IMS HEALTH INCORPORATED
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Employment Agreement for Xxxxxx X. Xxxxxxxx
As Amended and Restated
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IMS HEALTH INCORPORATED
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Employment Agreement for Xxxxxx X. Xxxxxxxx
As Amended and Restated
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Page
1. Employment; Effect of Amendment and Restatement....................... 1
2. Term.................................................................. 1
3. Offices and Duties.................................................... 2
(a) Generally....................................................... 2
(b) Place of Employment............................................. 2
(c) Rank of Executive Within Company................................ 2
4. Salary and Annual Incentive Compensation.............................. 3
(a) Base Salary..................................................... 3
(b) Annual Incentive Compensation................................... 3
5. Long Term Compensation, Including Stock Options, and Benefits,
Deferred Compensation, and Expense Reimbursement..................... 3
(a) Executive Compensation Plans.................................... 3
(b) Employee and Executive Benefit Plans............................ 4
(c) Acceleration of Awards Upon a Change in Control ................ 5
(d) Deferral of Compensation........................................ 5
(e) Company Registration Obligations................................ 5
(f) Reimbursement of Expenses....................................... 5
6. Termination Due to Retirement, Death, or Disability................... 5
(a) Retirement...................................................... 5
(b) Death........................................................... 6
(c) Disability...................................................... 7
(d) Other Terms of Payment Following Retirement, Death,
or Disability ................................................. 8
7. Termination of Employment For Reasons Other Than Retirement,
Death, or Disability................................................ 8
(a) Termination by the Company for Cause............................ 8
(b) Termination by Executive Other Than For Good Reason............. 9
(c) Termination by the Company Without Cause Prior to
a Change in Control........................................... 9
(d) Termination by Executive for Good Reason Prior to
a Change in Control........................................... 11
(e) Termination by the Company Without Cause After
a Change in Control........................................... 13
(f) Termination by Executive for Good Reason After
a Change in Control........................................... 16
(g) Other Terms Relating to Certain Terminations of Employment...... 18
8. Definitions Relating to Termination Events............................ 18
(a) "Cause"......................................................... 18
(b) "Change in Control"............................................. 19
(c) "Compensation Accrued at Termination"........................... 20
(d) "Disability".................................................... 20
(e) "Good Reason"................................................... 20
(f) "Potential Change in Control"................................... 22
9. Rabbi Trust Obligation Upon Potential Change in Control; Excise
Tax Related Provisions.............................................. 22
(a) Rabbi Trust Funded Upon Potential Change in Control............. 22
(b) Gross-up If Excise Tax Would Apply.............................. 23
10. Non-Competition and Non-Disclosure; Executive Cooperation;
Non-Disparagement................................................... 24
(a) Non-Competition................................................. 24
(b) Non-Disclosure; Ownership of Work............................... 25
(c) Cooperation With Regard to Litigation........................... 25
(d) Non-Disparagement............................................... 26
(e) Release of Employment Claims.................................... 26
(f) Forfeiture of Outstanding Options............................... 26
(g) Survival........................................................ 26
11. Governing Law; Disputes; Arbitration.................................. 27
(a) Governing Law................................................... 27
(b) Reimbursement of Expenses in Enforcing Rights................... 27
(c) Arbitration..................................................... 27
(d) Interest on Unpaid Amounts...................................... 27
12. Miscellaneous......................................................... 28
(a) Integration..................................................... 28
(b) Successors; Transferability..................................... 28
(c) Beneficiaries................................................... 28
(d) Notices......................................................... 28
(e) Reformation..................................................... 29
(f) Headings........................................................ 29
(g) No General Waivers.............................................. 29
(h) No Obligation To Mitigate....................................... 29
(i) Offsets; Withholding............................................ 29
(j) Successors and Assigns.......................................... 30
(k) Counterparts.................................................... 30
13. Indemnification....................................................... 30
IMS HEALTH INCORPORATED
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Employment Agreement for Xxxxxx X. Xxxxxxxx
As Amended and Restated
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THIS EMPLOYMENT AGREEMENT by and between IMS HEALTH INCORPORATED,
a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxxx ("Executive")
shall become effective as of July 1, 1998 (the "Effective Date"). It has been
amended and restated as of January 1, 2000.
W I T N E S S E T H
WHEREAS, Executive has served the Company and its predecessors in
the position of Chairman of the Board since 1985 and as Chief Executive Officer
from April 1995 through March 1999;
WHEREAS, the Company desires to continue to employ Executive as
Chairman of the Board 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; EFFECT OF AMENDMENT AND RESTATEMENT.
