EXHIBIT 10.46
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[IMS HEALTH LOGO]
Employment Agreement for Xxxxx X. Xxxxxx
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IMS HEALTH INCORPORATED
Employment Agreement for Xxxxx X. Xxxxxx
Page
1. Employment 1
2. Term 1
3. Offices and Duties 1
(a) Generally. 1
(b) Place of Employment 2
4. Salary and Annual Incentive Compensation 2
(a) Base Salary 2
(b) Annual Incentive Compensation 2
5. Long Term Compensation, Including Stock Options, Benefits,
Deferred Compensation, and Expense Reimbursement 2
(a) Executive Compensation Plans 2
(b) Employee and Executive Benefit Plans 3
(c) Acceleration of Awards Upon a Change in Control 4
(d) Deferral of Compensation 4
(e) Company Registration Obligations 4
(f) Reimbursement of Expenses 4
6. Termination Due to Retirement, Death or Disability 4
(a) Retirement 4
(b) Death 5
(c) Disability 5
(d) Other Terms of Payment Following Retirement,
Death or Disability 7
7. Termination of Employment For Reasons Other Than Retirement,
Death, or Disability 7
(a) Termination by the Company for Cause 7
(b) Termination by Executive Other Than For
Good Reason 7
(c) Termination by the Company Without Cause Prior
to or More than Two Years After a Change in
Control 7
(d) Termination by Executive for Good Reason Prior
to or More than Two Years After a Change in
Control 9
(e) Termination by the Company Without Cause
Within Two Years After a Change in Control 11
(f) Termination by Executive for Good Reason Within
Two Years After a Change in Control 13
(g) Other Terms Relating to Certain Terminations of
Employment 15
8. Definitions Relating to Termination Events 15
(a) "Cause" 15
(b) "Change in Control" 15
(c) "Compensation Accrued at Xxxxxxxxxxx" 00
(x) "Disability" 17
(e) "Good Reason 17
(f) "Potential Change in Control" 18
9. Rabbi Trust Obligation Upon Potential Change in Control;
Excise Tax Related Provisions 18
(a) Rabbi Trust Funded Upon Potential Change
in Control 18
(b) Gross-up If Excise Tax Would Apply 18
10. Non-Competition and Non-Disclosure; Executive Cooperation;
Non-Disparagement 20
(a) Non-Competition 20
(b) Non-Disclosure; Ownership of Work 20
(c) Cooperation With Regard to Litigation 20
(d) Non-Disparagement 21
(e) Release of Employment Claims 21
(f) Forfeiture of Outstanding Options 21
(g) Survival 21
11. Governing Law; Disputes; Arbitration 21
(a) Governing Law 21
(b) Reimbursement of Expenses in Enforcing Rights 22
(c) Arbitration 22
(d) Interest on Unpaid Amounts 22
12. Miscellaneous 22
(a) Integration 22
(b) Successors; Transferability 23
(c) Beneficiaries 23
(d) Notices 23
(e) Reformation 23
(f) Headings 23
(g) No General Waivers 23
(h) No Obligation To Mitigate 24
(i) Offsets; Withholding 24
(j) Successors and Assigns 24
(k) Counterparts 24
13. Indemnification 24
IMS HEALTH INCORPORATED
Employment Agreement for Xxxxx X. Xxxxxx
THIS EMPLOYMENT AGREEMENT by and between IMS HEALTH INCORPORATED, a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxx ("Executive") shall
become effective as of November 14, 2000 (the "Effective Date").
W I T N E S S E T H
WHEREAS, Executive has served the Company and its predecessors in
executive capacities since January 30, 1984;
WHEREAS, the Company desires to continue to employ Executive as Chief
Financial Officer and Chief Administrative Officer of the Company, and Executive
desires to accept such employment on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
adequacy of which the Company and Executive each hereby acknowledge, the Company
and Executive hereby agree as follows:
1. EMPLOYMENT.
The Company hereby agrees to employ Executive as its Chief Financial
Officer and Chief Administrative Officer, and Executive hereby agrees to accept
such employment and serve in such capacities, during the Term as defined in
Section 2 (subject to Section 7(c)) and upon the terms and conditions set forth
in this Employment Agreement (the "Agreement").
2. TERM.
The term of employment of Executive under this Agreement (the "Term")
shall be the period commencing on the Effective Date and ending on December 31,
2002 and any period of extension thereof in accordance with this Section 2,
except that the Term will end at a date, prior to the end of such period or
extension thereof, specified in Section 6 or 7 in the event of termination of
Executive's employment. The Term, if not previously ended, shall be extended
automatically without further action by either party by one additional year
(added to the end of the Term) first on December 31, 2002 (extending the Term to
December 31, 2003) and on each succeeding December 31 thereafter, unless either
party shall have served written notice in accordance with Section 12(d) upon the
other party on or before the June 30 preceding a December 31 extension date
electing not to extend the Term further as of that December 31 extension date,
in which case employment shall terminate on that December 31 and the Term shall
end at that date, subject to earlier termination of employment and earlier
termination of the Term in accordance with Section 6 or 7. The foregoing
notwithstanding, in the event there occurs a Potential Change in Control during
the period of 180 days prior to the December 31 on which the Term will terminate
as a result of notice given by the Executive or the Company hereunder, the Term
shall be extended automatically at that December 31 by an additional period such
that the Term will extend until the 180th day following such Potential Change in
Control.
3. OFFICES AND DUTIES.
The provisions of this Section 3 will apply during the Term, except as
otherwise provided in Section 7(c) or 7(e):
(a) GENERALLY. Executive shall serve as the Chief Financial Officer and
Chief Administrative Officer of the Company. In any and all such capacities,
Executive shall report only to the Chief Executive Officer of the Company and to
the Board of Directors (the "Board"). Executive shall have and perform such
duties, responsibilities, and authorities as are customary for the chief
financial officer and chief administrative officer of a publicly held
corporation of the size, type, and nature of the Company as they may exist from
time to time and consistent with such position and status, and shall
specifically include having the principal executive responsibility for the
following operations, departments or activities of the Company: Finance; Human
Resources; Compensation & Benefits; Communications; Aviation;
Enterprises/Venture Capital Activities; Tax; Corporate Development; Treasury;
Investor Relations; and Shared Business Services. In no event shall such duties,
responsibilities, and authorities be reduced from those of Executive at the
Effective Date (including those specified in this Section 3(a)), except with the
written consent of Executive. The Company shall use its best efforts to cause
Executive to be nominated to
become a director of Cognizant Technology Solutions Inc. ("CTS"), and will vote
any shares of CTS it may own for the election of Executive, to fill the first
vacant CTS board seat with respect to which the Company has the right to
nominate a director (beginning in 2001), and thereafter during the Term.
Executive shall devote his full business time and attention, and his best
efforts, abilities, experience, and talent, to the positions of Chief Financial
Officer and Chief Administrative Officer and for the businesses of the Company
without commitment to other business endeavors, except that Executive (i) may
make personal investments which are not in conflict with his duties to the
Company and manage personal and family financial and legal affairs, (ii) may
undertake public speaking engagements, and (iii) may serve as a director of (or
similar position with) any other business or an educational, charitable,
community, civic, religious, or similar type of organization with the approval
of the Chief Executive Officer, so long as such activities (i.e., those listed
in clauses (i) through (iii)) do not preclude or render unlawful Executive's
employment or service to the Company or otherwise materially inhibit the
performance of Executive's duties under this Agreement or materially impair the
business of the Company or its subsidiaries.
(b) PLACE OF EMPLOYMENT. Executive's principal place of employment shall
be at the Corporate Offices of the Company which shall be in Fairfield County,
Connecticut or London, England.
4. SALARY AND ANNUAL INCENTIVE COMPENSATION.
As partial compensation for the services to be rendered hereunder by
Executive, the Company agrees to pay to Executive during the Term the
compensation set forth in this Section 4.
(a) BASE SALARY. The Company will pay to Executive during the Term a base
salary, the annual rate of which shall be $363,000, payable in cash in
substantially equal semi-monthly installments commencing at the beginning of the
Term, and otherwise in accordance with the Company's usual payroll practices
with respect to senior executives (except to the extent deferred under Section
5(d)). Executive's annual base salary shall be reviewed by the Compensation and
Benefits Committee of the Board (the "Committee") at least once in each calendar
year, and may be increased above, but may not be reduced below, the then-current
rate of such base salary. For purposes of this Agreement, "Base Salary" means
Executive's then-current base salary.
(b) ANNUAL INCENTIVE COMPENSATION. The Company will pay to Executive
during the Term annual incentive compensation which shall offer to Executive an
opportunity to earn additional compensation based upon performance in amounts
determined by the Committee in accordance with the applicable plan and
consistent with past practices of the Company; provided, however, that the
annual incentive opportunity during the Term shall be not less than the greater
of 70% of Base Salary or the annual target incentive opportunity for the prior
year for achievement of target level performance, with the nature of the
performance and the levels of performance triggering payments of such annual
target incentive compensation for each year to be established and communicated
to Executive during the first quarter of such year by the Committee; provided,
further, that annual incentive payable for performance in 2000 shall be based on
the amount of salary actually paid during the year. In addition, the Committee
(or the Board) may determine, in its discretion, to increase the Executive's
annual target incentive opportunity or provide an additional annual incentive
opportunity, in excess of the annual target incentive opportunity, payable for
performance in excess of or in addition to the performance required for payment
of the annual target incentive amount. Any annual incentive compensation payable
to Executive shall be paid in accordance with the Company's usual practices with
respect to payment of incentive compensation to senior executives (except to the
extent deferred under Section 5(d)).
