Exhibit 10.1


 





 


Employment Agreement for David R.
Carlucci


 


As Amended and Restated as of January 1,
2005


 

















 


IMS HEALTH INCORPORATED


 


Employment Agreement for David R. Carlucci


 


As Amended and Restated as of January 1,
2005


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Employment

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Term

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Offices
  and Duties

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Generally

  	
  2

  
	
   

  	
  (b) Place
  of Employment

  	
  2

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Salary
  and Annual Incentive Compensation

  	
  2

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Base
  Salary

  	
  3

  
	
   

  	
  (b) Annual
  Incentive Compensation

  	
  3

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Long-Term
  Compensation, Including Restricted Stock, Stock Options, and Benefits,
  Deferred Compensation, and Expense Reimbursement

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Executive
  Compensation Plans

  	
  3

  
	
   

  	
  (b) Employee
  and Executive Benefit Plans

  	
  4

  
	
   

  	
  (c) Acceleration
  of Awards Upon a Change in Control

  	
  6

  
	
   

  	
  (d) Deferral
  of Compensation

  	
  6

  
	
   

  	
  (e) Reimbursement
  of Expenses

  	
  6

  
	
   

  	
  (f) Company
  Registration Obligations

  	
  6

  
	
   

  	
  (g) Limitations
  Under Code Section 409A

  	
  6

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Termination
  Due to Retirement, Death, or Disability

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Retirement

  	
  7

  
	
   

  	
  (b) Death

  	
  7

  
	
   

  	
  (c) Disability

  	
  8

  
	
   

  	
  (d) Other
  Terms of Payment Following Retirement, Death, or Disability

  	
  9

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Termination
  of Employment For Reasons Other Than Retirement, Death, or Disability

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Termination
  by the Company for Cause

  	
  10

  
	
   

  	
  (b) Termination
  by Executive Other Than For Good Reason

  	
  10

  
	
   

  	
  (c) Termination
  by the Company Without Cause Prior to a Change in Control

  	
  11

  
	
   

  	
  (d) Termination
  by Executive for Good Reason Prior to a Change in Control

  	
  13

  
	
   

  	
  (e) Termination
  by the Company Without Cause After a Change in Control

  	
  15

  
	
   

  	
  (f) Termination
  by Executive for Good Reason After a Change in Control

  	
  17

  



 


i

















 


	
   

  	
  (g) Other
  Terms Relating to Certain Terminations of Employment; Reimbursements;  Section 409A
  Exemptions; Delayed Payments Under Section 409A

  	
  19

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Definitions
  Relating to Termination Events

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) “Cause”

  	
  21

  
	
   

  	
  (b) “Change
  in Control”

  	
  21

  
	
   

  	
  (c) “Compensation
  Accrued at Termination”

  	
  22

  
	
   

  	
  (d) “Disability”

  	
  22

  
	
   

  	
  (e) “Good
  Reason”

  	
  22

  
	
   

  	
  (f) “Potential
  Change in Control”

  	
  24

  
	
   

  	
  (g) “Specified
  Employee”

  	
  24

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Rabbi
  Trust Obligation Upon Potential Change in Control; Excise Tax-Related
  Provisions

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Rabbi
  Trust Funded Upon Potential Change in Control

  	
  24

  
	
   

  	
  (b) Gross-up
  If Excise Tax Would Apply

  	
  25

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Non-Competition
  and Non-Disclosure; Executive Cooperation; Non-Disparagement

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Non-Competition

  	
  26

  
	
   

  	
  (b) Non-Disclosure;
  Ownership of Work

  	
  27

  
	
   

  	
  (c) Cooperation
  With Regard to Litigation

  	
  27

  
	
   

  	
  (d) Non-Disparagement

  	
  27

  
	
   

  	
  (e) Release
  of Employment Claims

  	
  27

  
	
   

  	
  (f) Forfeiture
  of Outstanding Options

  	
  28

  
	
   

  	
  (g) Survival

  	
  28

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Governing
  Law; Disputes; Arbitration

  	
  28

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Governing
  Law

  	
  28

  
	
   

  	
  (b) Reimbursement
  of Expenses in Enforcing Rights

  	
  29

  
	
   

  	
  (c) Arbitration

  	
  29

  
	
   

  	
  (d) Interest
  on Unpaid Amounts

  	
  29

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Miscellaneous

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  (a) Integration

  	
  30

  
	
   

  	
  (b) Successors;
  Transferability

  	
  30

  
	
   

  	
  (c) Beneficiaries

  	
  30

  
	
   

  	
  (d) Notices

  	
  30

  
	
   

  	
  (e) Reformation

  	
  31

  
	
   

  	
  (f) Headings

  	
  31

  
	
   

  	
  (g) No
  General Waivers

  	
  31

  
	
   

  	
  (h) No
  Obligation To Mitigate

  	
  31

  
	
   

  	
  (i) Offsets;
  Withholding

  	
  31

  
	
   

  	
  (j) Successors
  and Assigns

  	
  32

  
	
   

  	
  (k) Counterparts

  	
  32

  
	
   

  	
  (l) Due
  Authority and Execution

  	
  32

  
	
   

  	
  (m) Representations
  of Executive

  	
  32

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Indemnification

  	
  32

  



 


Attachment
A


 


ii

















 


IMS HEALTH INCORPORATED


 


Employment Agreement for David R. Carlucci


 


As Amended and Restated as of January 1,
2005


 


THIS EMPLOYMENT AGREEMENT by and between IMS HEALTH INCORPORATED, a
Delaware corporation (the “Company”), and David R. Carlucci (“Executive”),
which was first effective as of October 7, 2002 (the “Effective Date”) and
thereafter amended and restated effective as of December 3, 2002, January 1,
2005 and February 16, 2006 and amended effective January 1, 2005 is
hereby amended and restated in its entirety effective as of January 1,
2005.


 


W I T N E S S E T H


 


WHEREAS, Executive has served as Chief Executive Officer and President
of the Company and Chairman of the Board (from April 1, 2006 onward);


 


WHEREAS, the Company desires to continue to employ Executive in such
capacities and Executive desires to continue such employment on the terms and
conditions herein set forth; and


 


WHEREAS,
the Company and Executive desire to amend and restate the Agreement in its
entirety to comply with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations
thereunder (the “Regulations”) and in certain other respects effective as of January 1,
2005.


 


NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
adequacy of which the Company and Executive each hereby acknowledge, the
Company and Executive hereby agree as follows:


 


1.             Employment.


 


The Company hereby agrees to employ Executive as its Chief Executive
Officer and President, and Executive hereby agrees to accept such employment
during the Term as defined in Section 2 (subject to Section 7(c) and
7(e)) and to serve in such capacities from and after January 1, 2005, upon
the terms and conditions set forth in this Agreement. Prior to January 1,
2005, Executive served as Chief Operating Officer of the Company, which office
and title he relinquished with his consent. Commencing April 1, 2006,
Executive became Chairman of the Board, Chief Executive Officer and President.


 


2.             Term.


 


The term of employment of Executive under this Agreement (the “Term”)
shall be the period commencing on January 1, 2005 and ending on December 31,
2007 and any period of extension thereof in accordance with this Section 2,
except that the Term will end at a date, prior to the end of such period or
extension thereof, specified in Section 6 or 7 in the event of termination
of Executive’s employment. The Term, if not previously ended, shall be extended
automatically without further action by either party by one additional year
(added to the end of the Term) first on December 31, 2007 (extending the
Term to December 31, 2008) and on each succeeding December 31
thereafter, unless either party shall have served written notice in accordance
with Section 12(d) upon the other party on or within 90 days before
the December 31 extension date electing not to extend the Term further as
of that December 31 extension date,


 

















 


in
which case employment shall terminate on that December 31 and the Term
shall end at that date, subject to earlier termination of employment and
earlier termination of the Term in accordance with Section 6 or 7. The
foregoing notwithstanding, in the event there occurs a Potential Change in
Control during the period of 180 days prior to the December 31 on which
the Term will terminate as a result of notice given by Executive or the Company
hereunder, the Term shall be extended automatically at that December 31
until the day after the earlier of (a) the date the Change in Control is
consummated; or (b) the date the Change in Control contemplated by such
Potential Change in Control is fully and finally abandoned. Any termination by
the Company of Executive’s employment without Cause (as defined in Section 8(a))
or any termination by Executive of his employment for Good Reason (as defined
in Section 8(e)(i) through (viii)) following the occurrence of such
Potential Change in Control but prior to the Change in Control contemplated by
such Potential Change in Control shall be deemed a termination by the Company
without Cause within two years after a Change in Control as set forth in Section 7(e) and
a termination by Executive for Good Reason within two years after a Change in
Control as set forth in Section 7(f), respectively, upon the occurrence of
the Change in Control contemplated by such Potential Change in Control and the
compensation and benefits payable pursuant to Sections 7(e) or 7(f), as
the case may be, shall be paid as provided therein as though Executive’s date
of termination had occurred immediately following such Change in Control;
provided, however, that the provisions of Sections 7(c) or 7(d),
respectively, shall continue to apply in the interim and there shall be no
duplication of any compensation or benefits theretofore paid or to be paid to
Executive pursuant to Sections 7(c) or 7(d).


 


3.             Offices and Duties.


 


The provisions of this Section 3 will apply during the Term,
except as otherwise provided in Section 7(c) and 7(e):


 


(a)  Generally.    Executive
shall serve as the Chief Executive Officer and President of the Company, and
from April 1, 2006 onward also as Chairman of the Board of the Company,
and shall be nominated and, if elected, shall serve as a member of the Board of
Directors of the Company (the “Board”) and, for so long as he is serving on the
Board, Executive agrees to serve as a member of any Board committee if the
Board shall elect Executive to such committee. In any and all such capacities,
Executive shall report only to the Board of Directors and, on or before March 31,
2006, the Executive Chairman of the Board of the Company. Executive shall have
and perform such duties, responsibilities, and authorities as are customary for
the chief executive officer and president and chairman of the board (from April 1,
2006 onward) of a publicly held corporation of the size, type, and nature of
the Company as they may exist from time to time and consistent with such
position and status. Executive shall devote his full business time and
attention, and his best efforts, abilities, experience, and talent, to the
positions of Chief Executive Officer, President and Chairman of the Board (from
April 1, 2006 onward) and for the businesses of the Company without
commitment to other business endeavors, except that Executive (i) may make
personal investments which are not in conflict with his duties to the Company
and manage personal and family financial and legal affairs, (ii) may serve
as a member of the board of directors of such companies as he is serving on as
of January 1, 2005, (iii) undertake public speaking engagements, and (iv) serve
as a director of (or similar position with) any other business or an
educational, charitable, community, civic, religious, or similar type of
organization, with the approval of the Board, so long as such activities (i.e.,
those listed in clauses (i) through (iv)) do not preclude or render
unlawful Executive’s employment or service to the Company or otherwise
materially inhibit the performance of Executive’s duties under this Agreement
or impair the business of the Company or its subsidiaries.