The Company hereby agrees to employ Executive as its Chairman of
the Board, and Executive hereby agrees to accept such employment and serve in
such capacity, during the Term as defined in Section 2 (subject to Section 7(c)
and 7(e)) and upon the terms and conditions set forth in this Employment
Agreement (the "Agreement"). Changes to this Agreement resulting from its
amendment and restatement as of January 1, 2000 are effective from and after
that date and during the remainder of the Term, except that the change in
Executive's title and office whereby he ceased to serve as Chief Executive
Officer became effective March 19,1999. Subject to this exception, Executive's
employment during the Term and prior to 2000 was governed by the provisions of
this Agreement as in effect prior to the effectiveness of the amendment and
restatement.
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 June
30, 2001 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 June 30, 2001 (extending the Term to June 30, 2002) and on
each succeeding June 30 thereafter, unless either party shall have served
written notice in accordance with Section 12(d) upon the other party on or
before the December 31 preceding a June 30 extension date electing not to extend
the Term further as of that June 30 extension date, in which case employment
shall terminate on that June 30 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 June 30 on which the Term will terminate as a result of notice given by
Executive hereunder, the Term shall be extended automatically at that June 30 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) and 7(e):
(a) Generally. Executive shall serve as the Chairman of the Board
of the Company and shall be nominated and, if elected, shall serve as a member
of the Board of Directors of the Company (the "Board") and, for so long as he is
serving on the Board, Executive agrees to serve as a member of any Board
committee if the Board shall elect Executive to such committee. In any and all
such capacities, Executive shall report only to the Board of Directors of the
Company. Executive shall have and perform such duties, responsibilities, and
authorities as are customary for the chairman of the board 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, but in no event shall
such duties, responsibilities, and authorities be reduced from those of
Executive at the Effective Date. Executive shall devote his full business time
and attention, and his best efforts, abilities, experience, and talent, to the
positions of Chairman of the Board 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 serve as a
member of the board of directors of each of State Street Corporation and the New
York Stock Exchange, Inc., (iii) undertake public speaking engagements, and (iv)
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 Board of Directors of the Company, so long
as such activities (i.e., those listed in clauses (i) through (iv)) 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.
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(b) Place of Employment. Executive's principal place of
employment shall be at the Corporate Offices of the Company which shall be in
(i) New York City, (ii) Westchester County, New York, (iii) Fairfield County,
Connecticut (iv) Xxxxxxxxxx County, Pennsylvania, (v) Passaic County, New
Jersey, or (vi) London, England.
(c) Rank of Executive Within Company. As Chairman of the Board of
the Company, Executive shall be the highest-ranking executive of the Company.
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 in 2000 shall be $775,000, 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 target incentive opportunity shall be not less than the greater of 100%
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. 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, AND BENEFITS,
DEFERRED COMPENSATION, AND EXPENSE REIMBURSEMENT
(a) Executive Compensation Plans. Executive shall be entitled
during the
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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 ("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 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.
In furtherance of and not in limitation of the foregoing, during
the Term:
(i) Executive will participate as Chairman of the Board in all
executive and employee vacation and time-off programs;
(ii) The Company will provide Executive with coverage as Chairman of
the Board 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;
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(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 Supplemental Executive Retirement Plan (the
"SERP"), as in effect on the Effective Date (subject to such
enhancement to benefits as are provided hereunder, including
Sections 7(e) and (f)); provided, however, that, the provisions
of the SERP notwithstanding, Executive's "Average Final
Compensation," as such term is used in the SERP, shall in no
event be less than $1,722,254 in the event of retirement in
2000, $1,823,460 in the event of retirement in 2001, $1,914,640
in the event of retirement in 2002, $2,010,380 in the event of
retirement in 2003, $2,110,900 in the event of retirement in
2004, and $2,216,440 in the event of retirement in 2005 or
thereafter.
(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 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
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prior to any reduction for voluntary contributions made by Executive under any
deferral or similar contributory plan or program of the Company, 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.
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 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 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
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(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 SERP
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 SERP
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:
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(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,
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) 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;
(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 SERP), 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
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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
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).
(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, 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 SERP and any other benefit plan shall
be governed by such plan.
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(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. 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 SERP and any other benefit plan shall
be governed by such plan.
(c) Termination by the Company Without Cause Prior to 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, 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 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; 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 as expressly
provided below), and the Company will pay Executive, and Executive will be
entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
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(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;
(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;
and
-11-
(vii) 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)(vii)
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)(vii) 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)(vii). 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)(vii); 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)(vii) if the Company had
received adequate prior notice as required by this sentence.
