EXHIBIT 10.15
[IMS HEALTH LETTERHEAD]
TIER-2
CHANGE-IN-CONTROL AGREEMENT
FOR CERTAIN EXECUTIVES
OF IMS HEALTH INCORPORATED
Date
PERSONAL AND CONFIDENTIAL
[First_Name][Last_Name]
[Job_Title]
[Company]
Dear [First_Name][Last_Name]:
IMS Health Incorporated (the "Company") considers it essential to the best
interests of its stockholders to xxxxxx the continued employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that the possibility of a change in ownership or
control of the Company may result in the departure or distraction of such
personnel to the detriment of the Company and its stockholders. As you are a
skilled and dedicated executive with important management responsibilities and
talents, the Company believes that its best interests will be served if you are
encouraged to remain with the Company.
The Company has determined that your ability to perform your
responsibilities and utilize your talents for the benefit of the Company, and
the Company's ability to retain you as an employee, will be significantly
enhanced if you are provided with fair and reasonable protection from the risks
of a change in ownership or control of the Company. Accordingly, in order to
induce you to remain in the employ of the Company, you and the Company agree as
follows:
1. TERM OF AGREEMENT.
(a) GENERALLY. Except as provided in Section 1(b) hereof, (i) this
Agreement shall be effective as of__________ and shall continue in effect
through December 31, 2003, and (ii) commencing on January 1, 2004, and each
January 1 thereafter, this Agreement shall be automatically extended for one
additional year unless, not later than September 30th of the preceding year,
either party to this Agreement gives notice to the other that the Agreement
shall not be extended under this Section 1(a); PROVIDED, HOWEVER, that no such
notice by the Company shall be effective if a Change in Control or Potential
Change in Control (both as defined herein) shall have occurred prior to the date
of such notice.
(b) UPON A CHANGE IN CONTROL. If a Change in Control shall have
occurred at any time during the period in which this Agreement is effective,
this Agreement shall continue in effect for (i) the remainder of the month in
which the Change in Control occurred and (ii) a term of 24 months beyond the
month in which such Change in Control occurred (such entire period hereinafter
referred to as the "Protected Period").
2. CHANGE IN CONTROL; POTENTIAL CHANGE IN CONTROL.
(a) A "Change in Control" shall be deemed to have occurred if,
during the term of this Agreement:
(i) any "Person," as such term is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not including
any period prior to the effectiveness of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
(A) a director nominated by a Person who has entered into an agreement with the
Company to effect a transaction described in Sections (2)(a)(i), (iii) or (iv)
hereof, (B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a director nominated by
any Person who is the Beneficial Owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's securities) whose election by the Board or nomination for election by
the Company's stockholders was approved in advance by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or consolidated with
any other company, other than a merger or consolidation (A) which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 66 2/3% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and (B) after
which no Person holds 20% or more of the combined voting power of the
then-outstanding securities of the Company or such surviving entity;
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Change in Control has occurred.
(b) A "Potential Change in Control" shall be deemed to have occurred
if:
(i) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(ii) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(c) EMPLOYEE COVENANTS. You agree that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control, you
will remain in the employ of the
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Company until the earliest of (i) a date which is 180 days from the occurrence
of such Potential Change in Control, (ii) the termination of your employment by
reason of Disability (as defined herein) or (iii) the date on which you first
become entitled under this Agreement to receive the benefits provided in Section
3(b) hereof.
(d) COMPANY COVENANT REGARDING POTENTIAL CHANGE IN CONTROL. In the
event of a Potential Change in Control, the Company shall, not later than 15
days thereafter, have established one or more rabbi trusts and shall deposit
therein cash in an amount sufficient to provide for full payment of all
potential obligations of the Company that would arise assuming consummation of a
Change in Control and a subsequent termination of your employment under Section
3(b). Such rabbi trust(s) shall be irrevocable and shall provide that the
Company may not, directly or indirectly, use or recover any assets of the
trust(s) until such time as all obligations which potentially could arise
hereunder have been settled and paid in full, subject only to the claims of
creditors of the Company in the event of insolvency or bankruptcy of the
Company.