 


(b)  Place of Employment.    Executive’s
principal place of employment shall be at the Company’s principal executive
offices in Fairfield County, Connecticut.


 


4.             Salary and Annual Incentive
Compensation.


 


As partial compensation for the services to be rendered hereunder by
Executive, the Company agrees to pay to Executive during the Term the
compensation set forth in this Section 4.


 


2

















 


(a)  Base Salary.    The
Company will pay to Executive during the Term a base salary at the annual rate
of $825,000, payable commencing at April 1, 2006 in accordance with the
Company’s usual payroll practices with respect to senior executives (except to
the extent deferred under Section 5(d)). Executive’s annual base salary
shall be reviewed by the Human Resources Committee of the Board (the
Compensation and Benefits Committee before January 1, 2007) (the “Committee”)
as of April 1 of each year of the Term, beginning in 2006, and may be
increased above, but may not be reduced below, the then-current rate of such
base salary. For purposes of this Agreement, “Base Salary” means Executive’s
then-current base salary.


 


(b)  Annual Incentive
Compensation.    The Company will pay to Executive
during the Term annual incentive compensation which shall offer to Executive an
opportunity to earn additional compensation based upon performance in amounts
determined by the Committee in accordance with the applicable plan and
consistent with past practices of the Company; provided, however, that the
annual target incentive opportunity shall be not less than the greater of 100%
of Base Salary or the annual target incentive opportunity for the prior year
for achievement of target level performance, with the nature of the performance
and the levels of performance triggering payments of such annual target
incentive compensation for each year to be established after consultation with
Executive and communicated to Executive during the first quarter of such year
by the Committee. In addition, the Committee (or the Board) may determine, in
its discretion, to increase Executive’s annual target incentive opportunity or
provide an additional annual incentive opportunity, in excess of the annual
target incentive opportunity, payable for performance in excess of or in
addition to the performance required for payment of the annual target incentive
amount. Any annual incentive compensation payable to Executive shall be paid in
accordance with the applicable plan (except to the extent deferred under Section 5(d)).


 


5.             Long-Term Compensation,
Including Restricted Stock, Stock Options, Benefits, Deferred Compensation, and
Expense Reimbursement.


 


(a)  Executive
Compensation Plans.    Executive shall be
entitled during the Term to participate, without discrimination or duplication,
in all executive compensation plans and programs intended for general
participation by senior executives of the Company, as presently in effect or as
they may be modified or added to by the Company from time to time, subject to
the eligibility and other requirements of such plans and programs and subject
to the limitation specified in Section 5(a)(iv) below; provided that
for purposes of eligibility and benefit participation levels under any such
programs hereafter adopted that are not tax-qualified or otherwise subject to
nondiscrimination requirements under the Code, Executive shall be given full
service credit for service with IBM Corporation (“Past Service Credit”) and,
with respect to existing programs, Executive will be entitled to Past Service
Credit as provided in Section 5(b).


 


In furtherance of the foregoing:


 


(i)            Executive will continue to be eligible for
awards of Restricted Stock Units (“PERS”) under the Performance-Based
Restricted Stock Program (the “PBRSP”) which match the amount of annual
incentive compensation earned under Section 4(b); provided, however, that
the Company may replace the PBRSP with a different long-term incentive program
providing an incentive opportunity determined by the Committee to be reasonably
comparable to that under the PBRSP.


 


(ii)           The Company shall grant Executive, as of January 1, 2005, 38,000
Restricted Stock Units (“RSUs”) pursuant to and subject to the terms of the
Company’s Amended and Restated 1998 Stock Incentive Plan (“1998 Plan”) (the “Promotion
RSU Grant”). The Promotion RSU Grant shall vest as to one-third of the RSUs on
each of the first three anniversaries of the date of grant (subject to
accelerated vesting in accordance with other provisions of this Agreement).
Other terms of the RSUs shall be governed by the 1998 Plan and the agreement
under the 1998 Plan setting forth the terms of the RSUs.


 


3

















 


(iii)          The Company shall grant to Executive as of January 1, 2005 stock
options (the “Promotion Options”) to acquire 115,000 common shares of the
Company, par value $.01 per share (the “Company Common Stock”). The Promotion
Options shall be granted under the 1998 Plan, shall have an exercise price per
share equal to the Fair Market Value (as defined in the 1998 Plan) of the
Company Common Stock on the date of grant, shall vest and become fully
exercisable as to one-third of the underlying shares on each of the first three
anniversaries of the date of grant (subject to accelerated vesting in
accordance with other provisions of this Agreement) and shall provide for an
exercise period equal to (x) the remaining option term of ten years from
date of grant for so long as Executive remains employed, (y) upon Executive’s
termination of employment by the Company without Cause or by Executive for Good
Reason, the shorter of the remaining option term or three years from date of
termination, and (z), upon other terminations of Executive’s employment, in
accordance with the terms of this Agreement and otherwise in accordance with
the customary terms of options under the 1998 Plan.


 


(iv)          Other provisions of this Section 5 notwithstanding, Executive
agrees that no stock options (or any long-term equity award that replaces options)
will be granted to Executive for the 2005 award cycle.


 


(b)  Employee and
Executive Benefit Plans.    Executive shall be
entitled during the Term to participate, without discrimination or duplication,
in all employee and executive benefit plans and programs of the Company, as
presently in effect or as they may be modified or added to by the Company from
time to time, to the extent such plans are available to other senior executives
or employees of the Company, subject to the eligibility and other requirements
of such plans and programs, including without limitation plans providing
pensions, supplemental pensions, supplemental and other retirement benefits,
medical insurance, life insurance, disability insurance, and accidental death
or dismemberment insurance, as well as savings, profit-sharing, and stock
ownership plans, provided that such benefit plans and programs, in the
aggregate, shall provide Executive with benefits and compensation substantially
no less favorable than those provided by the Company to Executive under such
plans and programs as in effect on the Effective Date. Additionally, Executive
shall be eligible to participate in and receive benefits under the Company’s
Employee Protection Plan, and Executive shall be eligible to receive or
participate in perquisites under policies implemented by the Board and the
Committee.


 


In furtherance of and not in limitation of the foregoing, during the
Term:


 


(i)            Executive will participate as Chief Executive
Officer and President and Chairman of the Board (from April 1, 2006
onward) in all executive and employee vacation and time-off programs; provided
that Executive shall be entitled to a minimum of 25 vacation days annually; and


 


(ii)           Executive will be entitled to retirement benefits substantially in
accordance with the IMS Health Incorporated Supplemental Executive Retirement
Plan (the “SERP”), as in effect on the Effective Date; provided, however, that,
the provisions of the SERP notwithstanding, (A) for vesting purposes under
the SERP (except for the Vested Special Benefit specified below, Executive
shall be credited with 26 years of “Service,” based on his prior employment
with IBM Corporation; (B) in place of the annual benefit formula in Section 3.1(b)(i) and
3.2(b)(i) of the SERP, Executive’s Retirement Benefit or Deferred Vested
Benefit shall be calculated as “8% of his Average Final Compensation multiplied
by the number of his years of Service not in excess of five years, plus 1.675%
of such Average Final Compensation plus the Vested Special Benefit (defined
below) multiplied by the number of his years of Service (including fractional
portions thereof) over five through the date on
which the aggregate Retirement Benefit or Deferred Vested Benefit equals 60%
(60% represents the maximum authorized level of this Benefit)”; (C), 


 


4

















 


in addition to the offsets
specified in subsections (ii) and (iii) of Section 3.1(b) and
3.2(b) of the SERP, the Retirement Benefit or Deferred Vested Benefit
payable under the SERP shall be reduced by an annual life annuity benefit of
$96,327.24; and (D), solely with respect to Executive, Section 3.1(b) and
3.2(b) of the SERP are modified to include the following: “The ‘Vested
Special Benefit’ will be a percentage of Average Final Compensation accruing at
the rate of 1.825% for each of Executive’s years of service in excess of five
(the ‘Special Benefit’), subject to a vesting requirement under which one-sixth
of the aggregate then accrued Special Benefit will be vested and constitute the
Vested Special Benefit on and after December 16, 2008, two-sixths of the
then accrued Special Benefit (including the previously vested portion) will be
vested and constitute the Vested Special Benefit on and after December 16,
2009, and a similar calculation will be made as of December 16 of each of
the years from 2010 through 2013 (three-sixths, four-sixths, five-sixths and
100%, respectively) if and to the extent Executive has remained employed
through the applicable vesting date, provided that such vesting will accelerate
in the event of a termination of employment of Executive governed by Section 6(b) or
(c) or Section 7(c), (d), (e) or (f) of his Employment
Agreement (but no accelerated vesting will apply upon a Retirement under Section 6(a),
termination not for Cause under Section 7(a), or termination by Executive
other than for Good Reason under Section 7(b) of the Employment
Agreement), and provided further that, at any given date between two vesting
dates, accruals under this clause (D) since the earlier vesting date will
be included in calculating the Vested Special Benefit as of the given date.”  Other provisions of this Agreement
notwithstanding, acceleration of vesting of the Vested Special Benefit shall be
governed solely by clause (D) above.


 


Any provision to the contrary contained in
this Agreement notwithstanding, unless Executive is terminated by the Company
for “Cause” (as defined in Section 8(a)), the following benefits shall be
made available to Executive after the Term:


 


If Executive
is eligible upon termination of employment for retiree coverage under the
Company’s Health Plan (the “Health Plan”), Executive shall receive cash
payments equal on an after-tax basis to the cost for retiree coverage under the
Health Plan for Executive, his spouse and eligible dependents, with such
payments to be made by the Company to Executive on a monthly basis for so long
as he shall be eligible for retiree coverage under the Health Plan and in
accordance with Section 7(g) of this Agreement. If or when Executive
is not eligible for retiree coverage under the Health Plan (and eligibility for
COBRA continuation coverage only shall not be considered eligibility for
retiree coverage under the Health Plan under this Agreement), Executive shall
instead receive cash payments equal on an after-tax basis to the value of the
retiree coverage that Executive would have received under the Health Plan had
Executive, his spouse and eligible dependents qualified for full retiree
coverage under the Health Plan, with such payments to be made by the Company to
Executive on a monthly basis for life and in accordance with Section 7(g) of
this Agreement (it being understood that the Company payments to Executive
attributable to this retiree coverage will be equal on an after-tax basis to
the full monthly premium cost to Executive to purchase such coverage
independently, and shall not be limited to the value of the Company
contribution, if any, to the cost of retiree coverage under the Health Plan,
but shall not exceed the highest risk premium charged by a carrier having an
investment grade or better credit rating). If Executive is eligible upon
termination of employment for COBRA continuation coverage under the Health Plan
and elects such coverage, Executive shall receive cash payments equal on an
after-tax basis to the full monthly premium cost to Executive to purchase such
COBRA continuation coverage for Executive, his spouse and eligible dependents,
with such payments to be made by the Company to Executive on a monthly basis
for the duration of Executive’s COBRA continuation period and in accordance
with Section 7(g) of this Agreement, which payments shall be made in
lieu of any payments provided hereinabove that would otherwise be made during
the COBRA continuation period so that there is no duplication of payments
during the COBRA continuation period.


