep N.V., dated as of July 19, 2000.

 

         "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

 

         "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.

 

         "Retirement Accruals" has the meaning accorded such term in Section

3.03.

 

         "Second Tranche" has the meaning accorded such term in Section 2.03.

 

         "Separation Benefits" has the meaning accorded such term in Section

3.04.

 

         "Severance Benefits" has the meaning accorded such term in Section

3.03.

 

 

                                       24

<PAGE>   25

         "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.

 

 

                                       25

<PAGE>   26

         IN WITNESS WHEREOF, the Company and Executive have executed this

Agreement, to be effective as of the day and year first written above.

 

JOHN W. ROWE, M.D.                    AETNA INC.

 

 

/s/ John W. Rowe                      By: /s/ Elease E. Wright

                                         Name:   Elease E. Wright

                                         Title:  Senior Vice President,

                                                 Corporate Human Resources

 

 

 

Back to Top

 

AMENDMENT TO EMPLOYMENT AGREEMENT

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

     WHEREAS, the Board and the Executive desire to extend the term of and otherwise amend the Agreement on the terms and conditions set forth below;

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

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

     1.     Section 1.02 of the Agreement shall be deleted and replaced in its entirety as follows:

 

 

 

“SECTION 1.02. Term. Executive shall be employed by the Company for a period commencing on the Effective Date and, subject to earlier termination as provided herein, ending on December 31, 2006 (the “Employment Term”).”

     2.     Effective July 7, 2003, Executive’s Base Salary as referred to in Section 2.01 shall be increased by $100,000 to the annual rate of $1,100,000, payable in accordance with the payroll and administrative practices of the Company from time to time; provided, however, that such increase shall be mandatorily deferred (but nevertheless remain eligible for benefits) until the later of a date or dates elected by Executive prior to the effective date of such increase or the January 1st following Executive’s termination of employment and shall earn a rate of return in accordance with the Company’s deferral program applicable to the Company’s senior executive officers in effect from time to time.

     3.     Section 2.04 of the Agreement shall be deleted and replaced in its entirety as follows:

 

 

 

“SECTION 2.04. Life Insurance. During the Employment Term, Company shall pay an annual premium of $73,500 on life insurance covering Executive and payable to beneficiaries designated by Executive.”

     4.     Section 2.05(c) of the Agreement shall be deleted and replaced in its entirety as follows:

 


 

 

 

 

“SECTION 2.05. Employee Benefits. (c) Upon attaining age 62, Executive shall be entitled to a single life annuity for his lifetime under the Company’s supplemental non-qualified defined benefit plan of not less than $750,000, offset by the single life annuity equivalent amount, using the factors identified in said supplemental non-qualified defined benefit plan, attributable to Company contributions to the Company’s qualified and non-qualified defined contribution and defined benefit plans (the “Pension Benefits”). Executive shall vest in the Pension Benefits, subject to continued employment with the Company, in annual installments as follows: $300,000 on September 14, 2002, an additional $150,000 on September 14, 2003, an additional $150,000 on September 14, 2004, and an additional $150,000 on September 14, 2005. The Pension Benefit shall be payable in the form and at the times provided, from time to time, in the Retirement Plan.”

     5.     Section 3.05 regarding non-renewal payments shall no longer be applicable and shall be deleted in its entirety.

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

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

 

 

 

JOHN W. ROWE, M.D.

 

AETNA INC.

 

 

 

 

 

 

/s/: John W. Rowe, MD


 

 

By:

 

/s/: Elease E. Wright


Elease E. Wright
Title: Senior Vice President HR

 

Back to Top

 

EMPLOYMENT AGREEMENT

          AGREEMENT by and between ADC Telecommunications, Inc., a Minnesota corporation  (the “Company”), and RICHARD R. ROSCITT (the “Executive“), dated as of the 28th day of January, 2001.

          1.       Employment Period.  The Company hereby agrees to employ the Executive and the Execu­tive hereby agrees to become employed and remain in the employ of the Company, pursuant to the terms and conditions set forth in this Agreement.  The Executive’s employment hereunder shall commence on February 15, 2001 (the “Commencement Date”) and shall continue until the Executive’s employment terminates pursuant to Section 4 of this Agreement (the “Employment Period”).

