**Exhibit 10.5**

** **

 

 

**EmploymentAgreement for Robert H. Steinfeld**

 

**As Amendedand Restated as of February 11, 2003**

 

 

----

 

**IMS HEALTHINCORPORATED**

 

**EmploymentAgreement for Robert H. Steinfeld**

 

**As Amendedand Restated as of February 11, 2003**

 
| 1.     | Employment                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------|
|   |                                                                                                          |
| 2.     | Term                                                                                                          |
|   |                                                                                                          |
| 3.     | Offices and Duties                                                                                            |
|   |                                                                                                          |
|   | (a)                                                                                                           | Generally. |
|   |                                                                                                          |   |
|   | (b)                                                                                                           | Place of  Employment |
|   |                                                                                                          |
| 4.     | Salary and  Annual Incentive Compensation                                                                     |
|   |                                                                                                          |
|   | (a)                                                                                                           | Base Salary |
|   |                                                                                                          |   |
|   | (b)                                                                                                           | Annual Incentive  Compensation |
|   |                                                                                                          |
| 5.     | Long Term  Compensation, Including Stock Options, Benefits, Deferred Compensation, and  Expense Reimbursement |
|   |                                                                                                          |
|   | (a)                                                                                                           | Executive Compensation  Plans |
|   |                                                                                                          |   |
|   | (b)                                                                                                           | Employee and  Executive Benefit Plans |
|   |                                                                                                          |   |
|   | (c)                                                                                                           | Acceleration  of Awards Upon a Change in Control |
|   |                                                                                                          |   |
|   | (d)                                                                                                           | Deferral  of Compensation |
|   |                                                                                                          |   |
|   | (e)                                                                                                           | Company Registration  Obligations |
|   |                                                                                                          |   |
|   | (f)                                                                                                           | Reimbursement of Expenses |
|   |                                                                                                          |   |
| 6.     | Termination  Due to Retirement, Death or Disability                                                           |
|   |                                                                                                          |
|   | (a)                                                                                                           | Retirement |
|   |                                                                                                          |   |
|   | (b)                                                                                                           | Death |
|   |                                                                                                          |   |
|   | (c)                                                                                                           | Disability |
|   |                                                                                                          |   |
|   | (d)                                                                                                           | Other  Terms of Payment Following Retirement, Death or Disability |
|   |                                                                                                          |
| 7.     | Termination  of Employment For Reasons Other Than Retirement, Death, or Disability                            |
|   |                                                                                                          |
|   | (a)                                                                                                           | Termination by the  Company for Cause |
|   |                                                                                                          |   |
|   | (b)                                                                                                           | Termination  by Executive Other Than For Good Reason |
|   |                                                                                                          |   |
|   | (c)                                                                                                           | Termination  by the Company Without Cause Prior to or More than Two Years After a Change  in Control |
|   |                                                                                                          |   |
|   | (d)                                                                                                           | Termination  by Executive for Good Reason Prior to or More than Two Years After a Change  in Control |
|   |                                                                                                          |   |
|   | (e)                                                                                                           | Termination  by the Company Without Cause Within Two Years After a Change in Control |

 

i

----

 
|   | (f)                                                                                                 | Termination  by Executive for Good Reason Within Two Years After a Change in Control |
|--------|-----------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
|   |                                                                                                |                                                                                 |
|   | (g)                                                                                                 | Other  Terms Relating to Certain Terminations of Employment                          |
|   |                                                                                                |
| 8.     | Definitions  Relating to Termination Events                                                         |
|   |                                                                                                |
|   | (a)                                                                                                 | “Cause”                                                                    |
|   |                                                                                                |                                                                                 |
|   | (b)                                                                                                 | “Change in Control”                                                        |
|   |                                                                                                |                                                                                 |
|   | (c)                                                                                                 | “Compensation  Accrued at Termination”                                     |
|   |                                                                                                |                                                                                 |
|   | (d)                                                                                                 | “Disability”                                                               |
|   |                                                                                                |                                                                                 |
|   | (e)                                                                                                 | “Good Reason                                                                    |
|   |                                                                                                |                                                                                 |
|   | (f)                                                                                                 | “Potential Change in  Control”                                             |
|   |                                                                                                |
| 9.     | Rabbi  Trust Obligation Upon Potential Change in Control; Excise Tax Related  Provisions            |
|   |                                                                                                |
|   | (a)                                                                                                 | Rabbi  Trust Funded Upon Potential Change in Control                                 |
|   |                                                                                                |                                                                                 |
|   | (b)                                                                                                 | Gross-up If Excise  Tax Would Apply                                                  |
|   |                                                                                                |
| 10.    | Non-Competition  and Non-Disclosure; Executive Cooperation; Non-Disparagement; Certain  Forfeitures |
|   |                                                                                                |
|   | (a)                                                                                                 | Non-Competition                                                                      |
|   |                                                                                                |                                                                                 |
|   | (b)                                                                                                 | Non-Disclosure;  Ownership of Work                                                   |
|   |                                                                                                |                                                                                 |
|   | (c)                                                                                                 | Cooperation With  Regard to Litigation                                               |
|   |                                                                                                |                                                                                 |
|   | (d)                                                                                                 | Non-Disparagement                                                                    |
|   |                                                                                                |                                                                                 |
|   | (e)                                                                                                 | Release of Employment  Claims                                                        |
|   |                                                                                                |                                                                                 |
|   | (f)                                                                                                 | Forfeiture of  Outstanding Options                                                   |
|   |                                                                                                |                                                                                 |
|   | (g)                                                                                                 | Forfeiture of  Certain Bonuses and Profits                                           |
|   |                                                                                                |                                                                                 |
|   | (h)                                                                                                 | Survival                                                                             |
|   |                                                                                                |
| 11.    | Governing Law;  Disputes; Arbitration                                                               |
|   |                                                                                                |
|   | (a)                                                                                                 | Governing Law                                                                        |
|   |                                                                                                |                                                                                 |
|   | (b)                                                                                                 | Reimbursement  of Expenses in Enforcing Rights                                       |
|   |                                                                                                |                                                                                 |
|   | (c)                                                                                                 | Arbitration                                                                          |
|   |                                                                                                |                                                                                 |
|   | (d)                                                                                                 | Interest on Unpaid Amounts                                                           |
|   |                                                                                                |
| 12.    | Miscellaneous                                                                                       |
|   |                                                                                                |
|   | (a)                                                                                                 | Integration                                                                          |
|   |                                                                                                |                                                                                 |
|   | (b)                                                                                                 | Successors; Transferability                                                          |
|   |                                                                                                |                                                                                 |
|   | (c)                                                                                                 | Beneficiaries                                                                        |
|   |                                                                                                |                                                                                 |
|   | (d)                                                                                                 | Notices                                                                              |
|   |                                                                                                |                                                                                 |
|   | (e)                                                                                                 | Reformation                                                                          |

 

ii

----

 
|         | (f)             | Headings                   |
|--------------|-----------------|----------------------------|
|         |            |                       |
|         | (g)             | No General Waivers         |
|         |            |                       |
|         | (h)             | No  Obligation To Mitigate |
|         |            |                       |
|         | (i)             | Offsets;  Withholding      |
|         |            |                       |
|         | (j)             | Successors  and Assigns    |
|         |            |                       |
|         | (k)             | Counterparts               |
|         |            |                       |
| 13.          | Indemnification |
|         |            |                       |
| Attachment A |

 

iii

----

 

IMS HEALTH INCORPORATED

 

Employment Agreement forRobert H. Steinfeld

 

As Amended and Restated asof February 11, 2003

 

 

THIS EMPLOYMENT AGREEMENT byand between IMS HEALTH INCORPORATED, a Delaware corporation (the “Company”),and Robert H. Steinfeld (“Executive”) shall become effective as of November 14,2000 (the “Effective Date”), and the amendment and restatement hereof made this22nd day of May, 2003 shall become effective as of February 11, 2003 (the“Amendment Date”).

 

WITNESSETH

 

WHEREAS, Executive hasserved the Company and its predecessors in executive capacities since February24, 1997;

 

WHEREAS, the Company desiresto continue to employ Executive as Senior Vice President and General Counsel ofthe Company, and Executive desires to accept such employment on the terms andconditions herein set forth.

 

NOW, THEREFORE, inconsideration of the foregoing, the mutual covenants contained herein, andother good and valuable consideration the receipt and adequacy of which theCompany and Executive each hereby acknowledge, the Company and Executive herebyagree as follows:

 

1.                                       **Employment****.**

 

The Company hereby agrees toemploy Executive as its Senior Vice President and General Counsel (with theprincipal executive duties set forth below in Section 3), and Executive herebyagrees to accept such employment and serve in such capacities, during the Termas defined in Section 2 (subject to Section 7(c) and 7(e)) and upon the termsand conditions set forth in this Employment Agreement (the “Agreement”).

 

2.                                       **Term****.**

 

The term of employment ofExecutive under this Agreement (the “Term”) shall be the period commencing onthe Effective Date and ending on December 31, 2002 and any period of extensionthereof in accordance with this Section 2, except that the Term will endat a date, prior to the end of such period or extension thereof, specified inSection 6 or 7 in the event of termination of Executive’s employment. The Term,if not previously ended, shall be extended automatically without further actionby either party by one additional year (added to the end of the Term) first onDecember 31, 2002 (extending the Term to December 31, 2003) and on eachsucceeding December 31 thereafter, unless either party shall have servedwritten notice in accordance with Section 12(d) upon the other party on orbefore the June 30 preceding a December 31 extension date electing not toextend the Term further as of that December 31 extension date, in which caseemployment shall terminate on that December 31 and the Term shall end at thatdate, subject to earlier termination of employment and earlier termination ofthe Term in accordance with Section 6 or 7. The foregoing notwithstanding, inthe event there occurs a Potential Change in Control during the period of 180days prior to the December 31 on which the Term will terminate as a result ofnotice given by the Executive or the Company hereunder, the Term shall beextended automatically at that December 31 by an additional period such thatthe Term will extend until the 180th day following such Potential Change inControl.

 

----

 

3.                                       **Offices and Duties****.**

 

The provisions of thisSection 3 will apply during the Term, except as otherwise provided inSection 7(c) or 7(e):

 

(a)                                  Generally.  Executive shall serve as the Senior Vice Presidentand General Counsel of the Company. Executive shall have and perform such duties, responsibilities, andauthorities as are customary for the general counsel of a publicly heldcorporation of the size, type, and nature of the Company as they may exist fromtime to time.  In addition, Executiveshall have and perform such additional duties, responsibilities, andauthorities as may be from time to time assigned by the Chief Executive Officerbased on his assessment of the business needs of the Company, and the Companyreserves the right to change or modify these assignments and any positions andtitles associated therewith.  Executiveshall devote his full business time and attention, and his best efforts, abilities,experience, and talent, to the positions of Senior Vice President and GeneralCounsel and other assignments hereunder, and for the business of the Company,without commitment to other business endeavors, except that Executive (i) maymake personal investments which are not in conflict with his duties to theCompany and manage personal and family financial and legal affairs, (ii) mayundertake public speaking engagements, and (iii) may serve as a director of (orsimilar position with) any other business or an educational, charitable, community,civic, religious, or similar type of organization with the approval of theChief Executive Officer, so long as such activities (i.e., those listed inclauses (i) through (iii)) do not preclude or render unlawful Executive’semployment or service to the Company or otherwise materially inhibit theperformance of Executive’s duties under this Agreement or materially impair thebusiness of the Company or its subsidiaries.

 

(b)                                 Place ofEmployment. Executive’s principal place of employment shall be at the CorporateOffices of the Company which shall be in Fairfield County, Connecticut.

 

4.                                       **Salary and Annual Incentive Compensation****.**

 

As partial compensation forthe services to be rendered hereunder by Executive, the Company agrees to payto 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 annualrate of which shall be $275,000, payable in cash in substantially equalsemi-monthly installments commencing at the beginning of the Term, andotherwise in accordance with the Company’s usual payroll practices with respectto senior executives (except to the extent deferred under Section 5(d)).Executive’s annual base salary shall be reviewed by the Compensation andBenefits Committee (the “Committee”) of the Board of Directors (the “Board”) atleast once in each calendar year, and may be increased above, but may not bereduced below, the then-current rate of such base salary. For purposes of thisAgreement, “Base Salary” means Executive’s then-current base salary.