 


5

















 


(c)  Acceleration of
Awards Upon a Change in Control.    In the event
of a Change in Control (as defined in Section 8(b)), all outstanding stock
options, restricted stock units, stock appreciation rights, restricted stock,
and other equity-based awards then held by Executive shall become vested, and
in the case of options and stock appreciation rights, exercisable.  In the event that any such vested
equity-based award that is subject to Section 409A of the Code cannot be
paid to Executive upon such Change in Control because such Change in Control
does not qualify as a change in control within the meaning provided by Section 1.409A-3(i)(5) of
the Regulations, Executive shall have the right to elect to denominate such
award in cash both at the time of the Change in Control (as defined in Section 8(b) of
this Agreement) and again upon termination of employment following the Change
in Control.  If Executive elects to
denominate such award in cash, the Company will adjust the cash payment to
reflect the deferred payment date by multiplying the payment by the product of
the six-month CMT Treasury Bill annualized yield rate as published by the U.S.
Treasury for the date on which the award was denominated in cash (or the most
appropriate surrogate for such rate if such rate is not available) multiplied
by a fraction, the numerator of which is the number of days from and including the
date on which the award was denominated in cash until and including the date of
payment of such award to Executive and the denominator of which is 365 and pay
such adjusted amount.


 


(d)  Deferral of
Compensation.    If the Company has in effect or
adopts any deferral program or arrangement permitting executives to elect to
defer any compensation, Executive will be eligible to participate in such
program on terms no less favorable than the terms of participation of any other
senior executive officer of the Company. Any plan or program of the Company
which provides benefits based on the level of salary, annual incentive, or
other compensation of Executive shall, in determining Executive’s benefits,
take into account the amount of salary, annual incentive, or other compensation
prior to any reduction for voluntary contributions made by Executive under any
deferral or similar contributory plan or program of the Company, but shall not
treat any payout or settlement under such a deferral or similar contributory plan
or program to be additional salary, annual incentive, or other compensation for
purposes of determining such benefits, unless otherwise expressly provided
under such plan or program.


 


(e)  Reimbursement of
Expenses.   The Company will reimburse Executive for
all reasonable business expenses and disbursements incurred by Executive in the
performance of Executive’s duties during the Term in accordance with the
Company’s reimbursement policies as in effect from time to time and the
provisions of Section 7(g) of this Agreement.  If Executive becomes subject to Federal,
state or local income tax on any such reimbursement, such taxable reimbursement
shall be made on a fully grossed-up and after-tax basis so that Executive is
held economically harmless.


 


(f)  Company Registration
Obligations.    The Company will use its best
efforts to file with the Securities and Exchange Commission and thereafter
maintain the effectiveness of one or more registration statements registering
under the Securities Act of 1933, as amended (the “1933 Act”), the offer and
sale of shares by the Company to Executive pursuant to stock options or other
equity-based awards granted to Executive under Company plans or otherwise or,
if shares are acquired by Executive in a transaction not involving an offer or
sale to Executive but resulting in the acquired shares being “restricted
securities” for purposes of the 1933 Act, registering the reoffer and resale of
such shares by Executive.


 


(g) 
Limitations Under Code Section 409A.   Anything in this Section 5 to the contrary notwithstanding, with
respect to any payment otherwise required hereunder, in the event of any delay
in the payment date as a result of Section 7(g) of this Agreement
(relating to the six-month delay in payment of certain benefits to Specified
Employees as required by Section 409A of the Code), the Company will
adjust the payment to reflect the deferred payment date by multiplying the
payment by the product of the six-month CMT Treasury Bill annualized yield rate
as published by the U.S. Treasury for the date on which such payment would have
been made but for the delay (or the most appropriate surrogate for such rate if
such rate is not available) multiplied by a fraction, the numerator of which is
the number of days by which such payment was delayed and the denominator of
which is 365. The Company will pay the adjusted payment at the beginning of the
seventh month following Executive’s termination of employment.  


 


6

















 


Notwithstanding
the foregoing, if calculation of the amounts payable by such payment date is
not administratively practicable due to events beyond the control of Executive
(or Executive’s beneficiary or estate) and for reasons that are commercially
reasonable, payment will be made as soon as administratively practicable in
compliance with Section 409A of the Code and the Regulations. In the event
of Executive’s death during such six-month period, payment will be made in the
payroll period next following the payroll period in which Executive’s death
occurs.


 


6.             Termination Due to
Retirement, Death, or Disability.


 


(a)  Retirement.    Executive
may elect to terminate employment hereunder by retirement at or after age 60 or
at such earlier age as may be approved by the Board (in either case, “Retirement”).
At the time Executive’s employment terminates due to Retirement, the Term will
terminate, all obligations of the Company and Executive under Sections 1
through 5 of this Agreement will immediately cease except for obligations which
expressly continue after termination of employment due to Retirement, and the
Company will pay Executive at the time specified in Section 6(d), and
Executive will be entitled to receive, the following:


 


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


 


(ii)           In lieu of any annual incentive compensation under Section 4(b) for
the year in which Executive’s employment terminated, a lump sum amount equal to
annual incentive compensation that would have become payable in cash to
Executive (i.e., excluding the portion payable in PERS or in other non-cash
awards) for that year if his employment had not terminated, based on
performance actually achieved in that year (determined by the Committee
following completion of the performance year and paid at the time specified in
the applicable plan), multiplied by a fraction the numerator of which is the
number of days Executive was employed in the year of termination and the
denominator of which is the total number of days in the year of termination;


 


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


 


(iv)          All restricted stock and deferred stock awards, including outstanding
PERS awards, all other long-term incentive awards, and all deferral
arrangements under Section 5(d), shall be governed by the plans and
programs under which the awards were granted or governing the deferral, and all
rights under the SERP and any other benefit plan shall be governed by such plan,
as modified by this Agreement.


 


(b)  Death.    In
the event of Executive’s death which results in the termination of Executive’s
employment, the Term will terminate, all obligations of the Company and
Executive under Sections 1 through 5 of this Agreement will immediately cease
except for obligations which expressly continue after death, and the Company
will pay Executive’s beneficiary or estate at the time specified in Section 6(d),
and Executive’s beneficiary or estate will be entitled to receive, the following:


 


(i)            Executive’s Compensation Accrued at
Termination;


 


(ii)           In lieu of any annual incentive compensation
under Section 4(b) for the year in which Executive’s death occurred,
a lump sum amount equal to the annual incentive compensation that would have
become payable in cash to Executive (i.e., excluding the portion payable in
PERS or in other non-cash awards) for that year if his employment had 


 


7
















 


not terminated, based on
performance actually achieved in that year (determined by the Committee
following completion of the performance year and paid at the time specified in
the applicable plan), multiplied by a fraction the numerator of which is the number
of days Executive was employed in the year of his death and the denominator of
which is the total number of days in the year of death;


 


(iii)          The vesting and exercisability of stock options and stock appreciation
rights held by Executive at death and all other terms of such options and stock
appreciation rights shall be governed by the plans and programs and the
agreements and other documents pursuant to which such options and stock
appreciation rights were granted; and


 


(iv)          All restricted stock and deferred stock
awards, including outstanding PERS awards, all other long-term incentive
awards, and all deferral arrangements under Section 5(d), shall be
governed by the plans and programs under which the awards were granted or
governing the deferral, and all rights under the SERP and any other benefit
plan shall be governed by such plan, as modified by this Agreement.


 


(c)  Disability.    The
Company may terminate the employment of Executive hereunder due to the
Disability (as defined in Section 8(d)) of Executive. Upon termination of
employment, the Term will terminate, all obligations of the Company and
Executive under Sections 1 through 5 of this Agreement will immediately cease
except for obligations which expressly continue after termination of employment
due to Disability, and the Company will pay Executive at the time specified in Section 6(d),
and Executive will be entitled to receive, the following:


 


(i)            Executive’s Compensation Accrued at
Termination;


 


(ii)           In lieu of any annual incentive compensation
under Section 4(b) for the year in which Executive’s employment
terminated, a lump sum amount equal to the annual incentive compensation that
would have become payable in cash to Executive (i.e., excluding the portion
payable in PERS or in other non-cash awards) for that year if his employment
had not terminated, based on performance actually achieved in that year
(determined by the Committee following completion of the performance year and
paid at the time specified in the applicable plan), multiplied by a fraction
the numerator of which is the number of days Executive was employed in the year
of termination and the denominator of which is the total number of days in the
year of termination;


 


(iii)          The vesting and exercisability of stock
options and stock appreciation rights held by Executive at termination and all
other terms of such options and stock appreciation rights shall be governed by
the plans and programs and the agreements and other documents pursuant to which
such options and stock appreciation rights were granted, as modified by this
Agreement;


 


(iv)          The performance period under any long-term
incentive plan pursuant to which equity or other awards have been granted shall
be treated as satisfied and any performance objectives upon which the earning
of performance-based restricted stock and deferred stock awards and other
long-term incentive awards is conditioned shall be deemed to have been met at
target level at the date of termination. PERS for the year of termination shall
be awarded which match the dollar value pro-rata amount of annual incentive
compensation payable pursuant to Section 6(c)(ii) above and such PERS
awards together with all previously granted and outstanding PERS awards,
restricted stock, restricted stock units, deferred stock awards and other
long-term incentive awards (to the extent then or previously earned, or earned
as a result of this Section) shall become fully vested and non-forfeitable at
the date of such termination, and, in other respects, such awards 


 


8

















 


shall be governed by the
plans and programs and the agreements and other documents pursuant to which
such awards were granted;


 


(v)           Disability benefits shall be payable in
accordance with the Company’s plans, programs and policies (including the SERP)
as modified by this Agreement, and all deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral,
provided that, if the Company’s payment obligation pursuant to Section 7(c)(ii) hereof
(the “Section 7(c)(ii) Payment,” determined as though Executive’s
termination of employment had been treated as a termination by the Company
without Cause) would have been greater than the aggregate Disability benefits
due Executive pursuant to this Section 6(c)(v) for the first 24
months following his termination due to Disability, Executive shall be entitled
to a lump sum payment upon Executive’s termination due to Disability equal to
the difference between the Section 7(c)(ii) Payment and the aggregate
Disability benefits due Executive pursuant to this Section 6(c)(v) for
the first 24 months following his termination due to Disability;


 