3. TERMINATION.
(a) TERMINATION BY THE COMPANY FOR CAUSE, BY YOU WITHOUT GOOD
REASON, OR BY REASON OF DEATH OR DISABILITY. If during the Protected Period your
employment by the Company is terminated by the Company for Cause, by you without
Good Reason, or because of your death or Disability, the Company shall be
relieved of its obligation to make any payments to you other than (i) its
payment of amounts otherwise accrued and owing but not yet paid and (ii) any
amounts payable under then-existing employee benefit programs at the time such
amounts are due.
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY YOU FOR GOOD
REASON. If during the Protected Period your employment by the Company is
terminated by the Company without cause or by you for Good Reason, you shall be
entitled to the compensation and benefits described in this Section 3(b). If
your employment by the Company is terminated prior to a Change in Control at the
request of a Person engaging in a transaction or series of transactions that
would result in a Change in Control, the Protected Period shall commence upon
the subsequent occurrence of a Change in Control, your actual termination shall
be deemed a termination occurring during the Protected Period and covered by
this Section 3(b), your Date of Termination shall be deemed to have occurred
immediately following the Change in Control, and Notice of Termination shall be
deemed to have been given by the Company immediately prior to your actual
termination. Your continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder. The compensation and benefits provided under this Section 3(b) are as
follows:
(i) The Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, no later than the fifth day following the Date of Termination, and you
shall receive all other amounts to which you are entitled under any compensation
or benefit plan of the Company, at the time such payments are due.
(ii) At the time specified in Section 3(d) hereof, the Company
shall pay you, in lieu of any further salary, bonus or severance payments for
periods subsequent to the Date of Termination, a lump sum amount in cash equal
to three times the sum of:
(A) the greater of (I) your annual base salary in effect immediately
prior to the Change in Control of the Company or (II) your annual base salary in
effect at the time Notice of Termination is given; and
(B) the greater of (I) your annual target bonus for the year in
which the Change in Control occurs or, (II) if no such target bonus has yet been
determined for such year, your annual target bonus actually earned by you in the
year immediately preceding the year in which the Change in Control occurs.
(iii) At the time specified in Section 3(d) hereof, the
Company shall pay to you, in lieu of amounts which may otherwise be payable to
you under any bonus plan (a "Bonus
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Plan"), an amount in cash equal to (A) your annual target bonus for the year in
which the Change in Control occurs, multiplied by a fraction, (I) the numerator
of which equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (II) the denominator of
which is 365, and (B) the entire target bonus opportunity with respect to each
performance period in progress under all other Bonus Plans in effect at the time
of termination. Notwithstanding the foregoing, this Section 3(b)(iii) shall not
apply with respect to any amounts which may otherwise be payable to you under
the Company's Senior Executive Incentive Plan or any other Bonus Plan of the
Company that applies primarily to "covered employees" within the meaning of
Section 162(m) of the Code.
(iv) The Company shall provide you with a cash allowance, at
the time specified in Section 3(d) hereof, for outplacement and job search
activities (including, but not limited to, office and secretarial expenses) in
the amount of 20% of your annual base salary and annual target bonus taken into
account under Section 3(b)(ii) hereof, PROVIDED THAT (A) such cash allowance
shall not exceed $100,000 and (B) such cash allowance shall apply only to those
costs or obligations that are incurred by you during the 36-month period
following your termination of employment.
(v) For a 36-month period following your termination of
employment, the Company shall arrange to provide you with life and health
insurance benefits no less favorable than those which you were receiving
immediately prior to the Notice of Termination. Notwithstanding the foregoing,
any benefit described in the preceding sentence shall constitute secondary
coverage with respect to any life and health insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) during the 36-month period following your termination.