5. LONG-TERM COMPENSATION, INCLUDING STOCK OPTIONS, BENEFITS, DEFERRED
COMPENSATION, AND EXPENSE REIMBURSEMENT
(a) EXECUTIVE COMPENSATION PLANS. Executive shall be entitled during the
Term to participate, without discrimination or duplication, in all executive
compensation plans and programs intended for general participation by senior
executives of the Company, as presently in effect or as they may be modified or
added to by the Company from time to time, subject to the eligibility and other
requirements of such plans and programs, including without limitation any stock
option plans, plans under which restricted stock/restricted stock units,
performance-based restricted stock/restricted stock units
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("PERS") or performance-accelerated restricted stock/restricted stock units
("PARS") may be awarded, other annual and long-term cash and/or equity incentive
plans, and deferred compensation plans; provided, however, that such plans and
programs, in the aggregate, shall provide Executive with compensation and
incentive award opportunities substantially no less favorable than those
provided by the Company to Executive under such plans and programs as in effect
on the Effective Date.
(b) EMPLOYEE AND EXECUTIVE BENEFIT PLANS. Executive shall be entitled
during the Term to participate, without discrimination or duplication, in all
employee and executive benefit plans and programs of the Company, as presently
in effect or as they may be modified or added to by the Company from time to
time, to the extent such plans are available generally to other senior
executives or employees of the Company, subject to the eligibility and other
requirements of such plans and programs, including without limitation plans
providing pensions, supplemental pensions, supplemental and other retirement
benefits, medical insurance, life insurance, disability insurance, and
accidental death or dismemberment insurance, as well as savings, profit-sharing,
and stock ownership plans; provided, however, that such benefit plans and
programs, in the aggregate, shall provide Executive with benefits and
compensation substantially no less favorable than those provided by the Company
to Executive under such plans and programs as in effect on the Effective Date.
The foregoing notwithstanding, Executive shall not be eligible to participate or
receive benefits under the Company's Employee Protection Plan, and benefits to
Executive under his Change-in-Control Agreement shall be payable only if and to
the extent that such benefits would exceed the corresponding benefits payable
under this Agreement.
In furtherance of and not in limitation of the foregoing, during the Term:
(i) Executive will participate as Chief Financial Officer and
Chief Administrative Officer in all executive and employee vacation and
time-off programs;
(ii) The Company will provide Executive with coverage as Chief
Financial Officer and Chief Administrative Officer with respect to
long-term disability insurance and benefits substantially no less
favorable (including any required contributions by Executive) than such
insurance and benefits in effect on the Effective Date;
(iii) Executive will be covered by Company-paid group and individual
term life insurance providing a death benefit no less than the death
benefit provided under Company-paid insurance in effect at the Effective
Date; provided, however, that, with the consent of Executive, such
insurance may be combined with a supplementary retirement funding vehicle;
(iv) Executive will be entitled to retirement benefits
substantially no less favorable than those under the defined benefit
pension plans and programs of the Company, including the IMS Health
Incorporated U.S. Executive Retirement Plan (the "USERP"), as in effect on
the Effective Date (subject to such enhancement to benefits as are
provided hereunder, including Sections 7(c), (d), (e), and (f)); provided,
however, that the Company acknowledges that the Chief Executive Officer of
the Company and the Committee have previously determined that, pursuant to
Section 3 of the USERP, Executive's years of service with the Company
prior to the date he became a Member under the USERP shall be included as
Service in determining Executive's Vested Percentage under Section 3 of
the USERP. References in this Section 5(b)(iv) to "Member," "Service," and
"Vested Percentage" have the meanings defined in the USERP; and
(v) The Company will provide Executive with health and medical
benefits consistent with its policies for other senior executives.
Any provision to the contrary contained in this Agreement
notwithstanding, unless Executive is terminated by the Company for "Cause" (as
defined in Section 8(a)) or Executive terminates voluntarily and not for "Good
Reason" (as defined in Section 8(e)), Executive may elect continued
participation after termination of employment in the Company's health and
medical coverage for himself and his spouse and dependent children after such
coverage would otherwise end until such time as Executive becomes eligible for
similar coverage with a subsequent employer or other entity to which Executive
provides services or becomes eligible for Medicare (under rules in effect at the
Effective Date
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hereof); provided, however, that in the event of such election, Executive shall
pay the Company each year an amount equal to the then-current annual COBRA
premium being paid (or payable) by any other former employee of the Company,
unless otherwise provided under Section 6 or 7.
(c) ACCELERATION OF AWARDS UPON A CHANGE IN CONTROL. In the event of a
Change in Control (as defined in Section 8(b)), all outstanding stock options,
restricted stock, and other equity-based awards then held by Executive shall
become vested and exercisable.
(d) DEFERRAL OF COMPENSATION. If the Company has in effect or adopts any
deferral program or arrangement permitting executives to elect to defer any
compensation, Executive will be eligible to participate in such program on terms
no less favorable than the terms of participation of any other executive officer
of the Company. Any plan or program of the Company which provides benefits based
on the level of salary, annual incentive, or other compensation of Executive
shall, in determining Executive's benefits, take into account the amount of
salary, annual incentive, or other compensation prior to any reduction for
voluntary contributions made by Executive under any deferral or similar
contributory plan or program of the Company (excluding compensation that would
not be taken into account even if not deferred), but shall not treat any payout
or settlement under such a deferral or similar contributory plan or program to
be additional salary, annual incentive, or other compensation for purposes of
determining such benefits, unless otherwise expressly provided under such plan
or program.
(e) COMPANY REGISTRATION OBLIGATIONS. The Company will use its best
efforts to file with the Securities and Exchange Commission and thereafter
maintain the effectiveness of one or more registration statements registering
under the Securities Act of 1933, as amended (the "1933 Act"), the offer and
sale of shares by the Company to Executive pursuant to stock options or other
equity-based awards granted to Executive under Company plans or otherwise or, if
shares are acquired by Executive in a transaction not involving an offer or sale
to Executive but resulting in the acquired shares being "restricted securities"
for purposes of the 1933 Act, registering the reoffer and resale of such shares
by Executive.
(f) REIMBURSEMENT OF EXPENSES. The Company will promptly reimburse
Executive for all reasonable business expenses and disbursements incurred by
Executive in the performance of Executive's duties during the Term in accordance
with the Company's reimbursement policies as in effect from time to time.
Executive will remain assigned to the Company's Finance department for so long
as such department remains in London, and the Company will continue to reimburse
Executive for his estimated excess costs resulting from service outside the
United States ("expatriate" reimbursement) on the same basis as such excess
costs have been reimbursed immediately prior to the date of this Agreement.
6. TERMINATION DUE TO RETIREMENT, DEATH, OR DISABILITY.
(a) RETIREMENT. Executive may elect to terminate employment hereunder by
retirement at or after age 55 or, upon the request of Executive, at such earlier
age as may be approved by the Board (in either case, "Retirement"). At the time
Executive's employment terminates due to Retirement, the Term will terminate,
all obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease except for obligations which expressly continue
after termination of employment due to Retirement, and the Company will pay
Executive, and Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination (as defined in
Section 8(c));
(ii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated, an amount
equal to the portion of annual incentive compensation that would have
become payable in cash to Executive (i.e., excluding the portion payable
in PERS or in other non-cash awards) for that year if his employment had
not terminated, based on performance actually achieved in that year
(determined by the Committee following completion of the performance
year), multiplied by a fraction the numerator of which is the number
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of days Executive was employed in the year of termination and the
denominator of which is the total number of days in the year of
termination;
(iii) The vesting and exercisability of stock options held by
Executive at termination and all other terms of such options shall be
governed by the plans and programs and the agreements and other documents
pursuant to which such options were granted (subject to Section 10(f)
hereof); and
(iv) All restricted stock and deferred stock awards, including
outstanding PERS awards, all other long-term incentive awards, and all
deferral arrangements under Section 5(d), shall be governed by the plans
and programs under which the awards were granted or governing the
deferral, and all rights under the USERP and any other benefit plan shall
be governed by such plan.
(b) DEATH. In the event of Executive's death which results in the
termination of Executive's employment, the Term will terminate, all obligations
of the Company and Executive under Sections 1 through 5 of this Agreement will
immediately cease except for obligations which expressly continue after death,
and the Company will pay Executive's beneficiary or estate, and Executive's
beneficiary or estate will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's death occurred, an amount equal to
the portion of annual incentive compensation that would have become
payable in cash to Executive (i.e., excluding the portion payable in PERS
or in other non-cash awards) for that year if his employment had not
terminated, based on performance actually achieved in that year
(determined by the Committee following completion of the performance
year), multiplied by a fraction the numerator of which is the number of
days Executive was employed in the year of his death and the denominator
of which is the total number of days in the year of death;
(iii) The vesting and exercisability of stock options held by
Executive at death and all other terms of such options shall be governed
by the plans and programs and the agreements and other documents pursuant
to which such options were granted; and
(iv) All restricted stock and deferred stock awards, including
outstanding PERS awards, all other long-term incentive awards, and all
deferral arrangements under Section 5(d), shall be governed by the plans
and programs under which the awards were granted or governing the
deferral, and all rights under the USERP and any other benefit plan shall
be governed by such plan.