(vi)          Executive shall continue to participate for
the remainder of his life in those employee and executive benefit plans and
programs under Section 5(b) in which Executive was participating
immediately prior to termination to the extent such plans and programs provide
medical benefits and shall continue to participate until the later of Executive’s
attainment of age 65 and the date participation is generally available to
employees in those employee and executive benefit plans and programs under Section 5(b) in
which Executive was participating immediately prior to termination to the
extent such plans and programs provide disability benefits and shall continue
to participate until age 65 in such plans and programs to the extent they
provide life insurance benefits, provided the terms of all such plans and
programs allow Executive’s continued participation, as if Executive had
continued in employment with the Company during such period.   For so long as Executive shall participate
in the Company plans and programs referred to in this Section 6(c)(vi),
Executive shall receive cash payments equal on an after-tax basis to his cost
for participating in such plans and programs, with such payments to be made by
the Company to Executive on a monthly basis and in accordance with Section 7(g) of
this Agreement.  If or when the terms of
the Company plans and programs referred to in this Section 6(c)(vi) do
not allow Executive’s continued participation, Executive shall instead be paid
cash payments equivalent on an after-tax basis to the value of the additional
benefits described in this Section 6(c)(vi) that Executive would have
received under such plans or programs had Executive continued to be employed
for the remainder of his life in the case of medical benefits and until the
later of age 65 and the date participation is generally available to employees
in the case of plans and programs which provide disability benefits and until
age 65 in the case of plans and programs which provide life insurance benefits,
with such payments to be made by the
Company to Executive on a monthly basis and in accordance with Section 7(g) of this Agreement (it
being understood that the Company payments to Executive attributable to these
benefits will be equal on an after-tax basis to the full monthly premium cost
to Executive to purchase such benefits independently, and shall not be limited
to the value of the Company contribution, if any, to the cost of an employee’s
coverage under any such medical, disability or life benefits plan, but shall
not exceed the highest risk premium charged by a carrier having an investment
grade or better credit rating).
Notwithstanding the foregoing, Executive must continue to satisfy the
conditions set forth in Section 10 in order to continue receiving the
benefits provided under this Section 6(c)(vi).


 


(d)  Other Terms of Payment
Following Retirement, Death, or Disability.   Nothing
in this Section 6 shall limit the benefits payable or provided in the
event Executive’s employment terminates due to Retirement, death, or Disability
under the terms of plans or programs of the Company more favorable to the
Executive (or his beneficiaries) than the benefits payable or provided under
this Section 6 (except in the 


 


9

















 


case
of annual incentives in lieu of which amounts are paid hereunder), including
plans and programs adopted after the date of this Agreement.  Amounts
payable under this Section 6 following Executive’s termination of
employment, other than those expressly payable following determination of
performance for the year of termination for purposes of annual incentive
compensation or otherwise payable on a deferred basis, will be paid in the
payroll period next following the payroll period in which termination of
employment occurs; subject, however, to the provisions of Section 7(g) of
this Agreement relating to the six-month delay in payment of certain benefits
to Specified Employees as required by Section 409A of the Code. Any
payment or reimbursement due within such six-month period shall be delayed to
the end of such six-month period as required by Section 7(g). The Company
will adjust the payment or reimbursement to reflect the deferred payment date
by multiplying the payment by the product of the six-month CMT Treasury Bill
annualized yield rate as published by the U.S. Treasury for the date on which
such payment or reimbursement would have been made but for the delay (or the
most appropriate surrogate for such rate if such rate is not available)
multiplied by a fraction, the numerator of which is the number of days by which
such payment or reimbursement was delayed and the denominator of which is 365.
In the event of a reimbursement that is required by other terms of this
Agreement to be made on an after-tax basis which is subject to the six-month
delay in payment as described in Section 7(g) of this Agreement, the
reimbursement as adjusted in accordance with this Section 6(d) to
reflect the deferred payment date shall be paid to Executive on an after-tax
and fully grossed-up basis so that Executive is held economically harmless. The
Company will pay the adjusted payment or reimbursement at the beginning of the
seventh month following Executive’s termination of employment.  Notwithstanding the foregoing, if calculation
of the amounts payable by such payment date is not administratively practicable
due to events beyond the control of Executive (or Executive’s beneficiary or
estate) and for reasons that are commercially reasonable, payment will be made
as soon as administratively practicable in compliance with Section 409A of
the Code and the Regulations. In the event of Executive’s death during such
six-month period, payment will be made in the payroll period next following the
payroll period in which Executive’s death occurs.


 


7.             Termination of Employment
For Reasons Other Than Retirement, Death, or Disability.


 


(a)  Termination by the
Company for Cause.    The Company may terminate
the employment of Executive hereunder for Cause (as defined in Section 8(a))
at any time. At the time Executive’s employment is terminated for Cause, the
Term will terminate, all obligations of the Company and Executive under
Sections 1 through 5 of this Agreement will immediately cease, and the Company
will pay Executive at the time specified in Section 7(g), and Executive
will be entitled to receive, the following:


 


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


 


(ii)           All stock options, stock appreciation rights,
restricted stock and deferred stock awards, including outstanding PERS awards,
and all other long-term incentive awards will be governed by the terms of the
plans and programs under which the awards were granted, as modified by this
Agreement; and


 


(iii)          All deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral,
and all rights under the SERP and any other benefit plan shall be governed by
such plan, as modified by this Agreement.


 


(b)  Termination by
Executive Other Than For Good Reason.    Executive
may terminate his employment hereunder voluntarily for reasons other than Good
Reason (as defined in Section 8(e)) at any time. An election by Executive
not to extend the Term pursuant to Section 2 hereof shall be deemed to be
a termination of employment by Executive for reasons other than Good Reason at
the date of expiration of the Term, unless a Change in Control (as defined in Section 8(b))
occurs prior to, and there exists Good Reason at, such date of expiration. At
the time Executive’s employment is terminated by Executive other than for Good
Reason the Term will terminate, all obligations of the Company and Executive
under 


 


10

















 


Sections
1 through 5 of this Agreement will immediately cease, and the Company will pay
Executive at the time specified in Section 7(g), and Executive will be
entitled to receive, the following:


 


(i)            Executive’s Compensation Accrued at
Termination;


 


(ii)           All stock options, stock appreciation rights,
restricted stock and deferred stock awards, including outstanding PERS awards,
and all other long-term incentive awards will be governed by the terms of the
plans and programs under which the awards were granted; and


 


(iii)          All deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral,
and all rights under the SERP and any other benefit plan shall be governed by
such plan, as modified by this Agreement.


 


(c)  Termination by the
Company Without Cause Prior to a Change in Control.    The
Company may terminate the employment of Executive hereunder without Cause, if
at the date of termination no Change in Control has occurred or such date of
termination is at least two years after the most recent Change in Control, upon
at least 90 days’ written notice to Executive. The foregoing notwithstanding, the
Company may elect, by written notice to Executive, to terminate Executive’s
positions specified in Sections 1 and 3 and all other obligations of Executive
and the Company under Section 3 at a date earlier than the expiration of
such 90-day period, if so specified by the Company in the written notice,
provided that Executive shall be treated as an employee of the Company (without
any assigned duties) for all other purposes of this Agreement, including for
purposes of Sections 4 and 5, from such specified date until the expiration of
such 90-day period. An election by the Company not to extend the Term pursuant
to Section 2 hereof shall be deemed to be a termination of Executive’s
employment by the Company without Cause at the date of expiration of the Term
and shall be subject to this Section 7(c) if at the date of such
termination no Change in Control has occurred or such date of termination is at
least two years after the most recent Change in Control; provided, however,
that, if Executive has attained age 65 at such date of termination, such
termination shall be deemed a Retirement of Executive. At the time Executive’s
employment is terminated by the Company (i.e., at the expiration of such notice
period), the Term will terminate, all remaining obligations of the Company and
Executive under Sections 1 through 5 of this Agreement will immediately cease
(except as expressly provided below), and the Company will pay Executive at the
time specified in Section 7(g), and Executive will be entitled to receive,
the following:


 


(i)            Executive’s Compensation Accrued at
Termination;


 


(ii)           Cash in an aggregate amount equal to two
times the sum of (A) Executive’s Base Salary under Section 4(a) immediately
prior to termination plus (B) an amount equal to the greater of (x) the
Executive’s annual target incentive compensation potentially payable in cash to
Executive (i.e., excluding the portion payable in PERS or in other non-cash
awards) for the year of termination or (y) the Executive’s annual
incentive compensation that became payable in cash to Executive (i.e.,
excluding the portion payable in PERS or in other non-cash awards) for the
latest year preceding the year of termination based on performance actually
achieved in that latest year (the sum of (A) and (B) being herein
referred to as the “Cash Compensation”) . The amount determined to be payable
under this Section 7(c)(ii) shall be paid in a lump sum;


 


(iii)          In lieu of any annual incentive compensation
under Section 4(b) for the year in which Executive’s employment terminated,
a lump sum amount equal to the annual target incentive compensation potentially
payable in cash to Executive (i.e., excluding the portion payable in PERS or in
other non-cash awards) for the year of termination, multiplied by a fraction
the numerator of which is the number of days Executive was employed in the year
of termination and the denominator of which is the total number of days in the
year of termination;


 


11

















 


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


 


(v)           The performance period under any long-term
incentive plan pursuant to which equity or other awards have been granted shall
be treated as satisfied and any performance objectives upon which the earning
of performance-based restricted stock and deferred stock awards and other
long-term incentive awards is conditioned shall be deemed to have been met at
target level at the date of termination. PERS for the year of termination shall
be awarded which match the dollar value pro-rata amount of annual incentive compensation
payable pursuant to Section 7(c)(iii) above and such PERS awards
together with all previously granted and outstanding PERS awards, restricted
stock, restricted stock units, deferred stock awards and other long-term
incentive awards (to the extent then or previously earned, or earned as a
result of this Section) shall become fully vested and non-forfeitable at the
date of such termination, and, in other respects, such awards shall be governed
by the plans and programs and the agreements and other documents pursuant to
which such awards were granted;


 


(vi)          All deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral and
all rights under the SERP and any other benefit plan shall be governed by such
plan, as modified by this Agreement; and


 


(vii)         For a
period of two years after such termination, Executive shall continue to
participate in those employee and executive benefit plans and programs under Section 5(b) to
the extent such plans and programs provide medical, disability and life
insurance benefits in which Executive was participating immediately prior to
termination, the terms of which allow Executive’s continued participation, as
if Executive had continued in employment with the Company during such period;
provided, however, that such participation shall terminate, or the benefits
under such plans and programs shall be reduced, if and to the extent Executive
becomes covered (or is eligible to become covered) by plans of a subsequent employer
or other entity to which Executive provides services during such period
providing comparable benefits. For so long as Executive shall participate in
the Company plans and programs referred to in this Section 7(c)(vii),
Executive shall receive cash payments equal on an after-tax basis to his cost
for participating in such plans and programs, with such payments to be made by
the Company to Executive on a monthly basis and in accordance with Section 7(g) of
this Agreement.  If or when the terms of
the Company plans and programs referred to in this Section 7(c)(vii) do
not allow Executive’s continued participation, Executive shall instead be paid
cash payments equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(c)(vii) that Executive would
have received under such plans or programs had Executive continued to be
employed during such period, with such payments to be made by the Company to
Executive on a monthly basis during such period and in accordance with Section 7(g) of
this Agreement (it being understood that the Company payments to Executive
attributable to these benefits will be equal on an after-tax basis to the full
monthly premium cost to Executive to purchase such benefits independently, and
shall not be limited to the value of the Company contribution, if any, to the
cost of an employee’s coverage under any such medical, disability or life
benefits plan, but shall not exceed the highest risk premium charged by a
carrier having an investment grade or better credit rating). Notwithstanding
the foregoing, Executive must continue to satisfy 


 


12

















 


the
conditions set forth in Section 10 in order to continue receiving the
benefits provided under this Section 7(c)(vii).  Executive agrees to promptly notify the
Company of any employment or other arrangement by which Executive provides
services during the benefits-continuation period and of the nature and extent
of benefits for which Executive becomes eligible during such period which would
reduce or terminate benefits under this Section 7(c)(vii); and the Company
shall be entitled to recover from Executive any payments and the fair market
value of benefits previously made or provided to Executive hereunder which would
not have been paid under this Section 7(c)(vii) if the Company had
received adequate prior notice as required by this sentence. Notwithstanding
the foregoing, nothing in this Section 7(c)(vii) shall alter any
right Executive may have to participate in any Company medical, disability or
life insurance benefits plan or program that covers former employees of the
Company in accordance with the generally applicable terms of such plan or
program nor shall it alter Executive’s right to health coverage as provided by Section 5(b) of
this Agreement.