(d) Termination by Executive for Good Reason Prior to a Change in
Control. Executive may terminate his employment hereunder for Good Reason, prior
to 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 as
expressly provided below), and the Company will pay Executive, and Executive
will be entitled to receive, the following:
-12-
(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(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;
(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;
and
-13-
(vii) 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(d)(vii)
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)(vii) 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)(vii). 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)(vii); 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)(vii) if the Company
had received adequate prior notice as required by this sentence.
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 After a Change in
Control. The Company may terminate the employment of Executive hereunder without
Cause,
-14-
simultaneously with or 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 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 (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 as expressly provided below), 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
-15-
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 SERP, Executive will be credited with
additional years of age and/or years of Service (as defined in
the SERP) if and to the extent required so that Executive's
termination will qualify as a "Retirement" within the meaning of
the SERP and so that Executive will be entitled the maximum
"Retirement Benefit" in accordance with Section 3.1 of the SERP.
In addition, the provisions of the SERP notwithstanding, the
term "Average Final Compensation" as used in the SERP shall mean
the greatest of (A) Average Final Compensation as defined in the
SERP, (B) the sum of (x) Executive's Base Salary plus (y)
Executive's annual target incentive opportunity for the year in
which the Change in Control occurred (if not yet determined,
then such opportunity shall be deemed to equal the greater of
the minimum annual target incentive opportunity that would be
required by this Agreement or the actual annual incentive earned
for the year immediately preceding the year in which the Change
in Control occurred), or (C) $2,000,000; and
(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
-16-
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.
If any payment or benefit under this Section 7(e) is based on Base Salary or
other level of compensation or benefits at the time of Executive's termination
and if the Company has purported to reduce Base Salary or other level of
compensation or benefits prior to such termination in a manner that would
constitute 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(e).
(f) Termination by Executive for Good Reason After a Change in
Control. Executive may terminate his employment hereunder for Good Reason,
simultaneously with or 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 as expressly provided below), and the Company will pay Executive,
and Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
-17-
(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 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 SERP, Executive will be credited with
additional years of age and/or years of Service (as defined in
the SERP) if and to the extent
-18-
required so that Executive's termination will qualify as a
"Retirement" within the meaning of the SERP and so that
Executive will be entitled the maximum "Retirement Benefit" in
accordance with Section 3.1 of the SERP. In addition, the
provisions of the SERP notwithstanding, the term "Average Final
Compensation" as used in the SERP shall mean the greatest of (A)
Average Final Compensation as defined in the SERP, (B) the sum
of (x) Executive's Base Salary plus (y) Executive's annual
target incentive opportunity for the year in which the Change in
Control occurred (if not yet determined, then such opportunity
shall be deemed to equal the greater of the minimum annual
target incentive opportunity that would be required by this
Agreement or the actual annual incentive earned for the year
immediately preceding the year in which the Change in Control
occurred), or (C) $2,000,000; and
(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
-19-
have been paid under this Section 7(f)(viii) if the Company had
received adequate prior notice as required by this sentence.
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
benefits was the basis for Executive's termination for Good Reason or would
otherwise constitute 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 following 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
-20-
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, 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
-21-
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 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
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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 (A)
Executive shall be required to report to and take direction from
any person or body other than the Board of Directors of the
Company; and (B) if Executive shall be removed from the Board,
from the office of Chairman of the Board, or from any Board
committee on which Executive has served during the Term, or
there occurs any failure of Executive to be nominated, elected,
reappointed or reelected as a member of the Board, as Chairman
of the Board, or as a member of any Board committee on which he
has served during the Term, including a failure of the Board or
stockholders to take such actions (notwithstanding their legal
right to do so), 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
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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 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; or
(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.
Executive has consented to the change in his title and office whereby he ceased
to serve as Chief Executive Officer effective March 19,1999.
(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
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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 Code (or any similar federal, state or local tax that may hereafter be
imposed), 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 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;
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(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
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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).
(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 her 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 following a Change in Control or is terminated by Executive for
Good Reason 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
-27-
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 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 or be damaging to 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).
(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
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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 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
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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 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, Executive
shall not participate in the Company's Employee Protection Plan. 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
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
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and to the extent that this Agreement may provide enhanced benefits to Executive
under the SERP which benefits are not explicitly provided for under the SERP,
the SERP 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 such prior agreements and understandings or under
any benefit or compensation plan of the Company.
(b) Successors; Transferability. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise, and whether or not the corporate existence of the Company continues)
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: General Counsel
If to Executive:
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Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxx
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 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 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; provided, however, that, to the extent Executive
receives from a subsequent employer health or other insurance benefits that are
substantially 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.
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(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 the
amendment and restatement of this Agreement set forth in Section 1 hereof.
IMS HEALTH INCORPORATED
Name:
Title:
EXECUTIVE
----------------------
Xxxxxx X. Xxxxxxxx
