CONSULTING AGREEMENT
Exhibit 10.5
This Consulting Agreement (this “Agreement”) is made as of the 1st day of
October, 2006, by and between Aetna Inc. (“Company”) and Xxxx X. Xxxx, M.D. (“Consultant”). The
parties hereto agree as follows:
1. Engagement. Company hereby engages Consultant and Consultant hereby agrees to
render at the request of the Company’s Chief Executive Officer or Board of Directors, upon
reasonable notice, independent consulting services for Company on matters of an executive and/or
high level nature, including but not limited to design and analysis of Company’s experience with
various products and strategies including consumer-directed health plans, Aexcel networks, Chairman
initiatives, Medicare, pharmaceutical programs, wellness programs, and other business matters as
agreed by the parties. At the Company’s request, Consultant will collaborate with the Company on
presentation and publication of the results of these analyses for use by the Company, internally or
externally. In addition, at the Company’s request, Consultant shall serve as a director of the
Aetna Foundation, Inc. and continue to participate in specific community activities, including
Board-related service, as requested by Company and agreed to by Consultant. In this engagement and
all activities hereunder, Consultant shall serve as an independent contractor and not an employee
of Company, as further explained in Section 6 below.
2. Term. The term of this Agreement shall begin as of October 1, 2006 and shall
terminate on September 30, 2009, unless terminated earlier or extended pursuant to Section 5 of
this Agreement.
3. Compensation. As compensation for all services rendered by Consultant under this
Agreement, Company shall pay Consultant at a per diem rate of $4,000 per day and at $2,000 per
half-day for consulting services excluding any community-related efforts or service as a board
director of a charitable or not-for-profit entity, subject to the provisions of Section 5 of this
Agreement. All such compensation shall be payable without deduction, including no deduction for
federal income, social security, or state income taxes. All applicable taxes shall be the
responsibility of Consultant. Company also shall pay all travel-related expenses of Consultant for
such consulting services including all community-related efforts performed at Company’s and/or
Aetna Foundation Inc.’s request. In connection with any consulting assignment hereunder, (i)
Consultant shall have full access (on the same basis then applicable to senior executives of the
Company) to the Company’s travel facilities (e.g., car, driver, aircraft and helicopter services),
(ii) Company shall provide an office with appropriate support services for Consultant at Company’s
facilities in either New York or Boston (at Consultant’s election), unless Consultant assumes
another professional position that provides office and support services, provided, however, that if
Company does not maintain facilities in the city in which Consultant desires to work, it shall
provide Consultant facilities at another location in such city, and (iii) Company shall provide
Consultant with computers (including upgrades), software, printers, monitors and access to
information technology and communications support staff (on the same basis as such items and
support are made available to senior executives of the Company) in his office and at his two
principal residences.
4. Performance of Duties. Consultant shall render services conscientiously and shall
devote his best efforts and abilities thereto, at such times during the term hereof, and in such
manner, as Company and Consultant shall mutually agree, not to exceed 25 full days per calendar
quarter, it being acknowledged that Consultant’s services shall be performed at such places and at
such times as are reasonably convenient to Consultant, upon reasonable notice. Consultant shall
observe all policies and directives promulgated from time to time by Company.
5. Termination. This Agreement will terminate by either party upon reasonable notice
to the other. This Agreement also will terminate on Consultant’s death or, upon Consultant’s
acceptance of an academic or government position, upon Consultant’s request. The term of this
Agreement may be extended for two additional one-year periods on the same terms and conditions upon
mutual agreement of Consultant and Company. Consultant’s obligations under Section 7 (Confidential
Information), Section 8 (Return of Confidential Information and Other Company Property), Section 9
(Rights of Authorship), Section 10 (Remedy), Section 11 (Arbitration) and Section 12
(Miscellaneous) shall survive termination hereof.
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6. Independent Contractor. It is expressly agreed that Consultant is acting as an
independent contractor in performing services hereunder. Company shall carry no workers’
compensation insurance or any health or accident insurance (other than standard Aetna retiree
medical care benefits to which the Consultant is otherwise entitled) to cover Consultant. Company
shall not pay any contributions to Social Security, unemployment insurance, federal or state
withholding taxes, nor provide any other contributions or benefits that might be expected in an
employer-employee relationship. Company shall, however, pay all expenses associated with the
arrangement contemplated herein, including but not limited to advice, consulting, negotiation and
preparation of documents memorializing such arrangement.
7. Confidential Information. Consultant desires to act as a consultant to Company
and he understands and agrees that his duties for the Company in the past have required, and his
consulting duties may require, access to Confidential Information of a competitive nature, which
Company makes available only to select persons who have a need to know such confidential
information, and/or information subject to the attorney-client and work product privileges.