 


(d)    Termination
by Executive for Good Reason Prior to a Change in Control.    Executive
may terminate his employment hereunder for Good Reason, prior to a Change in
Control or after the second anniversary of the most recent Change in Control,
upon 90 days’ written notice to the Company; provided, however, that, if the
Company has corrected the basis for such Good Reason within 30 days after
receipt of such notice, Executive may not terminate his employment for Good
Reason with respect to the matters addressed in the written notice, and
therefore Executive’s notice of termination will automatically become null and
void. At the time Executive’s employment is terminated by Executive for Good
Reason (i.e., at the expiration of such notice period), the Term will
terminate, all obligations of the Company and Executive under Sections 1
through 5 of this Agreement will immediately cease (except as expressly
provided below), and the Company will pay Executive at the time specified in Section 7(g),
and Executive will be entitled to receive, the following:


 


(i)            Executive’s Compensation Accrued at
Termination;


 


(ii)           Cash in an aggregate amount equal to two
times the sum of (A) Executive’s Base Salary under Section 4(a) immediately
prior to termination plus (B) an amount equal to the greater of (x) Executive’s
annual target incentive compensation potentially payable in cash to Executive
(i.e., excluding the portion payable in PERS or in other non-cash awards) for
the year of termination or (y) Executive’s annual incentive compensation
that became payable in cash to Executive (i.e., excluding the portion payable
in PERS or in other non-cash awards) for the latest year preceding the year of
termination based on performance actually achieved in that latest year (the sum
of (A) and (B) being herein referred to as the “Cash Compensation”).
The amount determined to be payable under this Section 7(d)(ii) shall
be paid in a lump sum;


 


(iii)          In lieu of any annual incentive compensation
under Section 4(b) for the year in which Executive’s employment
terminated, a lump sum amount equal to Executive’s annual target incentive
compensation potentially payable in cash to Executive (i.e., excluding the
portion payable in PERS or in other non-cash awards) for the year of
termination, multiplied by a fraction the numerator of which is the number of
days Executive was employed in the year of termination and the denominator of
which is the total number of days in the year of termination;


 


(iv)          Stock options and stock appreciation rights
held by Executive at termination, if not then vested and exercisable, will
become fully vested and exercisable at the date of such termination, and, in
other respects (including the period following termination during which such
options and stock appreciation rights may be exercised), such options and stock
appreciation rights shall be governed by the plans and programs and the
agreements 


 


13

















 


and other documents pursuant
to which such options and stock appreciation rights were granted;


 


(v)           The performance period under any long-term
incentive plan pursuant to which equity or other awards have been granted shall
be treated as satisfied and any performance objectives upon which the earning
of performance-based restricted stock and deferred stock awards and other
long-term incentive awards is conditioned shall be deemed to have been met at
target level at the date of termination. 
PERS for the year of termination shall be awarded which match the dollar
value pro-rata amount of annual incentive compensation payable pursuant to Section 7(d)(iii) above
and such PERS awards together with all outstanding PERS awards, restricted
stock, deferred stock awards and other long-term incentive awards (to the
extent then or previously earned, or earned as a result of this Section) shall
become fully vested and non-forfeitable at the date of such termination, and,
in other respects, such awards shall be governed by the plans and programs and
the agreements and other documents pursuant to which such awards were granted;


 


(vi)          All deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral and
all rights under the SERP and any other benefit plan shall be governed by such
plan, as modified by this Agreement; and


 


(vii)         For a
period of two years after such termination, Executive shall continue to
participate in those employee and executive benefit plans and programs under Section 5(b) to
the extent such plans and programs provide medical, disability and life
insurance benefits in which Executive was participating immediately prior to
termination, the terms of which allow Executive’s continued participation, as
if Executive had continued in employment with the Company during such period;
provided, however, that such participation shall terminate, or the benefits
under such plans and programs shall be reduced, if and to the extent Executive
becomes covered (or is eligible to become covered) by plans of a subsequent
employer or other entity to which Executive provides services during such
period providing comparable benefits. For so long as Executive shall
participate in the Company plans and programs referred to in this Section 7(d)(vii),
Executive shall receive cash payments equal on an after-tax basis to his cost
for participating in such plans and programs, with such payments to be made by
the Company to Executive on a monthly basis and in accordance with Section 7(g) of
this Agreement.  If or when the terms of
the Company plans and programs referred to in this Section 7(d)(vii) do
not allow Executive’s continued participation, Executive shall instead be paid
cash payments equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(d)(vii) that Executive would
have received under such plans or programs had Executive continued to be
employed during such period, with such payments to be made by the Company to
Executive on a monthly basis during such period and in accordance with Section 7(g) of
this Agreement (it being understood that the Company payments to Executive
attributable to these benefits will be equal on an after-tax basis to the full
monthly premium cost to Executive to purchase such benefits independently, and
shall not be limited to the value of the Company contribution, if any, to the
cost of an employee’s coverage under any such medical, disability or life
benefits plan, but shall not exceed the highest risk premium charged by a
carrier having an investment grade or better credit rating).Notwithstanding the
foregoing, Executive must continue to satisfy the conditions set forth in Section 10
in order to continue receiving the benefits provided under this Section 7(d)(vii).
Executive agrees to promptly notify the Company of any employment or other
arrangement by which Executive provides services during the
benefits-continuation period and of the nature and extent of benefits for which
Executive becomes eligible during such period which would reduce or terminate
benefits under this Section 7(d)(vii); and the Company shall be entitled
to recover from Executive any 


 


14

















 


payments
and the fair market value of benefits previously made or provided to Executive
hereunder which would not have been paid under this Section 7(d)(vii) if
the Company had received adequate prior notice as required by this
sentence.  Notwithstanding the foregoing,
nothing in this Section 7(d)(vii) shall alter any right Executive may
have to participate in any Company medical, disability or life insurance
benefits plan or program that covers former employees of the Company in
accordance with the generally applicable terms of such plan or program nor
shall it alter Executive’s right to health coverage as provided by Section 5(b) of
this Agreement.


 


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


 


(e)    Termination
by the Company Without Cause After a Change in Control.    The
Company may terminate the employment of Executive hereunder without Cause,
simultaneously with or within two years after a Change in Control, upon at
least 90 days’ written notice to Executive. The foregoing notwithstanding, the
Company may elect, by written notice to Executive, to terminate Executive’s
positions specified in Sections 1 and 3 and all other obligations of Executive
and the Company under Section 3 at a date earlier than the expiration of
such 90-day notice period, if so specified by the Company in the written
notice, provided that Executive shall be treated as an employee of the Company
(without any assigned duties) for all other purposes of this Agreement, including
for purposes of Sections 4 and 5, from such specified date until the expiration
of such 90-day period. An election by the Company not to extend the Term
pursuant to Section 2 hereof shall be deemed to be a termination of
Executive’s employment by the Company without Cause at the date of expiration
of the Term and shall be subject to this Section 7(e) if the date of
such termination coincides with or is within two years after a Change in
Control; provided, however, that, if Executive has attained age 65 at such date
of termination, such termination shall be deemed a Retirement of Executive. At
the time Executive’s employment is terminated by the Company (i.e., at the
expiration of such notice period), the Term will terminate, all remaining
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease (except as expressly provided below), and the
Company will pay Executive at the time specified in Section 7(g), and
Executive will be entitled to receive, the following:


 


(i)            Executive’s Compensation Accrued at
Termination;


 


(ii)           Cash in an aggregate amount equal to three
times the sum of (A) Executive’s Base Salary under Section 4(a) immediately
prior to termination plus (B) an amount equal to the greater of (x) Executive’s
annual target incentive compensation potentially payable in cash to Executive
(i.e., excluding the portion payable in PERS or in other non-cash awards) for
the year of termination or (y) Executive’s annual incentive compensation
that became payable in cash to Executive (i.e., excluding the portion payable
in PERS or in other non-cash awards) for the latest year preceding the year of
termination based on performance actually achieved in that latest year. The
amount determined to be payable under this Section 7(e)(ii) shall be
paid by the Company in a lump sum;


 


(iii)          In lieu of any annual incentive compensation
under Section 4(b) for the year in which Executive’s employment
terminated, a lump sum amount equal to Executive’s annual target incentive
compensation potentially payable in cash to Executive (i.e., excluding the
portion payable in PERS or in other non-cash awards) for the year of
termination, multiplied by a fraction the numerator of which is the number of
days Executive was employed in the year of termination and the denominator of
which is the total number of days in the year of termination;


 


15

















 


(iv)          Stock options and stock appreciation rights
held by Executive at termination, if not then vested and exercisable, will
become fully vested and exercisable at the date of such termination, and any
such options or stock appreciation rights granted on or after the Effective
Date shall remain outstanding and exercisable until the stated expiration date
of the option or stock appreciation right as though Executive’s employment did
not terminate, and, in other respects, such options and stock appreciation
rights shall be governed by the plans and programs and the agreements and other
documents pursuant to which such options and stock appreciation rights were
granted;


 


(v)           The performance period under any long-term
incentive plan pursuant to which equity or other awards have been granted shall
be treated as satisfied and any performance objectives upon which the earning
of performance-based restricted stock and deferred stock awards and other
long-term incentive awards is conditioned shall be deemed to have been met at
target level at the date of termination. 
PERS for the year of termination shall be awarded which match the dollar
value pro-rata amount of annual incentive compensation payable pursuant to Section 7(e)(iii) above
and such PERS awards together with all outstanding PERS awards, restricted
stock, deferred stock awards and other long-term incentive awards (to the
extent then or previously earned, or earned as a result of this Section) shall
become fully vested and non-forfeitable at the date of such termination, and,
in other respects, such awards shall be governed by the plans and programs and
the agreements and other documents pursuant to which such awards were granted;