(vi) Starting at age 55, you shall receive retiree medical and
life benefits from the Company. Such benefits shall be no less favorable than
the benefits that you would have received had you, at the time Notice of
Termination is given, both (A) attained age 55 and (B) retired from the Company.
Notwithstanding the foregoing, any benefit described in the preceding sentence
shall constitute secondary coverage with respect to retiree medical and life
benefits actually received by you in connection with any subsequent employment
(or self-employment) following your termination.
(c) EXCISE TAX. In the event you become entitled to any amounts
payable in connection with a Change in Control (whether or not such amounts are
payable pursuant to this Agreement) (the "Severance Payments"), if any of such
Severance Payments are subject to the tax (the "Excise Tax") imposed by Section
4999 of the Code (or any similar federal, state or local tax that may hereafter
be imposed), the Company shall pay to you at the time specified in Section 3(d)
hereof an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 3(c), shall be equal to the Total
Payments. For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by you in connection with a
Change in Control or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with the Severance
Payments, constitute the "Total Payments") shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by you such other payments or
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;
(ii) the amount of the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (A) the total amount of the Total
Payments and (B) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying
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Section 3(c)(i) hereof); and (iii) the value of any non-cash benefits or any
deferred payments or benefit shall be determined by a nationally-recognized
accounting firm selected by you in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of your residence on the
Date of Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. In the event
that the Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time of termination of your employment, you shall
repay to the Company within ten days after the time that the amount of such
reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect of such excess
within ten days after the time that the amount of such excess is finally
determined.
(d) TIME OF PAYMENT. The payments provided for in Sections 3(b)(ii),
3(b)(iii) and 3(c) hereof shall be made not later than the fifteenth day
following the Date of Termination; PROVIDED, HOWEVER, that if the amount of such
payments cannot be finally determined on or before such day, the Company shall
pay to you on such day an estimate, as determined in good faith by the Company,
of the minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code) as soon as the amount thereof can be determined but in no event
later than the thirtieth day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to you,
payable on the fifteenth day after the demand by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code). The
payments provided in Section 3(b)(iv) hereof shall be made not later than the
fifteenth day following the submission of each receipt to the Company evidencing
costs or obligations incurred by you in connection with outplacement counseling
and job search activities.
(e) NOTICE. During the Protected Period, any purported termination
of your employment by the Company or by you shall be communicated by written
Notice of Termination to the other party hereto.
(f) CERTAIN DEFINITIONS. Except as otherwise indicated in this
Agreement, all definitions in this Section 3(f) shall be applicable during the
Protected Period only.
(i) DISABILITY. "Disability" shall mean your absence from the
full-time performance of your duties with the Company for six consecutive months
as a result of your incapacity due to physical or mental illness or disability,
and within 30 days after written Notice of Termination is thereafter given you
shall not have returned to the full-time performance of your duties.
(ii) CAUSE. "Cause" shall mean termination on account of (A)
the willful and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your incapacity due
to physical or mental illness or disability or any failure after the issuance of
a Notice of Termination by you for Good Reason) which failure is demonstrably
and materially damaging to the financial condition or reputation of the Company
and/or its subsidiaries, and which failure continues more than 48 hours after a
written demand for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the Board believes that
you have not substantially performed your duties or (B) the willful engaging by
you in conduct which is demonstrably and materially injurious to the
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Company, monetarily or otherwise. No act, or failure to act, on your part
shall be deemed "willful" unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or omission was in
the best interest of the Company. Notwithstanding the foregoing, you shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to you a copy of the resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) off the entire
membership of the Board at a meeting of the Board (after reasonable notice to
you and an opportunity for you, together with your counsel, to be heard
before the Board) finding that, in the good faith opinion of the Board, you
were guilty of conduct set forth above in this Section 3(f)(ii) and
specifying the particulars thereof in detail.