 

(b)                                 AnnualIncentive Compensation. The Company will pay to Executive duringthe Term annual incentive compensation which shall offer to Executive anopportunity to earn additional compensation based upon performance in amountsdetermined by the Committee in accordance with the applicable plan andconsistent with past practices of the Company; provided, however, that theannual incentive opportunity during the Term shall be not less than the greaterof 51% of Base Salary or the annual target incentive opportunity for the prioryear for achievement of target level performance, with the nature of theperformance and the levels of performance triggering payments of such annualtarget incentive compensation for each year to be established and communicatedto Executive during the first quarter of such year by the Committee; provided,further, that annual incentive payable for performance in 2000 shall be basedon 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 targetincentive opportunity or provide an additional annual incentive opportunity, inexcess of the annual target incentive opportunity, payable for performance inexcess of or in addition to the performance required for payment of the annualtarget incentive amount. Any annual incentive compensation payable to Executiveshall be paid in accordance with the Company’s usual practices with respect topayment of incentive compensation to senior executives (except to the extentdeferred under Section 5(d)).

 

2

----

 

5.                                       **Long-TermCompensation, Including****Stock Options, Benefits, Deferred Compensation, and ExpenseReimbursement**

 

(a)                                  ExecutiveCompensation Plans. Executive shall be entitled during the Term to participate, withoutdiscrimination or duplication, in executive compensation plans and programsintended for general participation by senior executives of the Company, aspresently in effect or as they may be modified or added to by the Company fromtime to time, subject to the eligibility and other requirements of such plansand programs, including without limitation any stock option plans, plans underwhich restricted stock/restricted stock units, performance-based restrictedstock/restricted stock units (“PERS”) or performance-accelerated restrictedstock/restricted stock units (“PARS”) may be awarded, other annual andlong-term cash and/or equity incentive plans, and deferred compensation plans;provided, however, that Executive’s participation in such plans and programs,in the aggregate, shall provide him with compensation and incentive awardopportunities substantially no less favorable than those provided by theCompany to Executive under such plans and programs as in effect on theAmendment Date.  The Company makes nocommitment under this Section 5(a) to provide participation opportunitiesto Executive in all plans and programs or at levels equal to (or otherwisecomparable to) the participation opportunity of any other executive.  The foregoing notwithstanding, Executiveshall be entitled to participate in the PERS program based on annualperformance commencing with the 2001 performance year, and will not be grantedPERS with respect to the 2000 performance year.

 

(b)                                 Employeeand Executive Benefit Plans. Executive shall be entitled during the Term to participate, withoutdiscrimination or duplication, in employee and executive benefit plans andprograms of the Company, as presently in effect or as they may be modified oradded to by the Company from time to time, subject to the eligibility and otherrequirements of such plans and programs, including without limitation plansproviding pensions, supplemental pensions, supplemental and other retirementbenefits, medical insurance, life insurance, disability insurance, andaccidental death or dismemberment insurance, as well as savings,profit-sharing, and stock ownership plans; provided, however, that Executive’sparticipation in such benefit plans and programs, in the aggregate, shallprovide Executive with benefits and compensation substantially no lessfavorable than those provided by the Company to Executive under such plans andprograms as in effect on the Amendment Date. The Company makes no commitment under this Section 5(b) to provideparticipation opportunities to Executive in all benefit plans and programs orat levels equal to (or otherwise comparable to) the participation opportunityof any other executive.  The foregoingnotwithstanding, Executive shall be eligible to participate or receivecompensation and benefits under the Company’s Employee Protection Plan and hisChange-in-Control Agreement, provided that any compensation and benefits toExecutive under the Employee Protection Plan and the Change-in-ControlAgreement shall be payable only if and to the extent that such benefits wouldexceed the corresponding benefits payable under this Agreement.

 

In furtherance of and not inlimitation of the foregoing, during the Term:

 

(i)                                     Executive will participate as Senior VicePresident and General Counsel in all executive and employee vacation andtime-off programs;

 

(ii)                                  The Company will provide Executive withcoverage as Senior Vice President and General Counsel with respect to long-termdisability insurance and benefits substantially no less favorable (includingany required contributions by Executive) than such insurance and benefits ineffect on the Amendment Date;

 

(iii)                               Executive will be covered by Company-paidgroup and individual term life insurance providing a death benefit no less thanthe death benefit provided under Company-paid insurance in effect at theAmendment Date; provided, however, that, with the consent of Executive, such insurancemay be combined with a supplementary retirement funding vehicle; and

 

(iv)                              Executive will be entitled to benefits underthe IMS Health Incorporated Executive Pension Plan (“EXPP”), with the effectivedate of Executive’s participation therein to be February 11, 2003.  Notwithstanding anything to the contrary inthis Agreement or the EXPP, Executive’s years of service with the Company (andits predecessor Cognizant Corporation) prior to the date that his participationin the EXPP commenced shall be included as Service for purposes ofparticipation, vesting and accrual of benefits under the EXPP subject to thespecial rules contained in this Section 5(b)(iv).  For the period from February 11, 2003 through January 31, 2006,Executive

 

3

----

 

shall be deemed aparticipant in both the EXPP and the IMS Health Incorporated U.S. ExecutiveRetirement Plan (the “USERP”), with Service apportioned between the two Plans; for this purpose, Executive shall becredited with additional Service for purposes of the EXPP (the “AdditionalService Credits”), including without limitation, Sections 3.1(b)(i) and3.2(b)(i) of the EXPP, with a corresponding reduction in Service for purposesof Sections 3.1(b)(i) and 3.2(b)(i) of the USERP, as follows:

 
| **Date**       |   | **Years of Service  Under USERP** |   | **Years of Service  Under EXPP** |   | **Total Years  of Service** |   |
|----------------|--------|-----------------------------------|--------|----------------------------------|--------|-----------------------------|--------|
|           |   |                              |   |                             |   |                        |   |
| Feb.  11, 2003 |   | 6.0833                            |   | 0                                |   | 6.0833                      |   |
| Jan.  31, 2004 |   | 4                                 |   | 3                                |   | 7                           |   |
| Jan.  31, 2005 |   | 2                                 |   | 6                                |   | 8                           |   |
| Jan.  31, 2006 |   | 0                                 |   | 9                                |   | 9                           |   |

 

From and after January 31,2006, such Additional Service Credits shall remain credited under the EXPP, andExecutive’s  benefits shall bedetermined solely under the EXPP, with Executive’s further Service accruing inaccordance with the terms of the EXPP. The provisions governing the accrual of Service under the EXPP set forth herein shall take precedence overany  inconsistent provision of the EXPP,including without limitation Section 1.32(e) of the EXPP (providing phased-incredit for pre-participation Service). Years of Service credited in accordance with the above table shall bedetermined in accordance with the rules generally applicable to creditingService under the EXPP, including  therules which provide that Service shall be computed in 1/12ths of a year, with afull month being granted for each completed or partial calendar month.  The foregoing notwithstanding, in the eventthat Executive shall become eligible for Retirement Benefits or Deferred VestedBenefits under the USERP and/or the EXPP, the aggregate benefit payable toExecutive under the USERP and/or the EXPP shall not be less than the RetirementBenefit or Deferred Vested Benefit, as the case may be, that would have beenpayable to Executive under the USERP had Executive continued to participate inthe USERP from February 11, 2003 until the date of his retirement ortermination of employment.  Moreover, inthe event that Executive’s Surviving Spouse shall become eligible for deathbenefits under the USERP and/or the EXPP prior to the commencement of benefitpayments to Executive, the Surviving Spouse’s Benefit shall not be less thanthe Surviving Spouse’s Benefit that would have been payable under the USERP hadExecutive continued to participate in the USERP from February 11, 2003 untilthe date of Executive’s death. Furthermore, for purposes of calculating Retirement Benefits, DeferredVested Benefits or Surviving Spouse’s Benefits payable under the USERP and/orthe EXPP, Executive’s Average Final Compensation shall not be less than$465,000.  Capitalized terms used hereinand not otherwise defined shall have the meaning ascribed to them in the EXPP(or if applicable, the USERP).

 

(c)                                  Accelerationof Awards Upon a Change in Control.                In the event of a Change in Control (asdefined in Section 8(b)), all outstanding stock options, restricted stock, andother equity-based awards then held by Executive shall become vested andexercisable.

 

(d)                                 Deferralof Compensation.  Ifthe Company has in effect or adopts any deferral program or arrangementpermitting executives to elect to defer any compensation, Executive will beeligible to participate in such program. Any plan or program of the Company which provides benefits based on thelevel of salary, annual incentive, or other compensation of Executive shall, indetermining Executive’s benefits, take into account the amount of salary,annual incentive, or other compensation prior to any reduction for voluntarycontributions made by Executive under any deferral or similar contributory planor program of the Company (excluding compensation that would not be taken intoaccount even if not deferred), but shall not treat any payout or settlementunder such a deferral or similar contributory plan or program to be additionalsalary, annual incentive, or other compensation for purposes of determiningsuch benefits, unless otherwise expressly provided under such plan or program.

 

(e)                                  CompanyRegistration Obligations.  TheCompany will use its best efforts to file with the Securities and ExchangeCommission and thereafter maintain the effectiveness of one or moreregistration

 

4

----

 

statements registering underthe Securities Act of 1933, as amended (the “1933 Act”), the offer and sale ofshares by the Company to Executive pursuant to stock options or otherequity-based awards granted to Executive under Company plans or otherwise or,if shares are acquired by Executive in a transaction not involving an offer orsale to Executive but resulting in the acquired shares being “restricted securities”for purposes of the 1933 Act, registering the reoffer and resale of such sharesby Executive.

 

(f)                                    Reimbursementof Expenses.  TheCompany will promptly reimburse Executive for all reasonable business expensesand disbursements incurred by Executive in the performance of Executive’sduties during the Term in accordance with the Company’s reimbursement policiesas in effect from time to time.

 

6.                                       **TerminationDue to Retirement, Death, or Disability****.**

 

(a)                                  Retirement.  Executive may elect to terminate employmenthereunder 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’semployment terminates due to Retirement, the Term will terminate, allobligations of the Company and Executive under Sections 1 through 5 of thisAgreement will immediately cease except for obligations which expresslycontinue after termination of employment due to Retirement, and the Companywill pay Executive, and Executive will be entitled to receive, the following:

 

(i)                                     Executive’s Compensation Accrued atTermination (as defined in Section 8(c));

 

(ii)                                  In lieu of any annual incentive compensationunder Section 4(b) for the year in which Executive’s employment terminated, anamount equal to the portion of annual incentive compensation that would havebecome payable in cash to Executive (i.e., excluding the portion payable inPERS or in other non-cash awards) for that year if his employment had notterminated, based on performance actually achieved in that year (determined bythe Committee following completion of the performance year), multiplied by afraction the numerator of which is the number of days Executive was employed inthe year of termination and the denominator of which is the total number ofdays in the year of termination;

 

(iii)                               The vesting and exercisability of stockoptions held by Executive at termination and all other terms of such optionsshall be governed by the plans and programs and the agreements and otherdocuments pursuant to which such options were granted (subject to Section 10(f)hereof); and

 

(iv)                              All restricted stock and deferred stockawards, including outstanding PERS awards, all other long-term incentiveawards, and all deferral arrangements under Section 5(d), shall be governed bythe plans and programs under which the awards were granted or governing thedeferral, and all rights under the EXPP, USERP and any other benefit plan shallbe governed by such plan subject to, in the case of the EXPP and USERP, Section5(b) hereof including without limitation that Additional Service Credits thatwere credited as of Executive’s Retirement as provided in Section 5(b)(iv) ofthis Agreement shall be fully reflected.