(c) DISABILITY. The Company may terminate the employment of Executive
hereunder due to the Disability (as defined in Section 8(d)) of Executive. Such
employment shall terminate at the expiration of the 30-day period referred to in
the definition of Disability set forth in Section 8(d), unless Executive has
returned to service and presented to the Company a certificate of good health
prior to such termination as specified in Section 8(d). Upon termination of
employment, the Term will terminate, all obligations of the Company and
Executive under Sections 1 through 5 of this Agreement will immediately cease
except for obligations which expressly continue after termination of employment
due to Disability, and the Company will pay Executive, and Executive will be
entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated, an amount
equal to the portion of annual incentive compensation that would have
become payable in cash to Executive (i.e., excluding the portion payable
in PERS or in other non-cash awards) for that year if his employment had
not terminated,
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based on performance actually achieved in that year (determined by the
Committee following completion of the performance year), multiplied by a
fraction the numerator of which is the number of days Executive was
employed in the year of termination and the denominator of which is the
total number of days in the year of termination;
(iii) Stock options held by Executive at termination shall be
governed by the plans and programs and the agreements and other documents
pursuant to which such options were granted;
(iv) Any performance objectives upon which the earning of
performance-based restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards is
conditioned shall be deemed to have been met at target level at the date
of termination, and restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards (to the
extent then or previously earned, in the case of performance-based awards)
shall become fully vested and non-forfeitable at the date of such
termination, and, in other respects, such awards shall be governed by the
plans and programs and the agreements and other documents pursuant to
which such awards were granted;
(v) Disability benefits shall be payable in accordance with the
Company's plans, programs and policies (including the USERP), and all
deferral arrangements under Section 5(d) will be settled in accordance
with the plans and programs governing the deferral; and
(vi) For the period extending from the date of termination due to
Disability until the date Executive reaches age 65, Executive shall
continue to participate in those employee and executive benefit plans and
programs under Section 5(b) to the extent such plans and programs provide
medical insurance, disability insurance and life insurance benefits (but
not other benefits, such as pension and retirement benefits, provided
under Section 5(b)) in which Executive was participating immediately prior
to termination, the terms of which allow Executive's continued
participation, as if Executive had continued in employment with the
Company during such period or, if the terms of such plans or programs do
not allow Executive's continued participation, Executive shall be paid a
cash payment equivalent on an after-tax basis to the value of the
additional benefits (of the type described in this Section 6(c)(vi))
Executive would have received under such plans or programs had Executive
continued to be employed during such period following Executive's
termination until age 65, with such benefits provided by the Company at
the same times and in the same manner as such benefits would have been
provided to Executive under such plans and programs (it being understood
that the value of any insurance-provided benefits will be based on the
premium cost to Executive, which shall not exceed the highest risk premium
charged by a carrier having an investment grade or better credit rating);
provided, however, that (A) Executive's Retirement Benefit calculated
under Sections 3.1(b)(i) or 3.2(b)(i) of the USERP shall be 2.5% of his
Average Final Compensation (rather than 1.67%) multiplied by the number of
his years of Service not excess of 36; (B) Executive will be credited with
three additional years of age and three additional years of Service for
purposes of the USERP; and (C) if Executive's age and years of service do
not qualify him for full benefits under the Company's retiree health
benefits plan, Executive and his spouse and qualifying dependents shall be
entitled to the same benefits as would have been provided if Executive's
age and years of service had qualified for full benefits under such plan.
The foregoing notwithstanding, Executive must continue to satisfy the
conditions set forth in Section 10 in order to continue receiving the
benefits provided under this Section 6(c)(vi).
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(d) OTHER TERMS OF PAYMENT FOLLOWING RETIREMENT, DEATH, OR DISABILITY.
Nothing in this Section 6 shall limit the benefits payable or provided In the
event Executive's employment terminates due to Retirement, death, or Disability
under the terms of plans or programs of the Company more favorable to the
Executive (or his beneficiaries) than the benefits payable or provided under
this Section 6 (except in the case of annual incentives in lieu of which amounts
are paid hereunder), including plans and programs adopted after the date of this
Agreement. Amounts payable under this Section 6 following Executive's
termination of employment, other than those expressly payable following
determination of performance for the year of termination for purposes of annual
incentive compensation or otherwise expressly payable on a deferred basis, will
be paid as promptly as practicable after such termination of employment.
7. TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN RETIREMENT, DEATH OR
DISABILITY.
(a) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate the
employment of Executive hereunder for Cause (as defined in Section 8(a)) at any
time. At the time Executive's employment is terminated for Cause, the Term will
terminate, all obligations of the Company and Executive under Sections 1 through
5 of this Agreement will immediately cease except for obligations which
expressly continue after termination of employment by the Company for Cause, and
the Company will pay Executive, and Executive will be entitled to receive, the
following:
(i) Executive's Compensation Accrued at Termination (as defined
in Section 8(c));
(ii) All stock options, restricted stock and deferred stock awards,
including outstanding PERS awards, and all other long-term incentive
awards will be governed by the terms of the plans and programs under which
the awards were granted; and
(iii) All deferral arrangements under Section 5(d) will be settled
in accordance with the plans and programs governing the deferral, and all
rights under the USERP and any other benefit plan shall be governed by
such plan (subject to Section 5(b)).
(b) TERMINATION BY EXECUTIVE OTHER THAN FOR GOOD REASON. Executive may
terminate his employment hereunder voluntarily for reasons other than Good
Reason (as defined in Section 8(e)) at any time, upon 90 days' written notice to
the Company. An election by Executive not to extend the Term pursuant to Section
2 hereof shall be deemed to be a termination of employment by Executive for
reasons other than Good Reason at the date of expiration of the Term, unless a
Change in Control (as defined in Section 8(b)) occurs prior to, and there exists
Good Reason at, such date of expiration. At the time Executive's employment is
terminated by Executive other than for Good Reason the Term will terminate, all
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease, and the Company will pay Executive, and
Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) All stock options, restricted stock and deferred stock awards,
including outstanding PERS awards, and all other long-term incentive
awards will be governed by the terms of the plans and programs under which
the awards were granted; and
(iii) All deferral arrangements under Section 5(d) will be settled
in accordance with the plans and programs governing the deferral, and all
rights under the USERP and any other benefit plan shall be governed by
such plan.
