AMENDED EMPLOYMENT AGREEMENT IV



 Exhibit 10.7 
  
 FIRST AMENDMENT TO 
 THE EMPLOYMENT AGREEMENT

  
 This First Amendment to the Employment Agreement effective as
of May 6, 2003 (this “Amendment”) is entered into by and between AdvancePCS (the “Company”) and _____________ (the “Employee”). 
  
 WHEREAS, the Company and Employee (collectively, the “Parties”) entered into that certain Employment Agreement (including any Exhibits thereto)
effective as of __________ (the “Agreement”); and 
  
 WHEREAS, the Parties now desire to amend the Agreement as further described below; 
  
 NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency is hereby acknowledged, the Parties hereby agree to the following: 
  

	1.	Capitalized terms used herein, unless otherwise defined herein, have the meaning ascribed to such terms in the Agreement and, except as expressly provided herein all provision of
the Agreement shall remain in full force and effect. 

  

	2.	Section 2 of the Agreement is hereby amended in its entirety and replaced with the following: 

  
 2. TERM. The employment of the Employee shall commence on the Effective Date and shall end on October 2, 2004
(the “Term”); provided, however, that if a Change in Control (as defined in Section 5(f) of this Agreement) shall have occurred during the Term, the Term shall expire no earlier than the date which is one year following the date of the
Change in Control. 
  

	3.	Section 4 of the Agreement is hereby amended by (i) adding the following new Subsection “(e)” and (ii) redesignating Subsection “(e)” thereof as Subsection
“(f)” and Subsection “(f)” thereof as Subsection “(g)”: 

  
 (e) Certain Terminations Following Change in Control. Following a Change in Control, the Employee’s employment hereunder may
also be terminated by the Company for CIC Cause (as defined in Section 5(f) of this Agreement) or by the Employee for CIC Good Reason (as defined in Section 5(f) of this Agreement). 
  

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	4.	Section 5(c) of the Agreement is hereby amended in its entirety and replaced with the following: 

  
 (c) Cause. If the Employee’s employment shall be terminated (i) for Cause prior to a Change in Control or
(ii) for CIC Cause on or after a Change in Control, the Company’s obligations to the Employee shall terminate other than the obligation to pay to the Employee the portion of Base Salary earned and balance of paid time off earned by Employee
through the Date of Termination plus the amount of any compensation previously deferred by the Employee, if any, consistent with Company policy. 
  

	5.	Section 5 of the Agreement is hereby amended by (i) adding the following new Subsections “(e)” and “(f)” and (ii) redesignating Subsection “(e)”
thereof as Subsection “(g)”: 

  
 (e)
Termination Following a Change in Control. If the Company shall terminate the Employee’s employment (other than for CIC Cause or Disability and except if the Employee’s employment is terminated as a result of the Employee’s
death) or if, the Employee shall terminate employment for CIC Good Reason, in either case, within one (1) year following the occurrence of a Change in Control, the Employee shall be entitled, subject to Section (e)(6) of this Agreement, to the
following payments and benefits (collectively, the “Severance Payments”) in lieu of the payments and benefits set forth in Section 5(d) of this Agreement: 
  

	 	(1)	a lump-sum severance payment, in cash, equal to one times the sum of (i) the Employee’s Base Salary and the annual automobile allowance provided to the Employee by the Company
pursuant to Exhibit A (as such allowance may have been increased), each as in effect immediately prior to the Date of Termination, or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting CIC Good
Reason, and (ii) the Employee’s target annual bonus under any annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination or, if higher, the fiscal year in which occurs the
first event or circumstance constituting CIC Good Reason; 

  

	 	(2)	those other obligations and benefits accrued or earned and vested (if applicable) by the Employee as of the Date of Termination; 

  

	 	(3)	 Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall pay to the Employee a lump sum amount, in cash, equal to
the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Employee for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of
Termination, is contingent 



  

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	 	  	only upon the continued employment of the Employee to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive
compensation awards to the Employee for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Employee would have earned on the last day of the performance award period, assuming the
achievement, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance
award period through the Date of Termination by the total number of months contained in such performance award period; provided, however, that the payments contemplated by this clause (ii) shall be offset by any amounts paid to the Employee, but
only with respect to the same performance award period, under any annual or long-term incentive plan in which the Employee participates. 