 

(v)                                 If Executive shall not be eligible uponRetirement for retiree coverage under the Company’s Health Plan (the “HealthPlan”) and Executive elects in accordance with the applicable provisions of theConsolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”)continued coverage under the Health Plan in accordance with the applicableprovisions of COBRA, the Company shall pay to Executive on a monthly basisduring such COBRA continuation period an amount equal on an after-tax basis tothe total cost of such coverage. Prior to the expiration of the maximum COBRAcontinuation period available to Executive, provided that Executive theretoforeshall have complied with the conditions set forth in Section 10, the Companyshall make a good faith effort to obtain insured coverage for Executive (andhis spouse and eligible dependents, if any, for whom coverage had been providedduring the COBRA continuation period) that is substantially comparable to suchCOBRA continuation coverage, which insured coverage shall begin on the date ofexpiration of Executive’s COBRA continuation period and continue until theearliest of:  (1) Executive’seligibility for medical coverage under the Company’s Health Plan, as a retireeor active employee, (2) Executive’s eligibility for medical coverage under aplan maintained by a subsequent employer or other entity to which Executive

 

5

----

 

provides services, (3)Executive’s eligibility for Medicare, or (4) Executive’s attainment of age 65.In the event that the Company determines, in its sole discretion, that it isunable to obtain such insured coverage for Executive (and his spouse andeligible dependents, if any, for whom coverage had been provided during theCOBRA continuation period) or in the event that Executive determines, in hissole discretion, that any such insured coverage offered by the Company is notsubstantially comparable to such COBRA continuation coverage, the Company shallpay to Executive, provided that Executive shall not have become eligible formedical coverage under (1) the Company’s Health Plan, as a retiree or activeemployee, (2) a plan maintained by a subsequent employer or other entity towhich Executive provides services, or (3) Medicare and, provided further, thatExecutive theretofore shall have complied with the conditions set forth inSection 10, a lump sum amount equal on an after-tax basis to the present valueof  the total cost of retiree medicalcoverage under the Health Plan that would have been incurred by both Executiveand the Company on behalf of Executive (and his spouse and eligible dependents,if any, for whom coverage had been provided during the COBRA continuationperiod) if Executive (and such spouse and dependents, if any) had been eligiblefor such retiree medical coverage from the end of Executive’s COBRAcontinuation period until Executive’s attainment of age 65, calculated on theassumption that the cost of such coverage would remain unchanged from that ineffect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for theHealth Plan and paid in cash as soon as administratively practicable followingthe expiration of Executive’s COBRA continuation period and shall not besubject to reduction or forfeiture by reason of any coverage for whichExecutive may thereafter become eligible by reason of subsequent employment orotherwise. For purposes of this Section 6(a)(v), present value shall becalculated on the basis of the discount rate set forth in the EXPP for thedetermination of lump sum payments.

 

(b)                                 Death.  In the event of Executive’s death whichresults in the termination of Executive’s employment, the Term will terminate,all obligations of the Company and Executive under Sections 1 through 5 of thisAgreement will immediately cease except for obligations which expresslycontinue after death, and the Company will pay Executive’s beneficiary orestate, and Executive’s beneficiary or estate will be entitled to receive, thefollowing:

 

(i)                                     Executive’s Compensation Accrued atTermination;

 

(ii)                                  In lieu of any annual incentive compensationunder Section 4(b) for the year in which Executive’s death occurred, an amountequal to the portion of annual incentive compensation that would have becomepayable in cash to Executive (i.e., excluding the portion payable in PERS or inother non-cash awards) for that year if his employment had not terminated,based on performance actually achieved in that year (determined by theCommittee following completion of the performance year), multiplied by afraction the numerator of which is the number of days Executive was employed inthe year of his death and the denominator of which is the total number of daysin the year of death;

 

(iii)                               The vesting and exercisability of stock optionsheld by Executive at death and all other terms of such options shall begoverned by the plans and programs and the agreements and other documentspursuant to which such options were granted;

 

(iv)                              All restricted stock and deferred stockawards, including outstanding PERS awards, all other long-term incentiveawards, and all deferral arrangements under Section 5(d), shall be governed bythe plans and programs under which the awards were granted or governing thedeferral, and all rights under the EXPP, USERP and any other benefit plan shallbe governed by such plan subject to, in the case of the EXPP and USERP, Section5(b) hereof including without limitation that Additional Service Credits asprovided in Section 5(b)(iv) of this Agreement that were credited as ofExecutive’s death shall be fully reflected and provided additionally that thesurviving spouse benefit under the USERP and/or the EXPP shall be  in an amount equal to 50% of the benefitthat would have been payable under Section 3.1 or 3.2 of the EXPP uponExecutive’s attainment of age 65 or Section 3.1 or 3.2 of the USERP uponExecutive’s attainment of age 55 (whichever is applicable or in the appropriatecombination thereof) without actuarial reduction or any other

 

6

----

 

discount except as providedin Section 5.5 of the EXPP and the USERP with respect to a reduction on accountof a surviving spouse who is more than ten years younger than Executive, andpayments to Executive’s surviving spouse shall commence on the later of thedate of Executive’s death or the date on which Executive would have attainedage 55; and

 

(v)                                 If Executive’s surviving spouse (and eligibledependents, if any) elects continued coverage under the Company’s Health Planin accordance with the applicable provisions of  COBRA, the Company shall pay to Executive’s surviving spouse on amonthly basis during such COBRA continuation period an amount equal on anafter-tax basis to the total cost of such coverage.  No further benefits shall be paid under this Section 6(b)(v)after the expiration of the maximum COBRA continuation period available toExecutive’s surviving spouse and eligible dependents, if any.

 

(c)                                  Disability.  The Company may terminate the employment ofExecutive hereunder due to the Disability (as defined in Section 8(d)) ofExecutive.  Upon termination ofemployment, the Term will terminate, all obligations of the Company andExecutive under Sections 1 through 5 of this Agreement will immediately ceaseexcept for obligations which expressly continue after termination of employmentdue to Disability, and the Company will pay Executive, and Executive will beentitled to receive, the following:

 

(i)                                     Executive’s Compensation Accrued atTermination;

 

(ii)                                  In lieu of any annual incentive compensationunder Section 4(b) for the year in which Executive’s employment terminated, anamount equal to the portion of annual incentive compensation that would havebecome payable in cash to Executive (i.e., excluding the portion payable in PERSor in other non-cash awards) for that year if his employment had notterminated, based on performance actually achieved in that year (determined bythe Committee following completion of the performance year), multiplied by afraction the numerator of which is the number of days Executive was employed inthe year of termination and the denominator of which is the total number ofdays in the year of termination;

 

(iii)                               Stock options held by Executive attermination shall be governed by the plans and programs and the agreements andother documents pursuant to which such options were granted;

 

(iv)                              Any performance objectives upon which theearning of performance-based restricted stock and deferred stock awards,including outstanding PERS awards, and other long-term incentive awards isconditioned shall be deemed to have been met at target level at the date oftermination, and restricted stock and deferred stock awards, includingoutstanding PERS awards, and other long-term incentive awards (to the extentthen or previously earned, in the case of performance-based awards) shallbecome 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 andthe agreements and other documents pursuant to which such awards were granted;

 

(v)                                 Disability benefits shall be payable inaccordance with the Company’s plans, programs and policies, including the EXPPand USERP, provided; however, that there shall be no duplication of disabilitybenefits provided under the EXPP and USERP and provided further that in theevent that disability benefits payable under the EXPP or USERP shall cease,Executive’s retirement benefits under the USERP and/or EXPP shall fully reflectthe Additional Service Credits that were credited as of Executive’s retirementas  provided in Section 5(b)(iv) of thisAgreement  and  the payment of such retirement benefits under the USERP and/orEXPP  shall commence at the later of thecessation of Executive’s disability benefits or Executive’s attainment of age55 in an amount equal to 100% of the benefit under Sections 3.1 or 3.2 of  the EXPP or Sections 3.1 or 3.2 of the USERP(whichever is applicable or in the appropriate combination thereof) withoutactuarial reduction or any other discount.), and all deferral arrangementsunder Section 5(d) will be settled in accordance with the plans and programsgoverning the deferral; and

 

(vi)                              If Executive elects after termination ofemployment continued coverage under the Health Plan in accordance with theapplicable provisions of COBRA, the Company shall pay to Executive on a

 

7

----

 

monthly basis during suchCOBRA continuation period an amount equal on an after-tax basis to the totalcost of such coverage. Prior to the expiration of the maximum COBRAcontinuation period available to Executive, provided that Executive theretoforeshall have complied with the conditions set forth in Section 10, the Companyshall make a good faith effort to obtain insured coverage for Executive (andhis spouse and eligible dependents, if any, for whom coverage had been providedduring the COBRA continuation period) that is substantially comparable to suchCOBRA continuation coverage, which insured coverage shall begin on the date ofexpiration of Executive’s COBRA continuation period and continue until theearliest of:  (1) Executive’seligibility for medical coverage under the Company’s Health Plan, as a retireeor active employee, (2) Executive’s eligibility for medical coverage under aplan maintained by a subsequent employer or other entity to which Executiveprovides services, (3) Executive’s eligibility for Medicare, or (4) Executive’sattainment of age 65.  In the event thatthe Company determines, in its sole discretion, that it is unable to obtainsuch insured coverage for Executive (and his spouse and eligible dependents, ifany, for whom coverage had been provided during the COBRA continuation period)or in the event that Executive determines, in his sole discretion, that anysuch insured coverage offered by the Company is not substantially comparable tosuch COBRA continuation coverage, the Company shall pay to Executive, providedthat Executive shall not have become eligible for medical coverage under (1) theCompany’s Health Plan, as a retiree or active employee, (2) a plan maintainedby a subsequent employer or other entity to which Executive provides services,or (3) Medicare and, provided further, that Executive theretofore shall havecomplied with the conditions set forth in Section 10, a lump sum amount equalon an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan thatwould have been incurred by both Executive and the Company on behalf ofExecutive (and his spouse and eligible dependents, if any, for whom coveragehad been provided during the COBRA continuation period) if Executive (and suchspouse and dependents, if any) had been eligible for such retiree medicalcoverage from the end of Executive’s COBRA continuation period untilExecutive’s attainment of age 65, calculated on the assumption that the cost ofsuch coverage would remain unchanged from that in effect for the year in whichsuch lump sum is paid.  Such lump sumamount shall be calculated by the actuary for the Health Plan and paid in cashas soon as administratively practicable following the expiration of Executive’sCOBRA continuation period and shall not be subject to reduction or forfeitureby reason of any coverage for which Executive may thereafter become eligible byreason of subsequent employment or otherwise. In addition, as soon as administratively practicable followingExecutive’s termination of employment, provided that Executive shall havecomplied with the conditions set forth in Section 10, the Company shall pay toExecutive a lump sum amount equal on an after-tax basis to the present value ofthe sum of (1) the amount that Executive would have paid for coverage under theCompany’s group long-term disability policy from Executive’s termination ofemployment until Executive’s attainment of age 65, calculated on the assumptionthat the cost of such coverage would remain unchanged from that in effect forthe year in which Executive’s termination occurred; and (2)  the amount that the Company would have paidto continue Executive’s group life insurance coverage from Executive’stermination of employment until Executive’s attainment of age 65, calculated onthe assumption that the cost of such coverage would remain unchanged from thatin effect for the year in which Executive’s termination occurred.  For purposes of this Section 6(c)(vi),present value shall be calculated on the basis of the discount rate set forthin the EXPP for the determination of lump sum payments.

 

(d)                                 Other Terms of Payment Following Retirement, Death, or Disability. Nothing in this Section 6 shall limit the benefits payable or providedIn the event Executive’s employment terminates due to Retirement, death, orDisability under the terms of plans or programs of the Company more favorableto the Executive (or his beneficiaries) than the benefits payable or providedunder this Section 6 (except in the case of annual incentives in lieu of whichamounts are paid hereunder), including plans and programs adopted after thedate of this Agreement.  Amounts payableunder this Section 6 following Executive’s termination of employment, otherthan those expressly payable following determination of performance for theyear of termination for purposes of annual incentive compensation or otherwiseexpressly payable on a deferred basis, will be paid as promptly as practicableafter such termination of employment.

 

8

----

 

7.                                       **Termination of Employment For Reasons Other ThanRetirement, Death or Disability.**

 

(a)                                  Terminationby the Company for Cause.  TheCompany may terminate the employment of Executive hereunder for Cause (asdefined in Section 8(a)) at any time. At the time Executive’s employment is terminated for Cause, the Term willterminate, all obligations of the Company and Executive under Sections 1through 5 of this Agreement will immediately cease except for obligations whichexpressly 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 atTermination (as defined in Section 8(c));

 

(ii)                                  All stock options, restricted stock anddeferred stock awards, including outstanding PERS awards, and all otherlong-term incentive awards will be governed by the terms of the plans andprograms 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 thedeferral, and all rights, if any, under the EXPP and USERP and any otherbenefit plan shall be governed by such plan.