(iii) GOOD REASON. "Good Reason" shall mean, without your
express written consent, the occurrence upon or after a Change in Control of any
of the following circumstances unless, in the case of Sections 3(f)(iii)(A),
(E), (F) or (G) hereof, such circumstances are fully corrected prior to the Date
of Termination specified in the Notice of Termination given in respect thereof:
(A) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change in
Control, or an adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control;
(B) a reduction by the Company in your annual base salary, any
target bonus or perquisites as in effect immediately prior to the Change in
Control or as the same may be increased from time to time except for
across-the-board perquisite reductions similarly affecting all senior executives
of the Company and all senior executives of any Person in control of the
Company;
(C) the relocation of the principle place of your employment to a
location more than 50 miles from the location of such place of employment on the
date of this Agreement; except for required travel on the Company's business to
an extent substantially consistent with your business travel obligations prior
to the Change in Control;
(D) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Company within seven
days of the date such compensation is due;
(E) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately prior to the
Change in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amounts of benefits provided and the level of your participation
relative to other participants, as existed at the time of the Change in Control;
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof; or
(G) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(f)(iv) hereof (and, if applicable, the requirements of Section
3(f)(ii) hereof), which purported termination shall not be effective for
purposes of this Agreement.
(iv) NOTICE OF TERMINATION. "Notice of Termination" shall mean
notice indicating the specific termination provision in this Agreement relied
upon and setting forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of your employment under the provision so
indicated.
(v) DATE OF TERMINATION. "Date of Termination" shall mean (A)
if your employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that
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you shall not have returned to the full-time performance of your duties during
such 30-day period) or (B) if your employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of a
termination for Cause, shall not be less than 30 days from the date such Notice
of Termination is given and, in the case of a termination for Good Reason, shall
not be less than 15 nor more than 60 days from the date such Notice of
Termination is given).
4. MITIGATION. Except as provided in Section 3(b)(v) and (vi) hereof, you
shall not be required to mitigate the amount of payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of
payment or benefit provided for under this Agreement be reduced by any
compensation earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Company, or otherwise.
5. COSTS OF PROCEEDINGS. The Company shall pay all costs and expenses,
including all attorneys' fees and disbursements, of the Company and, at least
monthly, you in connection with any legal proceedings, whether or not instituted
by the Company or you, relating to the interpretation or enforcement of any
provision of this Agreement; PROVIDED THAT if you instituted the proceeding and
a finding (no longer subject to appeal) is entered that you instituted the
proceeding in bad faith, you shall pay all of your costs and expenses, including
attorneys' fees and disbursements. The Company shall pay prejudgment interest on
any money judgment obtained by you as a result of such proceeding, calculated at
the prime rate of The Chase Manhattan Bank as in effect from time to time from
the date that payment should have been made to you under this Agreement.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Company shall require any successor (whether 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 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. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. In the event of your
death, all amounts otherwise payable to you hereunder shall, unless otherwise
provided herein, be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) personally delivered or (b) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement; PROVIDED THAT all
notice to the Company shall be directed to the attention of the Board with a
copy to the General Counsel of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the time or at any prior or subsequent
time. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without regard
to its conflicts of law principles. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such
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sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under this Agreement shall survive the expiration of
this Agreement to the extent necessary to give effect to this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and during
the term of this Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereof with respect to the subject matter contained herein. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. Notwithstanding anything to the
contrary in this Agreement, the procedural provisions of this Agreement shall
apply to all benefits payable as a result of a Change in Control (or other
change in control) under any employee benefit plan, agreement, program, policy
or arrangement of the Company.
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If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
IMS HEALTH INCORPORATED
By: _______________________________________
Chairman and Chief Executive Officer
Agreed to this ____________________ day
of ____________________________, 2001.