          2.       Position and Duties.

          (a)      The Executive agrees to serve as the Chief Executive Officer worldwide and to perform such duties (i) as are set forth for that position in the By-laws of the Company’s Board of Directors (the “Board”), (ii) as the Board shall assign to the Executive from time to time, and (iii) that the Executive undertakes or accepts consistent with his position as Chief Executive Officer.  The Executive acknowledges and agrees that, from time to time, he will be required to perform duties with respect to one or more of the Company’s subsidiary or affiliate companies (each an “Affiliate”), and that he will not be entitled to any additional compensation for performing those duties.

          (b)      The Company intends that the Board will elect the Executive to serve as the Chairman of the Board at the first Board meeting following the annual meeting of shareholders to be held on February 27, 2001, and the Executive agrees to serve in that position in accordance with the By-laws of the Board.

 

          (c)      During the Employment Period, and excluding any periods of vacation, holiday, personal leave and sick leave to which the Executive is entitled, the Executive agrees to serve the Company faithfully and to the best of his ability and to devote the Executive’s full time, attention and efforts to the business and affairs of the Company.  The Executive hereby confirms to the best of his knowledge and belief that he is under no contractual commitments inconsistent with his obligations set forth in this Agreement and that, during the Employment Period, the Executive will not render or perform any services for any other corporation, firm, entity or person which are inconsistent with the provisions of this Agreement, with any policy of the Company, or which would otherwise impair the Executive’s ability to perform his duties hereunder.  The rest of this Section 2(c) notwithstanding, the Executive may (i) serve on the boards of profit or non-profit corporations (the Executive shall obtain approval to serve on such a board in accordance with all of the Company’s policies, including, without limitation, the Company’s Business Conduct Policy regarding Conflicts of Interest), (ii) deliver lectures or fulfill speaking engagements, and (iii) manage personal investments, so long as the activities referred to in clauses (i) through (iii) above do not substantially interfere with the performance of the Executive’s responsibilities under this Agreement.

          (d)      The Executive’s primary office shall be located in the greater Twin Cites metropolitan area; provided, that the Executive’s primary office location may be relo­cated in connection with the relocation of the Company’s headquarters, subject to reimbursement for Executive’s reasonable expenses in connection with any move he is required to make.

          3.       Compensation.

          (a)      Base Salary. As his initial base compensation for all services he renders under this Agreement, the Executive shall receive an annualized base salary (“Annual Base Salary”) of $900,000.  The Annual Base Salary shall be paid in accordance with the Company’s normal payroll procedures and policies, as such procedures and policies may be modified from time to time.  The Annual Base Salary shall be reviewed and adjusted (upward only) in the sole discretion of the Board’s Compensation and Organization Committee (the “Committee”) according to a schedule and in a manner consistent with the Company’s practices for salary adjustment, as those practices may be revised from time to time (and which practices may include review of factors such as market conditions and total compensation paid to similar executives at peer and other companies).

          (b)      Incentive Compensation. The Executive shall be eligible to participate in any Management Incentive Plan (“MIP”) the Company establishes, according to the targets and goals, which shall be discussed in advance with the Executive, and the terms and conditions the Company establishes to govern the MIP for any fiscal year.  For each fiscal year MIP beginning in fiscal year 2001, the Executive’s target incentive compensation shall be not less than one hundred percent (100%) of the Annual Base Salary actually paid to the Executive during that fiscal year (“Target Incentive”).  The maximum amount of any annual MIP award shall be three times the Target Incentive.

          (c)      New Hire Bonus. On the first day of the Employment Period, the Executive will earn the right to be paid one million five hundred thousand dollars ($1,500,000), less all appropriate and necessary withholdings and deductions, which payment will be paid within five (5) days of it being earned.

          (d)      Restricted Cash Compensation.  The Executive will earn the right to be paid the sum of five million five hundred thousand dollars ($5,500,000), less all appropriate deductions and withholdings, according to the vesting schedule set forth below.  Except in the case of any termination in which the Executive, pursuant to Sections 5 and 6 of this Agreement, may earn the right to be paid unpaid portions of this restricted cash compensation, the Executive agrees that he must be actively employed on each vesting date in order to vest in and earn the payment to be made on that date.

