Exhibit 10.47
IMS HEALTH INCORPORATED
Employment Agreement for Xxxxxx X. Xxxxxxxxx
IMS HEALTH INCORPORATED
Employment Agreement for Xxxxxx X. Xxxxxxxxx
Page
1. Employment 1
2. Term 1
3. Offices and Duties 2
(a) Generally. 2
(b) Place of Employment 2
4. Salary and Annual Incentive Compensation 2
(a) Base Salary 2
(b) Annual Incentive Compensation 2
5. Long Term Compensation, Including Stock Options, Benefits,
Deferred Compensation, and Expense Reimbursement 3
(a) Executive Compensation Plans 3
(b) Employee and Executive Benefit Plans 3
(c) Acceleration of Awards Upon a Change in Control 4
(d) Deferral of Compensation 4
(e) Company Registration Obligations 4
(f) Reimbursement of Expenses 4
6. Termination Due to Retirement, Death or Disability 4
(a) Retirement 5
(b) Death 5
(c) Disability 6
(d) Other Terms of Payment Following Retirement, Death
or Disability 7
7. Termination of Employment For Reasons Other Than Retirement,
Death, or Disability 7
(a) Termination by the Company for Cause 7
(b) Termination by Executive Other Than For
Good Reason 7
(c) Termination by the Company Without Cause Prior to
or More than Two Years After a Change in Control 7
(d) Termination by Executive for Good Reason Prior
to or More than Two Years After a Change in Control 9
(e) Termination by the Company Without Cause Within
Two Years After a Change in Control 11
(f) Termination by Executive for Good Reason Within Two
Years After a Change in Control 12
(g) Other Terms Relating to Certain Terminations of Employment 14
8. Definitions Relating to Termination Events 14
(a) "Cause" 14
(b) "Change in Control" 15
(c) "Compensation Accrued at Xxxxxxxxxxx" 00
(x) "Disability" 16
(e) "Good Reason 16
(f) "Potential Change in Control" 17
9. Rabbi Trust Obligation Upon Potential Change in Control; Excise
Tax Related Provisions 17
(a) Rabbi Trust Funded Upon Potential Change in Control 17
(b) Gross-up If Excise Tax Would Apply 18
10. Non-Competition and Non-Disclosure; Executive Cooperation;
Non-Disparagement 19
(a) Non-Competition 19
(b) Non-Disclosure; Ownership of Work 20
(c) Cooperation With Regard to Litigation 20
(d) Non-Disparagement 20
(e) Release of Employment Claims 20
(f) Forfeiture of Outstanding Options 20
(g) Survival 20
11. Governing Law; Disputes; Arbitration 21
(a) Governing Law 21
(b) Reimbursement of Expenses in Enforcing Rights 21
(c) Arbitration 21
(d) Interest on Unpaid Amounts 21
12. Miscellaneous 21
(a) Integration 21
(b) Successors; Transferability 22
(c) Beneficiaries 22
(d) Notices 22
(e) Reformation 23
(f) Headings 23
(g) No General Waivers 23
(h) No Obligation To Mitigate 23
(i) Offsets; Withholding 23
(j) Successors and Assigns 23
(k) Counterparts 23
13. Indemnification 23
IMS HEALTH INCORPORATED
Employment Agreement for Xxxxxx X. Xxxxxxxxx
THIS EMPLOYMENT AGREEMENT by and between IMS HEALTH INCORPORATED, a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxxxx ("Executive")
shall become effective as of November 14, 2000 (the "Effective Date").
W I T N E S S E T H
WHEREAS, Executive has served the Company and its predecessors in
executive capacities since February 24, 1997;
WHEREAS, the Company desires to continue to employ Executive as Senior
Vice President and General Counsel of the Company, and Executive desires to
accept such employment on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
adequacy of which the Company and Executive each hereby acknowledge, the Company
and Executive hereby agree as follows:
1. EMPLOYMENT.
The Company hereby agrees to employ Executive as its Senior Vice
President and General Counsel (with the principal executive duties set forth
below in Section 3), and Executive hereby agrees to accept such employment and
serve in such capacities, during the Term as defined in Section 2 (subject to
Section 7(c) and 7(e)) and upon the terms and conditions set forth in this
Employment Agreement (the "Agreement").
2. TERM.
The term of employment of Executive under this Agreement (the "Term")
shall be the period commencing on the Effective Date and ending on December 31,
2002 and any period of extension thereof in accordance with this Section 2,
except that the Term will end at a date, prior to the end of such period or
extension thereof, specified in Section 6 or 7 in the event of termination of
Executive's employment. The Term, if not previously ended, shall be extended
automatically without further action by either party by one additional year
(added to the end of the Term) first on December 31, 2002 (extending the Term to
December 31, 2003) and on each succeeding December 31 thereafter, unless either
party shall have served written notice in accordance with Section 12(d) upon the
other party on or before the June 30 preceding a December 31 extension date
electing not to extend the Term further as of that December 31 extension date,
in which case employment shall terminate on that December 31 and the Term shall
end at that date, subject to earlier termination of employment and earlier
termination of the Term in accordance with Section 6 or 7. The foregoing
notwithstanding, in the event there occurs a Potential Change in Control during
the period of 180 days prior to the December 31 on which the Term will terminate
as a result of notice given by the Executive or the Company hereunder, the Term
shall be extended automatically at that December 31 by an additional period such
that the Term will extend until the 180th day following such Potential Change in
Control.
3. OFFICES AND DUTIES.
The provisions of this Section 3 will apply during the Term, except as
otherwise provided in Section 7(c) or 7(e):
(a) GENERALLY. Executive shall serve as the Senior Vice President and
General Counsel of the Company. In any and all such capacities, Executive shall
report only to the Chief Executive Officer or Chief Administrative Officer of
the Company and to the Board of Directors (the "Board"). Executive shall have
and perform such duties, responsibilities, and authorities as are customary for
the General Counsel of a publicly held corporation of the size, type, and nature
of the Company as they may exist from time to time in addition to Executive's
pre-existing responsibilities for Tax and Corporate Development and consistent
with such position and status, and shall specifically include having the
principal executive responsibility for the following operations, departments or
activities of the Company: the global Legal function, the global Tax function
and global Corporate Development. In no event shall such duties,
responsibilities, and authorities be reduced from those of Executive at the
Effective Date (including those specified in this Section 3(a)), except with the
written consent of Executive. Executive shall devote his full business time and
attention, and his best efforts, abilities, experience, and talent, to the
positions of Senior Vice President and General Counsel with principal executive
responsibility for the global Tax and Corporate Development function and for the
businesses of the Company without commitment to other business endeavors, except
that Executive (i) may make personal investments which are not in conflict with
his duties to the Company and manage personal and family financial and legal
affairs, (ii) may undertake public speaking engagements, and (iii) may serve as
a director of (or similar position with) any other business or an educational,
charitable, community, civic, religious, or similar type of organization with
the approval of the Chief Executive Officer, so long as such activities (i.e.,
those listed in clauses (i) through (iii)) do not preclude or render unlawful
Executive's employment or service to the Company or otherwise materially inhibit
the performance of Executive's duties under this Agreement or materially impair
the business of the Company or its subsidiaries.
(b) PLACE OF EMPLOYMENT. Executive's principal place of employment
shall be at the Corporate Offices of the Company which shall be in Fairfield
County, Connecticut.