-----------------------------------
[First_Name][Last_Name]
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[IMS HEALTH LETTERHEAD]
TIER 3
CHANGE-IN-CONTROL AGREEMENT
FOR CERTAIN EXECUTIVES
OF IMS HEALTH INCORPORATED
Date
PERSONAL AND CONFIDENTIAL
[First_Name][Last_Name]
[Job_Title]
[Company]
Dear [First_Name][Last_Name]:
IMS Health Incorporated (the "Company") considers it essential to the best
interests of its stockholders to xxxxxx the continued employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that the possibility of a change in ownership or
control of the Company may result in the departure or distraction of such
personnel to the detriment of the Company and its stockholders. As you are a
skilled and dedicated executive with important management responsibilities and
talents, the Company believes that its best interests will be served if you are
encouraged to remain with the Company.
The Company has determined that your ability to perform your
responsibilities and utilize your talents for the benefit of the Company, and
the Company's ability to retain you as an employee, will be significantly
enhanced if you are provided with fair and reasonable protection from the risks
of a change in ownership or control of the Company. Accordingly, in order to
induce you to remain in the employ of the Company, you and the Company agree as
follows:
1. TERM OF AGREEMENT.
(a) GENERALLY. Except as provided in Section 1(b) hereof, (i) this
Agreement shall be effective as of__________ and shall continue in effect
through December 31, 2003, and (ii) commencing on January 1, 2004, and each
January 1 thereafter, this Agreement shall be automatically extended for one
additional year unless, not later than September 30th of the preceding year,
either party to this Agreement gives notice to the other that the Agreement
shall not be extended under this Section 1(a); PROVIDED, HOWEVER, that no such
notice by the Company shall be effective if a Change in Control or Potential
Change in Control (both as defined herein) shall have occurred prior to the date
of such notice.
(b) UPON A CHANGE IN CONTROL. If a Change in Control shall have
occurred at any time during the period in which this Agreement is effective,
this Agreement shall continue in effect for (i) the remainder of the month in
which the Change in Control occurred and (ii) a term of 24 months beyond the
month in which such Change in Control occurred (such entire period hereinafter
referred to as the "Protected Period").
2. CHANGE IN CONTROL; POTENTIAL CHANGE IN CONTROL.
(a) A "Change in Control" shall be deemed to have occurred if,
during the term of this Agreement:
(i) any "Person," as such term is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not including
any period prior to the effectiveness of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other than
(A) a director nominated by a Person who has entered into an agreement with the
Company to effect a transaction described in Sections (2)(a)(i), (iii) or (iv)
hereof, (B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a director nominated by
any Person who is the Beneficial Owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's securities) whose election by the Board or nomination for election by
the Company's stockholders was approved in advance by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or consolidated with
any other company, other than a merger or consolidation (A) which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 66 2/3% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and (B) after
which no Person holds 20% or more of the combined voting power of the
then-outstanding securities of the Company or such surviving entity;
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Change in Control has occurred.
(b) A "Potential Change in Control" shall be deemed to have occurred
if:
(i) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(ii) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(c) EMPLOYEE COVENANTS. You agree that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control, you
will remain in the employ of the
2
Company until the earliest of (i) a date which is 180 days from the occurrence
of such Potential Change in Control, (ii) the termination of your employment by
reason of Disability (as defined herein) or (iii) the date on which you first
become entitled under this Agreement to receive the benefits provided in Section
3(b) hereof.
(d) COMPANY COVENANT REGARDING POTENTIAL CHANGE IN CONTROL. In the
event of a Potential Change in Control, the Company shall, not later than 15
days thereafter, have established one or more rabbi trusts and shall deposit
therein cash in an amount sufficient to provide for full payment of all
potential obligations of the Company that would arise assuming consummation of a
Change in Control and a subsequent termination of your employment under Section
3(b). Such rabbi trust(s) shall be irrevocable and shall provide that the
Company may not, directly or indirectly, use or recover any assets of the
trust(s) until such time as all obligations which potentially could arise
hereunder have been settled and paid in full, subject only to the claims of
creditors of the Company in the event of insolvency or bankruptcy of the
Company.