 

 

 

 

Restricted Cash Compensation Vesting Schedule


 

 

 

Sum


 

Vesting Date


 

 

·

$1,500,000

First anniversary of Commencement Date

 

·

$1,330,000

Second anniversary of Commencement Date

 

·

$1,330,000

Third anniversary of Commencement Date

 

·

$1,340,000

Fourth anniversary of Commencement Date

 

 

 

 

 

          (e)      Executive Incentive Exchange Plan.  Beginning on the first day of the Company’s 2002 fiscal year, the Executive will be eligible to participate in the Company’s Executive Incentive Exchange Plan, according to the terms of that Plan, as the same may be amended from time to time.

          (f)       Benefit Plans. During the Employment Period, the Executive shall be entitled to participate in the employee benefits offered generally by the Company to its executive employees, to the extent that the Executive’s position, tenure, salary, health, and other qualifications make the Executive eligible to participate. The Executive’s participation in such benefits shall be subject to the terms of the applicable plans, as the same may be amended from time to time.  The Company does not guarantee the adoption or continuance of any particular employee benefit or benefit plan during the Employment Period, and nothing in this Agreement is intended to, or shall in any way restrict the right of the Company, to amend, modify or terminate any of its benefits or benefit plans during the Employment Period.

          (g)      Stock Options.  To compensate Executive for forfeited stock option opportunities provided by his prior employer, and as a long-term incentive, the Executive will be eligible for the following stock options during his employment:

          (i)       New Hire Options.

          (A)     Non-Premium Option. The Committee will approve the grant to Executive of an option to purchase shares of the Company’s common stock, which option will have a face value of $16,772,900, and be in accordance with the terms of the ADC 1991 Stock Incentive Plan, as the same may be amended from time to time, and a non-qualified stock option agreement to be entered into by the Executive and the Company.  The exercise price for this option shall be the price of the Company’s common stock on the last day of the month in which occurs the Commencement Date. 

          (B)     Premium Options.  The Committee will approve a grant to Executive of three (3) “premium” options to purchase shares of the Company’s common stock, at the exercise prices set forth below, which options will have an aggregate total face value of $10,379,900, and be granted in accordance with the terms of the ADC 1991 Stock Incentive Plan, as the same may be amended from time to time, and non-qualified stock option agreements to be entered into by the Executive and the Company.

 

 

Grant


 

Exercise Price


 

 

·

Grant of 1/3 of all Premium options

20% above FMV

 

·

Grant of 1/3 of all Premium options

35% above FMV

 

·

Grant of 1/3 of all Premium options

45% above FMV

 

          The fair market value (“FMV”) of each of the premium option grants shall be the price of the Company’s common stock on the last day of the month in which occurs the Commencement Date.  The premium options shall vest on the fourth (4th) anniversary of the grant date and shall expire seven (7) years after the grant date.

          (ii)      Annual Option Grants.  At the beginning of each of fiscal year 2002 and 2003, the Committee will grant the Executive an option to purchase shares of the Company’s common stock, which option shall have a Black Scholes value of $5 million dollars, as determined by the Company in a manner consistent with the method used to determine the face value of the new hire option “non-premium option” described in Section 3(g)(i)(A), above.  Each grant shall be in accordance with the terms of the ADC 1991 Stock Incentive Plan, as the same shall be amended from time to time, and stock option agreements to be entered into by the Executive and the Company.  Each annual grant of stock options for fiscal year 2002 and 2003 shall be designated as incentive stock options to the maximum extent permitted by the Internal Revenue Code of 1986, as amended, and the remainder shall be designated as non-qualified stock options.

 

          (h)      Expenses.  During the Employment Period, the Executive shall be entitled to reimbursement for all reasonable business expenses he incurs in carrying out his duties under this Agreement in accordance with the policies and practices of the Company, provided that the Executive complies with the policies and practices of the Company for submission of expense reports, receipts, or similar documentation of such expenses as implemented from time to time by the Company.  During the Employment Period, the Executive may charter a private jet at Company expense whenever the Executive has a reasonable, good faith belief that such charter is in the Company’s best interest as compared to scheduled commercial flights.

          (i)       Paid Time Off.  The Executive shall be entitled to at least five (5) weeks of paid time off (“PTO”) during each 12-month period of the Employment Period, to be accrued and taken in accordance with the Company’s PTO Policy, as the same may be amended from time to time.  The Executive may accrue up to two (2) times the annual PTO award.