4. SALARY AND ANNUAL INCENTIVE COMPENSATION.
As partial compensation for the services to be rendered hereunder by
Executive, the Company agrees to pay to Executive during the Term the
compensation set forth in this Section 4.
(a) BASE SALARY. The Company will pay to Executive during the Term a
base salary, the annual rate of which shall be $275,000, payable in cash in
substantially equal semi-monthly installments commencing at the beginning of the
Term, and otherwise in accordance with the Company's usual payroll practices
with respect to senior executives (except to the extent deferred under Section
5(d)). Executive's annual base salary shall be reviewed by the Compensation and
Benefits Committee of the Board (the "Committee") at least once in each calendar
year, and may be increased above, but may not be reduced below, the then-current
rate of such base salary. For purposes of this Agreement, "Base Salary" means
Executive's then-current base salary.
(b) ANNUAL INCENTIVE COMPENSATION. The Company will pay to Executive
during the Term annual incentive compensation which shall offer to Executive an
opportunity to earn additional compensation based upon performance in amounts
determined by the Committee in accordance with the applicable plan and
consistent with past practices of the Company; provided, however, that the
annual incentive opportunity during the Term shall be not less than the greater
of 51% of Base Salary or the annual target incentive opportunity for the prior
year for achievement of target level performance, with the nature of the
performance and the levels of performance triggering payments of such annual
target incentive compensation for each year to be established and communicated
to Executive during the first quarter of such year by the Committee; provided,
further, that annual incentive payable for performance in 2000 shall be based on
the amount of salary actually paid during the year. In addition, the Committee
(or the Board) may determine, in its discretion, to increase the Executive's
annual target incentive opportunity or provide an additional annual incentive
opportunity, in excess of the annual target incentive opportunity, payable for
performance in excess of or in addition to the performance required for payment
of the annual target incentive amount. Any annual incentive compensation payable
to Executive shall be paid in
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accordance with the Company's usual practices with respect to payment of
incentive compensation to senior executives (except to the extent deferred under
Section 5(d)).
5. LONG-TERM COMPENSATION, INCLUDING STOCK OPTIONS, BENEFITS, DEFERRED
COMPENSATION, AND EXPENSE REIMBURSEMENT
(a) EXECUTIVE COMPENSATION PLANS. Executive shall be entitled during
the Term to participate, without discrimination or duplication, in all executive
compensation plans and programs intended for general participation by senior
executives of the Company, as presently in effect or as they may be modified or
added to by the Company from time to time, subject to the eligibility and other
requirements of such plans and programs, including without limitation any stock
option plans, plans under which restricted stock/restricted stock units,
performance-based restricted stock/restricted stock units ("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.
The foregoing notwithstanding, Executive shall be entitled to participate in the
PERS program based on annual performance commencing with the 2001 performance
year, and will not be granted PERS with respect to the 2000 performance year.
(b) EMPLOYEE AND EXECUTIVE BENEFIT PLANS. Executive shall be entitled
during the Term to participate, without discrimination or duplication, in all
employee and executive benefit plans and programs of the Company, as presently
in effect or as they may be modified or added to by the Company from time to
time, to the extent such plans are available generally to other senior
executives or employees of the Company, subject to the eligibility and other
requirements of such plans and programs, including without limitation plans
providing pensions, supplemental pensions, supplemental and other retirement
benefits, medical insurance, life insurance, disability insurance, and
accidental death or dismemberment insurance, as well as savings, profit-sharing,
and stock ownership plans; provided, however, that such benefit plans and
programs, in the aggregate, shall provide Executive with benefits and
compensation substantially no less favorable than those provided by the Company
to Executive under such plans and programs as in effect on the Effective Date.
The foregoing notwithstanding, Executive shall be eligible to participate or
receive compensation and benefits under the Company's Employee Protection Plan
and his Change-in-Control Agreement, provided that any compensation and benefits
to Executive under the Employee Protection Plan and the Change-in-Control
Agreement shall be payable only if and to the extent that such benefits would
exceed the corresponding benefits payable under this Agreement.
In furtherance of and not in limitation of the foregoing, during the
Term:
(i) Executive will participate as Senior Vice President and
General Counsel in all executive and employee vacation and time-off
programs;
(ii) The Company will provide Executive with coverage as
Senior Vice President and General Counsel with respect to long-term
disability insurance and benefits substantially no less favorable
(including any required contributions by Executive) than such insurance
and benefits in effect on the Effective Date;
(iii) Executive will be covered by Company-paid group and
individual term life insurance providing a death benefit no less than
the death benefit provided under Company-paid insurance in effect at
the Effective Date; provided, however, that, with the consent of
Executive, such insurance may be combined with a supplementary
retirement funding vehicle;
(iv) Executive will be entitled to retirement benefits
substantially no less favorable than those under the defined benefit
pension plans and programs of the Company. Accordingly, Executive
shall, as soon as possible, be admitted to, and shall be entitled to
retirement benefits as provided under, the IMS Health Incorporated U.S.
Executive Retirement Plan (the "USERP"). The Company acknowledges and
agrees that, pursuant to Section 3 of the USERP, Executive's years of
service with the Company prior to the date he will have become a Member
under the USERP shall be included as Service in determining Executive's
Vested Percentage under Section 3 of the
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USERP, and the Company will appropriately effectuate such
determination. References in this Section 5(b)(iv) to "Member,"
"Service" and "Vested Percentage" have the meanings defined in the
USERP. In addition, for purposes of this provision and the USERP,
Executive's "Average Final Compensation" shall be no less than the sum
of Executive's Base Salary for 2001 and the greater of (A) Executive's
target annual incentive compensation for 2001 and (B) actual annual
incentive compensation paid in respect of services rendered in 2001;
and
(v) The Company will provide Executive with health and medical
benefits consistent with its policies for other senior executives.
Any provision to the contrary contained in this Agreement
notwithstanding, unless Executive is terminated by the Company for "Cause" (as
defined in Section 8(a)) or Executive terminates voluntarily and not for "Good
Reason" (as defined in Section 8(e)), Executive may elect continued
participation after termination of employment in the Company's health and
medical coverage for himself and his spouse and dependent children after such
coverage would otherwise end until such time as Executive becomes eligible for
similar coverage with a subsequent employer or other entity to which Executive
provides services or becomes eligible for Medicare (under rules in effect at the
Effective Date hereof); provided, however, that in the event of such election,
Executive shall pay the Company each year an amount equal to the then-current
annual COBRA premium being paid (or payable) by any other former employee of the
Company, unless otherwise provided under Section 6 or 7.
(c) ACCELERATION OF AWARDS UPON A CHANGE IN CONTROL. In the event of a
Change in Control (as defined in Section 8(b)), all outstanding stock options,
restricted stock, and other equity-based awards then held by Executive shall
become vested and exercisable.
(d) DEFERRAL OF COMPENSATION. If the Company has in effect or adopts
any deferral program or arrangement permitting executives to elect to defer any
compensation, Executive will be eligible to participate in such program on terms
no less favorable than the terms of participation of any other executive officer
of the Company. Any plan or program of the Company which provides benefits based
on the level of salary, annual incentive, or other compensation of Executive
shall, in determining Executive's benefits, take into account the amount of
salary, annual incentive, or other compensation prior to any reduction for
voluntary contributions made by Executive under any deferral or similar
contributory plan or program of the Company (excluding compensation that would
not be taken into account even if not deferred), but shall not treat any payout
or settlement under such a deferral or similar contributory plan or program to
be additional salary, annual incentive, or other compensation for purposes of
determining such benefits, unless otherwise expressly provided under such plan
or program.