 


(vi)          All deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral;


 


(vii)         All rights under the SERP and any other benefit plan shall be governed
by such plan, as modified by this Agreement, except that, the provisions of the
SERP notwithstanding, the term “Average Final Compensation” as used in the SERP
shall mean the greater of (A) Average Final Compensation as defined in the
SERP or (B) $1,650,000; and


 


(viii)        For a period of three years after such termination, Executive shall
continue to participate in those employee and executive benefit plans and
programs under Section 5(b) to the extent such plans and programs
provide medical, disability and life insurance benefits in which Executive was
participating immediately prior to termination, the terms of which allow
Executive’s continued participation, as if Executive had continued in
employment with the Company during such period, and on terms no less favorable
than the terms applicable to Executive before the Change in Control; provided,
however, that such participation shall terminate, or the benefits under such
plans and programs shall be reduced, if and to the extent Executive becomes
covered (or is eligible to become covered) by plans of a subsequent employer or
other entity to which Executive provides services during such period providing
comparable benefits. For so long as Executive shall participate in the Company
plans and programs referred to in this Section 7(e)(viii), Executive shall
receive cash payments equal on an after-tax basis to his cost for participating
in such plans and programs, with such payments to be made by the Company to
Executive on a monthly basis and in accordance with Section 7(g) of
this Agreement.  If or when the terms of
the Company plans and programs referred to in this Section 7(e)(viii) do
not allow Executive’s continued participation, Executive shall instead be paid
cash payments equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(e)(viii) that Executive would
have received under such plans or programs had Executive continued to be
employed during such period, with such payments to be made by the Company to
Executive on a monthly basis during such period and in accordance with Section 7(g) of
this Agreement (it being understood that the Company payments to Executive
attributable to these benefits will be 


 


16

















 


equal on an after-tax basis
to the full monthly premium cost to Executive to purchase such benefits
independently, and shall not be limited to the value of the Company
contribution, if any, to the cost of an employee’s coverage under any such
medical, disability or life benefits plan, but shall not exceed the highest
risk premium charged by a carrier having an investment grade or better credit
rating). Notwithstanding the foregoing, Executive must continue to satisfy the
conditions set forth in Section 10 in order to continue receiving the
benefits provided under this Section 7(e)(viii).  Executive agrees to promptly notify the
Company of any employment or other arrangement by which Executive provides
services during the benefits-continuation period and of the nature and extent
of benefits for which Executive becomes eligible during such period which would
reduce or terminate benefits under this Section 7(e)(viii); and the
Company shall be entitled to recover from Executive any payments and the fair
market value of benefits previously made or provided to Executive hereunder
which would not have been paid under this Section 7(e)(viii) if the
Company had received adequate prior notice as required by this sentence.
Notwithstanding the foregoing, nothing in this Section 7(e)(viii) shall
alter any right Executive may have to participate in any Company medical,
disability or life insurance benefits plan or program that covers former
employees of the Company in accordance with the generally applicable terms of
such plan or program nor shall it alter Executive’s right to health coverage as
provided by Section 5(b) of this Agreement.


 


(f)    Termination
by Executive for Good Reason After a Change in Control.    Executive
may terminate his employment hereunder for Good Reason, simultaneously with or
within two years after a Change in Control, upon 90 days’ written notice to the
Company; provided, however, that, if the Company has corrected the basis for
such Good Reason within 30 days after receipt of such notice, Executive may not
terminate his employment for Good Reason, and therefore Executive’s notice of
termination will automatically become null and void. At the time Executive’s
employment is terminated by Executive for Good Reason (i.e., at the expiration
of such notice period), the Term will terminate, all obligations of the Company
and Executive under Sections 1 through 5 of this Agreement will immediately
cease (except as expressly provided below), and the Company will pay Executive
at the time specified in Section 7(g), and Executive will be entitled to
receive, the following:


 


(i)            Executive’s Compensation Accrued at
Termination;


 


(ii)           Cash in an aggregate amount equal to three
times the sum of (A) Executive’s Base Salary under Section 4(a) immediately
prior to termination plus (B) an amount equal to the greater of (x) Executive’s
annual target incentive compensation potentially payable in cash to Executive
(i.e., excluding the portion payable in PERS or in other non-cash awards) for
the year of termination or (y) Executive’s annual incentive compensation
that became payable in cash to Executive (i.e., excluding the portion payable
in PERS or in other non-cash awards) for the latest year preceding the year of
termination based on performance actually achieved in that latest year. The
amount determined to be payable under this Section 7(f)(ii) shall be
paid in a lump sum;


 


(iii)          In lieu of any annual incentive compensation
under Section 4(b) for the year in which Executive’s employment
terminated, a lump sum amount equal to Executive’s annual target incentive
compensation potentially payable in cash to Executive (i.e., excluding the
portion payable in PERS or in other non-cash awards) for the year of
termination, multiplied by a fraction the numerator of which is the number of
days Executive was employed in the year of termination and the denominator of
which is the total number of days in the year of termination;


 


(iv)          Stock options and stock appreciation rights
held by Executive at termination, if not then vested and exercisable, will
become fully vested and exercisable at the date of such 


 


17

















 


termination, and any such
options or stock appreciation rights granted on or after the Effective Date shall
remain outstanding and exercisable until the stated expiration date of the
option or stock appreciation right as though Executive’s employment did not
terminate, and, in other respects, such options and stock appreciation rights
shall be governed by the plans and programs and the agreements and other
documents pursuant to which such options and stock appreciation rights were
granted;


 


(v)           The performance period under any long-term
incentive plan pursuant to which equity or other awards have been granted shall
be treated as satisfied and any performance objectives upon which the earning
of performance-based restricted stock and deferred stock awards and other
long-term incentive awards is conditioned shall be deemed to have been met at
target level at the date of termination. 
PERS for the year of termination shall be awarded which match the dollar
value pro-rata amount of annual incentive compensation payable pursuant to Section 7(f)(iii) above
and such PERS awards together with all outstanding PERS awards, restricted
stock, deferred stock awards and other long-term incentive awards (to the
extent then or previously earned, or earned as a result of this Section) shall
become fully vested and non-forfeitable at the date of such termination, and,
in other respects, such awards shall be governed by the plans and programs and
the agreements and other documents pursuant to which such awards were granted;


 


(vi)          All deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral;


 


(vii)         All rights under the SERP and any other benefit plan shall be governed
by such plan, as modified by this Agreement, except that, the provisions of the
SERP notwithstanding, the term “Average Final Compensation” as used in the SERP
shall mean the greater of (A) Average Final Compensation as defined in the
SERP or (B) $1,650,000; and


 


(viii)        For a period of three years after such termination, Executive shall
continue to participate in those employee and executive benefit plans and
programs under Section 5(b) to the extent such plans and programs
provide medical, disability and life insurance benefits in which Executive was
participating immediately prior to termination, the terms of which allow
Executive’s continued participation, as if Executive had continued in
employment with the Company during such period, and on terms no less favorable
than the terms applicable to Executive before the Change in Control; provided,
however, that such participation shall terminate, or the benefits under such
plans and programs shall be reduced, if and to the extent Executive becomes
covered (or is eligible to become covered) by plans of a subsequent employer or
other entity to which Executive provides services during such period providing
comparable benefits. For so long as Executive shall participate in the Company
plans and programs referred to in this Section 7(f)(viii), Executive shall
receive cash payments equal on an after-tax basis to his cost for participating
in such plans and programs, with such payments to be made by the Company to
Executive on a monthly basis and in accordance with Section 7(g) of
this Agreement.  If or when the terms of
the Company plans and programs referred to in this Section 7(f)(viii) do
not allow Executive’s continued participation, Executive shall instead be paid
cash payments equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(f)(viii) that Executive would
have received under such plans or programs had Executive continued to be
employed during such period, with such payments to be made by the Company to
Executive on a monthly basis during such period and in accordance with Section 7(g) of
this Agreement (it being understood that the Company payments to Executive attributable
to these benefits will be equal on an after-tax basis to the full monthly
premium cost to Executive to purchase such benefits independently, and shall
not be limited to the value of the Company


 


18
















 


contribution, if any, to the cost of an employee’s
coverage under any such medical, disability or life benefits plan, but shall
not exceed the highest risk premium charged by a carrier having an investment
grade or better credit rating). Notwithstanding the foregoing, Executive must
continue to satisfy the conditions set forth in Section 10 in order to
continue receiving the benefits provided under this Section 7(f)(viii).  Executive agrees to promptly notify the
Company of any employment or other arrangement by which Executive provides
services during the benefits-continuation period and of the nature and extent
of benefits for which Executive becomes eligible during such period which would
reduce or terminate benefits under this Section 7(f)(viii); and the
Company shall be entitled to recover from Executive any payments and the fair
market value of benefits previously made or provided to Executive hereunder
which would not have been paid under this Section 7(f)(viii) if the
Company had received adequate prior notice as required by this sentence.
Notwithstanding the foregoing, nothing in this Section 7(f)(viii) shall
alter any right Executive may have to participate in any Company medical,
disability or life insurance benefits plan or program that covers former
employees of the Company in accordance with the generally applicable terms of
such plan or program nor shall it alter Executive’s right to health coverage as
provided by Section 5(b) of this Agreement.


 


If any payment or
benefit under this Section 7(f) is based on Base Salary or other
level of compensation or benefits at the time of Executive’s termination and if
a reduction in such Base Salary or other level of compensation or benefits was
the basis for Executive’s termination for Good Reason or would otherwise
constitute Good Reason, then the Base Salary or other level of compensation in
effect before such reduction shall be used to calculate payments or benefits
under this Section 7(f).


 


(g)        
Other Terms
Relating to Certain Terminations of Employment; Reimbursements; Section 409A
Exemptions; Delayed Payments Under Section 409A.


 


(i) Whether a
termination is deemed to be at or within two years after a Change in Control
for purposes of Sections 7(c), (d), (e), or (f) is determined at the date
of termination, regardless of whether the Change in Control had occurred at the
time a notice of termination was given.  In the event Executive’s
employment terminates for any reason set forth in Section 7(b) through
(f), Executive will be entitled to the benefit of any terms of plans or
agreements applicable to Executive which are more favorable than those
specified in this Section 7 (except in the case of annual incentives in
lieu of which amounts are paid hereunder).


 


(ii) Amounts payable
under this Section 7 following Executive’s termination of employment,
other than those expressly payable on a deferred basis, will be paid in the
payroll period next following the payroll period in which termination of
employment occurs except as otherwise provided in this Section 7.