          (j)       Executive Perquisites.  The Executive will be eligible to receive any executive perquisites that the Company may from time to time deem are appropriate and administratively feasible to provide to its executives, generally or to the Executive, specifically.  The Executive understands that the Company may in its sole discretion modify or terminate any executive perquisite offered to the Executive.  Those perquisites shall include:

          (i)       $24,000 annual perquisite allowance, paid at a rate of $2,000 per month, to cover additional benefits that will best meet the Executive’s personal needs;

          (ii)      payment of club membership and monthly fees; and

          (iii)     beginning on January 1, 2002, eligibility to participate in the Company’s 401(k) Excess Plan, according to the terms of that Plan, as the same may be amended from time to time.

 

          4.       Termination of Employment.  The Executive’s employment under this Agreement may be terminated during the Employment Period as described in this Section 4.

          (a)      Death or Disability.  The Executive’s employment shall terminate automatically upon the Executive’s death.  The Executive’s employment shall terminate for “Disability” if the Executive, due to illness or physical or mental incapacity, is unable to perform the duties of the Executive’s position under this Agreement for a period of 26 consecutive weeks.

          (b)      Termination By the Company.  The Company may terminate the Executive’s employ­ment for Cause or without Cause.  For purposes of this Agreement, “Cause” shall mean the Executive’s (i) convictionof or plea of nolo contendre to a felony or to any crime involving moral turpitude; (ii) willful mis­conduct that causes, or in the reasonable judgment of the Board creates a significant risk of, substantial injury to the Company; (iii) repeated failure to undertake communicated directives on substantial business matters issued through written instruction to do so by the Board; and (iv) any willful breach of this Agreement that causes, or in the reasonable judgment of the Board creates a significant risk of, substantial injury to the Company.

          Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless the Company provides the Executive (a) no less than ten (10) days prior written notice setting forth the reasons for the Company’s intention to terminate for Cause, (b) an opportunity for the Executive to be heard (together with comments of counsel) by the Board, and (c) delivery of a notice of termination from the Board stating with specificity its conclusion that the Executive committed the act(s) or omission(s) establishing Cause to terminate the Executive’s employment.

           (c)      Termination By the Executive.  The Executive may terminate his employment for Good Rea­son or without Good Reason.  “Good Reason” will exist in the event that the Company, without the Executive’s written consent: (i) institutes a material adverse change in the Executive’s title or in the duties assigned to the Executive, which will include, without limitation, that the Board fails to elect him as Chairman of the Board; (ii) requires the Executive to relocate his principal residence to a location other than the Twin Cities metropolitan area, except in connection with the move of the Company’s headquarters;  (iii) reduces the total amount of the Executive’s annual target cash compensation (i.e., the Annual Base Salary plus the annual MIP Target Incentive) for any fiscal year; or (iv) substantially fails to comply with the provisions of Section 3; provided, that an unintentional failure to comply or a failure to comply that results from administrative oversight shall not give rise to Good Reason, if such failure is promptly corrected.  The Executive shall have Good Reason to terminate his employment if (i) within forty-five (45) days following the Executive’s actual knowledge of the event which the Executive determines consti­tutes Good Reason, he notifies the Company in writing that he has determined a Good Reason exists and specifies the event creating Good Reason, and (ii) fol­lowing receipt of such notice, the Company fails to remedy such event within forty-five (45) days.  If either condition is not met, the Executive shall not have a Good Reason to terminate his employment.

          (d)      Date of Termination.  “Date of Termination” means (i) if the Executive’s employment is terminated by the Company (other than for Cause, death or Disabil­ity) or by the Executive for Good Reason, the thirtieth (30th) day after the mailing of the notice of termination or any later date specified therein; (ii) if the Executive’s employment is terminated for Cause, the date set forth on the notice of termination sent by the Board in accordance with Section 4(b); (iii) if the Executive’s employment terminates by reason of death, the date of death of the Executive, or if by reason of, Disability, the date of the determination of Disability as set forth in Section 4(a); or (iv) if the Executive terminates his employment without Good Reason, thirty (30) days after mailing of the notice of termination or any later date specified therein (in the case of a notice of termination sent pursuant to part (iv), the Company may request that the Executive cease providing services during the notice period).