(e) COMPANY REGISTRATION OBLIGATIONS. The Company will use its best
efforts to file with the Securities and Exchange Commission and thereafter
maintain the effectiveness of one or more registration statements registering
under the Securities Act of 1933, as amended (the "1933 Act"), the offer and
sale of shares by the Company to Executive pursuant to stock options or other
equity-based awards granted to Executive under Company plans or otherwise or, if
shares are acquired by Executive in a transaction not involving an offer or sale
to Executive but resulting in the acquired shares being "restricted securities"
for purposes of the 1933 Act, registering the reoffer and resale of such shares
by Executive.
(f) REIMBURSEMENT OF EXPENSES. The Company will promptly reimburse
Executive for all reasonable business expenses and disbursements incurred by
Executive in the performance of Executive's duties during the Term in accordance
with the Company's reimbursement policies as in effect from time to time.
6. TERMINATION DUE TO RETIREMENT, DEATH, OR DISABILITY.
(a) RETIREMENT. Executive may elect to terminate employment hereunder
by retirement at or after age 55 or, upon the request of Executive, at such
earlier age as may be approved by the Board (in either case, "Retirement"). At
the time Executive's employment terminates due to Retirement, the Term
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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
(iv) All restricted stock and deferred stock awards, including
outstanding PERS awards, all other long-term incentive awards,
and all deferral arrangements under Section 5(d), shall be
governed by the plans and programs under which the awards were
granted or governing the deferral, and all rights under the
USERP and any other benefit plan shall be governed by such
plan.
(b) DEATH. In the event of Executive's death which results in the
termination of Executive's employment, the Term will terminate, all obligations
of the Company and Executive under Sections 1 through 5 of this Agreement will
immediately cease except for obligations which expressly continue after death,
and the Company will pay Executive's beneficiary or estate, and Executive's
beneficiary or estate will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's death occurred, an
amount equal to the portion of annual incentive compensation
that would have become payable in cash to Executive (i.e.,
excluding the portion payable in PERS or in other non-cash
awards) for that year if his employment had not terminated,
based on performance actually achieved in that year
(determined by the Committee following completion of the
performance year), multiplied by a fraction the numerator of
which is the number of days Executive was employed in the year
of his death and the denominator of which is the total number
of days in the year of death;
(iii) The vesting and exercisability of stock options held by
Executive at death and all other terms of such options shall
be governed by the plans and programs and the agreements and
other documents pursuant to which such options were granted;
and
(iv) All restricted stock and deferred stock awards, including
outstanding PERS awards, all other long-term incentive awards,
and all deferral arrangements under Section 5(d), shall be
governed by the plans and programs under which the awards were
granted or governing the deferral, and all rights under the
USERP and any other benefit plan shall be governed by such
plan.
(c) DISABILITY. The Company may terminate the employment of Executive
hereunder due to the Disability (as defined in Section 8(d)) of Executive. Such
employment shall terminate at the expiration of the 30-day period referred to in
the definition of Disability set forth in Section 8(d), unless Executive has
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returned to service and presented to the Company a certificate of good health
prior to such termination as specified in Section 8(d). Upon termination of
employment, the Term will terminate, all obligations of the Company and
Executive under Sections 1 through 5 of this Agreement will immediately cease
except for obligations which expressly continue after termination of employment
due to Disability, and the Company will pay Executive, and Executive will be
entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated,
an amount equal to the portion of annual incentive
compensation that would have become payable in cash to
Executive (i.e., excluding the portion payable in PERS or in
other non-cash awards) for that year if his employment had not
terminated, based on performance actually achieved in that
year (determined by the Committee following completion of the
performance year), multiplied by a fraction the numerator of
which is the number of days Executive was employed in the year
of termination and the denominator of which is the total
number of days in the year of termination;
(iii) Stock options held by Executive at termination shall be
governed by the plans and programs and the agreements and
other documents pursuant to which such options were granted;
(iv) Any performance objectives upon which the earning of
performance-based restricted stock and deferred stock awards,
including outstanding PERS awards, and other long-term
incentive awards is conditioned shall be deemed to have been
met at target level at the date of termination, and restricted
stock and deferred stock awards, including outstanding PERS
awards, and other long-term incentive awards (to the extent
then or previously earned, in the case of performance-based
awards) shall become fully vested and non-forfeitable at the
date of such termination, and, in other respects, such awards
shall be governed by the plans and programs and the agreements
and other documents pursuant to which such awards were
granted;
(v) Disability benefits shall be payable in accordance with the
Company's plans, programs and policies (including the USERP),
and all deferral arrangements under Section 5(d) will be
settled in accordance with the plans and programs governing
the deferral; and
(vi) For the period extending from the date of termination due to
Disability until the date Executive reaches age 65, Executive
shall continue to participate in those employee and executive
benefit plans and programs under Section 5(b) to the extent
such plans and programs provide medical insurance, disability
insurance and life insurance benefits (but not other benefits,
such as pension and retirement benefits, provided under
Section 5(b)) in which Executive was participating immediately
prior to termination, the terms of which allow Executive's
continued participation, as if Executive had continued in
employment with the Company during such period or, if the
terms of such plans or programs do not allow Executive's
continued participation, Executive shall be paid a cash
payment equivalent on an after-tax basis to the value of the
additional benefits (of the type described in this Section
6(c)(vi)) Executive would have received under such plans or
programs had Executive continued to be employed during such
period following Executive's termination until age 65, with
such benefits provided by the Company at the same times and in
the same manner as such benefits would have been provided to
Executive under such plans and programs (it being understood
that the value of any insurance-provided benefits will be
based on the premium cost to Executive, which shall not exceed
the highest risk premium charged by a carrier having an
investment grade or better credit rating). The foregoing
notwithstanding, Executive must continue to satisfy the
conditions set forth in Section 10 in order to continue
receiving the benefits provided under this Section 6(c)(vi).
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(d) OTHER TERMS OF PAYMENT FOLLOWING RETIREMENT, DEATH, OR DISABILITY.
Nothing in this Section 6 shall limit the benefits payable or provided In the
event Executive's employment terminates due to Retirement, death, or Disability
under the terms of plans or programs of the Company more favorable to the
Executive (or his beneficiaries) than the benefits payable or provided under
this Section 6 (except in the case of annual incentives in lieu of which amounts
are paid hereunder), including plans and programs adopted after the date of this
Agreement. Amounts payable under this Section 6 following Executive's
termination of employment, other than those expressly payable following
determination of performance for the year of termination for purposes of annual
incentive compensation or otherwise expressly payable on a deferred basis, will
be paid as promptly as practicable after such termination of employment.
7. TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN RETIREMENT, DEATH OR
DISABILITY.
(a) TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate the
employment of Executive hereunder for Cause (as defined in Section 8(a)) at any
time. At the time Executive's employment is terminated for Cause, the Term will
terminate, all obligations of the Company and Executive under Sections 1 through
5 of this Agreement will immediately cease except for obligations which
expressly continue after termination of employment by the Company for Cause, and
the Company will pay Executive, and Executive will be entitled to receive, the
following:
(i) Executive's Compensation Accrued at Termination (as
defined in Section 8(c));
(ii) All stock options, restricted stock and deferred stock
awards, including outstanding PERS awards, and all other long-term
incentive awards will be governed by the terms of the plans and
programs under which the awards were granted; and
(iii) All deferral arrangements under Section 5(d) will be
settled in accordance with the plans and programs governing the
deferral, and all rights under the USERP and any other benefit plan
shall be governed by such plan (subject to Section 5(b)).