3. TERMINATION.
(a) TERMINATION BY THE COMPANY FOR CAUSE, BY YOU WITHOUT GOOD
REASON, OR BY REASON OF DEATH OR DISABILITY. If during the Protected Period your
employment by the Company is terminated by the Company for Cause, by you without
Good Reason, or because of your death or Disability, the Company shall be
relieved of its obligation to make any payments to you other than (i) its
payment of amounts otherwise accrued and owing but not yet paid and (ii) any
amounts payable under then-existing employee benefit programs at the time such
amounts are due.
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY YOU FOR GOOD
REASON. If during the Protected Period your employment by the Company is
terminated by the Company without cause or by you for Good Reason, you shall be
entitled to the compensation and benefits described in this Section 3(b). If
your employment by the Company is terminated prior to a Change in Control at the
request of a Person engaging in a transaction or series of transactions that
would result in a Change in Control, the Protected Period shall commence upon
the subsequent occurrence of a Change in Control, your actual termination shall
be deemed a termination occurring during the Protected Period and covered by
this Section 3(b), your Date of Termination shall be deemed to have occurred
immediately following the Change in Control, and Notice of Termination shall be
deemed to have been given by the Company immediately prior to your actual
termination. Your continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder. The compensation and benefits provided under this Section 3(b) are as
follows:
(i) The Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, no later than the fifth day following the Date of Termination, and you
shall receive all other amounts to which you are entitled under any compensation
or benefit plan of the Company, at the time such payments are due.
(ii) At the time specified in Section 3(d) hereof, the Company
shall pay you, in lieu of any further salary, bonus or severance payments for
periods subsequent to the Date of Termination, a lump sum amount in cash equal
to two times the sum of:
(A) the greater of (I) your annual base salary in effect immediately
prior to the Change in Control of the Company or (II) your annual base salary in
effect at the time Notice of Termination is given; and
(B) the greater of (I) your annual target bonus for the year in
which the Change in Control occurs or, (II) if no such target bonus has yet been
determined for such year, your annual target bonus actually earned by you in the
year immediately preceding the year in which the Change in Control occurs.
(iii) At the time specified in Section 3(d) hereof, the
Company shall pay to you, in lieu of amounts which may otherwise be payable to
you under any bonus plan (a "Bonus
3
Plan"), an amount in cash equal to (A) your annual target bonus for the year in
which the Change in Control occurs, multiplied by a fraction, (I) the numerator
of which equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (II) the denominator of
which is 365, and (B) the entire target bonus opportunity with respect to each
performance period in progress under all other Bonus Plans in effect at the time
of termination. Notwithstanding the foregoing, this Section 3(b)(iii) shall not
apply with respect to any amounts which may otherwise be payable to you under
the Company's Senior Executive Incentive Plan or any other Bonus Plan of the
Company that applies primarily to "covered employees" within the meaning of
Section 162(m) of the Code.
(iv) The Company shall provide you with a cash allowance, at
the time specified in Section 3(d) hereof, for outplacement and job search
activities (including, but not limited to, office and secretarial expenses) in
the amount of 20% of your annual base salary and annual target bonus taken into
account under Section 3(b)(ii) hereof, PROVIDED THAT (A) such cash allowance
shall not exceed $100,000 and (B) such cash allowance shall apply only to those
costs or obligations that are incurred by you during the 36-month period
following your termination of employment.
(v) For a 24-month period following your termination of
employment, the Company shall arrange to provide you with life and health
insurance benefits no less favorable than those which you were receiving
immediately prior to the Notice of Termination. Notwithstanding the foregoing,
any benefit described in the preceding sentence shall constitute secondary
coverage with respect to any life and health insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) during the 24-month period following your termination.
(vi) Starting at age 55, you shall receive retiree medical and
life benefits from the Company. Such benefits shall be no less favorable than
the benefits that you would have received had you, at the time Notice of
Termination is given, both (A) attained age 55 and (B) retired from the Company.