          (e)      Continuation of Provisions. Notwithstanding any termination of the Executive’s employment with the Company, the Executive, in consideration of the Executive’s employment hereunder to the Date of Termination, shall remain bound by the provisions of this Agreement which specifically relate to periods, activities or obligations upon or subsequent to the termination of the Executive’s employment, including, but not limited to, the covenants contained in Sections 8, 9 and 10 hereof and the Employee Invention Agreement, as defined in Section 8.

          (f)       Surrender of Records and Property.  Upon any termination of the Executive’s employment with the Company, the Executive shall deliver promptly to the Company the SecurID Net Access card, and all records, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, computer disks, computer software, computer programs (including source code, object code, on-line files, documentation, testing materials and plans and reports), designs, drawings, formulae, data, tables or calculations or copies thereof, which are the property of the Company or any Company Affiliate or which relate in any way to the business, products, practices or techniques of the Company or any Company Affiliate, and all other property, trade secrets and confidential information of the Company or any Company Affiliate, including, but not limited to, all tangible, written, graphical, machine readable and other materials (including all copies) which in whole or in part contain any trade secrets or confidential information of the Company or any Company Affiliate which in any of these cases are in the Executive’s possession or under the Executive’s control.

          5.       Compensation and Payments upon Termination.

          (a)      Without Cause; Good Reason.  Subject to Section 6, if, during the Employment Period, the Company terminates the Executive’s employment without Cause, or if the Executive terminates employment for Good Reason, and in either case if the Executive signs (and then does not rescind) a general release of claims in a form acceptable to the Company, then the Executive shall be entitled to receive the following severance benefits:

          (i)       payment of an amount which is 200% of the sum of Executive’s then Annual Base Salary and Target Incentive under the MIP plan for that current fiscal year, less all required withholding and deductions, to be paid in one lump sum;

          (ii)      payment of the Executive’s Annual Base Salary earned through the Date of Termination, and any MIP incentive earned for a prior fiscal year, but not yet paid, less all required withholding and deductions, to be paid in one lump sum;

          (iii)     payment of any as yet unpaid restricted cash compensation payments as provided in Section 3(d), less all required withholding and deductions, to be paid in one lump sum within ninety (90) days  following the Date of Termination;

          (iv)     if the Date of Termination occurs prior to or on the three-year anniversary of the last day of the month in which falls the Commencement Date, payment of an additional termination payment according to the sliding scale schedule set forth below, less all withholdings and deductions, to be paid in one lump sum within ninety (90) days following the Date of Termination:

 

 

Termination Date


 

 

Gross
Termination
Payment


 

 

After Commencement Date, but no later than 1-year anniversary of the end of the month in which falls Commencement Date

 

$8 million

 

After 1-year anniversary, but no later than 2-year anniversary of the end of the month in which falls Commencement Date

 

$5 million

 

After 2-year anniversary, but no later than 3-year anniversary of the end of the month in which falls Commencement Date

 

$2 million

 

After the 3-year anniversary of the end of the month in which falls the Commencement Date

 

No payment

 

; and

                    (v)      other benefits and perquisites, if applicable, to be paid or provided to the Executive in ac­cordance with applicable plans and programs of the Company.

 

          (b)      Death or Disability.  If the Executive’s employment is terminated by rea­son of the Executive’s death or Disability, the Company shall pay the Executive (or the Executive’s estate, if applicable):

          (i)       the Executive’s Annual Base Salary earned through the Date of Termination, to the extent not yet paid, and any MIP incentive compensation earned for a prior fiscal year but not yet paid, less all required withholdings and deductions, to be paid in one lump sum;

          (ii)      any as yet unpaid restricted cash compensation payments provided in Section 3(d), less all required withholdings and deductions, to be paid in one lump sum within ninety (90) days following the Date of Termination;

          (iii)     in the case of the Executive’s death only, a pro rata share of the Executive’s MIP Target Incentive, in accordance with the MIP plan for that current fiscal year, less all required withholdings and deductions; and

          (iv)     in the case of death, life insurance benefits under the Company’s applicable life insurance policy, and in the case of disability, disability benefits under the Company’s disability benefits policy.  The Company agrees to undertake, as soon as practicable, reasonable efforts to investigate and review the possibility of increasing the maximum disability benefits available under its current policy; provided, the Company shall have no obligation under this Agreement to actually increase them.

          (c)      Cause; Without Good Reason.  If the Executive’s employment is terminated by the Company for Cause or the Executive voluntarily terminates employment without Good Reason, the Company shall pay to the Executive any Annual Base Salary earned through the Date of Termination.  The Company shall have no further obligations under this Agreement.