(b) TERMINATION BY EXECUTIVE OTHER THAN FOR GOOD REASON. Executive may
terminate his employment hereunder voluntarily for reasons other than Good
Reason (as defined in Section 8(e)) at any time upon 90 days' written notice to
the Company. An election by Executive not to extend the Term pursuant to Section
2 hereof shall be deemed to be a termination of employment by Executive for
reasons other than Good Reason at the date of expiration of the Term, unless a
Change in Control (as defined in Section 8(b)) occurs prior to, and there exists
Good Reason at, such date of expiration. At the time Executive's employment is
terminated by Executive other than for Good Reason the Term will terminate, all
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease, and the Company will pay Executive, and
Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) All stock options, restricted stock and deferred stock awards,
including outstanding PERS awards, and all other long-term
incentive awards will be governed by the terms of the plans
and programs under which the awards were granted; and
(iii) All deferral arrangements under Section 5(d) will be settled
in accordance with the plans and programs governing the
deferral, and all rights under the USERP and any other benefit
plan shall be governed by such plan.
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE PRIOR TO OR MORE THAN TWO
YEARS AFTER A CHANGE IN CONTROL. The Company may terminate the employment of
Executive hereunder without Cause, if at the date of termination no Change in
Control has occurred or such date of termination is at least two years after the
most recent Change in Control, upon at least 90 days' written notice to
Executive. The foregoing notwithstanding, the Company may elect, by written
notice to Executive, to terminate Executive's positions specified in Sections 1
and 3 and all other obligations of Executive and the Company under 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
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assigned duties) for all other purposes of this Agreement, including for
purposes of Sections 4 and 5, from such specified date until the expiration of
such 90-day period. An election by the Company not to extend the Term pursuant
to Section 2 hereof shall be deemed to be a termination of Executive's
employment by the Company without Cause at the date of expiration of the Term
and shall be subject to this Section 7(c) if at the date of such termination no
Change in Control has occurred or such date of termination is at least two years
after the most recent Change in Control; provided, however, that, if Executive
has attained age 65 at such date of termination, such termination shall be
deemed a Retirement of Executive. At the time Executive's employment is
terminated by the Company (i.e., at the expiration of such notice period), the
Term will terminate, all remaining obligations of the Company and Executive
under Sections 1 through 5 of this Agreement will immediately cease (except for
obligations which continue after termination of employment as expressly provided
herein), and the Company will pay Executive, and Executive will be entitled to
receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) Cash in an aggregate amount equal to one 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;
(vii) All rights under the USERP shall be governed by such plan
(subject to Section 5(b)); and
8
(viii) For a period of two years after such termination (but not
after Executive attains age 65), Executive shall continue to
participate in those employee and executive benefit plans and
programs under Section 5(b) to the extent such plans and
programs provide medical insurance, disability insurance and
life insurance benefits (but not other benefits, such as
pension and retirement benefits, provided under Section 5(b))
in which Executive was participating immediately prior to
termination, the terms of which allow Executive's continued
participation, as if Executive had continued in employment
with the Company during such period; provided, however, that
such participation shall terminate, or the benefits under such
plans and programs shall be reduced, if and to the extent
Executive becomes covered (or is eligible to become covered)
by plans of a subsequent employer or other entity to which
Executive provides services during such period providing
comparable benefits. If the terms of the Company plans and
programs referred to in this Section 7(c)(viii) do not allow
Executive's continued participation, Executive shall be paid a
cash payment equivalent on an after-tax basis to the value of
the additional benefits described in this Section 7(c)(viii)
Executive would have received under such plans or programs had
Executive continued to be employed during such period, with
such benefits provided by the Company at the same times and in
the same manner as such benefits would have been provided to
Executive under such plans and programs (it being understood
that the value of any insurance-provided benefits will be
based on the premium cost to Executive, which shall not exceed
the highest risk premium charged by a carrier having an
investment grade or better credit rating); provided, however,
that Executive must continue to satisfy the conditions set
forth in Section 10 in order to continue receiving the
benefits provided under this Section 7(c)(viii). Executive
agrees to promptly notify the Company of any employment or
other arrangement by which Executive provides services during
the benefits-continuation period and of the nature and extent
of benefits for which Executive becomes eligible during such
period which would reduce or terminate benefits under this
Section 7(c)(viii); and the Company 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(c)(viii)
if the Company had received adequate prior notice as required
by this sentence.
(d) TERMINATION BY EXECUTIVE FOR GOOD REASON PRIOR TO OR MORE THAN TWO
YEARS AFTER A CHANGE IN CONTROL. Executive may terminate his employment
hereunder for Good Reason, prior to a Change in Control or after the second
anniversary of the most recent Change in Control, upon 90 days' written notice
to the Company; provided, however, that, if the Company has corrected the basis
for such Good Reason within 30 days after receipt of such notice, Executive may
not terminate his employment for Good Reason, and therefore Executive's notice
of termination will automatically become null and void. At the time Executive's
employment is terminated by Executive for Good Reason (i.e., at the expiration
of such notice period), the Term will terminate, all obligations of the Company
and Executive under Sections 1 through 5 of this Agreement will immediately
cease (except for obligations which continue after termination of employment as
expressly provided herein), and the Company will pay Executive, and Executive
will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) Cash in an aggregate amount equal to one 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
9
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;
(vii) All rights under the USERP shall be governed by such plan
(subject to Section 5(b)); and
(viii) For a period of two years after such termination (but not
after Executive attains age 65), Executive shall continue to
participate in those employee and executive benefit plans and
programs under Section 5(b) to the extent such plans and
programs provide medical insurance, disability insurance and
life insurance benefits (but not other benefits, such as
pension and retirement benefits, provided under Section 5(b))
in which Executive was participating immediately prior to
termination, the terms of which allow Executive's continued
participation, as if Executive had continued in employment
with the Company during such period; provided, however, that
such participation shall terminate, or the benefits under such
plans and programs shall be reduced, if and to the extent
Executive becomes covered (or is eligible to become covered)
by plans of a subsequent employer or other entity to which
Executive provides services during such period providing
comparable benefits. If the terms of the Company plans and
programs referred to in this Section 7(d)(viii) do not allow
Executive's continued participation, Executive shall be paid a
cash payment equivalent on an after-tax basis to the value of
the additional benefits described in this Section 7(d)(viii)
Executive would have received under such plans or programs had
Executive continued to be employed during such period, with
such benefits provided by the Company at the same times and in
the same manner as such benefits would have been provided to
Executive under such plans and programs (it being understood
that the value of any insurance-provided benefits will be
based on the premium cost to Executive, which shall not exceed
the highest risk premium charged by a carrier having an
investment grade or better credit rating); provided, however,
that Executive must continue to satisfy the conditions set
forth in Section 10 in order to continue receiving the
benefits provided under this Section 7(d)(viii). Executive
agrees to promptly notify the Company of any employment or
other arrangement by which Executive provides services during
the benefits-continuation period and of the nature and
10
extent of benefits for which Executive becomes eligible during
such period which would reduce or terminate benefits under
this Section 7(d)(viii); and the Company shall be entitled to
recover from Executive any payments and the fair market value
of benefits previously made or provided to Executive hereunder
which would not have been paid under this Section 7(d)(viii)
if the Company had received adequate prior notice as required
by this sentence.