  

	 	(4)	any stock options granted to the Employee shall become fully vested; and 

  

	 	(5)	 For the twelve (12) month period immediately following the Date of Termination (or such longer period as any plan, program, practice or policy may provide), the
Company shall arrange to provide the Employee and the Employee’s dependents with the benefits to which Employee and the Employee’s dependents would have been entitled under Section 3(c) immediately prior to the Date of Termination or, if
more favorable to the Employee, those provided to the Employee and the Employee’s dependents immediately prior to the first occurrence of an event or circumstance constituting CIC Good Reason, at no greater after-tax cost to the Employee than
the after-tax cost to the Employee immediately prior to such date or occurrence; provided, however, that, unless the Employee consents to a different method (after taking into account the effect of such method on the calculation of
“parachute payments” pursuant to Section 5(e)(6) hereof, such benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Employee pursuant to this Section 5(e)(5) shall be reduced to the extent benefits
of the same type are received by or made available to the Employee during the twelve (12) month period following the Employee’s termination of employment (and any such benefits received by or made available to the Employee shall be reported to
the Company by the Employee); provided, however, that the Company shall reimburse the Employee for the excess, if any, of the after-tax cost of such benefits to the Employee over such after-tax cost immediately 



  

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	 	  	prior to the Date of Termination or, if more favorable to the Employee, the first occurrence of an event or circumstance constituting CIC Good Reason. If the Severance Payments
shall be decreased pursuant to Section 5(e)(6) of this Agreement, and the Section (5)(e)(5) benefits which remain payable after the application of Section 5(e)(6) of this Agreement are thereafter reduced pursuant to the immediately preceding
sentence, the Company shall, no later than five (5) business days following such reduction, pay to the Employee the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 5(e)(6) of this Agreement, (b) the amount
of the subsequent reduction in these Section 5(e)(5) benefits, or (c) the maximum amount which can be paid to the Employee without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code.


  

	 	(6)(a)	Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Employee in connection with a Change in Control or
the termination of the Employee’s 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) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Payments”) would not be deductible (in whole or part), by the Company, an affiliate or Person making
such payment or providing such benefit as a result of section 280G of the Code, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason
of section 280G of the Code in such other plan, arrangement or agreement), the cash Severance Payments shall first be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero); provided,
however, that the Employee may elect to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments. 

  

	 	  	 (b) For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Employee shall have waived at such time and in such
manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax
Counsel”) reasonably acceptable to the Employee and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the 



  

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	 	  	“Auditor”), does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the
Code, (iii) the Severance Payments shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually rendered
within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Code, in the opinion of Tax Counsel, and (iv) the value of any noncash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. 

  

	 	  	(c) If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Employee and the Company
in applying the terms of Section (5)(e)(6) of this Agreement, the Total Payments paid to or for the Employee’s benefit are in an amount that would result in any portion of such Total Payments being subject to the Excise Tax, then, if such
repayment would result in (i) no portion of the remaining Total Payments being subject to the Excise Tax and (ii) a dollar-for-dollar reduction in the Employee’s taxable income and wages for purposes of federal, state and local income and
employment taxes, the Employee shall have an obligation to pay the Company upon demand an amount equal to the sum of (i) the excess of the Total Payments paid to or for the Employee’s benefit over the Total Payments that could have been paid to
or for the Employee’s benefit without any portion of such Total Payments being subject to the Excise Tax; and (ii) interest on the amount set forth in clause (i) of this sentence at the rate provided in section 1274(b)(2)(B) of the Code from
the date of the Employee’s receipt of such excess until the date of such payment. 

  

	 	(7)	 The payments provided in subsections 5(e)(1) and (e)(3) of this Agreement shall be made not later than the fifth day following the Date of Termination; provided,
however, that if the amounts of such payments, and the limitations set forth in Section 5(e)(6) of this Agreement cannot be finally determined on or before such day, the Company shall pay to the Employee on such day an estimate, as determined in
good faith by the Company, in accordance with Section 5(e)(6) of this Agreement, of the minimum amount of such payments to which the Employee is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid
remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount 



  

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	 	  	thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall be repaid by the Employee to the Company on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of
the Code). At the time that payments are made under this Agreement, the Company shall provide the Employee with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including,
without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).