          6.       Change In Control. Following a “Change in Control” (as that term is defined in the Company’s current Change in Control Plan), if the Executive is not elected Chairman and Chief Executive Officer of any successor company resulting from the  “Change in Control,” and if the Executive terminates his employment due to that failure:

          (a)      the Executive will be eligible to receive payments and benefits under the Change in Control Plan then in effect;provided, the Company shall provide the Executive with compensation and benefits that are no less beneficial than those in the Change in Control Plan in effect on the Commencement Date;

          (b)      the Company will pay the Executive any as yet unpaid restricted cash compensation payments provided in Section 3(d), less all required withholdings and deductions, to be paid in one lump sum within ninety (90) days following the Date of Termination; and

          (c)      the Executive’s termination would trigger the right to acceleration of unvested stock options subject to and in accordance with the terms of any existing Stock Option Agreement between the Executive and the Company.

          The Executive also will be paid or provided other benefits and perquisites, if applicable, in accordance with applicable plans and programs of the Company.  If the Executive receives the payments and benefits described in this Section 6, the Executive will not be eligible to receive any other severance or termination payments or benefits, including but not limited to those provided in Section 5 of this Agreement.

          7.       Relocation.  The Executive understands that he must relocate his primary residence to the greater Twin Cities metropolitan area.  To assist the Executive in obtaining his new residence, the Company will provide the Executive with the assistance and programs described in the Company’s relocation program and any other assistance the Company agrees to provide.  In addition, during the period from the Commencement Date until the earlier of (i) October 31, 2001, or (ii) until the Executive moves his personal belongings to his Minnesota residence, the Company shall reimburse the Executive for the reasonable temporary living expenses he incurs, including costs for lodging, meals and incidental expenses, and to travel back to his New Jersey residence.

          8.       Confidential Information/Intellectual Property; Other Employment Policies.  As a condition precedent to the Company hiring the Executive and the Company’s performance of its obligations hereunder, the Executive shall execute and deliver to the Company the Employee Invention, Copyright and Trade Secret Agreement in the form attached hereto as Exhibit A (the “Employee Invention Agreement”). The Executive shall also comply with all of the applicable policies generally in effect for employees of the Company or any applicable Company Affiliate for which the Executive performs services, including without limitation, the Company’s Code of Business Conduct and the Company’s Policy on Trading in ADC’s Securities, as the same may be amended from time to time.

          9.       Non-Competition.

          (a)      Covenant.  In consideration of the financial and other benefits described in this Agreement, the Executive agrees that, during the period commencing on the Commencement Date and ending on the date that is  one (1) year after the date on which the Executive ceases to be employed by the Company (for whatever reason and whether such cessation is occasioned by the Company or the Executive), the Executive shall not, directly or indirectly, and in any manner or capacity (e.g., as an advisor, principal, agent, partner, officer, director, investor, shareholder, employee, member of any association or otherwise), engage in any business activities that are competitive with the business conducted by the Company or any Company Affiliate on or prior to the date the Executive ceases to be employed by ADC.

          (b)      Geographical Extent of Covenant.  The Executive acknowledges that the Company directly, or indirectly through Company Affiliates, currently is engaged in business on a world-wide basis.  Consequently, the Executive agrees that his obligations under this Section 9 shall apply in any market, foreign or domestic, in which: (a) the Company or, as applicable, a Company Affiliate(s), operates during the one-year period described in Section 9(a); and (b) the Company or, as applicable, a Company Affiliate(s), has plans to enter on the date the Executive ceases to be employed by the Company.

          (c)      Limitation on Covenant.  Ownership by the Executive, as a passive investment, of less than one percent (1%) of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this Section 9.

          10.     Non-Solicitation.  The Executive agrees that for a period of two (2) years after termination of his employment for any reason (and whether occasioned by the Company or the Executive), the Executive shall not, except with the prior written consent of the Company, (i) hire or attempt to hire for employment any person who is employed by the Company or a Company Affiliate, or attempt to influence any such person to terminate employment with the Company or any Company Affiliate; (ii) induce or attempt to induce any employee of the Company or any Company Affiliate to work for, render services to, provide advice to, or supply confidential business information or trade secrets of the Company or any Company Affiliate to any third person, firm or corporation; (iii) induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of the Company or any Company Affiliate to cease doing business with the Company or such Company Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor or other business relation and the Company or any Company Affiliate.  Nothing herein shall prohibit the Executive from general advertising for personnel not specifically targeting any employee or other personnel of the Company.