If any payment or benefit under this Section 7(d) is based on Base Salary or
other level of compensation or benefits at the time of Executive's termination
and if a reduction in such Base Salary or other level of compensation or benefit
was the basis for Executive's termination for Good Reason, then the Base Salary
or other level of compensation in effect before such reduction shall be used to
calculate payments or benefits under this Section 7(d).
(e) TERMINATION BY THE COMPANY WITHOUT CAUSE WITHIN TWO YEARS AFTER A
CHANGE IN CONTROL. The Company may terminate the employment of Executive
hereunder without Cause, simultaneously with or within two years after a Change
in Control, upon at least 90 days' written notice to Executive. The foregoing
notwithstanding, the Company may elect, by written notice to Executive, to
terminate Executive's positions specified in Sections 1 and 3 and all other
obligations of Executive and the Company under Section 3 at a date earlier than
the expiration of such 90-day notice period, if so specified by the Company in
the written notice, provided that Executive shall be treated as an employee of
the Company (without any assigned duties) for all other purposes of this
Agreement, including for purposes of Sections 4 and 5, from such specified date
until the expiration of such 90-day period. An election by the Company not to
extend the Term pursuant to Section 2 hereof shall be deemed to be a termination
of Executive's employment by the Company without Cause at the date of expiration
of the Term and shall be subject to this Section 7(e) if the date of such
termination coincides with or is within two years after a Change in Control;
provided, however, that, if Executive has attained age 65 at such date of
termination, such termination shall be deemed a Retirement of Executive. At the
time Executive's employment is terminated by the Company (i.e., at the
expiration of such notice period), the Term will terminate, all remaining
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease (except for obligations which continue after
termination of employment as expressly provided herein), and the Company will
pay Executive, and Executive will be entitled to receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) Cash in an aggregate amount equal to three times the sum of
(A) Executive's Base Salary under Section 4(a) immediately
prior to termination plus (B) an amount equal to the greater
of (x) the portion of Executive's annual target incentive
compensation potentially payable in cash to Executive (i.e.,
excluding the portion payable in PERS or in other non-cash
awards) for the year of termination or (y) the portion of
Executive's annual incentive compensation that became payable
in cash to Executive (i.e., excluding the portion payable in
PERS or in other non-cash awards) for the latest year
preceding the year of termination based on performance
actually achieved in that latest year. The amount determined
to be payable under this Section 7(e)(ii) shall be paid by the
Company not later than 15 days after Executive's termination;
(iii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated,
an amount equal to the portion of Executive's annual target
incentive compensation potentially payable in cash to
Executive (i.e., excluding the portion payable in PERS or in
other non-cash awards) for the year of termination, multiplied
by a fraction the numerator of which is the number of days
Executive was employed in the year of termination and the
denominator of which is the total number of days in the year
of termination;
(iv) Stock options held by Executive at termination, if not then
vested and exercisable, will become fully vested and
exercisable at the date of such termination, and any such
options granted on or after the date hereof shall remain
outstanding and exercisable until the stated expiration date
of the Option as though Executive's employment did not
11
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) All rights under the USERP shall be governed by such plan
(subject to Section 5(b)); 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(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.
(f) TERMINATION BY EXECUTIVE FOR GOOD REASON WITHIN TWO YEARS AFTER A
CHANGE IN CONTROL. Executive may terminate his employment hereunder for Good
Reason, simultaneously with or within two years after a Change in Control, upon
90 days' written notice to the Company; provided, however, that, if the Company
has corrected the basis for such Good Reason within 30 days after receipt of
such notice, Executive may not terminate his employment for Good Reason, and
therefore Executive's notice of termination will automatically become null and
void. At the time Executive's employment is
12
terminated by Executive for Good Reason (i.e., at the expiration of such notice
period), the Term will terminate, all obligations of the Company and Executive
under Sections 1 through 5 of this Agreement will immediately cease (except for
obligations which continue after termination of employment as expressly provided
herein), and the Company will pay Executive, and Executive will be entitled to
receive, the following:
(i) Executive's Compensation Accrued at Termination;
(ii) Cash in an aggregate amount equal to three times the sum of
(A) Executive's Base Salary under Section 4(a) immediately
prior to termination plus (B) an amount equal to the greater
of (x) the portion of Executive's annual target incentive
compensation potentially payable in cash to Executive (i.e.,
excluding the portion payable in PERS or in other non-cash
awards) for the year of termination or (y) the portion of
Executive's annual incentive compensation that became payable
in cash to Executive (i.e., excluding the portion payable in
PERS or in other non-cash awards) for the latest year
preceding the year of termination based on performance
actually achieved in that latest year. The amount determined
to be payable under this Section 7(f)(ii) shall be paid by the
Company not later than 15 days after Executive's termination;
(iii) In lieu of any annual incentive compensation under Section
4(b) for the year in which Executive's employment terminated,
an amount equal to the portion of Executive's annual target
incentive compensation potentially payable in cash to
Executive (i.e., excluding the portion payable in PERS or in
other non-cash awards) for the year of termination, multiplied
by a fraction the numerator of which is the number of days
Executive was employed in the year of termination 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) All rights under the USERP shall be governed by such plan
(subject to Section 5(b)); 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
13
benefits under such plans and programs shall be reduced, if
and to the extent Executive becomes covered (or is eligible to
become covered) by plans of a subsequent employer or other
entity to which Executive provides services during such period
providing comparable benefits. If the terms of the Company
plans and programs referred to in this Section 7(f)(viii) do
not allow Executive's continued participation, Executive shall
be paid a cash payment equivalent on an after-tax basis to the
value of the additional benefits described in this Section
7(f)(viii) Executive would have received under such plans or
programs had Executive continued to be employed during such
period, with such benefits provided by the Company at the same
times and in the same manner as such benefits would have been
provided to Executive under such plans and programs (it being
understood that the value of any insurance-provided benefits
will be based on the premium cost to Executive, which shall
not exceed the highest risk premium charged by a carrier
having an investment grade or better credit rating); provided,
however, that Executive must continue to satisfy the
conditions set forth in Section 10 in order to continue
receiving the benefits provided under this Section 7(f)(viii).
Executive agrees to promptly notify the Company of any
employment or other arrangement by which Executive provides
services during the benefits-continuation period and of the
nature and extent of benefits for which Executive becomes
eligible during such period which would reduce or terminate
benefits under this Section 7(f)(viii); and the Company shall
be entitled to recover from Executive any payments and the
fair market value of benefits previously made or provided to
Executive hereunder which would not have been paid under this
Section 7(f)(viii) if the Company had received adequate prior
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 benefit
was the basis for Executive's termination for Good Reason, then the Base Salary
or other level of compensation in effect before such reduction shall be used to
calculate payments or benefits under this Section 7(f).
(g) OTHER TERMS RELATING TO CERTAIN TERMINATIONS OF EMPLOYMENT. Whether
a termination is deemed to be at or within two years after a Change in Control
for purposes of Sections 7(c), (d), (e), or (f) is determined at the date of
termination, regardless of whether the Change in Control had occurred at the
time a notice of termination was given. In the event Executive's employment
terminates for any reason set forth in Section 7(b) through (f), Executive will
be entitled to the benefit of any terms of plans or agreements applicable to
Executive which are more favorable than those specified in this Section 7
(except in the case of annual incentives in lieu of which amounts are paid
hereunder). Amounts payable under this Section 7 following Executive's
termination of employment, other than those expressly payable on a deferred
basis, will be paid as promptly as practicable after such a termination of
employment, and such amounts payable under Section 7(e) or 7(f) will be paid in
no event later than 15 days after Executive's termination of employment unless
not determinable within such period.