 

(b)                                 Termination by Executive Other Than For Good Reason. Executive may terminate his employment hereunder voluntarily for reasonsother than Good Reason (as defined in Section 8(e)) at any time upon 90 days’written notice to the Company.  Anelection by Executive not to extend the Term pursuant to Section 2 hereof shallbe deemed to be a termination of employment by Executive for reasons other thanGood 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’semployment is terminated by Executive other than for Good Reason the Term willterminate, all obligations of the Company and Executive under Sections 1through 5 of this Agreement will immediately cease, and the Company will payExecutive, and Executive will be entitled to receive, the following:

 

(i)                                     Executive’s Compensation Accrued atTermination;

 

(ii)                                  All stock options, restricted stock anddeferred stock awards, including outstanding PERS awards, and all otherlong-term incentive awards will be governed by the terms of the plans andprograms 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 thedeferral, and all rights under the EXPP, USERP and any other benefit plan shallbe governed by such plan, subject to Section 5(b) hereof, including withoutlimitation that Additional Service Credits that were credited as of Executive’stermination as provided in Section 5(b)(iv) of this Agreement shall be fullyreflected.

 

(c)                                  Termination by the Company Without Cause Prior to or More than TwoYears After a Change in Control.  TheCompany may terminate the employment of Executive hereunder without Cause, ifat the date of termination no Change in Control has occurred or such date oftermination is at least two years after the most recent Change in Control, uponat least 90 days’ written notice to Executive. The foregoing notwithstanding, the Company may elect, by written noticeto Executive, to terminate Executive’s positions specified in Sections 1 and 3and all other obligations of Executive and the Company under Section 3 at adate earlier than the expiration of such 90-day period, if so specified by theCompany in the written notice, provided that Executive shall be treated as anemployee of the Company (without any assigned duties) for all other purposes ofthis Agreement, including for purposes of Sections 4 and 5, from such specifieddate until the expiration of such 90-day period.  An election by the Company not to extend the Term pursuant toSection 2 hereof shall be deemed to be a termination of Executive’s employmentby the Company without Cause at the date of expiration of the Term and shall besubject to this Section 7(c) if at the date of such termination no Change inControl has occurred or such date of termination is at least two years afterthe most recent Change in Control; provided, however, that, if Executive hasattained age 65 at such date of termination, such termination shall be deemed aRetirement of Executive.  At the timeExecutive’s employment is terminated by the Company (i.e., at the expiration ofsuch notice period), the Term will terminate, all remaining obligations of theCompany and Executive under Sections 1 through 5 of this Agreement willimmediately cease (except for

 

9

----

 

obligations which continueafter termination of employment as expressly provided herein), and the Companywill pay Executive, and Executive will be entitled to receive, the following:

 

(i)                                     Executive’s Compensation Accrued atTermination;

 

(ii)                                  Cash in an aggregate amount equal to onetimes the sum of (A) Executive’s Base Salary under Section 4(a) immediatelyprior to termination plus (B) an amount equal to the greater of (x) the portionof Executive’s annual target incentive compensation potentially payable in cashto Executive (i.e., excluding the portion payable in PERS or in other non-cashawards) for the year of termination or (y) the portion of Executive’s annualincentive compensation that became payable in cash to Executive (i.e.,excluding the portion payable in PERS or in other non-cash awards) for thelatest year preceding the year of termination based on performance actuallyachieved in that latest year.  Theamount determined to be payable under this Section 7(c)(ii) shall be payable inmonthly installments over the 24 months following termination, withoutinterest, except the Company may elect to accelerate payment of  the remaining balance of such amount and topay it as a lump sum, without discount;

 

(iii)                               In lieu of any annual incentive compensationunder Section 4(b) for the year in which Executive’s employment terminated, anamount equal to the portion of Executive’s annual target incentive compensationpotentially payable in cash to Executive (i.e., excluding the portion payablein PERS or in other non-cash awards) for the year of termination, multiplied bya fraction the numerator of which is the number of days Executive was employedin the year of termination and the denominator of which is the total number ofdays in the year of termination;

 

(iv)                              Stock options held by Executive attermination, if not then vested and exercisable, will become fully vested andexercisable at the date of such termination, and, in other respects (includingthe period following termination during which such options may be exercised),such options shall be governed by the plans and programs and the agreements andother documents pursuant to which such options were granted;

 

(v)                                 Any performance objectives upon which theearning of performance-based restricted stock and deferred stock awards,including outstanding PERS awards, and other long-term incentive awards isconditioned shall be deemed to have been met at target level at the date oftermination, and restricted stock and deferred stock awards, includingoutstanding PERS awards, and other long-term incentive awards (to the extentthen or previously earned, in the case of performance-based awards) shallbecome 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 andthe 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 thedeferral;

 

(vii)                           All rights under the EXPP and USERP shall begoverned by such plan, subject to Section 5(b) hereof including withoutlimitation that Additional Service Credits that were credited as of Executive’stermination as provided in Section 5(b)(iv) of this Agreement shall be fullyreflected; and

 

(viii)                        If Executive elects after termination ofemployment continued coverage under the Health Plan in accordance with theapplicable provisions of COBRA, the Company shall pay to Executive on a monthlybasis during such COBRA continuation period an amount equal on an after-taxbasis to the total cost of such coverage. If the maximum COBRA continuationperiod available to Executive shall be less than two years, prior to theexpiration of the maximum COBRA continuation period available to Executive,provided that Executive theretofore shall have complied with the conditions setforth in Section 10, the Company shall make a good faith effort to obtain insuredcoverage for Executive (and his spouse and eligible dependents, if any, forwhom coverage had been provided during the COBRA continuation period) that issubstantially comparable to such COBRA continuation coverage, which insuredcoverage shall begin on the

 

10

----

 

date of expiration ofExecutive’s COBRA continuation period and continue until the second anniversaryof Executive’s termination of employment. In the event that the Company determines, in its sole discretion, thatit is unable to obtain such insured coverage for Executive (and his spouse andeligible dependents, if any, for whom coverage had been provided during theCOBRA continuation period) or in the event that Executive determines, in his solediscretion, that any such insured coverage offered by the Company is notsubstantially comparable to such COBRA continuation coverage, the Company shallpay to Executive, provided that Executive shall not have become eligible formedical coverage under (1) the Company’s Health Plan, as a retiree or activeemployee, (2) a plan maintained by a subsequent employer or other entity towhich Executive provides services, or (3) Medicare and, provided further, thatExecutive theretofore shall have complied with the conditions set forth inSection 10, a lump sum amount equal on an after-tax basis to the present valueof  the total cost of retiree medicalcoverage under the Health Plan that would have been incurred by both Executiveand the Company on behalf of Executive (and his spouse and eligible dependents,if any, for whom coverage had been provided during the COBRA continuationperiod) if Executive (and such spouse and dependents, if any) had been eligiblefor such retiree medical coverage from the end of Executive’s COBRAcontinuation period until the second anniversary of Executive’s termination ofemployment, calculated on the assumption that the cost of such coverage wouldremain unchanged from that in effect for the year in which such lump sum ispaid.  Such lump sum amount shall becalculated by the actuary for the Health Plan and paid in cash as soon asadministratively practicable following the expiration of Executive’s COBRAcontinuation period and shall not be subject to reduction or forfeiture by reasonof any coverage for which Executive may thereafter become eligible by reason ofsubsequent employment or otherwise. In addition, as soon as administrativelypracticable following Executive’s termination of employment, provided thatExecutive shall have complied with the conditions set forth in Section 10, theCompany shall pay to Executive a lump sum amount equal on an after-tax basis tothe present value of the sum of (1) the amount that Executive would have paid,had he remained employed, for coverage under the Company’s group long-termdisability policy from the date of Executive’s termination of employment untilthe second anniversary of Executive’s termination of employment,calculated  on the assumption that thecost of such coverage would remain unchanged from that in effect for the yearin which Executive’s termination occurred; and (2) the amount that the Companywould have paid to continue Executive’s group life insurance coverage, had heremained employed, from the date of Executive’s termination of employment untilthe second anniversary of Executive’s termination of employment, calculated onthe assumption that the cost of such coverage would remain unchanged from thatin effect for the year in which Executive’s termination occurred.  For purposes of this Section 7(c)(viii),present value shall be calculated on the basis of the discount rate set forthin the EXPP for the determination of lump sum payments.

 

(d)                                 Termination by Executive for Good Reason Prior to or More than TwoYears After a Change in Control. Executive may terminate his employment hereunder for Good Reason, priorto a Change in Control or after the second anniversary of the most recentChange in Control, upon 90 days’ written notice to the Company; provided,however, that, if the Company has corrected the basis for such Good Reasonwithin 30 days after receipt of such notice, Executive may not terminate hisemployment for Good Reason, and therefore Executive’s notice of terminationwill automatically become null and void. At the time Executive’s employment is terminated by Executive for GoodReason (i.e., at the expiration of such notice period), the Term willterminate, all obligations of the Company and Executive under Sections 1through 5 of this Agreement will immediately cease (except for obligationswhich 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 atTermination;

 

(ii)                                  Cash in an aggregate amount equal to onetimes the sum of (A) Exe cutive’s Base Salary under Section 4(a) immediatelyprior to termination plus (B) an amount equal to the greater of (x) the portionof Executive’s annual target incentive compensation potentially payable in cashto Executive (i.e., excluding the portion payable in PERS or in other non-cashawards) for the year of termination or (y) the portion of Executive’s annualincentive compensation that became payable

 

11

----

 

in cash to Executive (i.e.,excluding the portion payable in PERS or in other non-cash awards) for thelatest year preceding the year of termination based on performance actuallyachieved in that latest year.  The amountdetermined to be payable under this Section 7(d)(ii) shall be payable inmonthly installments over the 24 months following termination, withoutinterest, except the Company may elect to accelerate payment of  the remaining balance of such amount and topay it as a lump sum, without discount;

 

(iii)                               In lieu of any annual incentive compensationunder Section 4(b) for the year in which Executive’s employment terminated, anamount equal to the portion of Executive’s annual target incentive compensationpotentially payable in cash to Executive (i.e., excluding the portion payablein PERS or in other non-cash awards) for the year of termination, multiplied bya fraction the numerator of which is the number of days Executive was employedin the year of termination and the denominator of which is the total number ofdays in the year of termination;

 

(iv)                              Stock options held by Executive attermination, if not then vested and exercisable, will become fully vested andexercisable at the date of such termination, and, in other respects (includingthe period following termination during which such options may be exercised),such options shall be governed by the plans and programs and the agreements andother documents pursuant to which such options were granted;

 

(v)                                 Any performance objectives upon which theearning of performance-based restricted stock and deferred stock awards,including outstanding PERS awards, and other long-term incentive awards isconditioned shall be deemed to have been met at target level at the date oftermination, and restricted stock and deferred stock awards, includingoutstanding PERS awards, and other long-term incentive awards (to the extentthen or previously earned, in the case of performance-based awards) shallbecome 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 andthe 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 thedeferral;

 

(vii)                           All rights under the EXPP and USERP shall begoverned by such plan, subject to Section 5(b) hereof including withoutlimitation that Additional Service Credits that were credited as of Executive’stermination as provided in Section 5(b)(iv) of this Agreement shall be fullyreflected; and

 

(viii)                        If Executive elects after termination ofemployment continued coverage under the Health Plan in accordance with theapplicable provisions of COBRA, the Company shall pay to Executive on a monthlybasis during such COBRA continuation period an amount equal on an after-taxbasis to the total cost of such coverage. If the maximum COBRA continuationperiod available to Executive shall be less than two years, prior to theexpiration of the maximum COBRA continuation period available to Executive,provided that Executive theretofore shall have complied with the conditions setforth in Section 10, the Company shall make a good faith effort to obtaininsured coverage for Executive (and his spouse and eligible dependents, if any,for whom coverage had been provided during the COBRA continuation period) thatis substantially comparable to such COBRA continuation coverage, which insuredcoverage shall begin on the date of expiration of Executive’s COBRAcontinuation period and continue until the second anniversary of Executive’stermination of employment.  In the eventthat the Company determines, in its sole discretion, that it is unable toobtain such insured coverage for Executive (and his spouse and eligibledependents, if any, for whom coverage had been provided during the COBRAcontinuation period) or in the event that Executive determines, in his solediscretion, that any such insured coverage offered by the Company is notsubstantially comparable to such COBRA continuation coverage, the Company shallpay to Executive, provided that Executive shall not have become eligible formedical coverage under (1) the Company’s Health Plan, as a retiree or activeemployee, (2) a plan maintained by a subsequent employer or other entity towhich Executive provides services, or (3) Medicare and, provided further, thatExecutive

 

12

----

 

theretofore shall havecomplied with the conditions set forth in Section 10, a lump sum amount equalon an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan thatwould have been incurred by both Executive and the Company on behalf ofExecutive (and his spouse and eligible dependents, if any, for whom coveragehad been provided during the COBRA continuation period) if Executive (and suchspouse and dependents, if any) had been eligible for such retiree medicalcoverage from the end of Executive’s COBRA continuation period until the secondanniversary of Executive’s termination of employment, calculated on theassumption that the cost of such coverage would remain unchanged from that ineffect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for theHealth Plan and paid in cash as soon as administratively practicable followingthe expiration of Executive’s COBRA continuation period and shall not besubject to reduction or forfeiture by reason of any coverage for whichExecutive may thereafter become eligible by reason of subsequent employment orotherwise. In addition, as soon as administratively practicable followingExecutive’s termination of employment, provided that Executive shall havecomplied with the conditions set forth in Section 10, the Company shall pay toExecutive a lump sum amount equal on an after-tax basis to the present value ofthe sum of (1) the amount that Executive would have paid, had he remainedemployed, for coverage under the Company’s group long-term disability policyfrom the date of Executive’s termination of employment until the secondanniversary of Executive’s termination of employment, calculated  on the assumption that the cost of suchcoverage would remain unchanged from that in effect for the year in whichExecutive’s termination occurred; and (2) the amount that the Company wouldhave paid to continue Executive’s group life insurance coverage, had heremained employed, from the date of Executive’s termination of employment untilthe second anniversary of Executive’s termination of employment, calculated onthe assumption that the cost of such coverage would remain unchanged from thatin effect for the year in which Executive’s termination occurred.  For purposes of this Section 7(d)(viii),present value shall be calculated on the basis of the discount rate set forthin the EXPP for the determination of lump sum payments.