 


(iii) Any
reimbursements made or in-kind benefits provided under this Agreement shall be
subject to the following conditions:


 


(A) the amount of
expenses eligible for reimbursement or in-kind benefits provided in any one
taxable year of Executive shall not affect the amount of expenses eligible for
reimbursement or in-kind benefits provided in any other taxable year of
Executive;


 


(B) the
reimbursement of any expense shall be made each calendar quarter and not later
than the last day of Executive’s taxable year following Executive’s taxable
year in which the expense was incurred (unless this Agreement specifically
provides for reimbursement by an earlier date);


 


(C) the right to
reimbursement of an expense or payment of an in-kind benefit shall not be
subject to liquidation or exchange for another benefit.


 


19

















 


In addition, with respect
to any reimbursement made under Sections 5(b), 6(c)(vi), 7(c)(vii), 7(d)(vii),
7(e)(viii) and 7(f)(viii) for expenses for medical coverage purchased
by Executive, any such reimbursements made during the period of time Executive
would be entitled (or would, but for such reimbursement, be entitled) to
continuation coverage under the Company Health Plan pursuant to COBRA if
Executive had elected such coverage and paid the applicable premiums shall be
exempt from Section 409A of the Code and the six-month delay in payment
described hereinbelow pursuant to Section 1.409A-1(b)(9)(v)(B) of the
Regulations.


 


(iv) Executive’s
right to reimbursements under this Agreement shall be treated as a right to a
series of separate payments under Section 1.409A-2(b)(2)(iii) of the
Regulations.


 


(v) It is intended
that payments made under this Agreement due to Executive’s termination of employment
which are paid on or before the 15th day of the third month
following the end of Executive’s taxable year in which his termination of
employment occurs shall be exempt from compliance with Section 409A of the
Code pursuant to the exemption for short-term deferrals set forth in Section 1.409A-1(b)(4) of
the Regulations.


 


(vi) Anything
in this Agreement to the contrary notwithstanding, payments to be made under
this Agreement upon termination of Executive’s employment which are subject to Section 409A
of the Code shall be delayed for six months following such termination of
employment if Executive is a Specified Employee as defined in Section 8(g) on
the date of his termination of employment. 
Any payment or reimbursement due within such six-month period shall be
delayed to the end of such six-month period. The Company will adjust the
payment or reimbursement to reflect the deferred payment date by multiplying
the payment or reimbursement by the product of the six-month CMT Treasury Bill
annualized yield rate as published by the U.S. Treasury for the date on which
such payment or reimbursement would have been made but for the delay (or the
most appropriate surrogate for such rate if such rate is not available)
multiplied by a fraction, the numerator of which is the number of days by which
such payment or reimbursement was delayed and the denominator of which is
365.  In the event of a reimbursement
that is required by other terms of this Agreement to be made on an after-tax
basis and which is subject to the six-month delay provided herein, the
reimbursement as adjusted in accordance with this Section 7(g) to
reflect the deferred payment date shall be paid to Executive on an after-tax
and fully grossed-up basis so that Executive is held economically harmless. The
Company will pay the adjusted payment or reimbursement at the beginning of the
seventh month following Executive’s termination of employment. Notwithstanding
the foregoing, if calculation of the amounts payable by any payment date
specified in this Section 7(g) is not administratively practicable
due to events beyond the control of Executive (or Executive’s beneficiary or
estate) and for reasons that are commercially reasonable, payment will be made
as soon as administratively practicable in compliance with Section 409A of
the Code and the Regulations thereunder. 
In the event of Executive’s death during such six-month period, payment
will be made in the payroll period next following the payroll period in which
Executive’s death occurs.


 


(vii) Any payments
to Executive in accordance with Sections 7(c) or 7(d) of this
Agreement following the occurrence of a Potential Change in Control but prior
to the Change in Control contemplated by such Potential Change in Control and
any remaining payments to Executive in accordance with Sections 7(e) or 7(f) of
this Agreement, respectively, following such Change in Control which are made
as a result of the last sentence of Section 2 of this Agreement shall be
deemed a single payment made upon Executive’s termination of employment for
purposes of compliance with the permissible payment rules of Treasury
Regulations Section 1.409A-3, but if such payments shall not qualify as a
single payment made upon Executive’s termination of employment under the
permissible payment rules of Treasury Regulations Section 1.409A-3,
then the payments to be made under Sections 7(e) or 7(f) of this
Agreement shall be made upon the earlier of a change in control of the
Company within the meaning provided by Treasury Regulations Section 1.409A-3(i)(5) or
12 months after Executive’s termination of employment.


 


20

















 


8.             Definitions Relating to
Termination Events.


 


(a)    “Cause”.    For
purposes of this Agreement, “Cause” shall mean Executive’s


 


(i)            willful and continued failure to
substantially perform his duties hereunder (other than any such failure
resulting from incapacity due to physical or mental illness or Disability or
any failure after the issuance of a notice of termination by Executive for Good
Reason) which failure is demonstrably and materially damaging to the financial
condition or reputation of the Company and/or its subsidiaries, and which
failure continues more than 48 hours after a written demand for substantial
performance is delivered to Executive by the Board, which demand specifically
identifies the manner in which the Board believes that Executive has not
substantially performed his duties hereunder and the demonstrable and material
damage caused thereby; or


 


(ii)           the willful engaging by Executive in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise.


 


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


 


(b)    “Change in Control”.    For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred if, during the term of this Agreement:


 


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


 


(ii)           during any period of twenty-four months
(not including any period prior to the effectiveness of this Agreement),
individuals who at the beginning of such period constitute the Board, and any
new director (other than (A) a director nominated by a Person who has
entered into an agreement with the Company to effect a transaction described in
Sections (8)(b)(i), (iii) or (iv) hereof, (B) a director
nominated by any Person (including the Company) who publicly announces an intention
to take or to consider taking actions (including, but not limited to, an actual
or threatened proxy contest) which if consummated would constitute a Change in
Control or (C) a director nominated by any Person who is the Beneficial
Owner, directly or indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company’s securities) whose election
by the Board or nomination for election by the Company’s stockholders was
approved in advance by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved, cease
for any reason to constitute at least a majority thereof;


 


21

















 


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


 


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


 


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


 


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


 


(i)            The unpaid portion of annual base salary
at the rate payable, in accordance with Section 4(a) hereof, at the
date of Executive’s termination of employment, pro rated through such date of
termination, payable in a lump sum at the time specified in Section 6(d) or
Section 7(g), as the case may be;


 


(ii)           All earned and unpaid and/or vested,
nonforfeitable amounts owing or accrued at the date of Executive’s termination
of employment under any compensation and benefit plans, programs, and
arrangements set forth or referred to in Sections 4(b) and 5(a) and 5(b) hereof
(including the guaranteed bonus and any earned and vested annual incentive
compensation and long-term incentive award) in which Executive theretofore
participated, payable in accordance with the terms and conditions of the plans,
programs, and arrangements (and agreements and documents thereunder) pursuant
to which such compensation and benefits were granted or accrued; and


 


(iii)          Reasonable business expenses and
disbursements incurred by Executive prior to Executive’s termination of
employment, to be reimbursed to Executive, as authorized under Section 5(f),
in accordance the Company’s reimbursement policies as in effect at the date of
such termination, payable in a lump sum in accordance with Section 7(g) with
such reimbursements to be made on a fully grossed-up and after-tax basis if
Executive is subject to Federal, state or local income tax on such
reimbursements so that Executive is held economically harmless.


 


(d)    “Disability”.    For
purposes of this Agreement, “Disability” means that Executive has been
determined to be disabled in accordance with the Company’s long-term disability
plan by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months and Executive has received at least three
months of benefits under the Company’s short-term disability and/or the
long-term disability plan.


 


(e)    “Good Reason”.    For
purposes of this Agreement, “Good Reason” shall mean, without Executive’s
express written consent, the occurrence of any of the following circumstances
provided that Executive shall have given notice of such circumstance(s) to
the Company within a period not to exceed 90 days of the initial existence of
such circumstance(s) and the Company shall not have remedied such
circumstance(s) within 30 days after receipt of such notice:


 


22

















 


(i)            the assignment to Executive of duties
materially inconsistent with Executive’s position and status hereunder, or an
alteration, materially adverse to Executive, in the nature of Executive’s
duties, responsibilities, and authorities, Executive’s positions or the
conditions of Executive’s employment from those specified in Section 3 or
otherwise hereunder (other than inadvertent actions which are promptly
remedied); for this purpose, it shall constitute “Good Reason” under this
subsection (e)(i) if (A) Executive shall be required to report
to and take direction from any person or body other than the Board of Directors
and, on or before March 31, 2006, the Executive Chairman of the Board or (B) Executive
shall be removed from the Board, from the office of Chairman of the Board, or
from any Board committee on which Executive has served during the Term, or
there occurs any failure of Executive to be nominated, elected, reappointed or
reelected as a member of the Board, as Chairman of the Board, or as a member of
any Board committee on which he has served during the Term, including a failure
of the Board or stockholders to take such actions (notwithstanding their legal
right to do so); except the
foregoing shall not constitute Good Reason if occurring in connection with the
termination of Executive’s employment for Cause, Disability, Retirement, as a
result of Executive’s death, or as a result of action by or with the consent of
Executive;


 


(ii)           (A) a material reduction by the
Company in Executive’s Base Salary, (B) the setting of Executive’s annual
target incentive opportunity or payment of earned annual incentive in amounts
materially less than specified under or otherwise not in material conformity
with Section 4 hereof, (C) a material change in compensation or
benefits not in material conformity with Section 5, or (D) a material
reduction, after a Change in Control, in perquisites from the level of such
perquisites as in effect immediately prior to the Change in Control or as the
same may have been increased from time to time after the Change in Control
except for across-the-board perquisite reductions similarly affecting all
senior executives of the Company and all senior executives of any Person in
control of the Company;


 


(iii)          the relocation of the principal place of
Executive’s employment not in material conformity with Section 3(b) hereof;
for this purpose, required travel on the Company’s business will not constitute
a relocation so long as the extent of such travel is substantially consistent
with Executive’s customary business travel obligations in periods prior to the
Effective Date;


 


(iv)          the failure by the Company to pay to
Executive any material portion of Executive’s compensation or to pay to
Executive any material portion of an installment of deferred compensation under
any deferred compensation program of the Company within a reasonable time after
such compensation is due;


 


(v)           the failure by the Company to continue in
effect any material compensation or benefit plan in which Executive
participated immediately prior to a Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue
Executive’s participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amounts of
compensation or benefits provided and the level of Executive’s participation
relative to other participants, as existed at the time of the Change in
Control;


 


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


 


23

















 


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


 


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


 


provided, however, that a
forfeiture under Section 10(f) shall not constitute “Good Reason.”  Notwithstanding the foregoing, if Executive
terminates his employment after a Potential Change in Control but prior to the
Change in Control contemplated by such Potential Change in Control, a
determination as to whether Executive will be deemed to have terminated his
employment for Good Reason upon such Change in Control as provided in Section 2
of this Agreement will be made by substituting “Potential Change in Control”
for “Change in Control” each place it appears in Sections 8(e)(ii) and (v) above.