8. DEFINITIONS RELATING TO TERMINATION EVENTS.
(a) "CAUSE." For purposes of this Agreement, "Cause" shall mean
Executive's
(i) willful and continued failure to substantially perform his
duties hereunder (other than any such failure resulting from incapacity
due to physical or mental illness or disability or any failure after
the issuance of a notice of termination by Executive for Good Reason)
which failure is demonstrably and materially damaging to the financial
condition or reputation of the Company and/or its subsidiaries, and
which failure continues more than 48 hours after a written demand for
substantial performance is delivered to Executive by the Board, which
demand specifically identifies the manner in which the Board believes
that Executive has not substantially performed his duties hereunder and
the demonstrable and material damage caused thereby; or
(ii) the willful engaging by Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise.
14
No act, or failure to act, on the part of Executive shall be deemed "willful"
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Executive a copy of the resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to Executive and an opportunity
for Executive, together with Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, Executive was guilty of
conduct set forth above in this definition and specifying the particulars
thereof in detail.
(b) "CHANGE IN CONTROL." For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if, during the term of this Agreement:
(i) any "Person," as such term is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or
any company owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), becomes the "Beneficial Owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then-outstanding securities;
(ii) during any period of twenty-four months (not including
any period prior to the effectiveness of this Agreement), individuals
who at the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who has
entered into an agreement with the Company to effect a transaction
described in Sections (8)(b)(i), (iii) or (iv) hereof, (B) a director
nominated by any Person (including the Company) who publicly announces
an intention to take or to consider taking actions (including, but not
limited to, an actual or threatened proxy contest) which if consummated
would constitute a Change in Control or (C) a director nominated by any
Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined
voting power of the Company's securities) whose election by the Board
or nomination for election by the Company's stockholders was approved
in advance by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve any transaction
or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (A) which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 66 2/3% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and
(B) after which no Person holds 20% or more of the combined voting
power of the then-outstanding securities of the Company or such
surviving entity;
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
(v) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Change in Control has occurred.
(c) "COMPENSATION ACCRUED AT TERMINATION." For purposes of this
Agreement, "Compensation Accrued at Termination" means the following:
15
(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 termination given in respect thereof:
(i) the assignment to Executive of duties inconsistent with
Executive's position and status hereunder, or an alteration,
adverse to Executive, in the nature of Executive's duties,
responsibilities, and authorities, Executive's positions or
the conditions of Executive's employment from those specified
in Section 3 or otherwise hereunder (other than inadvertent
actions which are promptly remedied); for this purpose, it
shall constitute "Good Reason" under this subsection (e)(i) if
Executive shall be required to report to and take direction
from any person or body other than the Chief Executive Officer
or Chief Administrative Officer of the Company and the Board;
except the foregoing shall not constitute Good Reason if
occurring in connection with the termination of Executive's
employment for Cause, Disability, Retirement, as a result of
Executive's death, or as a result of action by or with the
consent of Executive; for purposes of this Section 8(e)(i),
references to the Company (and the Board and stockholders of
the Company) refer to the ultimate parent company (and its
board and stockholders) succeeding the Company following an
acquisition in which the corporate existence of the Company
continues, in accordance with Section 12(b);
(ii) (A) a reduction by the Company in Executive's Base Salary, (B)
the setting of Executive's annual target incentive opportunity
or payment of earned annual incentive in amounts less than
specified under or otherwise not in conformity with Section 4
hereof, (C) a change in compensation or benefits not in
conformity with Section 5, or (D) a reduction, after a Change
in Control in perquisites from the level of such perquisites
as in effect immediately prior to the Change in Control or as
the same may have been increased from time to time after the
Change in Control except for across-the-board perquisite
reductions similarly affecting all senior executives of the
Company and all senior executives of any Person in control of
the Company;
(iii) the relocation of the principal place of Executive's
employment not in conformity with Section 3(b) hereof; for
this purpose, required travel on the Company's business will
not
16
constitute a relocation so long as the extent of such travel
is substantially consistent with Executive's customary
business travel obligations in periods prior to the Effective
Date;
(iv) the failure by the Company to pay to Executive any portion of
Executive's compensation or to pay to Executive any portion of
an installment of deferred compensation under any deferred
compensation program of the Company within seven days of the
date such compensation is due;
(v) the failure by the Company to continue in effect any material
compensation or benefit plan in which Executive participated
immediately prior to a Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan, or the failure
by the Company to continue Executive's participation therein
(or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amounts of
compensation or benefits provided and the level of Executive's
participation relative to other participants, as existed at
the time of the Change in Control;
(vi) the failure of the Company to obtain a satisfactory agreement
from any successor 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.
(f) "POTENTIAL CHANGE IN CONTROL" For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if, during the term of this
Agreement:
(i) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(ii) any Person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
9. RABBI TRUST OBLIGATION UPON POTENTIAL CHANGE IN CONTROL; EXCISE
TAX-RELATED PROVISIONS.
(a) RABBI TRUST FUNDED UPON POTENTIAL CHANGE IN CONTROL. In the event
of a Potential Change in Control or Change in Control, the Company shall, not
later than 15 days thereafter, have established one or more rabbi trusts and
shall deposit therein cash in an amount sufficient to provide for full payment
of all potential obligations of the Company that would arise assuming
consummation of a Change in Control, or has arisen in the case of an actual
Change in Control, and a subsequent termination of Executive's employment under
Section 7(e) or (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.
17
(b) GROSS-UP IF EXCISE TAX WOULD APPLY. In the event Executive
becomes entitled to any amounts or benefits payable in connection with a Change
in Control or other change in control (whether or not such amounts are payable
pursuant to this Agreement) (the "Severance Payments"), if any of such Severance
Payments are subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Internal Revenue Code (or any similar federal, state or local tax that may
hereafter be imposed) (the "Code"), the Company shall pay to Executive at the
time specified in Section 9(b)(iii) hereof an additional amount (the "Gross-Up
Payment") such that the net amount retained by Executive, after deduction of any
Excise Tax on the Total Payments (as hereinafter defined) and any federal, state
and local income tax and Excise Tax upon the payment provided for by Section
9(b)(i), shall be equal to the Total Payments.
(i) For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such
Excise Tax:
(A) any other payments or benefits received or to be
received by Executive in connection with a Change in Control
or Executive's termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any Person whose actions result in
a Change in Control or any Person affiliated with the Company
or such Person) (which, together with the Severance Payments,
constitute the "Total Payments") shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by Executive such
other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning
of Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax;
(B) the amount of the Total Payments which shall be
treated as subject to the Excise Tax shall be equal to the
lesser of (x) the total amount of the Total Payments and (y)
the amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying Section
9(b)(i)(A) hereof); and
(C) the value of any non-cash benefits or any
deferred payments or benefit shall be determined by a
nationally-recognized accounting firm selected by Executive in
accordance with the principles of Sections 280G(d)(3) and (4)
of the Code.
(ii) For purposes of determining the amount of the Gross-Up
Payment, Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year
in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state
and locality of Executive's residence on the Date of Termination, net
of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. In the event
that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of
Executive's employment, Executive shall repay to the Company within
ten days after the time that the amount of such reduction in Excise
Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up
Payment attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being repaid by
Executive if such repayment results in a reduction in Excise Tax
and/or federal and state and local income tax deduction) plus
interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at
the time of the termination of Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional gross-up payment in respect of such excess within
ten days after the time that the amount of such excess is finally
determined.