  
 (f) Definitions. For
purposes of this Section 5, the following definitions shall apply: 
  

	 	(i)	“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. 

  

	 	(ii)	“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act. 

  

	 	(iii)	“Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred: 

  

	 	(1)	any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (representing 50% or more of the combined voting power of the Company’s then
outstanding securities (the “Beneficial Ownership Event”); provided, however, a Beneficial Ownership Event shall not constitute a Change in Control under this paragraph 1 if such Beneficial Ownership Event occurs in connection with the
consummation of a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation immediately following which the individuals who comprise the Board of Directors immediately prior thereto
constitute at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or any parent thereof; or 

  

	 	(2)	 the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the
Board of Directors of the Company and any new director (other than 



  

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a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or 


  

	 	(3)	there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation
immediately following which the individuals who comprise the Board of Directors immediately prior thereto constitute at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or any parent
thereof; or 

  

	 	(4)	the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board of Directors
immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof. 

  
 Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. 
  

	 	(iv)	“CIC Cause” means, following a Change in Control: 

  
 (a) any willful and material act or acts of personal dishonesty taken by the Employee at the expense of the Company, or 
  

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 (b) any willful and material violation by the Employee of the Employee’s obligations under this
Agreement, or 
  
 (c) the conviction of the Employee of a
felony, or 
  
 (d) failure to meet reasonable performance
criteria for the Employee’s position as established by the Company, after Employee fails to cure such non-performance within a reasonable time after receiving notice of the same. 
  
 For purposes of Section 5(f), (1) the term “willful” shall mean any act of the Employee done in bad faith or
without reasonable belief that the Employee’s action was in the best interest of the Company and (2) with respect to any termination of employment pursuant to clause (a), (b) or (d) of the definition of CIC Cause contained herein,
notwithstanding anything herein to the contrary, a Notice of Termination for such CIC Cause shall include a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds (2/3) of the entire membership of the Board of
Directors at a meeting of the Board of Directors which was called and held for the purpose of considering such termination (after reasonable notice to the Employee and an opportunity for the Employee, together with the Employee’s counsel, to be
heard before the Board of Directors) finding that, in the good faith opinion of the Board of Directors, the Employee was guilty of conduct set forth in clause (a), (b) or (d), and specifying the particulars thereof in detail. In the event of a
dispute concerning the application of this provision, no claim by the Company that CIC Cause exists shall be given effect unless the Company establishes to the Board of Directors by clear and convincing evidence that CIC Cause exists. 
  

	 	(v)	“CIC Good Reason” shall mean, following a Change in Control, without the Employee’s consent: 

  
 (a) the assignment to the Employee of any duties
inconsistent in any material respect with the Employee’s position authority, duties or responsibilities as contemplated by Section 1 of this Agreement, or any other action by the Company which results in a significant diminution in such, or
new, position, authority, duties or responsibilities, excluding any isolated and inadvertent action not taken in bad faith and which is remedied by the Company within ten (10) days after receipt of a notice thereof given by the Employee; 

 
 (b) any failure by the Company to comply with any of the
provisions of Section 3, “Compensation,” of this Agreement other than an isolated and inadvertent failure not taken in bad faith and which is remedied by the Company within ten (10) days after receipt of notice thereof given by the
Employee; 
  

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 (c) the Employee being required to relocate to a principal place of employment more than
twenty-five (25) miles from the Employee’s current principal place of employment; or 
  
 (d) any purported termination by the Company of the Employee’s employment otherwise than as expressly permitted by this Agreement.

  

	 	(vi)	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. 

  

	 	(vii)	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time. 

  

	 	(viii)	“Excise Tax” shall mean any excise tax imposed under section 4999 of the Code. 

  

	 	(ix)	“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. 

  

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 IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written.

  

	 ADVANCEPCS

		
	By:	 	 
	 	

	 	 	[Employee]


  

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