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE PRIOR TO OR MORE THAN TWO
YEARS AFTER A CHANGE IN CONTROL. The Company may terminate the employment of
Executive hereunder without Cause, if at the date of termination no Change in
Control has occurred or such date of termination is at least two years after the
most recent Change in Control, upon at least 90 days' written notice to
Executive. The foregoing notwithstanding, the Company may elect, by written
notice to Executive, to terminate Executive's positions specified in Sections 1
and 3 and all other obligations of Executive and the Company under
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Section 3 at a date earlier than the expiration of such 90-day period, if so
specified by the Company in the written notice, provided that Executive shall be
treated as an employee of the Company (without any assigned duties) for all
other purposes of this Agreement, including for purposes of Sections 4 and 5,
from such specified date until the expiration of such 90-day period. An election
by the Company not to extend the Term pursuant to Section 2 hereof shall be
deemed to be a termination of Executive's employment by the Company without
Cause at the date of expiration of the Term and shall be subject to this Section
7(c) if at the date of such termination no Change in Control has occurred or
such date of termination is at least two years after the most recent Change in
Control; provided, however, that, if Executive has attained age 65 at such date
of termination, such termination shall be deemed a Retirement of Executive. At
the time Executive's employment is terminated by the Company (i.e., at the
expiration of such notice period), the Term will terminate, all remaining
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease (except for obligations which continue after
termination of employment as expressly provided herein), and the Company will
pay Executive, and Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) Cash in an aggregate amount equal to two times the sum of (A)
Executive's Base Salary under Section 4(a) immediately prior to
termination plus (B) an amount equal to the greater of (x) the portion of
Executive's annual target incentive compensation potentially payable in
cash to Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the year of termination or (y) the portion of
Executive's annual incentive compensation that became payable in cash to
Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the latest year preceding the year of termination
based on performance actually achieved in that latest year. The amount
determined to be payable under this Section 7(c)(ii) shall be payable in
monthly installments over the 24 months following termination, without
interest, except the Company may elect to accelerate payment of the
remaining balance of such amount and to pay it as a lump sum, without
discount;
(iii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated, an amount
equal to the portion of Executive's annual target incentive compensation
potentially payable in cash to Executive (i.e., excluding the portion
payable in PERS or in other non-cash awards) for the year of termination,
multiplied by a fraction the numerator of which is the number of days
Executive was employed in the year of termination and the denominator of
which is the total number of days in the year of termination;
(iv) Stock options held by Executive at termination, if not then
vested and exercisable, will become fully vested and exercisable at the
date of such termination, and, in other respects (including the period
following termination during which such options may be exercised), such
options shall be governed by the plans and programs and the agreements and
other documents pursuant to which such options were granted; except stock
options which were outstanding and "in-the-money" at the Effective date,
other than such options which were granted either on February 15, 2000 and
May 25, 2000 (all tranches), shall be governed by the terms of the plans
and agreements governing such options;
(v) Any performance objectives upon which the earning of
performance-based restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards is
conditioned shall be deemed to have been met at target level at the date
of termination, and restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards (to the
extent then or previously earned, in the case of performance-based awards)
shall become fully vested and non-forfeitable at the date of such
termination, and, in other respects, such awards shall be governed by the
plans and programs and the agreements and other documents pursuant to
which such awards were granted;
(vi) All deferral arrangements under Section 5(d) will be settled in
accordance with
8
the plans and programs governing the deferral;
(vii) For purposes of the USERP, (A) Executive shall be credited
with three additional years of age and three additional years of Service
(as defined in the USERP), and (B) Executive's Retirement Benefit
calculated under Sections 3.1(b)(i) or 3.2(b)(i) of the USERP shall be
2.5% of his Average Final Compensation (rather than 1.67%) multiplied by
the number of his years of Service not excess of 36;
(viii) For a period of two years after such termination (but not
after Executive attains age 65), Executive shall continue to participate
in those employee and executive benefit plans and programs under Section
5(b) to the extent such plans and programs provide medical insurance,
disability insurance and life insurance benefits (but not other benefits,
such as pension and retirement benefits, provided under Section 5(b)) in
which Executive was participating immediately prior to termination, the
terms of which allow Executive's continued participation, as if Executive
had continued in employment with the Company during such period; provided,
however, that such participation shall terminate, or the benefits under
such plans and programs shall be reduced, if and to the extent Executive
becomes covered (or is eligible to become covered) by plans of a
subsequent employer or other entity to which Executive provides services
during such period providing comparable benefits. If the terms of the
Company plans and programs referred to in this Section 7(c)(viii) do not
allow Executive's continued participation, Executive shall be paid a cash
payment equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(c)(viii) Executive would have
received under such plans or programs had Executive continued to be
employed during such period, with such benefits provided by the Company at
the same times and in the same manner as such benefits would have been
provided to Executive under such plans and programs (it being understood
that the value of any insurance-provided benefits will be based on the
premium cost to Executive, which shall not exceed the highest risk premium
charged by a carrier having an investment grade or better credit rating);
provided, however, that Executive must continue to satisfy the conditions
set forth in Section 10 in order to continue receiving the benefits
provided under this Section 7(c)(viii). Executive agrees to promptly
notify the Company of any employment or other arrangement by which
Executive provides services during the benefits-continuation period and of
the nature and extent of benefits for which Executive becomes eligible
during such period which would reduce or terminate benefits under this
Section 7(c)(viii); and the Company be entitled to recover from Executive
any payments and the fair market value of benefits previously made or
provided to Executive hereunder which would not have been paid under this
Section 7(c)(viii) if the Company had received adequate prior notice as
required by this sentence; and
(ix) If Executive's age and years of service do not qualify him for
full benefits under the Company's retiree health benefits plan, Executive
and his spouse and qualifying dependents shall be entitled to the same
benefits as would have been provided if Executive's age and years of
service had qualified for full benefits under such plan.
(d) TERMINATION BY EXECUTIVE FOR GOOD REASON PRIOR TO OR MORE THAN TWO
YEARS AFTER A CHANGE IN CONTROL. Executive may terminate his employment
hereunder for Good Reason, prior to a Change in Control or after the second
anniversary of the most recent Change in Control, upon 90 days' written notice
to the Company; provided, however, that, if the Company has corrected the basis
for such Good Reason within 30 days after receipt of such notice, Executive may
not terminate his employment for Good Reason, and therefore Executive's notice
of termination will automatically become null and void. At the time Executive's
employment is terminated by Executive for Good Reason (i.e., at the expiration
of such notice period), the Term will terminate, all obligations of the Company
and Executive under Sections 1 through 5 of this Agreement will immediately
cease (except for obligations which continue after termination of employment as
expressly provided herein), and the Company will pay Executive, and Executive
will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
9
(ii) Cash in an aggregate amount equal to two times the sum of (A)
Executive's Base Salary under Section 4(a) immediately prior to
termination plus (B) an amount equal to the greater of (x) the portion of
Executive's annual target incentive compensation potentially payable in
cash to Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the year of termination or (y) the portion of
Executive's annual incentive compensation that became payable in cash to
Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the latest year preceding the year of termination
based on performance actually achieved in that latest year. The amount
determined to be payable under this Section 7(d)(ii) shall be payable in
monthly installments over the 24 months following termination, without
interest, except the Company may elect to accelerate payment of the
remaining balance of such amount and to pay it as a lump sum, without
discount;
(iii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated, an amount
equal to the portion of Executive's annual target incentive compensation
potentially payable in cash to Executive (i.e., excluding the portion
payable in PERS or in other non-cash awards) for the year of termination,
multiplied by a fraction the numerator of which is the number of days
Executive was employed in the year of termination and the denominator of
which is the total number of days in the year of termination;
(iv) Stock options held by Executive at termination, if not then
vested and exercisable, will become fully vested and exercisable at the
date of such termination, and, in other respects (including the period
following termination during which such options may be exercised), such
options shall be governed by the plans and programs and the agreements and
other documents pursuant to which such options were granted; provided,
however, that (A) stock options which were outstanding and "in-the-money"
at the Effective date, other than such options which were granted either
on February 15, 2000 and May 25, 2000 (all tranches), shall be governed by
the terms of the plans and agreements governing such options, and (B) no
acceleration of vesting and exercisability of any option shall apply under
this Section 7(d)(iv) if Executive's Good Reason is based solely on Good
Reason as defined in Section 8(e)(ix);
(v) Any performance objectives upon which the earning of
performance-based restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards is
conditioned shall be deemed to have been met at target level at the date
of termination, and restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards (to the
extent then or previously earned, in the case of performance-based awards)
shall become fully vested and non-forfeitable at the date of such
termination, except the foregoing provisions of this Section 7(d)(v) shall
not apply if Executive's Good Reason is based solely on Good Reason as
defined in Section 8(e)(ix); and, in other respects, all awards held by
Executive shall be governed by the plans and programs and the agreements
and other documents pursuant to which such awards were granted;
(vi) All deferral arrangements under Section 5(d) will be settled
in accordance with the plans and programs governing the deferral;
(vii) For purposes of the USERP, (A) Executive shall be credited
with three additional years of age and three additional years of Service
(as defined in the USERP), except no such crediting of age and years shall
be made if Executive's Good Reason is based solely on Good Reason as
defined in Section 8(e)(ix); and (B), Executive's Retirement Benefit
calculated under Sections 3.1(b)(i) or 3.2(b)(i) of the USERP shall be
2.5% of his Average Final Compensation (rather than 1.67%) multiplied by
the number of his years of Service not excess of 36, except that the this
clause (B) shall not apply if Executive's termination occurs on or before
November 14, 2001 and his Good Reason for termination is based solely on
Good Reason as defined in Section 8(e)(ix);
(viii) For a period of two years after such termination (but not
after Executive attains
10
age 65), Executive shall continue to participate in those employee and
executive benefit plans and programs under Section 5(b) to the extent such
plans and programs provide medical insurance, disability insurance and
life insurance benefits (but not other benefits, such as pension and
retirement benefits, provided under Section 5(b)) in which Executive was
participating immediately prior to termination, the terms of which allow
Executive's continued participation, as if Executive had continued in
employment with the Company during such period; provided, however, that
such participation shall terminate, or the benefits under such plans and
programs shall be reduced, if and to the extent Executive becomes covered
(or is eligible to become covered) by plans of a subsequent employer or
other entity to which Executive provides services during such period
providing comparable benefits. If the terms of the Company plans and
programs referred to in this Section 7(d)(viii) do not allow Executive's
continued participation, Executive shall be paid a cash payment equivalent
on an after-tax basis to the value of the additional benefits described in
this Section 7(d)(viii) Executive would have received under such plans or
programs had Executive continued to be employed during such period, with
such benefits provided by the Company at the same times and in the same
manner as such benefits would have been provided to Executive under such
plans and programs (it being understood that the value of any
insurance-provided benefits will be based on the premium cost to
Executive, which shall not exceed the highest risk premium charged by a
carrier having an investment grade or better credit rating); provided,
however, that Executive must continue to satisfy the conditions set forth
in Section 10 in order to continue receiving the benefits provided under
this Section 7(d)(viii). Executive agrees to promptly notify the Company
of any employment or other arrangement by which Executive provides
services during the benefits-continuation period and of the nature and
extent of benefits for which Executive becomes eligible during such period
which would reduce or terminate benefits under this Section 7(d)(viii);
and the Company shall be entitled to recover from Executive any payments
and the fair market value of benefits previously made or provided to
Executive hereunder which would not have been paid under this Section
7(d)(viii) if the Company had received adequate prior notice as required
by this sentence; and
(ix) If Executive's age and years of service do not qualify him for
full benefits under the Company's retiree health benefits plan, Executive
and his spouse and qualifying dependents shall be entitled to the same
benefits as would have been provided if Executive's age and years of
service had qualified for full benefits under such plan; provided,
however, that this Section 7(d)(ix) shall not apply if Executive's Good
Reason is based solely on Good Reason as defined in Section 8(e)(ix).