Notwithstanding the foregoing, any benefit described in the preceding sentence
shall constitute secondary coverage with respect to retiree medical and life
benefits actually received by you in connection with any subsequent employment
(or self-employment) following your termination.
(c) EXCISE TAX. In the event you become entitled to any amounts
payable in connection with a Change in Control (whether or not such amounts are
payable pursuant to this Agreement) (the "Severance Payments"), if any of such
Severance Payments are subject to the tax (the "Excise Tax") imposed by Section
4999 of the Code (or any similar federal, state or local tax that may hereafter
be imposed), the Company shall pay to you at the time specified in Section 3(d)
hereof an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 3(c), shall be equal to the Total
Payments. For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by you in connection with a
Change in Control or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with the Severance
Payments, constitute the "Total Payments") shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by you such other payments or
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;
(ii) the amount of the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser of (A) the total amount of the Total
Payments and (B) the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying
4
Section 3(c)(i) hereof); and (iii) the value of any non-cash benefits or any
deferred payments or benefit shall be determined by a nationally-recognized
accounting firm selected by you in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of your residence on the
Date of Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. In the event
that the Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time of termination of your employment, you shall
repay to the Company within ten days after the time that the amount of such
reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal and state and local income tax
imposed on the Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or federal and state and local income tax
deduction) plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of your employment (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional gross-up payment in respect of such excess
within ten days after the time that the amount of such excess is finally
determined.
(d) TIME OF PAYMENT. The payments provided for in Sections 3(b)(ii),
3(b)(iii) and 3(c) hereof shall be made not later than the fifteenth day
following the Date of Termination; PROVIDED, HOWEVER, that if the amount of such
payments cannot be finally determined on or before such day, the Company shall
pay to you on such day an estimate, as determined in good faith by the Company,
of the minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code) as soon as the amount thereof can be determined but in no event
later than the thirtieth day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to you,
payable on the fifteenth day after the demand by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code). The
payments provided in Section 3(b)(iv) hereof shall be made not later than the
fifteenth day following the submission of each receipt to the Company evidencing
costs or obligations incurred by you in connection with outplacement counseling
and job search activities.
(e) NOTICE. During the Protected Period, any purported termination
of your employment by the Company or by you shall be communicated by written
Notice of Termination to the other party hereto.
(f) CERTAIN DEFINITIONS. Except as otherwise indicated in this
Agreement, all definitions in this Section 3(f) shall be applicable during the
Protected Period only.
(i) DISABILITY. "Disability" shall mean your absence from the
full-time performance of your duties with the Company for six consecutive months
as a result of your incapacity due to physical or mental illness or disability,
and within 30 days after written Notice of Termination is thereafter given you
shall not have returned to the full-time performance of your duties.
(ii) CAUSE. "Cause" shall mean termination on account of (A)
the willful and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your incapacity due
to physical or mental illness or disability or any failure after the issuance of
a Notice of Termination by you for Good Reason) which failure is demonstrably
and materially damaging to the financial condition or reputation of the Company
and/or its subsidiaries, and which failure continues more than 48 hours after a
written demand for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the Board believes that
you have not substantially performed your duties or (B) the willful engaging by
you in conduct which is demonstrably and materially injurious to the
5
Company, monetarily or otherwise. No act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there shall have been
delivered to you a copy of the resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) off the entire membership of the Board at
a meeting of the Board (after reasonable notice to you and an opportunity for
you, together with your counsel, to be heard before the Board) finding that, in
the good faith opinion of the Board, you were guilty of conduct set forth above
in this Section 3(f)(ii) and specifying the particulars thereof in detail.