 

If any payment or benefitunder this Section 7(d) is based on Base Salary or other level of compensationor benefits at the time of Executive’s termination and if a reduction in suchBase Salary or other level of compensation or benefit was the basis forExecutive’s termination for Good Reason, then the Base Salary or other level ofcompensation in effect before such reduction shall be used to calculatepayments or benefits under this Section 7(d).

 

(e)                                  Termination by the Company Without CauseWithin Two Years After a Change in Control.  TheCompany may terminate the employment of Executive hereunder without Cause,simultaneously with or within two years after a Change in Control, upon atleast 90 days’ written notice to Executive. The foregoing notwithstanding, the Company may elect, by written noticeto Executive, to terminate Executive’s positions specified in Sections 1 and 3and all other obligations of Executive and the Company under Section 3 at adate earlier than the expiration of such 90-day notice period, if so specifiedby the Company in the written notice, provided that Executive shall be treatedas an employee of the Company (without any assigned duties) for all otherpurposes of this Agreement, including for purposes of Sections 4 and 5, fromsuch specified date until the expiration of such 90-day period.  An election by the Company not to extend theTerm pursuant to Section 2 hereof shall be deemed to be a termination ofExecutive’s employment by the Company without Cause at the date of expirationof the Term and shall be subject to this Section 7(e) if the date of such terminationcoincides 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 terminatedby the Company (i.e., at the expiration of such notice period), the Term willterminate, all remaining obligations of the Company and Executive underSections 1 through 5 of this Agreement will immediately cease (except forobligations which continue after termination of employment as expresslyprovided herein), and the Company will pay Executive, and Executive will beentitled to receive, the following:

 

(i)                                     Executive’s Compensation Accrued atTermination;

 

(ii)                                  Cash in an aggregate amount equal to threetimes the sum of (A) Executive’s Base Salary under Section 4(a) immediatelyprior to termination plus (B) an amount equal to the greater of (x) the portionof Executive’s annual target incentive compensation potentially payable in cashto

 

13

----

 

Executive (i.e., excludingthe portion payable in PERS or in other non-cash awards) for the year oftermination or (y) the portion of Executive’s annual incentive compensationthat became payable in cash to Executive (i.e., excluding the portion payablein PERS or in other non-cash awards) for the latest year preceding the year oftermination based on performance actually achieved in that latest year.  The amount determined to be payable underthis Section 7(e)(ii) shall be paid by the Company not later than 15 days afterExecutive’s termination;

 

(iii)                               In lieu of any annual incentive compensationunder Section 4(b) for the year in which Executive’s employment terminated, anamount equal to the portion of Executive’s annual target incentive compensationpotentially payable in cash to Executive (i.e., excluding the portion payablein PERS or in other non-cash awards) for the year of termination, multiplied bya fraction the numerator of which is the number of days Executive was employedin the year of termination and the denominator of which is the total number ofdays in the year of termination;

 

(iv)                              Stock options held by Executive attermination, if not then vested and exercisable, will become fully vested and exercisableat the date of such termination, and any such options granted on or after thedate hereof shall remain outstanding and exercisable until the statedexpiration date of the Option as though Executive’s employment did notterminate, and, in other respects, such options shall be governed by the plansand programs and the agreements and other documents pursuant to which suchoptions were granted;

 

(v)                                 Any performance objectives upon which theearning of performance-based restricted stock and deferred stock awards,including outstanding PERS awards, and other long-term incentive awards isconditioned shall be deemed to have been met at target level at the date oftermination, and restricted stock and deferred stock awards, includingoutstanding PERS awards, and other long-term incentive awards (to the extentthen or previously earned, in the case of performance-based awards) shallbecome 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 andthe 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 thedeferral;

 

(vii)                           All rights under the EXPP and USERP shall begoverned by such plan, subject to Section 5(b) hereof including withoutlimitation that Additional Service Credits that were credited as of Executive’stermination as provided in Section 5(b)(iv) of this Agreement shall be fullyreflected; provided additionally that (a) payments under the EXPP and USERPshall commence as provided in Section 3.8 of the EXPP and the USERP in anamount equal to 100% of the benefit under Section 3.1 or 3.2 of the EXPP orSection 3.1 or 3.2 of the USERP (whichever is applicable or in the appropriatecombination thereof) without actuarial reduction or any other discount and (b)if such termination occurs prior to January 31, 2006, any additional years ofService credited as a result of Section 3.8 of the EXPP (governing Change inControl) shall be credited in accordance with Section 5(b)(iv) of thisAgreement so that the Additional Service Credits are fully reflected in theadditional years of Service credited pursuant to Section 3.8 of the EXPP; and

 

(viii)                        If Executive elects after termination ofemployment continued coverage under the Health Plan in accordance with theapplicable provisions of COBRA, the Company shall pay to Executive on a monthlybasis during such COBRA continuation period an amount equal on an after-taxbasis to the total cost of such coverage. If the maximum COBRA continuationperiod available to Executive shall be less than three years, prior to theexpiration of the maximum COBRA continuation period available to Executive,provided that Executive theretofore shall have complied with the conditions setforth in Section 10, the Company shall make a good faith effort to obtaininsured coverage for Executive (and his spouse and eligible dependents, if any,for whom coverage had been provided during the COBRA continuation period) thatis substantially comparable to such COBRA continuation coverage, which insuredcoverage shall begin on the date of expiration of Executive’s COBRAcontinuation period and continue until the third anniversary of Executive’stermination of employment.  In the eventthat the Company

 

14

----

 

determines, in its solediscretion, that it is unable to obtain such insured coverage for Executive(and his spouse and eligible dependents, if any, for whom coverage had beenprovided during the COBRA continuation period) or in the event that Executivedetermines, in his sole discretion, that any such insured coverage offered bythe Company is not substantially comparable to such COBRA continuationcoverage, the Company shall pay to Executive, provided that Executive shall nothave become eligible for medical coverage under (1) the Company’s Health Plan,as a retiree or active employee, (2) a plan maintained by a subsequent employeror other entity to which Executive provides services, or (3) Medicare and,provided further, that Executive theretofore shall have complied with theconditions set forth in Section 10, a lump sum amount equal on an after-taxbasis to the present value of  the totalcost of retiree medical coverage under the Health Plan that would have beenincurred by both Executive and the Company on behalf of Executive (and hisspouse and eligible dependents, if any, for whom coverage had been providedduring the COBRA continuation period) if Executive (and such spouse anddependents, if any) had been eligible for such retiree medical coverage fromthe end of Executive’s COBRA continuation period until the third anniversary ofExecutive’s termination of employment, calculated on the assumption that thecost of such coverage would remain unchanged from that in effect for the yearin which such lump sum is paid.  Suchlump sum amount shall be calculated by the actuary for the Health Plan and paidin cash as soon as administratively practicable following the expiration ofExecutive’s COBRA continuation period and shall not be subject to reduction orforfeiture by reason of any coverage for which Executive may thereafter becomeeligible by reason of subsequent employment or otherwise. In addition, as soonas administratively practicable following Executive’s termination ofemployment, provided that Executive shall have complied with the conditions setforth in Section 10, the Company shall pay to Executive a lump sum amount equalon an after-tax basis to the present value of the sum of (1) the amount thatExecutive would have paid, had he remained employed, for coverage under theCompany’s group long-term disability policy from the date of Executive’stermination of employment until the third anniversary of Executive’stermination of employment, calculated on the assumption that the cost of such coverage would remain unchangedfrom that in effect for the year in which Executive’s termination occurred; and(2) the amount that the Company would have paid to continue Executive’s grouplife insurance coverage, had he remained employed, from the date of Executive’stermination of employment until the third anniversary of Executive’stermination of employment, calculated on the assumption that the cost of suchcoverage would remain unchanged from that in effect for the year in whichExecutive’s termination occurred.  Forpurposes of this Section 7(e)(viii), present value shall be calculated on thebasis of the discount rate set forth in the EXPP for the determination of lumpsum payments.

 

(f)                                    Termination by Executive for Good Reason Within Two Years After aChange in Control. Executive may terminate his employment hereunder for Good Reason,simultaneously with or within two years after a Change in Control, upon 90days’ written notice to the Company; provided, however, that, if the Companyhas corrected the basis for such Good Reason within 30 days after receipt ofsuch notice, Executive may not terminate his employment for Good Reason, andtherefore Executive’s notice of termination will automatically become null andvoid.  At the time Executive’semployment is terminated by Executive for Good Reason (i.e., at the expirationof such notice period), the Term will terminate, all obligations of the Companyand Executive under Sections 1 through 5 of this Agreement will immediatelycease (except for obligations which continue after termination of employment asexpressly provided herein), and the Company will pay Executive, and Executivewill be entitled to receive, the following:

 

(i)                                     Executive’s Compensation Accrued atTermination;

 

(ii)                                  Cash in an aggregate amount equal to threetimes the sum of (A) Executive’s Base Salary under Section 4(a) immediatelyprior to termination plus (B) an amount equal to the greater of (x) the portionof Executive’s annual target incentive compensation potentially payable in cashto Executive (i.e., excluding the portion payable in PERS or in other non-cashawards) for the year of termination or (y) the portion of Executive’s annualincentive compensation that became payable in cash to Executive (i.e.,excluding the portion payable in PERS or in other non-cash awards) for thelatest year preceding the year of termination based on performance actuallyachieved in that

 

15

----

 

latest year.  The amount determined to be payable underthis Section 7(f)(ii) shall be paid by the Company not later than 15 days afterExecutive’s termination;

 

(iii)                               In lieu of any annual incentive compensationunder Section 4(b) for the year in which Executive’s employment terminated, anamount equal to the portion of Executive’s annual target incentive compensationpotentially payable in cash to Executive (i.e., excluding the portion payablein PERS or in other non-cash awards) for the year of termination, multiplied bya fraction the numerator of which is the number of days Executive was employedin the year of termination and the denominator of which is the total number ofdays in the year of termination;

 

(iv)                              Stock options held by Executive attermination, if not then vested and exercisable, will become fully vested andexercisable at the date of such termination, and any such options granted on orafter the date hereof shall remain outstanding and exercisable until the statedexpiration date of the Option as though Executive’s employment did notterminate, and, in other respects, such options shall be governed by the plansand programs and the agreements and other documents pursuant to which suchoptions were granted;

 

(v)                                 Any performance objectives upon which theearning of performance-based restricted stock and deferred stock awards,including outstanding PERS awards, and other long-term incentive awards isconditioned shall be deemed to have been met at target level at the date oftermination, and restricted stock and deferred stock awards, includingoutstanding PERS awards, and other long-term incentive awards (to the extentthen or previously earned, in the case of performance-based awards) shallbecome 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 andthe 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 thedeferral;

 