If any payment or benefit under this Section 7(d) is based on Base
Salary or other level of compensation or benefits at the time of
Executive's termination and if a reduction in such Base Salary or other
level of compensation or benefit was the basis for Executive's termination
for Good Reason, then the Base Salary or other level of compensation in
effect before such reduction shall be used to calculate payments or
benefits under this Section 7(d).
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE WITHIN TWO YEARS AFTER A
CHANGE IN CONTROL. The Company may terminate the employment of Executive
hereunder without Cause, simultaneously with or within two years after a Change
in Control, upon at least 90 days' written notice to Executive. The foregoing
notwithstanding, the Company may elect, by written notice to Executive, to
terminate Executive's positions specified in Sections 1 and 3 and all other
obligations of Executive and the Company under Section 3 at a date earlier
than the expiration of such 90-day notice period, if so specified by the
Company in the written notice, provided that Executive shall be treated as an
employee of the Company (without any assigned duties) for all other purposes
of this Agreement, including for purposes of Sections 4 and 5, from such
specified date until the expiration of such 90-day period. An election by the
Company not to extend the Term pursuant to Section 2 hereof shall be deemed
to be a termination of Executive's employment by the Company without Cause at
the date of expiration of the Term and shall be subject to this Section 7(e)
if the date of such termination coincides with or is within two years after a
Change in Control; provided, however, that, if Executive has attained age 65
at such date of termination, such termination shall be deemed a Retirement of
Executive. At the time Executive's employment is terminated by the Company
11
(i.e., at the expiration of such notice period), the Term will terminate, all
remaining obligations of the Company and Executive under Sections 1 through 5 of
this Agreement will immediately cease (except for obligations which continue
after termination of employment as expressly provided herein), and the Company
will pay Executive, and Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) Cash in an aggregate amount equal to three times the sum of
(A) Executive's Base Salary under Section 4(a) immediately prior to
termination plus (B) an amount equal to the greater of (x) the portion of
Executive's annual target incentive compensation potentially payable in
cash to Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the year of termination or (y) the portion of
Executive's annual incentive compensation that became payable in cash to
Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the latest year preceding the year of termination
based on performance actually achieved in that latest year. The amount
determined to be payable under this Section 7(e)(ii) shall be paid by the
Company not later than 15 days after Executive's termination;
(iii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated, an amount
equal to the portion of Executive's annual target incentive compensation
potentially payable in cash to Executive (i.e., excluding the portion
payable in PERS or in other non-cash awards) for the year of termination,
multiplied by a fraction the numerator of which is the number of days
Executive was employed in the year of termination and the denominator of
which is the total number of days in the year of termination;
(iv) Stock options held by Executive at termination, if not then
vested and exercisable, will become fully vested and exercisable at the
date of such termination, and any such options granted on or after the
date hereof shall remain outstanding and exercisable until the stated
expiration date of the Option as though Executive's employment did not
terminate, and, in other respects, such options shall be governed by the
plans and programs and the agreements and other documents pursuant to
which such options were granted;
(v) Any performance objectives upon which the earning of
performance-based restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards is
conditioned shall be deemed to have been met at target level at the date
of termination, and restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards (to the
extent then or previously earned, in the case of performance-based awards)
shall become fully vested and non-forfeitable at the date of such
termination, and, in other respects, such awards shall be governed by the
plans and programs and the agreements and other documents pursuant to
which such awards were granted;
(vi) All deferral arrangements under Section 5(d) will be settled
in accordance with the plans and programs governing the deferral;
(vii) For purposes of the USERP, (A) Executive shall be credited
with three additional years of age and three additional years of Service
(as defined in the USERP); and (B) Executive's Retirement Benefit
calculated under Sections 3.1(b)(i) or 3.2(b)(i) of the USERP shall be
2.5% of his Average Final Compensation (rather than 1.67%) multiplied by
the number of his years of Service not excess of 36;
(viii) For a period of three years after such termination (but not
after Executive attains age 65), Executive shall continue to participate
in those employee and executive benefit plans and programs under Section
5(b) to the extent such plans and programs provide medical insurance,
disability insurance and life insurance benefits (but not other benefits,
such as pension and retirement benefits, provided under Section 5(b)) in
which Executive was participating immediately prior to termination, the
terms of which allow Executive's continued participation, as if Executive
had continued in employment with the Company during such period; provided,
however, that such
12
participation shall terminate, or the benefits under such plans and
programs shall be reduced, if and to the extent Executive becomes covered
(or is eligible to become covered) by plans of a subsequent employer or
other entity to which Executive provides services during such period
providing comparable benefits. If the terms of the Company plans and
programs referred to in this Section 7(e)(viii) do not allow Executive's
continued participation, Executive shall be paid a cash payment equivalent
on an after-tax basis to the value of the additional benefits described in
this Section 7(e)(viii) Executive would have received under such plans or
programs had Executive continued to be employed during such period, with
such benefits provided by the Company at the same times and in the same
manner as such benefits would have been provided to Executive under such
plans and programs (it being understood that the value of any
insurance-provided benefits will be based on the premium cost to
Executive, which shall not exceed the highest risk premium charged by a
carrier having an investment grade or better credit rating); provided,
however, that Executive must continue to satisfy the conditions set forth
in Section 10 in order to continue receiving the benefits provided under
this Section 7(e)(viii). Executive agrees to promptly notify the Company
of any employment or other arrangement by which Executive provides
services during the benefits-continuation period and of the nature and
extent of benefits for which Executive becomes eligible during such period
which would reduce or terminate benefits under this Section 7(e)(viii);
and the Company shall be entitled to recover from Executive any payments
and the fair market value of benefits previously made or provided to
Executive hereunder which would not have been paid under this Section
7(e)(viii) if the Company had received adequate prior notice as required
by this sentence; and
(ix) If Executive's age and years of service do not qualify him for
full benefits under the Company's retiree health benefits plan, Executive
and his spouse and qualifying dependents shall be entitled to the same
benefits as would have been provided if Executive's age and years of
service had qualified for full benefits under such plan.
(f) TERMINATION BY EXECUTIVE FOR GOOD REASON WITHIN TWO YEARS AFTER A
CHANGE IN CONTROL. Executive may terminate his employment hereunder for Good
Reason, simultaneously with or within two years after a Change in Control, upon
90 days' written notice to the Company; provided, however, that, if the Company
has corrected the basis for such Good Reason within 30 days after receipt of
such notice, Executive may not terminate his employment for Good Reason, and
therefore Executive's notice of termination will automatically become null and
void. At the time Executive's employment is terminated by Executive for Good
Reason (i.e., at the expiration of such notice period), the Term will terminate,
all obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease (except for obligations which continue after
termination of employment as expressly provided herein), and the Company will
pay Executive, and Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) Cash in an aggregate amount equal to three times the sum of
(A) Executive's Base Salary under Section 4(a) immediately prior to
termination plus (B) an amount equal to the greater of (x) the portion of
Executive's annual target incentive compensation potentially payable in
cash to Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the year of termination or (y) the portion of
Executive's annual incentive compensation that became payable in cash to
Executive (i.e., excluding the portion payable in PERS or in other
non-cash awards) for the latest year preceding the year of termination
based on performance actually achieved in that latest year. The amount
determined to be payable under this Section 7(f)(ii) shall be paid by the
Company not later than 15 days after Executive's termination;
(iii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated, an amount
equal to the portion of Executive's annual target incentive compensation
potentially payable in cash to Executive (i.e., excluding the portion
payable in PERS or in other non-cash awards) for the year of termination,
multiplied by a fraction the numerator of which is the number of days
Executive was employed in the year of termination
13
and the denominator of which is the total number of days in the year of
termination;
(iv) Stock options held by Executive at termination, if not then
vested and exercisable, will become fully vested and exercisable at the
date of such termination, and any such options granted on or after the
date hereof shall remain outstanding and exercisable until the stated
expiration date of the Option as though Executive's employment did not
terminate, and, in other respects, such options shall be governed by the
plans and programs and the agreements and other documents pursuant to
which such options were granted;
(v) Any performance objectives upon which the earning of
performance-based restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards is
conditioned shall be deemed to have been met at target level at the date
of termination, and restricted stock and deferred stock awards, including
outstanding PERS awards, and other long-term incentive awards (to the
extent then or previously earned, in the case of performance-based awards)
shall become fully vested and non-forfeitable at the date of such
termination, and, in other respects, such awards shall be governed by the
plans and programs and the agreements and other documents pursuant to
which such awards were granted;
(vi) All deferral arrangements under Section 5(d) will be settled
in accordance with the plans and programs governing the deferral;
(vii) For purposes of the USERP, (A) Executive shall be credited
with three additional years of age and three additional years of Service
(as defined in the USERP), except no such crediting of age and years shall
be made if Executive's Good Reason is based solely on Good Reason as
defined in Section 8(e)(ix); and (B) Executive's Retirement Benefit
calculated under Sections 3.1(b)(i) or 3.2(b)(i) of the USERP shall be
2.5% of his Average Final Compensation (rather than 1.67%) multiplied by
the number of his years of Service not excess of 36;
(viii) For a period of three years after such termination (but not
after Executive attains age 65), Executive shall continue to participate
in those employee and executive benefit plans and programs under Section
5(b) to the extent such plans and programs provide medical insurance,
disability insurance and life insurance benefits (but not other benefits,
such as pension and retirement benefits, provided under Section 5(b)) in
which Executive was participating immediately prior to termination, the
terms of which allow Executive's continued participation, as if Executive
had continued in employment with the Company during such period; provided,
however, that such participation shall terminate, or the benefits under
such plans and programs shall be reduced, if and to the extent Executive
becomes covered (or is eligible to become covered) by plans of a
subsequent employer or other entity to which Executive provides services
during such period providing comparable benefits. If the terms of the
Company plans and programs referred to in this Section 7(f)(viii) do not
allow Executive's continued participation, Executive shall be paid a cash
payment equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(f)(viii) Executive would have
received under such plans or programs had Executive continued to be
employed during such period, with such benefits provided by the Company at
the same times and in the same manner as such benefits would have been
provided to Executive under such plans and programs (it being understood
that the value of any insurance-provided benefits will be based on the
premium cost to Executive, which shall not exceed the highest risk premium
charged by a carrier having an investment grade or better credit rating);
provided, however, that Executive must continue to satisfy the conditions
set forth in Section 10 in order to continue receiving the benefits
provided under this Section 7(f)(viii). Executive agrees to promptly
notify the Company of any employment or other arrangement by which
Executive provides services during the benefits-continuation period and of
the nature and extent of benefits for which Executive becomes eligible
during such period which would reduce or terminate benefits under this
Section 7(f)(viii); and the Company shall be entitled to recover from
Executive any payments and the fair market value of benefits previously
made or provided to Executive hereunder which would not have been paid
under this Section 7(f)(viii) if the Company had received adequate prior
14
notice as required by this sentence; and
(ix) If Executive's age and years of service do not qualify him for
full benefits under the Company's retiree health benefits plan, Executive
and his spouse and qualifying dependents shall be entitled to the same
benefits as would have been provided if Executive's age and years of
service had qualified for full benefits under such plan.