18
(iii) The payments provided for in this Section 9(b) shall be
made not later than the fifteenth day following the date of
Executive's termination of employment; PROVIDED, HOWEVER, that if the
amount of such payments cannot be finally determined on or before
such day, the Company shall pay to Executive on such day an estimate,
as determined in good faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event
later than the thirtieth day after the date of Executive's
termination of employment. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to
Executive, payable on the fifteenth day after the demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(iv) All determinations under this Section 9(b) shall be made
at the expense of the Company by a nationally recognized public
accounting firm selected by Executive, and such determination shall
be binding upon Executive and the Company.
10. NON-COMPETITION AND NON-DISCLOSURE; EXECUTIVE COOPERATION;
NON-DISPARAGEMENT.
(a) NON-COMPETITION. Without the consent in writing of the Board,
Executive will not, at any time during the Term and for a period of two years
following termination of Executive's employment for any reason, acting alone or
in conjunction with others, directly or indirectly (i) engage (either as owner,
investor, partner, stockholder, employer, employee, consultant, advisor, or
director) in any business in which he has been directly engaged on behalf of the
Company or any affiliate, or has supervised as an executive thereof, during the
last two years prior to such termination, or which was engaged in or planned by
the Company or an affiliate at the time of such termination, in any geographic
area in which such business was conducted or planned to be conducted; (ii)
induce any customers of the Company or any of its affiliates with whom Executive
has had contacts or relationships, directly or indirectly, during and within the
scope of his employment with the Company or any of its affiliates, to curtail or
cancel their business with the Company or any such affiliate; (iii) induce, or
attempt to influence, any employee of the Company or any of its affiliates to
terminate employment; or (iv) solicit, hire or retain as an employee or
independent contractor, or assist any third party in the solicitation, hire, or
retention as an employee or independent contractor, any person who during the
previous 12 months was an employee of the Company or any affiliate; PROVIDED,
HOWEVER, that the limitation contained in clause (i) above shall not apply if
Executive's employment is terminated as a result of a termination by the Company
without Cause within two years following a Change in Control or is terminated by
Executive for Good Reason within two years following a Change in Control, and
provided further, that activities engaged in by or on behalf of the Company are
not restricted by this covenant. The provisions of subparagraphs (i), (ii),
(iii), and (iv) above are separate and distinct commitments independent of each
of the other subparagraphs. It is agreed that the ownership of not more than one
percent of the equity securities of any company having securities listed on an
exchange or regularly traded in the over-the-counter market shall not, of
itself, be deemed inconsistent with clause (i) of this Section 10(a).
(b) NON-DISCLOSURE; OWNERSHIP OF WORK. Executive shall not, at any time
during the Term and thereafter (including following Executive's termination of
employment for any reason), disclose, use, transfer, or sell, except in the
course of employment with or other service to the Company, any proprietary
information, secrets, organizational or employee information, or other
confidential information belonging or relating to the Company and its affiliates
and customers so long as such information has not otherwise been disclosed or is
not otherwise in the public domain, except as required by law or pursuant to
legal process. In addition, upon termination of employment for any reason,
Executive will return to the Company or its affiliates all documents and other
media containing information belonging or relating to the Company or its
affiliates. Executive will promptly disclose in writing to the Company all
inventions, discoveries, developments, improvements and innovations
(collectively referred to as "Inventions") that Executive has conceived or made
during the Term; PROVIDED, HOWEVER, that in this context "Inventions" are
limited to those which (i) relate in any manner to the existing or contemplated
business or research activities of the Company and its affiliates; (ii) are
suggested by or result from Executive's work at the Company; or (iii) result
from the use of the time, materials or facilities of the Company and its
affiliates. All Inventions will be
19
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 herself
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 her provision of testimony or assistance.
(d) NON-DISPARAGEMENT. Executive shall not, at any time during the Term
and thereafter, make statements or representations, or otherwise communicate,
directly or indirectly, in writing, orally, or otherwise, or take any action
which may, directly or indirectly, disparage the Company or any of its
subsidiaries or affiliates or their respective officers, directors, employees,
advisors, businesses or reputations. Notwithstanding the foregoing, nothing in
this Agreement shall preclude Executive from making truthful statements that are
required by applicable law, regulation or legal process.
(e) RELEASE OF EMPLOYMENT CLAIMS. Executive agrees, as a condition to
receipt of any termination payments and benefits provided for in Sections 6 and
7 herein (other than Compensation Accrued at Termination), that he will execute
a general release agreement, in a form satisfactory to the Company, releasing
any and all claims arising out of Executive's employment other than enforcement
of this Agreement and rights to indemnification under any agreement, law,
Company organizational document or policy, or otherwise.
(f) FORFEITURE OF OUTSTANDING OPTIONS. The provisions of Sections 6 and
7 notwithstanding, if Executive willfully and materially fails to substantially
comply with any restrictive covenant under this Section 10 or willfully and
materially fails to substantially comply with any material obligation under this
Agreement, all options to purchase Common Stock granted by the Company and then
held by Executive or a transferee of Executive shall be immediately forfeited
and thereupon such options shall be cancelled. Notwithstanding the foregoing,
Executive shall not forfeit any option unless and until there shall have been
delivered to him, within six months after the Board (i) had knowledge of conduct
or an event allegedly constituting grounds for such forfeiture and (ii) had
reason to believe that such conduct or event could be grounds for such
forfeiture, a copy of a resolution duly adopted by a majority affirmative vote
of the membership of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after giving Executive reasonable notice
specifying the nature of the grounds for such forfeiture and not less than 30
days to correct the acts or omissions complained of, if correctable, and
affording Executive the opportunity, together with his counsel, to be heard
before the Board) finding that, in the good faith opinion of the Board,
Executive has engaged and continues to engage in conduct set forth in this
Section 10(f) which constitutes grounds for forfeiture of Executive's options;
provided, however, that if any option is exercised after delivery of such notice
and the Board subsequently makes the determination described in this sentence,
Executive shall be required to pay to the Company an amount equal to the
difference between the aggregate value of the shares acquired upon such exercise
at the date of the Board determination and the aggregate exercise price paid by
Executive. Any such forfeiture shall apply to such options notwithstanding any
term or provision of any option agreement. In addition, options granted to
Executive on or after January 1, 2000, and gains resulting from the exercise of
such options, shall be subject to forfeiture in accordance with the Company's
standard policies relating to such forfeitures and clawbacks, as such policies
are in effect at the time of grant of such options.
(g) SURVIVAL. The provisions of this Section 10 shall survive the
termination of the Term and any termination or expiration of this Agreement.
11. GOVERNING LAW; DISPUTES; ARBITRATION.
(a) GOVERNING LAW. This Agreement is governed by and is to be
construed, administered, and enforced in accordance with the laws of the State
of Connecticut, without regard to conflicts of law principles, except insofar as
federal laws and regulations and the Delaware General Corporation Law may
20
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 successful in asserting such rights;
provided, however, that no reimbursement shall be made of such expenses relating
to any unsuccessful assertion of rights if and to the extent that Executive's
assertion of such rights was in bad faith or frivolous, as determined by
arbitrators in accordance with Section 11(c) or a court having jurisdiction over
the matter.