(vii)                           All rights under the EXPP and USERP shall begoverned by such plan, subject to Section 5(b) hereof including withoutlimitation that Additional Service Credits that were credited as of Executive’stermination as provided in Section 5(b)(iv) of this Agreement shall be fullyreflected; provided additionally that (a) payments under the EXPP and USERPshall commence as provided in Section 3.8 of the EXPP and the USERP in anamount equal to 100% of the benefit under Section 3.1 or 3.2 of the EXPP orSection 3.1 or 3.2 of the USERP (whichever is applicable or in the appropriatecombination thereof) without actuarial reduction or any other discount and (b)if such termination occurs prior to January 31, 2006 any additional years ofService credited as a result of Section 3.8 of the EXPP (governing Change inControl) shall be credited in accordance with Section 5(b)(iv) of this Agreementso that the Additional Service Credits are fully reflected in the additionalyears of Service credited pursuant to Section 3.8 of the EXPP; and

 

(viii)                        If Executive elects after termination ofemployment continued coverage under the Health Plan in accordance with theapplicable provisions of COBRA, the Company shall pay to Executive on a monthlybasis during such COBRA continuation period an amount equal on an after-taxbasis to the total cost of such coverage. If the maximum COBRA continuation periodavailable to Executive shall be less than three years, prior to the expirationof the maximum COBRA continuation period available to Executive, provided thatExecutive theretofore shall have complied with the conditions set forth inSection 10, the Company shall make a good faith effort to obtain insuredcoverage for Executive (and his spouse and eligible dependents, if any, forwhom coverage had been provided during the COBRA continuation period) that issubstantially comparable to such COBRA continuation coverage, which insuredcoverage shall begin on the date of expiration of Executive’s COBRAcontinuation period and continue until the third anniversary of Executive’stermination of employment.  In the eventthat the Company determines, in its sole discretion, that it is unable toobtain such insured coverage for Executive (and his spouse and eligibledependents, if any, for whom coverage had been provided during the COBRAcontinuation period) or in the event that Executive determines, in his sole discretion,that any such insured coverage offered by the Company is not substantiallycomparable to such

 

16

----

 

COBRA continuation coverage,the Company shall pay to Executive, provided that Executive shall not havebecome eligible for medical coverage under (1) the Company’s Health Plan, as aretiree or active employee, (2) a plan maintained by a subsequent employer orother entity to which Executive provides services, or (3) Medicare and,provided further, that Executive theretofore shall have complied with theconditions set forth in Section 10, a lump sum amount equal on an after-taxbasis to the present value of  the totalcost of retiree medical coverage under the Health Plan that would have beenincurred by both Executive and the Company on behalf of Executive (and hisspouse and eligible dependents, if any, for whom coverage had been providedduring the COBRA continuation period) if Executive (and such spouse anddependents, if any) had been eligible for such retiree medical coverage fromthe end of Executive’s COBRA continuation period until the third anniversary ofExecutive’s termination of employment, calculated on the assumption that thecost of such coverage would remain unchanged from that in effect for the yearin which such lump sum is paid.  Suchlump sum amount shall be calculated by the actuary for the Health Plan and paidin cash as soon as administratively practicable following the expiration ofExecutive’s COBRA continuation period and shall not be subject to reduction orforfeiture by reason of any coverage for which Executive may thereafter becomeeligible by reason of subsequent employment or otherwise. In addition, as soonas administratively practicable following Executive’s termination of employment,provided that Executive shall have complied with the conditions set forth inSection 10, the Company shall pay to Executive a lump sum amount equal on anafter-tax basis to the present value of the sum of (1) the amount thatExecutive would have paid, had he remained employed, for coverage under theCompany’s group long-term disability policy from the date of Executive’stermination of employment until the third anniversary of Executive’stermination of employment, calculated on the assumption that the cost of such coverage would remain unchangedfrom that in effect for the year in which Executive’s termination occurred; and(2) the amount that the Company would have paid to continue Executive’s grouplife insurance coverage, had he remained employed, from the date of Executive’stermination of employment until the third anniversary of Executive’stermination of employment, calculated on the assumption that the cost of suchcoverage would remain unchanged from that in effect for the year in which Executive’stermination occurred.  For purposes ofthis Section 7(f)(viii), present value shall be calculated on the basis of thediscount rate set forth in the EXPP for the determination of lump sum payments.

 

If any payment or benefitunder this Section 7(f) is based on Base Salary or other level of compensationor benefits at the time of Executive’s termination and if a reduction in suchBase Salary or other level of compensation or benefit was the basis forExecutive’s termination for Good Reason, then the Base Salary or other level ofcompensation in effect before such reduction shall be used to calculatepayments 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 aChange in Control for purposes of Sections 7(c), (d), (e), or (f) is determinedat the date of termination, regardless of whether the Change in Control hadoccurred at the time a notice of termination was given.  In the event Executive’s employmentterminates for any reason set forth in Section 7(b) through (f), Executive willbe entitled to the benefit of any terms of plans or agreements applicable toExecutive which are more favorable than those specified in this Section 7 (exceptin the case of annual incentives in lieu of which amounts are paidhereunder).  Amounts payable under thisSection 7 following Executive’s termination of employment, other than thoseexpressly payable on a deferred basis, will be paid as promptly as practicableafter such a termination of employment, and such amounts payable under Section7(e) or 7(f) will be paid in no event later than 15 days after Executive’stermination 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 tosubstantially perform his duties hereunder (other than any such failureresulting from incapacity due to physical or mental illness or Disability orany failure after the issuance of a notice of termination by Executive for GoodReason) which failure is demonstrably and materially damaging to the financialcondition or reputation of the Company and/or its subsidiaries, and whichfailure continues more than 48 hours after a written demand for

 

17

----

 

substantial performance isdelivered to Executive by the Board, which demand specifically identifies themanner in which the Board believes that Executive has not substantiallyperformed his duties hereunder and the demonstrable and material damage causedthereby; or

 

(ii)                                  the willful engaging by Executive in conductwhich is demonstrably and materially injurious to the Company, monetarily orotherwise.

 

No act, or failure to act,on the part of Executive shall be deemed “willful” unless done, or omitted tobe done, by Executive not in good faith and without reasonable belief that hisaction or omission was in the best interest of the Company.  Notwithstanding the foregoing, Executiveshall not be deemed to have been terminated for Cause unless and until thereshall have been delivered to Executive a copy of the resolution duly adopted bythe affirmative vote of not less than three-quarters (3/4) of the entiremembership of the Board at a meeting of the Board (after reasonable notice toExecutive and an opportunity for Executive, together with Executive’s counsel,to be heard before the Board) finding that, in the good faith opinion of theBoard, Executive was guilty of conduct set forth above in this definition andspecifying the particulars thereof in detail.

 

(b)                                 “Change in Control.”  Forpurposes of this Agreement, a “Change in Control” shall be deemed to haveoccurred if, during the term of this Agreement:

 

(i)                                     any “Person,” as such term is used forpurposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”) (other than the Company, any trustee or otherfiduciary holding securities under an employee benefit plan of the Company, orany company owned, directly or indirectly, by the stockholders of the Companyin substantially the same proportions as their ownership of stock of theCompany), becomes the “Beneficial Owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of securities of the Companyrepresenting 20% or more of the combined voting power of the Company’sthen-outstanding securities;

 

(ii)                                  during any period of twenty-four months (notincluding any period prior to the effectiveness of this Agreement), individualswho 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 anagreement 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 toconsider taking actions (including, but not limited to, an actual or threatenedproxy contest) which if consummated would constitute a Change in Control or (C)a director nominated by any Person who is the Beneficial Owner, directly orindirectly, of securities of the Company representing 10% or more of thecombined voting power of the Company’s securities) whose election by the Boardor nomination for election by the Company’s stockholders was approved inadvance by a vote of at least two-thirds (2/3) of the directors then still inoffice who either were directors at the beginning of the period or whoseelection or nomination for election was previously so approved, cease for anyreason to constitute at least a majority thereof;

 

(iii)                               the stockholders of the Company approve anytransaction or series of transactions under which the Company is merged orconsolidated with any other company, other than a merger or consolidation (A)which would result in the voting securities of the Company outstandingimmediately prior thereto continuing to represent (either by remainingoutstanding or by being converted into voting securities of the survivingentity) more than 66 2/3% of the combined voting power of the voting securitiesof the Company or such surviving entity outstanding immediately after suchmerger or consolidation and (B) after which no Person holds 20% or more of thecombined voting power of the then-outstanding securities of the Company or suchsurviving entity;

 

(iv)                              the stockholders of the Company approve aplan of complete liquidation of the Company or an agreement for the sale ordisposition by the Company of all or substantially all of the Company’s assets;or

 

(v)                                 the Board adopts a resolution to the effectthat, for purposes of this Agreement, a Change in Control has occurred.

 

18

----

 

(c)                                  “CompensationAccrued at Termination.”  For purposes of this Agreement,“Compensation Accrued at Termination” means the following:

 

(i)                                     The unpaid portion of annual base salary atthe rate payable, in accordance with Section 4(a) hereof, at the date ofExecutive’s termination of employment, pro rated through such date oftermination, payable in accordance with the Company’s regular pay schedule;

 

(ii)                                  All vested, nonforfeitable amounts owing oraccrued at the date of Executive’s termination of employment under anycompensation and benefit plans, programs, and arrangements set forth orreferred to in Sections 4(b) and 5(a) and 5(b) hereof (including any earned andvested annual incentive compensation and long-term incentive award) in whichExecutive theretofore participated, payable in accordance with the terms andconditions of the plans, programs, and arrangements (and agreements anddocuments thereunder) pursuant to which such compensation and benefits weregranted or accrued; and

 

(iii)                               Reasonable business expenses anddisbursements incurred by Executive prior to Executive’s termination ofemployment, to be reimbursed to Executive, as authorized under Section 5(f), inaccordance the Company’s reimbursement policies as in effect at the date of suchtermination.

 

(d)                                 “Disability.”  Forpurposes of this Agreement, “Disability” shall have the meaning ascribed to itunder the EXPP.

 

(e)                                  “Good Reason.”  Forpurposes of this Agreement, “Good Reason” shall mean, without Executive’sexpress written consent, the occurrence of any of the following circumstancesunless, in the case of subsections (i), (iv), (vi) or (viii) hereof, suchcircumstances are fully corrected prior to the date of termination specified inthe notice of termination given in respect thereof:

 

(i)                                     the assignment to Executive of duties  inconsistent with Executive’s position andstatus as Senior Vice President and General Counsel, or an alteration,  adverse to Executive, in Executive’sposition and status as Senior Vice President and General Counsel or in thenature of Executive’s duties, responsibilities, and authorities or conditionsof Executive’s employment from those relating to Executive position and statusas Senior Vice President and General Counsel (excluding changes in assignmentspermitted under Section 3 and excluding inadvertent actions which are promptlyremedied); except the foregoing shall not constitute Good Reason if occurringin connection with the termination of Executive’s employment for Cause,Disability, Retirement, as a result of Executive’s death, or as a result ofaction by or with the consent of Executive; for purposes of this Section8(e)(i), references to the Company (and the Board and stockholders of theCompany) refer to the ultimate parent company (and its board and stockholders)succeeding the Company following an acquisition in which the corporateexistence of the Company continues, in accordance with Section 12(b);

 

(ii)                                  (A) a reduction by the Company in Executive’sBase Salary, (B) the setting of Executive’s annual target incentive opportunityor payment of earned annual incentive in amounts less than specified under orotherwise not in conformity with Section 4 hereof, (C) a change in compensationor benefits not in conformity with Section 5, or (D) a reduction, after aChange in Control in perquisites from the level of such perquisites as ineffect immediately prior to the Change in Control or as the same may have beenincreased from time to time after the Change in Control except foracross-the-board perquisite reductions similarly affecting all seniorexecutives of the Company and all senior executives of any Person in control ofthe Company;

 

(iii)                               the relocation of the principal place ofExecutive’s employment not in conformity with Section 3(b) hereof; for thispurpose, required travel on the Company’s business will not constitute arelocation so long as the extent of such travel is substantially consistentwith Executive’s customary business travel obligations in periods prior to theEffective Date;

 

19

----

 

(iv)                              the failure by the Company to pay toExecutive any portion of Executive’s compensation or to pay to Executive anyportion of an installment of deferred compensation under any deferredcompensation program of the Company within seven days of the date suchcompensation is due;

 

(v)                                 the failure by the Company to continue ineffect any material compensation or benefit plan in which Executiveparticipated immediately prior to a Change in Control, unless an equitablearrangement (embodied in an ongoing substitute or alternative plan) has beenmade with respect to such plan, or the failure by the Company to continueExecutive’s participation therein (or in such substitute or alternative plan)on a basis not materially less favorable, both in terms of the amounts ofcompensation or benefits provided and the level of Executive’s participationrelative to other participants, as existed at the time of the Change inControl;

 

(vi)                              the failure of the Company to obtain asatisfactory agreement from any successor to the Company to fully assume theCompany’s obligations and to perform under this Agreement, as contemplated inSection 12(b) hereof, in a form reasonably acceptable to Executive;

 

(vii)                           any election by the Company not to extend theTerm of this Agreement at the next possible extension date under Section 2hereof, unless Executive will have attained age 65 at or before such extensiondate; or

 

(viii)                        any other failure by the Company to performany material obligation under, or breach by the Company of any materialprovision of, this Agreement;

 

provided, however, that aforfeiture under Section 10(f) or (g) shall not constitute “Good Reason.”