If any payment or benefit under this Section 7(f) is based on Base Salary or
other level of compensation or benefits at the time of Executive's termination
and if a reduction in such Base Salary or other level of compensation or benefit
was the basis for Executive's termination for Good Reason, then the Base Salary
or other level of compensation in effect before such reduction shall be used to
calculate payments or benefits under this Section 7(f).
(g) OTHER TERMS RELATING TO CERTAIN TERMINATIONS OF EMPLOYMENT. Whether
a termination is deemed to be at or within two years after a Change in Control
for purposes of Sections 7(c), (d), (e), or (f) is determined at the date of
termination, regardless of whether the Change in Control had occurred at the
time a notice of termination was given. In the event Executive's employment
terminates for any reason set forth in Section 7(b) through (f), Executive will
be entitled to the benefit of any terms of plans or agreements applicable to
Executive which are more favorable than those specified in this Section 7
(except in the case of annual incentives in lieu of which amounts are paid
hereunder). Amounts payable under this Section 7 following Executive's
termination of employment, other than those expressly payable on a deferred
basis, will be paid as promptly as practicable after such a termination of
employment, and such amounts payable under Section 7(e) or 7(f) will be paid in
no event later than 15 days after Executive's termination of employment unless
not determinable within such period.
8. DEFINITIONS RELATING TO TERMINATION EVENTS.
(a) "CAUSE." For purposes of this Agreement, "Cause" shall mean
Executive's
(i) willful and continued failure to substantially perform his
duties hereunder (other than any such failure resulting from incapacity
due to physical or mental illness or disability or any failure after the
issuance of a notice of termination by Executive 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 Executive by the Board, which demand
specifically identifies the manner in which the Board believes that
Executive has not substantially performed his duties hereunder and the
demonstrable and material damage caused thereby; or
(ii) the willful engaging by Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise.
No act, or failure to act, on the part of Executive shall be deemed "willful"
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Executive a copy of the resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to Executive and an opportunity
for Executive, together with Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, Executive was guilty of
conduct set forth above in this definition and specifying the particulars
thereof in detail.
(b) "CHANGE IN CONTROL." For purposes of this Agreement, 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,
15
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
(8)(b)(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.
(c) "COMPENSATION ACCRUED AT TERMINATION." For purposes of this
Agreement, "Compensation Accrued at Termination" means the following:
(i) The unpaid portion of annual base salary at the rate payable,
in accordance with Section 4(a) hereof, at the date of Executive's
termination of employment, pro rated through such date of termination,
payable in accordance with the Company's regular pay schedule;
(ii) All vested, nonforfeitable amounts owing or accrued at the
date of Executive's termination of employment under any compensation and
benefit plans, programs, and arrangements set forth or referred to in
Sections 4(b) and 5(a) and 5(b) hereof (including any earned and vested
annual incentive compensation, and long-term incentive award) in which
Executive theretofore participated, payable in accordance with the terms
and conditions of the plans, programs, and arrangements (and agreements
and documents thereunder) pursuant to which such compensation and benefits
were granted or accrued; and
(iii) Reasonable business expenses and disbursements incurred by
Executive prior to Executive's termination of employment, to be reimbursed
to Executive, as authorized under Section 5(f), in accordance the
Company's reimbursement policies as in effect at the date of such
16
termination.
(d) "DISABILITY." For purposes of this Agreement, "Disability" means
Executive's absence from the full-time performance of Executive's duties
hereunder for six consecutive months as a result of his incapacity due to
physical or mental illness or disability, and, within 30 days after written
notice of termination is thereafter given by the Company, Executive shall have
not returned to the full-time performance of such duties.
(e) "GOOD REASON." For purposes of this Agreement, "Good Reason" shall
mean, without Executive's express written consent, the occurrence of any of the
following circumstances unless, in the case of subsections (i), (iv), (vi) or
(viii) hereof, such circumstances are fully corrected prior to the date of
termination specified in the notice of termination given in respect thereof:
(i) the assignment to Executive of duties inconsistent with
Executive's position and status hereunder, or an alteration, adverse to
Executive, in the nature of Executive's duties, responsibilities, and
authorities, Executive's positions or the conditions of Executive's
employment from those specified in Section 3 or otherwise hereunder (other
than inadvertent actions which are promptly remedied); for this purpose,
it shall constitute "Good Reason" under this subsection (e)(i) if
Executive shall be required to report to and take direction from any
person or body other than the Chief Executive Officer of the Company and
the Board, except the foregoing shall not constitute Good Reason if
occurring in connection with the termination of Executive's employment for
Cause, Disability, Retirement, as a result of Executive's death, or as a
result of action by or with the consent of Executive; for purposes of this
Section 8(e)(i), references to the Company (and the Board and stockholders
of the Company) refer to the ultimate parent company (and its board and
stockholders) succeeding the Company following an acquisition in which the
corporate existence of the Company continues, in accordance with Section
12(b);
(ii) (A) a reduction by the Company in Executive's Base Salary, (B)
the setting of Executive's annual target incentive opportunity or payment
of earned annual incentive in amounts less than specified under or
otherwise not in conformity with Section 4 hereof, (C) a change in
compensation or benefits not in conformity with Section 5, or (D) a
reduction, after a Change in Control in perquisites from the level of such
perquisites as in effect immediately prior to the Change in Control or as
the same may have been increased from time to time after the Change in
Control 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;
(iii) the relocation of the principal place of Executive's
employment not in conformity with Section 3(b) hereof; for this purpose,
required travel on the Company's business will not constitute a relocation
so long as the extent of such travel is substantially consistent with
Executive's customary business travel obligations in periods prior to the
Effective Date;
(iv) the failure by the Company to pay to Executive any portion of
Executive's compensation or to pay to Executive 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;
(v) the failure by the Company to continue in effect any material
compensation or benefit plan in which Executive participated immediately
prior to a 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 Executive's
participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amounts of
compensation or benefits provided and the level of Executive's
participation relative to other participants, as existed at the time of
the Change in Control;
(vi) the failure of the Company to obtain a satisfactory agreement
from any successor
17
to the Company to fully assume the Company's obligations and to perform
under this Agreement, as contemplated in Section 12(b) hereof, in a form
reasonably acceptable to Executive;
(vii) any election by the Company not to extend the Term of this
Agreement at the next possible extension date under Section 2 hereof,
unless Executive will have attained age 65 at or before such extension
date;
(viii) any other failure by the Company to perform any material
obligation under, or breach by the Company of any material provision of,
this Agreement; or
(ix) Executive determines, in his sole discretion, that any other
circumstance constitutes "Good Reason" or otherwise determines to
terminate his employment hereunder, subject to 90 days' notice.
(f) "POTENTIAL CHANGE IN CONTROL" For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if, during the term of this
Agreement:
(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.