          11.     Dispute Resolution Process.

          (a)      Dispute Defined.  The Company and the Executive desire to establish a reasonable and confidential means of resolving any dispute, question or interpretation arising out of or relating to (i) this Agreement or the alleged breach or threatened breach of it, (ii) the making of this Agreement, including claims of fraud in the inducement, (iii) the Executive’s employment by the Company pursuant to this Agreement, including claims of wrongful termination or discrimination, or (iv) any activities by the Executive following the cessation of his employment with the Company (each such dispute to be referred to herein as a “Dispute”).

          (b)      Procedure.  In furtherance of the parties’ mutual desire, the Company and the Executive agree that if either party believes a Dispute exists, that party shall provide the other with written notice of the claimed Dispute.  Upon receipt of that written notice, the following procedure shall be the exclusive means of fully and finally resolving the Dispute.  First, within thirty (30) days of the other party receiving that notice, the Executive and appropriate representatives of the Company and/or Board will meet to attempt to resolve amicably the Dispute.  Second, if a mutually agreeable resolution is not reached within thirty (20) days following the parties’ first meeting, the parties will engage in mediation with a neutral mediator, said mediation to be held within forty-five (45) days of the final meeting between the Executive and representatives of the Company and/or Board.  Third, if the Dispute is not resolved through mediation within thirty (30) days, the Dispute shall be resolved exclusively by final and binding arbitration held in accordance with the provisions of this Agreement and the American Arbitration Association (“AAA”) National Rules for the Resolution of Employment Disputes then in effect, unless such rules are inconsistent with the provisions of this Agreement.  In connection with such arbitration:

          (i)       Any such arbitration shall be conducted: (A) by a neutral arbitrator appointed by mutual agreement of the parties; or (B) failing such agreement, by a neutral arbitrator appointed in accordance with said AAA rules;

          (ii)      The parties shall be permitted reasonable discovery in accordance with the provisions of the Minnesota Rules of Civil Procedure, including the production of relevant documents by the other party, the exchange of witness lists, and a limited number of depositions, including depositions of any expert who will testify at the arbitration;

          (iii)     The summary judgment procedure applicable under Rule 56 of the Minnesota Rules of Civil Procedure shall be available and apply to any arbitration conducted pursuant to this Agreement;

          (iv)     The arbitrator’s award shall include findings of fact and conclusions of law showing the legal and factual bases for the arbitrator’s decision;

          (v)      The arbitrator shall have the authority to award to the prevailing party any remedy or relief that a United States District Court or court of the State of Minnesota could order or grant if the dispute had first been brought in that judicial forum, including costs and attorneys’ fees;

          (vi)     The arbitrator’s award may be entered by any court of competent jurisdiction; and

          (vii)    Unless otherwise agreed by the parties, the place of any arbitration proceeding shall be Minneapolis, Minnesota.

          (c)      Confidentiality of Dispute Resolution.  Except as the parties shall agree in writing, upon court order, or as required by law, neither the Company nor the Executive will disclose to any third party, except for their counsel, retained experts and other persons directly serving counsel or retained experts, any fact or information in any way pertaining to the process of resolving a Dispute under this Section 11, or to the fact of or any term that is part of a resolution or settlement of any Dispute.  This prohibition on disclosure specifically includes, without limitation, any disclosure of an oral statement or of a written document made or provided by either the Executive or the Company, or by any of its or his representatives, counsel or retained experts, or other persons directly serving any representatives, counsel or retained experts.

          (d)      Right to Injunctive Relief.  The Executive acknowledges and agrees that the services to be rendered by him hereunder are of a special, unique and extraordinary character, that it would be difficult to replace such services and that any violation of Sections 4(f), 8, 9 or 10 hereof or of the Employee Invention Agreement would be highly injurious to the Company and/or to any Company Affiliate and that it would be extremely difficult to compensate the Company and/or any Company Affiliate fully for damages for any such violation.  Accordingly, notwithstanding the terms of this Section 11, the Company or any Company Affiliate, as the case may be, shall be entitled to seek temporary and permanent injunctive relief from a court of law, said relief to be obtained in accordance with Section 13(a), to enforce the provisions of Sections 4(f), 8, 9 or 10 hereof, and the Employee Invention Agreement.  This provision with respect to injunctive relief shall not, however, diminish the right of the Company or any Company Affiliate to claim and recover damages, or to seek and obtain any other relief available to it pursuant to the provisions of this Section 11.