 

(f)                                    “PotentialChange in Control”  For purposesof 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, theconsummation of which would result in the occurrence of a Change in Control;

 

(ii)                                  any Person (including the Company) publiclyannounces an intention to take or to consider taking actions which ifconsummated would constitute a Change in Control; or

 

(iii)                               the Board adopts a resolution to the effectthat, for purposes of this Agreement, a Potential Change in Control has occurred.

 

9.                                       **Rabbi Trust Obligation Upon Potential Change inControl; Excise Tax-Related Provisions****.**

 

(a)                                  Rabbi Trust Funded Upon Potential Change in Control. In the event of a Potential Change inControl or Change in Control, the Company shall, not later than 15 daysthereafter, have established one or more rabbi trusts and shall deposit thereincash in an amount sufficient to provide for full payment of all potentialobligations of the Company that would arise assuming consummation of a Changein Control, or has arisen in the case of an actual Change in Control, and asubsequent termination of Executive’s employment under Section 7(e) or (f).Such rabbi trust(s) shall be irrevocable and shall provide that the Company maynot, directly or indirectly, use or recover any assets of the trust(s) untilsuch time as all obligations which potentially could arise hereunder have beensettled and paid in full, subject only to the claims of creditors of theCompany in the event of insolvency or bankruptcy of the Company; provided,however, that if no Change in Control has occurred within two years after suchPotential Change in Control, such rabbi trust(s) shall at the end of suchtwo-year period become revocable and may thereafter be revoked by the Company.

 

(b)                                 Gross-upIf Excise Tax Would Apply.  Inthe event Executive becomes entitled to any amounts or benefits payable inconnection with a Change in Control or other change in control (whether or notsuch amounts are payable pursuant to this Agreement) (the “SeverancePayments”), if any of such Severance Payments are subject to the tax (the“Excise Tax”) imposed by Section 4999 of the Internal Revenue Code (or anysimilar federal, state or local tax that may hereafter be imposed) (the“Code”), the Company shall pay to Executive at the time specified in Section9(b)(iii) hereof an additional amount (the “Gross-Up Payment”) such that thenet amount retained by Executive, after deduction of any Excise Tax on theTotal Payments (as hereinafter defined) and any federal, state

 

20

----

 

and local income tax andExcise Tax upon the payment provided for by Section 9(b)(i), shall be equal tothe Total Payments.

 

(i)                                     For purposes of determining whether any ofthe Severance Payments will be subject to the Excise Tax and the amount of suchExcise Tax:

 

(A)                              any other payments or benefits received or tobe received by Executive in connection with a Change in Control or Executive’stermination of employment (whether pursuant to the terms of this Agreement orany other plan, arrangement or agreement with the Company, any Person whoseactions result in a Change in Control or any Person affiliated with the Companyor such Person) (which, together with the Severance Payments, constitute the“Total Payments”) shall be treated as “parachute payments” within the meaningof Section 280G(b)(2) of the Code, and all “excess parachute payments” withinthe meaning of Section 280G(b)(1) of the Code shall be treated as subject tothe Excise Tax, unless in the opinion of nationally-recognized tax counselselected by Executive such other payments or benefits (in whole or in part) donot constitute parachute payments, or such excess parachute payments (in wholeor in part) represent reasonable compensation for services actually renderedwithin the meaning of Section 280G(b)(4) of the Code in excess of the baseamount within the meaning of Section 280G(b)(3) of the Code, or are otherwisenot subject to the Excise Tax;

 

(B)                                the amount of the Total Payments which shallbe treated as subject to the Excise Tax shall be equal to the lesser of (x) thetotal amount of the Total Payments and (y) the amount of excess parachutepayments within the meaning of Section 280G(b)(1) of the Code (after applyingSection 9(b)(i)(A) hereof); and

 

(C)                                the value of any non-cash benefits or anydeferred payments or benefit shall be determined by a nationally-recognizedaccounting firm selected by Executive in accordance with the principles ofSections 280G(d)(3) and (4) of the Code.

 

(ii)                                  For purposes of determining the amount of theGross-Up Payment, Executive shall be deemed to pay federal income taxes at thehighest marginal rate of federal income taxation in the calendar year in whichthe Gross-Up Payment is to be made and state and local income taxes at thehighest marginal rate of taxation in the state and locality of Executive’sresidence on the Date of Termination, net of the maximum reduction in federalincome 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 theamount taken into account hereunder at the time of termination of Executive’semployment, Executive shall repay to the Company within ten days after the timethat the amount of such reduction in Excise Tax is finally determined theportion of the Gross-Up Payment attributable to such reduction (plus theportion of the Gross-Up Payment attributable to the Excise Tax and federal andstate and local income tax imposed on the Gross-Up Payment being repaid byExecutive if such repayment results in a reduction in Excise Tax and/or federaland state and local income tax deduction) plus interest on the amount of suchrepayment at the rate provided in Section 1274(b)(2)(B) of the Code.  In the event that the Excise Tax isdetermined to exceed the amount taken into account hereunder at the time of thetermination of Executive’s employment (including by reason of any payment theexistence or amount of which cannot be determined at the time of the Gross-UpPayment), the Company shall make an additional gross-up payment in respect ofsuch excess within ten days after the time that the amount of such excess isfinally determined.

 

(iii)                               The payments provided for in this Section9(b) shall be made not later than the fifteenth day following the date ofExecutive’s termination of employment; provided, however, that if theamount of such payments cannot be finally determined on or before such day, theCompany shall pay to Executive on such day an estimate, as determined in goodfaith by the Company, of the minimum amount of such payments and shall pay theremainder of such payments (together with interest at the rate provided inSection 1274(b)(2)(B) of the Code) as soon as the amount thereof can bedetermined but in no event later than the thirtieth day after the date ofExecutive’s termination of employment. In the event that the amount of theestimated payments exceeds the amount subsequently determined to have been due,such excess shall constitute a loan by the

 

21

----

 

Company to Executive,payable on the fifteenth day after the demand by the Company (together withinterest 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 publicaccounting firm selected by Executive, and such determination shall be bindingupon Executive and the Company.

 

10.**                                ****Non-Competition and Non-Disclosure; ExecutiveCooperation; Non-Disparagement; Certain Forfeitures****.**

 

(a)                                  Non-Competition. Without the consent in writing of the Board, Executive will not, atany time during the Term and for a period of two years following termination ofExecutive’s employment for any reason, acting alone or in conjunction withothers, directly or indirectly (i) engage (either as owner, investor, partner,stockholder, employer, employee, consultant, advisor, or director) in anybusiness in which he has been directly engaged on behalf of the Company or anyaffiliate, or has supervised as an executive thereof, during the last two yearsprior to such termination, or which was engaged in or planned by the Company oran affiliate at the time of such termination, in any geographic area in whichsuch business was conducted or planned to be conducted; (ii) induce anycustomers of the Company or any of its affiliates with whom Executive has hadcontacts or relationships, directly or indirectly, during and within the scopeof his employment with the Company or any of its affiliates, to curtail orcancel their business with the Company or any such affiliate; (iii) induce, orattempt to influence, any employee of the Company or any of its affiliates toterminate employment; or (iv) solicit, hire or retain as an employee orindependent contractor, or assist any third party in the solicitation, hire, orretention as an employee or independent contractor, any person who during theprevious 12 months was an employee of the Company or any affiliate; provided,however, that the limitation contained in clause (i) above shall not applyif Executive’s employment is terminated as a result of a termination by theCompany without Cause within two years following a Change in Control or isterminated by Executive for Good Reason within two years following a Change inControl, and provided further, that activities engaged in by or on behalf ofthe Company are not restricted by this covenant. The provisions ofsubparagraphs (i), (ii), (iii), and (iv) above are separate and distinctcommitments independent of each of the other subparagraphs.  It is agreed that the ownership of not morethan one percent of the equity securities of any company having securitieslisted on an exchange or regularly traded in the over-the-counter market shallnot, 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 theTerm and thereafter (including following Executive’s termination of employmentfor any reason), disclose, use, transfer, or sell, except in the course ofemployment with or other service to the Company, any proprietary information,secrets, organizational or employee information, or other confidentialinformation belonging or relating to the Company and its affiliates andcustomers so long as such information has not otherwise been disclosed or isnot otherwise in the public domain, except as required by law or pursuant tolegal process. In addition, upon termination of employment for any reason,Executive will return to the Company or its affiliates all documents and othermedia containing information belonging or relating to the Company or itsaffiliates. Executive will promptly disclose in writing to the Company all inventions,discoveries, developments, improvements and innovations (collectively referredto 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 researchactivities of the Company and its affiliates; (ii) are suggested by or resultfrom 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 willbe the Company’s property rather than Executive’s. Should the Company requestit, Executive agrees to sign any document that the Company may reasonablyrequire to establish ownership in any Invention.

 

(c)                                  CooperationWith Regard to Litigation. Executive agrees to cooperate with theCompany, during the Term and thereafter (including following Executive’stermination of employment for any reason), by making herself available totestify on behalf of the Company or any subsidiary or affiliate of the Company,in any action, suit, or proceeding, whether civil, criminal, administrative, orinvestigative, and to assist the Company, or any subsidiary or affiliate of theCompany, in any such action, suit, or proceeding, by providing information andmeeting and consulting with the Board or its representatives or counsel, orrepresentatives or counsel to the Company, or any subsidiary or affiliate ofthe Company, as requested.  The Companyagrees to reimburse the Executive, on an after-tax basis, for all expensesactually incurred in connection with her provision of testimony or assistance.

 

22

----

 

(d)                                 Non-Disparagement. Executive shall not, at any time during the Term and thereafter, makestatements or representations, or otherwise communicate, directly orindirectly, in writing, orally, or otherwise, or take any action which may,directly or indirectly, disparage the Company or any of its subsidiaries oraffiliates or their respective officers, directors, employees, advisors,businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall precludeExecutive from making truthful statements that are required by applicable law,regulation or legal process.

 

(e)                                  Releaseof Employment Claims. Executive agrees, as a condition to receipt of any termination paymentsand benefits provided for in Sections 6 and 7 herein (other than CompensationAccrued at Termination), that he will execute a general release agreement, insubstantially the form set forth in Attachment A to this Agreement, releasingany and all claims arising out of Executive’s employment other than enforcementof this Agreement and rights to indemnification under any agreement, law,Company organizational document or policy, or otherwise.

 

(f)                                    Forfeitureof Outstanding Options.  Theprovisions of Sections 6 and 7 notwithstanding, if Executive willfully andmaterially fails to substantially comply with any restrictive covenant underthis Section 10 or willfully and materially fails to substantially comply withany material obligation under this Agreement, all options to purchase CommonStock granted by the Company and then held by Executive or a transferee ofExecutive shall be immediately forfeited and thereupon such options shall becancelled. Notwithstanding the foregoing, Executive shall not forfeit anyoption unless and until there shall have been delivered to him, within sixmonths after the Board (i) had knowledge of conduct or an event allegedlyconstituting grounds for such forfeiture and (ii) had reason to believe thatsuch conduct or event could be grounds for such forfeiture, a copy of aresolution duly adopted by a majority affirmative vote of the membership of theBoard (excluding Executive) at a meeting of the Board called and held for suchpurpose (after giving Executive reasonable notice specifying the nature of thegrounds for such forfeiture and not less than 30 days to correct the acts oromissions complained of, if correctable, and affording Executive theopportunity, together with his counsel, to be heard before the Board) findingthat, in the good faith opinion of the Board, Executive has engaged andcontinues to engage in conduct set forth in this Section 10(f) whichconstitutes grounds for forfeiture of Executive’s options; provided, however,that if any option is exercised after delivery of such notice and the Boardsubsequently makes the determination described in this sentence, Executiveshall be required to pay to the Company an amount equal to the differencebetween the aggregate value of the shares acquired upon such exercise at thedate of the Board determination and the aggregate exercise price paid byExecutive. Any such forfeiture shall apply to such options notwithstanding anyterm or provision of any option agreement. In addition, options granted toExecutive on or after January 1, 2000, and gains resulting from the exercise ofsuch options, shall be subject to forfeiture in accordance with the Company’sstandard policies relating to such forfeitures and clawbacks, as such policiesare in effect at the time of grant of such options.