9. RABBI TRUST OBLIGATION UPON POTENTIAL CHANGE IN CONTROL; EXCISE
TAX-RELATED PROVISIONS.
(a) RABBI TRUST FUNDED UPON POTENTIAL CHANGE IN CONTROL. In the event of
a Potential Change in Control or 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, or has arisen in the case of an actual Change in Control, and
a subsequent termination of Executive's employment under Section 7(e) or 7(f).
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; provided, however, that
if no Change in Control has occurred within two years after such Potential
Change in Control, such rabbi trust(s) shall at the end of such two-year period
become revocable and may thereafter be revoked by the Company.
(b) GROSS-UP IF EXCISE TAX WOULD APPLY. In the event Executive becomes
entitled to any amounts or benefits payable in connection with a Change in
Control or other 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 Internal Revenue Code (or any similar federal, state or local tax that may
hereafter be imposed) (the "Code"), the Company shall pay to Executive at the
time specified in Section 9(b)(iii) hereof an additional amount (the "Gross-Up
Payment") such that the net amount retained by Executive, 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 Section
9(b)(i), shall be equal to the Total Payments.
(i) For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such Excise
Tax:
(A) any other payments or benefits received or to be received
by Executive in
18
connection with a Change in Control or Executive's 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 Executive 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;
(B) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (x) the
total amount of the Total Payments and (y) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the
Code (after applying Section 9(b)(i)(A) hereof); and
(C) the value of any non-cash benefits or any deferred
payments or benefit shall be determined by a nationally-recognized
accounting firm selected by Executive in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(ii) For purposes of determining the amount of the Gross-Up
Payment, Executive 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
Executive's 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 Executive's employment, Executive
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 Executive
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 Executive's
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.
(iii) The payments provided for in this Section 9(b) shall be made
not later than the fifteenth day following the date of Executive's
termination of employment; PROVIDED, HOWEVER, that if the amount of such
payments cannot be finally determined on or before such day, the Company
shall pay to Executive 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 Executive's termination of employment. 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 Executive, 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).
19
(iv) All determinations under this Section 9(b) shall be made at
the expense of the Company by a nationally recognized public accounting
firm selected by Executive, and such determination shall be binding upon
Executive and the Company.
10. NON-COMPETITION AND NON-DISCLOSURE; EXECUTIVE COOPERATION;
NON-DISPARAGEMENT.
(a) NON-COMPETITION. Without the consent in writing of the Board,
Executive will not, at any time during the Term and for a period of two years
following termination of Executive's employment for any reason, acting alone or
in conjunction with others, directly or indirectly (i) engage (either as owner,
investor, partner, stockholder, employer, employee, consultant, advisor, or
director) in any business in which he has been directly engaged on behalf of the
Company or any affiliate, or has supervised as an executive thereof, during the
last two years prior to such termination, or which was engaged in or planned by
the Company or an affiliate at the time of such termination, in any geographic
area in which such business was conducted or planned to be conducted; (ii)
induce any customers of the Company or any of its affiliates with whom Executive
has had contacts or relationships, directly or indirectly, during and within the
scope of his employment with the Company or any of its affiliates, to curtail or
cancel their business with the Company or any such affiliate; (iii) induce, or
attempt to influence, any employee of the Company or any of its affiliates to
terminate employment; or (iv) solicit, hire or retain as an employee or
independent contractor, or assist any third party in the solicitation, hire, or
retention as an employee or independent contractor, any person who during the
previous 12 months was an employee of the Company or any affiliate; PROVIDED,
HOWEVER, that the limitation contained in clause (i) above shall not apply if
Executive's employment is terminated as a result of a termination by the Company
without Cause within two years following a Change in Control or is terminated by
Executive for Good Reason within two years following a Change in Control, and
provided further, that activities engaged in by or on behalf of the Company are
not restricted by this covenant. The provisions of subparagraphs (i), (ii),
(iii), and (iv) above are separate and distinct commitments independent of each
of the other subparagraphs. It is agreed that the ownership of not more than one
percent of the equity securities of any company having securities listed on an
exchange or regularly traded in the over-the-counter market shall not, of
itself, be deemed inconsistent with clause (i) of this Section 10(a).
(b) NON-DISCLOSURE; OWNERSHIP OF WORK. Executive shall not, at any time
during the Term and thereafter (including following Executive's termination of
employment for any reason), disclose, use, transfer, or sell, except in the
course of employment with or other service to the Company, any proprietary
information, secrets, organizational or employee information, or other
confidential information belonging or relating to the Company and its affiliates
and customers so long as such information has not otherwise been disclosed or is
not otherwise in the public domain, except as required by law or pursuant to
legal process. In addition, upon termination of employment for any reason,
Executive will return to the Company or its affiliates all documents and other
media containing information belonging or relating to the Company or its
affiliates. Executive will promptly disclose in writing to the Company all
inventions, discoveries, developments, improvements and innovations
(collectively referred to as "Inventions") that Executive has conceived or made
during the Term; PROVIDED, HOWEVER, that in this context "Inventions" are
limited to those which (i) relate in any manner to the existing or contemplated
business or research activities of the Company and its affiliates; (ii) are
suggested by or result from Executive's work at the Company; or (iii) result
from the use of the time, materials or facilities of the Company and its
affiliates. All Inventions will be the Company's property rather than
Executive's. Should the Company request it, Executive agrees to sign any
document that the Company may reasonably require to establish ownership in any
Invention.
(c) COOPERATION WITH REGARD TO LITIGATION. Executive agrees to cooperate
with the Company, during the Term and thereafter (including following
Executive's termination of employment for any reason), by making himself
available to testify on behalf of the Company or any subsidiary or affiliate of
the Company, in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Company, or any subsidiary
or affiliate of the Company, in any such action, suit, or proceeding, by
providing information and meeting and consulting with the Board or its
representatives or counsel, or representatives or counsel to the Company, or any
subsidiary or affiliate of the Company, as requested. The Company agrees to
reimburse the Executive, on an after-tax basis, for all expenses actually
incurred
20
in connection with his provision of testimony or assistance.
(d) NON-DISPARAGEMENT. Executive shall not, at any time during the Term
and thereafter, make statements or representations, or otherwise communicate,
directly or indirectly, in writing, orally, or otherwise, or take any action
which may, directly or indirectly, disparage the Company or any of its
subsidiaries or affiliates or their respective officers, directors, employees,
advisors, businesses or reputations. Notwithstanding the foregoing, nothing in
this Agreement shall preclude Executive from making truthful statements that are
required by applicable law, regulation or legal process.
(e) RELEASE OF EMPLOYMENT CLAIMS. Executive agrees, as a condition to
receipt of any termination payments and benefits provided for in Sections 6 and
7 herein (other than Compensation Accrued at Termination), that he will execute
a general release agreement, in a form satisfactory to the Company, releasing
any and all claims arising out of Executive's employment other than enforcement
of this Agreement and rights to indemnification under any agreement, law,
Company organizational document or policy, or otherwise.
(f) FORFEITURE OF OUTSTANDING OPTIONS. The provisions of Sections 6 and
7 notwithstanding, if Executive willfully and materially fails to substantially
comply with any restrictive covenant under this Section 10 or willfully and
materially fails to substantially comply with any material obligation under this
Agreement, all options to purchase Common Stock granted by the Company and then
held by Executive or a transferee of Executive shall be immediately forfeited
and thereupon such options shall be cancelled. Notwithstanding the foregoing,
Executive shall not forfeit any option unless and until there shall have been
delivered to him, within six months after the Board (i) had knowledge of conduct
or an event allegedly constituting grounds for such forfeiture and (ii) had
reason to believe that such conduct or event could be grounds for such
forfeiture, a copy of a resolution duly adopted by a majority affirmative vote
of the membership of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after giving Executive reasonable notice
specifying the nature of the grounds for such forfeiture and not less than 30
days to correct the acts or omissions complained of, if correctable, and
affording Executive the opportunity, together with his counsel, to be heard
before the Board) finding that, in the good faith opinion of the Board,
Executive has engaged and continues to engage in conduct set forth in this
Section 10(f) which constitutes grounds for forfeiture of Executive's options;
provided, however, that if any option is exercised after delivery of such notice
and the Board subsequently makes the determination described in this sentence,
Executive shall be required to pay to the Company an amount equal to the
difference between the aggregate value of the shares acquired upon such exercise
at the date of the Board determination and the aggregate exercise price paid by
Executive. Any such forfeiture shall apply to such options notwithstanding any
term or provision of any option agreement. In addition, options granted to
Executive on or after January 1, 2000, and gains resulting from the exercise of
such options, shall be subject to forfeiture in accordance with the Company's
standard policies relating to such forfeitures and clawbacks, as such policies
are in effect at the time of grant of such options.
(g) SURVIVAL. The provisions of this Section 10 shall survive the
termination of the Term and any termination or expiration of this Agreement.