(iii) GOOD REASON. "Good Reason" shall mean, without your
express written consent, the occurrence upon or after a Change in Control of any
of the following circumstances unless, in the case of Sections 3(f)(iii)(A),
(E), (F) or (G) hereof, such circumstances are fully corrected prior to the Date
of Termination specified in the Notice of Termination given in respect thereof:
(A) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change in
Control, or an adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to such Change in Control;
(B) a reduction by the Company in your annual base salary, any
target bonus or perquisites as in effect immediately prior to the Change in
Control or as the same may be increased from time to time except for
across-the-board perquisite reductions similarly affecting all senior executives
of the Company and all senior executives of any Person in control of the
Company;
(C) the relocation of the principle place of your employment to a
location more than 50 miles from the location of such place of employment on the
date of this Agreement; except for required travel on the Company's business to
an extent substantially consistent with your business travel obligations prior
to the Change in Control;
(D) the failure by the Company to pay to you any portion of your
compensation or to pay to you any portion of an installment of deferred
compensation under any deferred compensation program of the Company within seven
days of the date such compensation is due;
(E) the failure by the Company to continue in effect any material
compensation or benefit plan in which you participated immediately prior to the
Change in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both
in terms of the amounts of benefits provided and the level of your participation
relative to other participants, as existed at the time of the Change in Control;
(F) the failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof; or
(G) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(f)(iv) hereof (and, if applicable, the requirements of Section
3(f)(ii) hereof), which purported termination shall not be effective for
purposes of this Agreement.
(iv) NOTICE OF TERMINATION. "Notice of Termination" shall mean
notice indicating the specific termination provision in this Agreement relied
upon and setting forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of your employment under the provision so
indicated.
(v) DATE OF TERMINATION. "Date of Termination" shall mean (A)
if your employment is terminated for Disability, 30 days after Notice of
Termination is given (provided that
6
you shall not have returned to the full-time performance of your duties during
such 30-day period) or (B) if your employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of a
termination for Cause, shall not be less than 30 days from the date such Notice
of Termination is given and, in the case of a termination for Good Reason, shall
not be less than 15 nor more than 60 days from the date such Notice of
Termination is given).
4. MITIGATION. Except as provided in Section 3(b)(v) and (vi) hereof, you
shall not be required to mitigate the amount of payment provided for under this
Agreement by seeking other employment or otherwise, nor shall the amount of
payment or benefit provided for under this Agreement be reduced by any
compensation earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Company, or otherwise.
5. COSTS OF PROCEEDINGS. The Company shall pay all costs and expenses,
including all attorneys' fees and disbursements, of the Company and, at least
monthly, you in connection with any legal proceedings, whether or not instituted
by the Company or you, relating to the interpretation or enforcement of any
provision of this Agreement; PROVIDED THAT if you instituted the proceeding and
a finding (no longer subject to appeal) is entered that you instituted the
proceeding in bad faith, you shall pay all of your costs and expenses, including
attorneys' fees and disbursements. The Company shall pay prejudgment interest on
any money judgment obtained by you as a result of such proceeding, calculated at
the prime rate of The Chase Manhattan Bank as in effect from time to time from
the date that payment should have been made to you under this Agreement.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Company shall require any successor (whether 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 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. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. In the event of your
death, all amounts otherwise payable to you hereunder shall, unless otherwise
provided herein, be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) personally delivered or (b) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement; PROVIDED THAT all
notice to the Company shall be directed to the attention of the Board with a
copy to the General Counsel of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the time or at any prior or subsequent
time. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without regard
to its conflicts of law principles. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such
7
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under this Agreement shall survive the expiration of
this Agreement to the extent necessary to give effect to this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and during
the term of this Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereof with respect to the subject matter contained herein. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. Notwithstanding anything to the
contrary in this Agreement, the procedural provisions of this Agreement shall
apply to all benefits payable as a result of a Change in Control (or other
change in control) under any employee benefit plan, agreement, program, policy
or arrangement of the Company.
8
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
IMS HEALTH INCORPORATED
By: _____________________________________
Chairman and Chief Executive Officer
Agreed to this ____________________ day
of ____________________________, 2001.
-----------------------------------
[First_Name][Last_Name]
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