 

(g)                                 Forfeiture of Certain Bonuses and Profits.  Ifthe Company is required to prepare an accounting restatement due to thematerial noncompliance of the Company, as a result of misconduct, with anyfinancial reporting requirement under the securities laws, and if Executive,knowingly or through gross negligence, caused or failed to prevent suchmisconduct, Executive shall reimburse the Company for (1) any bonus or otherincentive based or equity-based compensation received by Executive from theCompany during the 12-month period following the first public issuance orfiling with the Securities and Exchange Commission (whichever first occurs) ofthe financial document embodying such financial reporting requirement; and (2)any profits realized from the sale of securities of the Company during that12-month period.

 

(h)                                 Survival.The provisions of this Section 10 shall survive the termination of the Term andany termination or expiration of this Agreement.

 

11.                                 **GoverningLaw; Disputes; Arbitration****.**

 

(a)                                  Governing Law.  Anything in the USERP or the EXPP to thecontrary notwithstanding, this Agreement and the rights and obligations of theCompany and Executive under the USERP and the EXPP are governed by and are tobe construed, administered, and enforced in accordance with the laws of theState of Connecticut, without regard to conflicts of law principles, exceptinsofar as federal laws and regulations and the Delaware General CorporationLaw may be applicable. If under the governing law, any portion of thisAgreement or the USERP or the EXPP is at any time deemed to be in conflict withany applicable statute, rule, regulation, ordinance, or other principle of law,such portion shall be deemed to be modified or altered to the extent necessaryto conform thereto or, if that is not possible, to be omitted therefrom . Theinvalidity of any such portion shall not

 

23

----

 

affect the force, effect,and validity of the remaining portion thereof. If any court determines that anyprovision of Section 10 of this Agreement is unenforceable because of theduration or geographic scope of such provision, it is the parties’ intent thatsuch court shall have the power to modify the duration or geographic scope ofsuch provision, as the case may be, to the extent necessary to render theprovision enforceable and, in its modified form, such provision shall beenforced.

 

(b)                                 Reimbursement of Expenses in Enforcing Rights. Upon submission of invoices, the Company shall promptly pay or reimburseall reasonable costs and expenses (including fees and disbursements of counseland pension experts) incurred by Executive or Executive’s surviving spouse inseeking to interpret this Agreement or enforce rights pursuant to thisAgreement or in any proceeding in connection therewith brought by Executive orExecutive’s surviving spouse, whether or not Executive or Executive’s survivingspouse is ultimately successful in enforcing such rights or in such proceeding;provided, however, that no reimbursement shall be owed with respect to expensesrelating to any unsuccessful assertion of rights or proceeding if and to theextent that such assertion or proceeding was initiated or maintained in bad faith or was frivolous, as determinedby the arbitrators in accordance with Section 11(c) or a court havingjurisdiction over the matter, in which case any amounts previously paid by theCompany shall be promptly repaid.

 

(c)                                  Arbitration.  Anything in the USERP or the EXPP to thecontrary notwithstanding, any dispute or controversy arising under or inconnection with this Agreement or the USERP or the EXPP shall be settledexclusively by arbitration in  Fairfield,CT, by three arbitrators in accordance with the rules of the AmericanArbitration Association in effect at the time of submission to arbitration.Judgment may be entered on the arbitrators’ award in any court havingjurisdiction. For purposes of entering any judgment upon an award rendered bythe arbitrators, the Company and Executive hereby consent to the jurisdictionof any or all of the following courts: (i) the United States District Court forthe District of Connecticut, (ii) any of the courts of the State ofConnecticut, or (iii) any other court having jurisdiction. The Company andExecutive further agree that any service of process or notice requirements inany such proceeding shall be satisfied if the rules of such court relatingthereto have been substantially satisfied. The Company and Executive herebywaive, to the fullest extent permitted by applicable law, any objection whichit may now or hereafter have to such jurisdiction and any defense ofinconvenient forum. The Company and Executive hereby agree that a judgment uponan award rendered by the arbitrators may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law. Subject to Section11(b) of this Agreement, the Company shall bear all costs and expenses arisingin connection with any arbitration proceeding pursuant to this Section 11.Notwithstanding any provision in this Section 11, Executive shall be entitledto seek specific performance of Executive’s right to be paid during thependency of any dispute or controversy arising under or in connection with thisAgreement.

 

(d)                                 Intereston Unpaid Amounts.  Anyamount which has become payable pursuant to the terms of this Agreement or anydecision by arbitrators or judgment by a court of law pursuant to this Section11 but which has not been timely paid shall bear interest at the prime rate ineffect at the time such amount first becomes payable, as quoted by theCompany’s principal bank.

 

12.                                 **Miscellaneous****.**

 

(a)                                  Integration.  This Agreement cancels and supersedes anyand all prior employment agreements and understandings between the partieshereto with respect to the employment of Executive by the Company, any parentor predecessor company, and the Company’s subsidiaries during the Term, exceptfor contracts relating to compensation under executive compensation andemployee benefit plans of the Company and its subsidiaries.  The foregoing notwithstanding, in the eventof any conflict or ambiguity between this Agreement and the Employee ProtectionPlan as applicable to Executive or the Change-in-Control Agreement executed byExecutive and the Company or the EXPP or USERP, the provisions of thisAgreement shall govern except that Executive shall remain entitled to any rightor benefit under the Employee Protection Plan or the Change-in-ControlAgreement or the EXPP or USERP for so long as such Plan or Agreement remains ineffect, if and to the extent that such right or benefit is more favorable toExecutive than a corresponding provision of this Agreement; but no payment orbenefit under the Employee Protection Plan or Change-in-Control Agreement orthe EXPP or USERP shall be made or extended which duplicates any payment orbenefit hereunder.  If and to the extentthat this Agreement may provide enhanced benefits to Executive under the EXPPor USERP which benefits are not explicitly provided for under the EXPP orUSERP, the EXPP or USERP shall be deemed amended by this Agreement (but onlyinsofar as it pertains to Executive). This Agreement constitutes the entire agreement among the parties withrespect to the matters herein provided, and no modification or waiver of anyprovision hereof shall be effective unless in writing and signed by

 

24

----

 

the parties hereto.Executive shall not be entitled to any payment or benefit under this Agreementwhich duplicates a payment or benefit received or receivable by Executive underany prior agreements and understandings or under any benefit or compensationplan 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 toexpressly assume and agree to perform this Agreement in the same manner and tothe same extent that the Company would be required to perform it if no suchsuccession had taken place.

 

As used in this Agreement,“Company” shall mean the Company as hereinbefore defined and any successor toits business and/or assets as aforesaid which assumes and agrees to performthis Agreement by operation of law, or otherwise and, in the case of anacquisition of the Company in which the corporate existence of the Company continues,the ultimate parent company following such acquisition. Subject to theforegoing, the Company may transfer and assign this Agreement and the Company’srights and obligations hereunder. Neither this Agreement nor the rights orobligations hereunder of the parties hereto shall be transferable or assignableby Executive, except in accordance with the laws of descent and distribution oras specified in Section 12(c).

 

(c)                                  Beneficiaries.Executive shall be entitled to designate (and change, to the extent permittedunder applicable law) a beneficiary or beneficiaries to receive anycompensation or benefits provided hereunder following Executive’s death.

 

(d)                                 Notices.Whenever under this Agreement it becomes necessary to give notice, such noticeshall 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 whoshould be advised or notified, by Federal Express or other similar overnightservice or by certified or registered mail, return receipt requested, postageprepaid and addressed to such party at the address set forth below or at suchother address as may be designated by such party by like notice:

 

If to the Company:

 

IMS HEALTH INCORPORATED1499 Post RoadFairfield, CT  06824Attention: Chief Executive Officer

 

If to Executive:

 

Mr. Robert H. Steinfeld

Senior Vice President andGeneral CounselIMS Health Incorporated1499 Post RoadFairfield, CT  06824

 

If the parties by mutualagreement supply each other with telecopier numbers for the purposes ofproviding notice by facsimile, such notice shall also be proper notice underthis Agreement. In the case of Federal Express or other similar overnightservice, such notice or advice shall be effective when sent, and, in the casesof certified or registered mail, shall be effective two days after deposit intothe mails by delivery to the U.S. Post Office.

 

(e)                                  Reformation.The invalidity of any portion of this Agreement shall not be deemed to renderthe remainder of this Agreement invalid.

 

(f)                                    Headings.The headings of this Agreement are for convenience of reference only and do notconstitute a part hereof.

 

(g)                                 No GeneralWaivers. The failure of any party at any time torequire performance by any other party of any provision hereof or to resort toany remedy provided herein or at law or in equity shall in no way affect theright of such party to require such performance or to resort to such remedy atany time thereafter, nor shall the waiver by any party of a breach of any of theprovisions hereof be deemed to be a waiver of any subsequent breach

 

25

----

 

of such provisions. No suchwaiver shall be effective unless in writing and signed by the party againstwhom such waiver is sought to be enforced.

 

(h)                                 NoObligation To Mitigate. Executive shall not be required to seekother employment or otherwise to mitigate Executive’s damages upon anytermination of employment, and any compensation or benefits received from anyother employment of Executive shall not mitigate or reduce the obligations ofthe Company or the rights of Executive hereunder, except that, to the extentExecutive receives from a subsequent employer health or other insurancebenefits 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 Termshall be correspondingly reduced.

 

(i)                                     Offsets;Withholding. The amounts required to be paid by theCompany to Executive pursuant to this Agreement shall not be subject to offsetother than with respect to any amounts that are owed to the Company byExecutive due to his receipt of funds as a result of his fraudulent activity.The foregoing and other provisions of this Agreement notwithstanding, all paymentsto 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 requiredwithholding taxes and other required deductions.

 

(j)                                     Successorsand Assigns. This Agreement shall be binding upon andshall inure to the benefit of Executive, his heirs, executors, administratorsand beneficiaries, and shall be binding upon and inure to the benefit of theCompany and its successors and assigns.

 

(k)                                  Counterparts.This Agreement may be executed in counterparts, each of which shall be deemedto be an original but all of which together will constitute one and the sameinstrument.

 

13.                                 **Indemnification****.**

 

All rights toindemnification by the Company now existing in favor of the Executive asprovided in the Company’s Certificate of Incorporation or By-laws or pursuantto other agreements in effect on or immediately prior to the Effective Dateshall continue in full force and effect from the Effective Date (including allperiods after the expiration of the Term), and the Company shall also advanceexpenses for which indemnification may be ultimately claimed as such expensesare incurred to the fullest extent permitted under applicable law, subject toany requirement that the Executive provide an undertaking to repay suchadvances if it is ultimately determined that the Executive is not entitled toindemnification; provided, however, that any determination required to be madewith respect to whether the Executive’s conduct complies with the standardsrequired to be met as a condition of indemnification or advancement of expensesunder applicable law and the Company’s Certificate of Incorporation, By-laws,or other agreement shall be made by independent counsel mutually acceptable tothe Executive and the Company (except to the extent otherwise required by law).After the date hereof, the Company shall not amend its Certificate ofIncorporation or By-laws or any agreement in any manner which adversely affectsthe rights of the Executive to indemnification thereunder. Any provisioncontained herein notwithstanding, this Agreement shall not limit or reduce anyrights of the Executive to indemnification pursuant to applicable law.  In addition, the Company will maintaindirectors’ and officers’ liability insurance in effect and covering acts andomissions of Executive during the Term and for a period of six years thereafteron terms substantially no less favorable than those in effect on the EffectiveDate.

 

IN WITNESS WHEREOF,Executive has hereunto set his hand and the Company has caused this instrumentto be duly executed as of the date of this Agreement set forth in Section 1hereof.

 
|   | IMS HEALTH INCORPORATED |
|--------|-------------------------|
|   |                    |
|   |                    |
|   | By:                     | /s/ David M. Thomas |
|   |                    | Name: David M. Thomas |
|   |                    | Title: Chairman of the  Board and Chief Executive Officer |
|   |                    |
|   |                    |
|   | /s/ Robert H. Steinfeld |
|   | Robert H. Steinfeld     |

 

26

----