(c) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Westport, CT, by three arbitrators in accordance with the rules of the American
Arbitration Association in effect at the time of submission to arbitration.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. For purposes of entering any judgment upon an award rendered by
the arbitrators, the Company and Executive hereby consent to the jurisdiction of
any or all of the following courts: (i) the United States District Court for the
District of Connecticut, (ii) any of the courts of the State of Connecticut, or
(iii) any other court having jurisdiction. The Company and Executive further
agree that any service of process or notice requirements in any such proceeding
shall be satisfied if the rules of such court relating thereto have been
substantially satisfied. The Company and Executive hereby waive, to the fullest
extent permitted by applicable law, any objection which it may now or hereafter
have to such jurisdiction and any defense of inconvenient forum. The Company and
Executive hereby agree that a judgment upon an award rendered by the arbitrators
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Subject to Section 11(b), the Company shall bear all
costs and expenses arising in connection with any arbitration proceeding
pursuant to this Section 11. Notwithstanding any provision in this Section 11,
Executive shall be entitled to seek specific performance of Executive's right to
be paid during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
(d) INTEREST ON UNPAID AMOUNTS. Any amount which has become payable
pursuant to the terms of this Agreement or any decision by arbitrators or
judgment by a court of law pursuant to this Section 11 but which has not been
timely paid shall bear interest at the prime rate in effect at the time such
amount first becomes payable, as quoted by the Company's principal bank.
12. MISCELLANEOUS.
(a) INTEGRATION. This Agreement cancels and supersedes any and all
prior employment agreements and understandings between the parties hereto with
respect to the employment of Executive by the Company, any parent or predecessor
company, and the Company's subsidiaries during the Term, except for contracts
relating to compensation under executive compensation and employee benefit plans
of the Company and its subsidiaries. The foregoing notwithstanding, in the event
of any conflict or ambiguity between this Agreement and the Employee Protection
Plan as applicable to Executive or the Change-in-Control Agreement executed by
Executive and the Company, the provisions of this Agreement shall govern except
that Executive shall remain entitled to any right or benefit under the Employee
Protection Plan or the Change-in-Control Agreement for so long as such Plan or
Agreement remains in effect, if and to the extent that such right or benefit is
more favorable to Executive than a corresponding provision of this Agreement;
but no payment or benefit under the Employee Protection Plan or
Change-in-Control Agreement shall be made or extended which duplicates any
payment or benefit hereunder. If and to the extent that this Agreement may
provide enhanced benefits to Executive under the USERP which benefits are not
explicitly provided for under the USERP, the USERP shall be deemed amended by
this
21
Agreement (but only insofar as it pertains to Executive). This Agreement
constitutes the entire agreement among the parties with respect to the matters
herein provided, and no modification or waiver of any provision hereof shall be
effective unless in writing and signed by the parties hereto. Executive shall
not be entitled to any payment or benefit under this Agreement which duplicates
a payment or benefit received or receivable by Executive under any prior
agreements and understandings or under any benefit or compensation plan of the
Company which are in effect.
(b) SUCCESSORS; TRANSFERABILITY. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise and, in the case of an acquisition of the Company in which the
corporate existence of the Company continues, the ultimate parent company
following such acquisition. Subject to the foregoing, the Company may transfer
and assign this Agreement and the Company's rights and obligations hereunder.
Neither this Agreement nor the rights or obligations hereunder of the parties
hereto shall be transferable or assignable by Executive, except in accordance
with the laws of descent and distribution or as specified in Section 12(c).
(c) BENEFICIARIES. Executive shall be entitled to designate (and
change, to the extent permitted under applicable law) a beneficiary or
beneficiaries to receive any compensation or benefits provided hereunder
following Executive's death.
(d) NOTICES. Whenever under this Agreement it becomes necessary to give
notice, such notice shall be in writing, signed by the party or parties giving
or making the same, and shall be served on the person or persons for whom it is
intended or who should be advised or notified, by Federal Express or other
similar overnight service or by certified or registered mail, return receipt
requested, postage prepaid and addressed to such party at the address set forth
below or at such other address as may be designated by such party by like
notice:
If to the Company:
IMS HEALTH INCORPORATED
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Administrative Officer
If to Executive:
Xx. Xxxxxx X. Xxxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If the parties by mutual agreement supply each other with telecopier
numbers for the purposes of providing notice by facsimile, such notice shall
also be proper notice under this Agreement. In the case of Federal Express or
other similar overnight service, such notice or advice shall be effective when
sent, and, in the cases of certified or registered mail, shall be effective two
days after deposit into the mails by delivery to the U.S. Post Office.
(e) REFORMATION. The invalidity of any portion of this Agreement shall
not be deemed to render the remainder of this Agreement invalid.
(f) HEADINGS. The headings of this Agreement are for convenience of
reference only and do not constitute a part hereof.
22
(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, and any compensation or benefits received from any
other employment of Executive shall not mitigate or reduce the obligations of
the Company or the rights of Executive hereunder, except that, to the extent
Executive receives from a subsequent employer health or other insurance benefits
that are similar to the benefits referred to in Section 5(b) hereof, any such
benefits to be provided by the Company to Executive following the Term shall be
correspondingly reduced.
(i) OFFSETS; WITHHOLDING. The amounts required to be paid by the
Company to Executive pursuant to this Agreement shall not be subject to offset
other than with respect to any amounts that are owed to the Company by Executive
due to his receipt of funds as a result of his fraudulent activity. The
foregoing and other provisions of this Agreement notwithstanding, all payments
to be made to Executive under this Agreement, including under Sections 6 and 7,
or otherwise by the Company, will be subject to withholding to satisfy required
withholding taxes and other required deductions.
(j) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of Executive, his heirs, executors, administrators
and beneficiaries, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns.
(k) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. INDEMNIFICATION.
All rights to indemnification by the Company now existing in favor of
the Executive as provided in the Company's Certificate of Incorporation or
By-laws or pursuant to other agreements in effect on or immediately prior to the
Effective Date shall continue in full force and effect from the Effective Date
(including all periods after the expiration of the Term), and the Company shall
also advance expenses for which indemnification may be ultimately claimed as
such expenses are incurred to the fullest extent permitted under applicable law,
subject to any requirement that the Executive provide an undertaking to repay
such advances if it is ultimately determined that the Executive is not entitled
to indemnification; provided, however, that any determination required to be
made with respect to whether the Executive's conduct complies with the standards
required to be met as a condition of indemnification or advancement of expenses
under applicable law and the Company's Certificate of Incorporation, By-laws, or
other agreement shall be made by independent counsel mutually acceptable to the
Executive and the Company (except to the extent otherwise required by law).
After the date hereof, the Company shall not amend its Certificate of
Incorporation or By-laws or any agreement in any manner which adversely affects
the rights of the Executive to indemnification thereunder. Any provision
contained herein notwithstanding, this Agreement shall not limit or reduce any
rights of the Executive to indemnification pursuant to applicable law. In
addition, the Company will maintain directors' and officers' liability insurance
in effect and covering acts and omissions of Executive during the Term and for a
period of six years thereafter on terms substantially no less favorable than
those in effect on the Effective Date.
IN WITNESS WHEREOF, Executive has hereunto set his hand and the Company
has caused this instrument to be duly executed as of the date of this Agreement
set forth in Section 1 hereof.
IMS HEALTH INCORPORATED
By: /s/ Xxxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: President and
Chief Executive Officer
23
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman
/s/ XXXXXX X. XXXXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxxxx
24