Consultant understands and agrees that for purposes of this Agreement, “Confidential Information”
includes all trade secrets and all information furnished by Company to Consultant, or to which
Consultant gains access during the course of his or her consulting relationship with Company, which
is either non-public, confidential or proprietary in nature, including, but not limited to
financial statements, client lists or information, supplier lists or information, subcontractor
lists or information, prospect lists or information, information pertaining to Company’s channels
of distribution, marketing, work product, pricing policy and records, sales representative
commission policy, sales volume by products, customer or geographic area, personnel history,
accounting procedures, invoice forms, contracts, leases, business plan, information about the
structure and marketing of the Company’s products and policies, revenue and/or commission
information, commission percentages, rating discounts and/or client costs, products, inventions,
services, pricing, databases, lead generation sources, debt information, employment manuals,
employee benefit cards, employee benefit statements, computer systems, software, computer hardware,
computer codes, passwords, programs and formula, technology, designs, secret processes, proprietary
or technical information, procedures or manuals, trademarks or copyrighted material in use or under
consideration for use, together with analyses, proposals, compilations, forecasts, studies, or
other documents or work product prepared by Company, its agents, representatives (including
attorneys, accountants and financial advisors) or employees which contain or otherwise reflect such
information. Consultant will not retain, use or disclose, directly or indirectly, any of Company’s
Confidential Information. Consultant recognizes that this Confidential Information is a unique
asset of Company, developed and perfected over a considerable time and at substantial expense to
Company and the disclosure of which may cause injury, loss of profits and loss of goodwill to
Company. Consultant agrees to protect the confidentiality of all Confidential Information during
the term of this Agreement and thereafter. Consultant agrees to keep all documents containing or
referring to Confidential Information in secure locations and not to duplicate, use or reveal to
third parties any Confidential Information except as necessary for the business purposes of
Company. Consultant agrees to inform all other persons to whom the Confidential Information might
be disclosed or made available of Company’s proprietary interest and of the recipient’s obligations
under this Agreement and to take such other protective measures as may be or become reasonably
necessary to preserve the confidentiality of such Confidential Information. Notwithstanding the
foregoing, however, “Confidential Information” shall not include such information that the
Consultant is required by law or a governmental agency to disclose, or information that has come
into the public domain by means other than breach of this Agreement.
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8. Return of Confidential Information and Other Company Property. Consultant
acknowledges that all papers, photographs and apparatus related to the business of Company,
including those prepared or made by Consultant, including but not limited to the Confidential
Information, shall be and remain at all times the property of Company. When the consulting
relationship with the Company terminates for any reason, or upon request by Company, Consultant
will promptly deliver (within five calendar days) to Company all of Consultant’s files and copies
thereof and other property of Company in the Consultant’s possession, including but not limited to
any security pass or ID card, pagers, voice mail passwords or passcodes, company credit card, keys,
computer disks and software, work product, brochures or customer data, all originals and copies of
the Confidential Information and all originals and copies of documents relating to the Confidential
Information.
9. Rights of Authorship. Consultant acknowledges that all original works of
authorship that are made by him (solely or jointly with others) within the scope of this Agreement
and which are protectable by copyright are “works made for hire” as that term is defined in the
United States Copyright Act (17 U.S.C., Section 101).
10. Remedy. Consultant understands that Company would not have any adequate remedy at
law for the material breach or threatened breach by the Consultant of Sections 7 (Confidential
Information), 8 (Return of Confidential Information and Other Company Property) or 9 (Rights of
Authorship) of this Agreement, and agrees that in the event of any such material breach or
threatened breach, Company may, in addition to the other remedies which may be available to it,
file a suit in equity to enjoin Consultant from the breach or threatened breach of such
covenant(s).
11. Arbitration. Any matter, controversy or claim arising out of or relating to this
Agreement or to any breach of this Agreement, except claims set forth in Section 10 of this
Agreement, as to which Company has elected to seek a court remedy, shall be settled by arbitration
before one arbitrator in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgments on the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. Each party shall pay: the fees of his or its attorneys;
the expenses of his or its witnesses; and all other expenses connected with presenting his or its
case. Other costs of the arbitration, including the cost of any record or transcripts of the
arbitration hearing, administrative fees, the fees of the arbitrator, and all other fees and costs
shall be borne equally by the parties.
12. Miscellaneous.
(a) Notices. Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing and if sent by registered or certified mail to Company or Consultant at
the address set forth below to such other address as they shall notify each other in writing.
If to Company:
Chief Executive Officer
Aetna Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Aetna Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
With a copy to:
General Counsel
Aetna Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Aetna Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
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If to Consultant: at Consultant’s last known address as reflected on the books and records of
the Company
With a copy to:
Xxxxx Xxxxx & Partners
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
(b) Assignment. This Agreement shall be binding upon and inure to the benefit of
Company and its successors and assigns. This Agreement shall not be assignable by Consultant.
(c) Applicable Law. This Agreement shall be construed in accordance with the laws of
the State of Connecticut in every respect, without regard to its rules regarding conflicts of law.
(d) Headings. Section headings and numbers herein are included for convenience of
reference only and this Agreement is not to be construed with reference thereto. If there is any
conflict between such numbers and headings and the text hereof, the text shall control.
(e) Severability. If for any reason any portion of this Agreement shall be held
invalid or unenforceable, the parties agree that it is their intent that such provision shall be
enforced to the maximum extent possible under applicable law, and that the court or arbitrator
shall reform such provision to make it enforceable in accordance with the intent of the parties,
and that notwithstanding such invalidity, unenforceability or reformation of any provision, the
remaining provisions of this Agreement shall remain in full force and effect.
(f) Entire Agreement. This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof and supersedes all previous agreements between the
parties, provided, however, that the parties acknowledge that certain provisions of the Employment
Agreement dated as of September 6, 2000, as amended, may remain in effect as provided in such
agreement and amendments thereto, during all or a portion of the term of this Agreement. No
officer, employee, or representative of Company has any authority to make any representation or
promise in connection with this Agreement or the subject matter hereof that is not contained
herein, and Consultant represents and warrants that he has not executed this Agreement in reliance
upon any such representation or promise. No modification, extension or renewal of this Agreement
shall be valid unless made in writing and signed by the parties hereto.
(g) Waiver of Breach. The waiver by Company of a breach of any provision of this
Agreement by Consultant shall not operate or be construed as a waiver of any subsequent breach by
Consultant.
(h) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall constitute one agreement.
| AETNA INC. |
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| By: | ||||
| Its Chairman | ||||
| Aetna Inc. | Xxxx X. Xxxx, M.D. | |||||||
By: Its: |
/s/: Xxxxxx X. Xxxxxx
|
/s/: Xxxx X. Xxxx
|
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Date:
|
9/27/2006 | Date: 9/27/06 | ||||||
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