          12.     Assignment; Successors.

          (a)      This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s heirs, executors and administrators.

          (b)      This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns, provided that the Company may not assign this Agree­ment except in connection with the assignment or disposition of all or substantially all of the as­sets or stock of the Company, or by law as a result of a merger or consolidation.

          (c)      The Company shall require any successor or assignee to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such assignment had taken place.

          13.     Miscellaneous.

          (a)      This Agreement shall be governed by, and construed in accordance with, the laws of the State of Minnesota, without reference to its conflict of law rules. The parties agree, subject to the provisions requiring arbitration, that any litigation in any way relating to this Agreement or to the Executive’s employment by the Company, shall be venued in the State of Minnesota, Hennepin County District Court, or the United States District Court for the District of Minnesota. The Executive and the Company hereby consent to the personal jurisdiction of these courts and waive any objection that such venue is inconvenient or improper.

          (b)      The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

          (c)      This Agreement may not be amended or modified except by a written agreement executed by the par­ties hereto or their respective successors.

          (d)      All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party, by registered or certified mail, return receipt requested, postage prepaid, or by or by telefacsimile with printed confirmation, addressed as follows:

 

If to the Executive:

 

Richard R. Roscitt

 

Forty-Six Ridgeview Drive

 

Basking Ridge, New Jersey 07920

 

 

 

If to the Company:

 

ADC Telecommunications Inc.

 

P.O. Box 1101

 

Minneapolis, Minnesota 55440-1101

 

Fax (952) 946-3209

 

Attention: Chairman of Compensation and Organization Committee

or to such other address as either party furnishes to the other in writing in accordance with this paragraph.  Notices and communications shall be effective when actually received by the addressee or three (3) days after the initiation of delivery; provided, that this period will not extend any period of notice specifically set forth in this Agreement.

          (e)      To the extent any provision of this Agreement shall be determined to be invalid or unenforceable in any jurisdiction, such provision shall be deemed to be deleted from this Agreement as to such jurisdiction only, and the validity and enforceability of the remainder of such provision and of this Agreement shall be unaffected.  In furtherance of and not in limitation of the foregoing, the Executive expressly agrees that should the duration of, geographical extent of, or business activities covered by, any provision of this Agreement be in excess of that which is valid or enforceable under applicable law in a given jurisdiction, then such provision, as to such jurisdiction only, shall be construed to cover only that duration, extent or activities that may validly or enforceably be covered.

          (f)       Notwithstanding any other provision of this Agreement, the Company shall withhold from any amount payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations, or that are consistent with the Company’s prevailing practice.

          (g)      The Executive’s or the Company’s failure to insist upon strict compliance with any provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

          (h)      This Agreement (including other agreements specifically mentioned in this Agreement) contains the entire agreement of the parties relating to the employment of the Executive by the Company and the other matters discussed herein and supersedes all prior promises, contracts, agreements and understandings of any kind, whether express or implied, oral or written, with respect to such subject matter (including, but not limited to, any promise, contract or understanding, whether express or implied, oral or written, by and between the Company and the Executive), and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein or in the other agreements mentioned herein.

          (i)       This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

          (j)       The parties hereto shall execute and deliver all documents, provide all information and take or forbear from all such action as may be necessary or appropriate to achieve the purposes of the Agreement.

          (k)      The Company shall reimburse the Executive for fees and expenses incurred in connection with the negotiation and preparation of this Agreement, up to a maximum total reimbursement amount of $15,000.

 

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization of its Board of Directors, the Company has caused this Agree­ment to be executed in its name on its behalf, all as of the day and year first above written.

ADC TELECOMMUNICATIONS, INC.

 

RICHARD R. ROSCITT

 

 

 

By /s/ Laura N. Owen


 

 

/s/ Richard R. Roscitt


 

 

 

 

Its Vice President, Human Resources


 

 

Date January 28, 2001


 

 

 

 

Date January 28, 2001