11. GOVERNING LAW; DISPUTES; ARBITRATION.
(a) GOVERNING LAW. This Agreement is governed by and is to be construed,
administered, and enforced in accordance with the laws of the State of
Connecticut, without regard to conflicts of law principles, except insofar as
federal laws and regulations and the Delaware General Corporation Law may be
applicable. If under the governing law, any portion of this Agreement is at any
time deemed to be in conflict with any applicable statute, rule, regulation,
ordinance, or other principle of law, such portion shall be deemed to be
modified or altered to the extent necessary to conform thereto or, if that is
not possible, to be omitted from this Agreement. The invalidity of any such
portion shall not affect the force, effect, and validity of the remaining
portion hereof. If any court determines that any provision of Section 10 is
unenforceable because of the duration or geographic scope of such provision, it
is the parties' intent that such court shall have the power to modify the
duration or geographic scope of such provision, as the case
21
may be, to the extent necessary to render the provision enforceable and, in its
modified form, such provision shall be enforced.
(b) REIMBURSEMENT OF EXPENSES IN ENFORCING RIGHTS. All reasonable costs
and expenses (including fees and disbursements of counsel) incurred by Executive
in seeking to interpret this Agreement or enforce rights pursuant to this
Agreement shall be paid on behalf of or reimbursed to Executive promptly by the
Company, whether or not Executive is successful in asserting such rights;
provided, however, that no reimbursement shall be made of such expenses relating
to any unsuccessful assertion of rights if and to the extent that Executive's
assertion of such rights was in bad faith or frivolous, as determined by
arbitrators in accordance with Section 11(c) or a court having jurisdiction over
the matter.
(c) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Westport, CT, by three arbitrators in accordance with the rules of the American
Arbitration Association in effect at the time of submission to arbitration.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. For purposes of entering any judgment upon an award rendered by
the arbitrators, the Company and Executive hereby consent to the jurisdiction of
any or all of the following courts: (i) the United States District Court for the
District of Connecticut, (ii) any of the courts of the State of Connecticut, or
(iii) any other court having jurisdiction. The Company and Executive further
agree that any service of process or notice requirements in any such proceeding
shall be satisfied if the rules of such court relating thereto have been
substantially satisfied. The Company and Executive hereby waive, to the fullest
extent permitted by applicable law, any objection which it may now or hereafter
have to such jurisdiction and any defense of inconvenient forum. The Company and
Executive hereby agree that a judgment upon an award rendered by the arbitrators
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Subject to Section 11(b), the Company shall bear all
costs and expenses arising in connection with any arbitration proceeding
pursuant to this Section 11. Notwithstanding any provision in this Section 11,
Executive shall be entitled to seek specific performance of Executive's right to
be paid during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
(d) INTEREST ON UNPAID AMOUNTS. Any amount which has become payable
pursuant to the terms of this Agreement or any decision by arbitrators or
judgment by a court of law pursuant to this Section 11 but which has not been
timely paid shall bear interest at the prime rate in effect at the time such
amount first becomes payable, as quoted by the Company's principal bank.
12. MISCELLANEOUS.
(a) INTEGRATION. This Agreement cancels and supersedes any and all prior
employment agreements and understandings between the parties hereto with respect
to the employment of Executive by the Company, any parent or predecessor
company, and the Company's subsidiaries during the Term, except for contracts
relating to compensation under executive compensation and employee benefit plans
of the Company and its subsidiaries. The foregoing notwithstanding, in the event
of any conflict or ambiguity between this Agreement and a Change-in-Control
Agreement executed by Executive and the Company, the provisions of this
Agreement shall govern except that Executive shall remain entitled to any right
or benefit under a Change-in-Control Agreement executed by the Company, for so
long as such Change-in-Control Agreement remains in effect, if and to the extent
that such right or benefit is more favorable to Executive than a corresponding
provision of this Agreement; but no payment or benefit under the
Change-in-Control Agreement shall be made or extended which duplicates any
payment or benefit hereunder. If and to the extent that this Agreement may
provide enhanced benefits to Executive under the USERP which benefits are not
explicitly provided for under the USERP, the USERP shall be deemed amended by
this Agreement (but only insofar as it pertains to Executive). This Agreement
constitutes the entire agreement among the parties with respect to the matters
herein provided, and no modification or waiver of any provision hereof shall be
effective unless in writing and signed by the parties hereto. Executive shall
not be entitled to any payment or benefit under this Agreement which duplicates
a payment or benefit received or receivable by Executive under any prior
agreements and understandings or
22
under any benefit or compensation plan of the Company which are in effect.
(b) SUCCESSORS; TRANSFERABILITY. 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 and, in the case of an acquisition of the Company in which the
corporate existence of the Company continues, the ultimate parent company
following such acquisition. Subject to the foregoing, the Company may transfer
and assign this Agreement and the Company's rights and obligations hereunder.
Neither this Agreement nor the rights or obligations hereunder of the parties
hereto shall be transferable or assignable by Executive, except in accordance
with the laws of descent and distribution or as specified in Section 12(c).
(c) BENEFICIARIES. Executive shall be entitled to designate (and change,
to the extent permitted under applicable law) a beneficiary or beneficiaries to
receive any compensation or benefits provided hereunder following Executive's
death.
(d) NOTICES. Whenever under this Agreement it becomes necessary to give
notice, such notice shall be in writing, signed by the party or parties giving
or making the same, and shall be served on the person or persons for whom it is
intended or who should be advised or notified, by Federal Express or other
similar overnight service or by certified or registered mail, return receipt
requested, postage prepaid and addressed to such party at the address set forth
below or at such other address as may be designated by such party by like
notice:
If to the Company:
IMS HEALTH INCORPORATED
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
If to Executive:
Xx. Xxxxx X. Xxxxxx
00 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
If the parties by mutual agreement supply each other with telecopier numbers for
the purposes of providing notice by facsimile, such notice shall also be proper
notice under this Agreement. In the case of Federal Express or other similar
overnight service, such notice or advice shall be effective when sent, and, in
the cases of certified or registered mail, shall be effective two days after
deposit into the mails by delivery to the U.S. Post Office.
(e) REFORMATION. The invalidity of any portion of this Agreement shall
not be deemed to render the remainder of this Agreement invalid.
(f) HEADINGS. The headings of this Agreement are for convenience of
reference only and do not constitute a part hereof.
(g) NO GENERAL WAIVERS. The failure of any party at any time to require
performance by any other party of any provision hereof or to resort to any
remedy provided herein or at law or in equity shall in no way affect the right
of such party to require such performance or to resort to such remedy at any
time
23
thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.
(h) NO OBLIGATION TO MITIGATE. Executive shall not be required to seek
other employment or otherwise to mitigate Executive's damages upon any
termination of employment, and any compensation or benefits received from any
other employment of Executive shall not mitigate or reduce the obligations of
the Company or the rights of Executive hereunder, except that, to the extent
Executive receives from a subsequent employer health or other insurance benefits
that are similar to the benefits referred to in Section 5(b) hereof, any such
benefits to be provided by the Company to Executive following the Term shall be
correspondingly reduced.
(i) OFFSETS; WITHHOLDING. The amounts required to be paid by the Company
to Executive pursuant to this Agreement shall not be subject to offset other
than with respect to any amounts that are owed to the Company by Executive due
to his receipt of funds as a result of his fraudulent activity. The foregoing
and other provisions of this Agreement notwithstanding, all payments to be made
to Executive under this Agreement, including under Sections 6 and 7, or
otherwise by the Company, will be subject to withholding to satisfy required
withholding taxes and other required deductions.
(j) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of Executive, his heirs, executors, administrators
and beneficiaries, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns.
(k) 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.
13. INDEMNIFICATION.
All rights to indemnification by the Company now existing in favor of the
Executive as provided in the Company's Certificate of Incorporation or By-laws
or pursuant to other agreements in effect on or immediately prior to the
Effective Date shall continue in full force and effect from the Effective Date
(including all periods after the expiration of the Term), and the Company shall
also advance expenses for which indemnification may be ultimately claimed as
such expenses are incurred to the fullest extent permitted under applicable law,
subject to any requirement that the Executive provide an undertaking to repay
such advances if it is ultimately determined that the Executive is not entitled
to indemnification; provided, however, that any determination required to be
made with respect to whether the Executive's conduct complies with the standards
required to be met as a condition of indemnification or advancement of expenses
under applicable law and the Company's Certificate of Incorporation, By-laws, or
other agreement shall be made by independent counsel mutually acceptable to the
Executive and the Company (except to the extent otherwise required by law).
After the date hereof, the Company shall not amend its Certificate of
Incorporation or By-laws or any agreement in any manner which adversely affects
the rights of the Executive to indemnification thereunder. Any provision
contained herein notwithstanding, this Agreement shall not limit or reduce any
rights of the Executive to indemnification pursuant to applicable law. In
addition, the Company will maintain directors' and officers' liability insurance
in effect and covering acts and omissions of Executive during the Term and for a
period of six years thereafter on terms substantially no less favorable than
those in effect on the Effective Date.
IN WITNESS WHEREOF, Executive has hereunto set his hand and the Company
has caused this instrument to be duly executed as of the date of this Agreement
set forth in Section 1 hereof.
24
IMS HEALTH INCORPORATED
By: /s/ Xxxxxxxx X. Xxxx
--------------------
Name: Xxxxxxxx X. Xxxx
Title: President and
Chief Executive Officer
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman
/s/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx
25