 


(f)    “Potential Change in Control”.    For
purposes of this Agreement, a “Potential Change in Control” shall be deemed to
have occurred if, during the term of this Agreement:


 


(i)            the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;


 


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


 


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


 


(g)     “Specified Employee”.     For purposes of this Agreement, a “Specified
Employee” shall mean an employee of the Company, at a time when any stock of the
Company is publicly traded on an established securities market or otherwise,
who satisfies the requirements for being designated a “key employee” under Section 416(i)(1)(A)(i),
(ii) or (iii) of the Code without regard to Section 416(i)(5) of
the Code at any time during a calendar year, in which case such employee shall
be considered a Specified Employee for the twelve-month period beginning on the
first day of the fourth month immediately following the end of such calendar
year. Notwithstanding the foregoing, all employees who are nonresident aliens
during an entire calendar year are excluded for purposes of determining which
employees meet the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of
the Code without regard to Section 416(i)(5) of the Code for such
calendar year. The term “nonresident alien” as used herein shall have the
meaning set forth in Regulations Section 1.409A-1(j).  In the event of any corporate spinoff or
merger, the determination of which employees meet the requirements of Section 416(i)(1)(A)(i),
(ii) or (iii) of the Code without regard to Section 416(i)(5) of
the Code for any calendar year shall be determined in accordance with
Regulations Section 1.409A-1(i)(6).


 


9.             Rabbi Trust Obligation
Upon Potential Change in Control; Excise Tax-Related Provisions.


 


(a)    Rabbi Trust Funded Upon Potential Change in Control.    In
the event of a Potential Change in Control or Change in Control, the Company
shall, not later than 15 days thereafter, have established one or more rabbi
trusts and shall deposit therein cash in an amount sufficient to provide for
full payment of all potential obligations of the Company that would arise
assuming consummation of a Change in Control, or has arisen in the case of an
actual Change in Control, and a subsequent termination of Executive’s
employment under Section 7(e) or 7(f) ), and potential
obligations under the last sentence of Section 2 of this Agreement.  Such rabbi trust(s) shall be irrevocable
and shall provide that the Company may not, directly or indirectly, use or
recover any assets of the trust(s) until such time as all obligations
which 


 


24

















 


potentially could arise
hereunder have been settled and paid in full, subject only to the claims of
creditors of the Company in the event of insolvency or bankruptcy of the
Company; provided, however, that if no Change in Control has occurred within
two years after such Potential Change in Control, such rabbi trust(s) shall
at the end of such two-year period become revocable and may thereafter be
revoked by the Company.


 


(b)    Gross-up If Excise Tax Would Apply.    In
the event Executive becomes entitled to any amounts or benefits payable in
connection with a Change in Control or other change in ownership or control
(whether or not such amounts are payable pursuant to this Agreement) (the “Change
in Control Payments”), if any of such Change in Control Payments are subject to
the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any
similar federal, state or local tax that may hereafter be imposed), the Company
shall pay to Executive at the time specified in Section 9(b)(iii) hereof
an additional amount (the “Gross-Up Payment”) such that the net amount retained
by Executive, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payments provided for by Section 9(b), shall be equal to the
Total Payments.


 


(i)            For purposes of determining whether any
of the Change in Control Payments will be subject to the Excise Tax and the
amount of such Excise Tax:


 


(A)          any payments or benefits received or to
be received by Executive in connection with a Change in Control or other change
in ownership or control or Executive’s termination of employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person) (which,
together with the Change in Control Payments, constitute the “Total Payments”)
shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of
the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of
the Code shall be treated as subject to the Excise Tax, unless in the opinion
of nationally-recognized tax counsel selected by Executive such other payments
or benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of Section 280G(b)(3) of
the Code, or are otherwise not subject to the Excise Tax;


 


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


 


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


 


(ii)           For purposes of determining the amount of
the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of Executive’s
residence in the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could actually be
obtained from deduction of such state and local taxes by Executive.  In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account and paid
to Executive hereunder, Executive shall file for a refund of such excess Excise
Tax.  Executive shall repay to the
Company the excess Excise Tax amount actually refunded to Executive by the
Internal Revenue Service within ten business days after the later of (A) 


 


25

















 


the date that the
Internal Revenue Service makes a final determination (within the meaning of Section 1313
of the Code) that an overpayment of such Excise Tax was made (and including a
final determination of the amount thereof) and (B) the actual receipt of
the refund check from the Internal Revenue Service for the amount of such
overpayment of Excise Tax by Executive; provided, however, if no refund shall
be due to Executive because such overpayment of the Excise Tax has been applied
to satisfy Executive’s other tax liabilities, Executive shall notify the
Company of such application of the overpayment to Executive’s other tax
liabilities and shall pay to the Company within ten business days after such
application of the overpayment to Executive’s other tax liabilities the amount
of the Excise Tax that would otherwise have been refunded. In the event that
the Excise Tax is determined to exceed the amount taken into account and paid
hereunder, the Company shall make an additional Gross-Up Payment in respect of
such excess within ten business days after the time that the amount of such
excess is determined but in no event later than 30 days after the Change in
Control.  In no event shall any Gross-Up
Payment be made under this Section 9(b) later than the last day of
Executive’s taxable year next following Executive’s taxable year in which
Executive remits the Excise Tax. 
Anything in this Section 9(b) to the contrary notwithstanding,
any Gross-Up Payment to be made hereunder shall be subject to such delay in
payment as may apply under Section 7(g) of this Agreement (including
but not limited to Section 7(g)(vi)) in the event that such payment is
made in connection with Executive’s termination of employment and is subject to
Section 409A of the Code.


 


(iii)          The Gross-Up Payment provided for in this
Section 9(b) shall be made at the same time as any payments giving
rise to an Excise Tax are made; provided, however, that if the amount of
such Gross-Up Payment cannot be finally determined at the same time as the
payments giving rise to an Excise Tax are made, the Company shall pay to
Executive at the time the payments giving rise to an Excise Tax are made an
estimate, as determined in good faith by the Company pursuant to Section 9(b)(iv) hereof,
of the amount of such Gross-Up Payment and shall pay the remainder of such
Gross-Up Payment at the time provided in Section 9(b)(ii) above.  Executive’s right to payments under this Section 9(b) shall
be treated as a right to a series of separate payments under Section 1.409A-2(b)(2)(iii) of
the Regulations.


 


(iv)          All determinations under this Section 9(b) shall
be made by the Company at its expense using a nationally recognized public
accounting firm selected by Executive, and such determination shall be binding
upon Executive and the Company.


 


10.           Non-Competition and
Non-Disclosure; Executive Cooperation; Non-Disparagement.


 


(a)    Non-Competition.    Without
the consent in writing of the Board, Executive will not, at any time during the
Term and for a period of two years following termination of Executive’s
employment for any reason, acting alone or in conjunction with others, directly
or indirectly (i) engage (either as owner, investor, partner, stockholder,
employer, employee, consultant, advisor, or director) in any business in which
he has been directly engaged on behalf of the Company or any affiliate, or has
supervised as an executive thereof, during the last two years prior to such
termination, or which was engaged in or planned by the Company or an affiliate
at the time of such termination, in any geographic area in which such business
was conducted or planned to be conducted; (ii) induce any customers of the
Company or any of its affiliates with whom Executive has had contacts or relationships,
directly or indirectly, during and within the scope of his employment with the
Company or any of its affiliates, to curtail or cancel their business with the
Company or any such affiliate; (iii) induce, or attempt to influence, any
employee of the Company or any of its affiliates to terminate employment; or (iv) solicit,
hire or retain as an employee or independent contractor, or assist any third
party in the solicitation, hire, or retention as an employee or independent
contractor, any person who during the previous 12 months was an employee of the
Company or any 


 


26

















 


affiliate; provided,
however, that the limitation contained in clause (i) above shall not apply
if Executive’s employment is terminated as a result of a termination by the
Company without Cause within two years following a Change in Control or is
terminated by Executive for Good Reason within two years following a Change in
Control; and provided further, that activities engaged in by or on behalf of
the Company are not restricted by this covenant. The provisions of
subparagraphs (i), (ii), (iii), and (iv) above are separate and distinct
commitments independent of each of the other subparagraphs. It is agreed that
the ownership of not more than one percent of the equity securities of any
company having securities listed on an exchange or regularly traded in the
over-the-counter market shall not, of itself, be deemed inconsistent with
clause (i) of this Section 10(a).


 


(b)    Non-Disclosure; Ownership of Work.    Executive
shall not, at any time during the Term and thereafter (including following
Executive’s termination of employment for any reason), disclose, use, transfer,
or sell, except in the course of employment with or other service to the
Company, any proprietary information, secrets, organizational or employee
information, or other confidential information belonging or relating to the
Company and its affiliates and customers so long as such information has not
otherwise been disclosed or is not otherwise in the public domain, except as
required by law or pursuant to legal process. In addition, upon termination of
employment for any reason, Executive will return to the Company or its
affiliates all documents and other media containing information belonging or
relating to the Company or its affiliates. Executive will promptly disclose in
writing to the Company all inventions, discoveries, developments, improvements
and innovations (collectively referred to as “Inventions”) that Executive has
conceived or made during the Term; provided, however, that in this context “Inventions”
are limited to those which (i) relate in any manner to the existing or
contemplated business or research activities of the Company and its affiliates;
(ii) are suggested by or result from Executive’s work at the Company; or (iii) result
from the use of the time, materials or facilities of the Company and its
affiliates. All Inventions will be the Company’s property rather than Executive’s.
Should the Company request it, Executive agrees to sign any document that the
Company may reasonably require to establish ownership in any Invention.


 


(c)    Cooperation With Regard to
Litigation.    Executive agrees to cooperate
with the Company, during the Term and thereafter (including following Executive’s
termination of employment for any reason), by making himself available to
testify on behalf of the Company or any subsidiary or affiliate of the Company,
in any action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, and to assist the Company, or any subsidiary or affiliate of the
Company, in any such action, suit, or proceeding, by providing information and
meeting and consulting with the Board or its representatives or counsel, or
representatives or counsel to the Company, or any subsidiary or affiliate of
the Company, as may be reasonably requested and after taking into account
Executive’s post-termination responsibilities and obligations. The Company
agrees to reimburse Executive, on an after-tax basis each calendar quarter, for
all expenses actually incurred in connection with his provision of testimony or
assistance in accordance with the provisions of Section 7(g) of this
Agreement but not later than the last day of the year in which the expense was
incurred.


 


(d)    Non-Disparagement.    Executive
shall not, at any time during the Term and thereafter make statements or
representations, or otherwise communicate, directly or indirectly, in writing,
orally, or otherwise, or take any action which may, directly or indirectly,
disparage or be damaging to the Company, its subsidiaries or affiliates or
their respective officers, directors, employees, advisors, businesses or
reputations, nor shall Executive’s successor in office make any such statements
or representations regarding Executive. Notwithstanding the foregoing, nothing
in this Agreement shall preclude Executive or his successor from making
truthful statements that are required by applicable law, regulation or legal
process.


 


(e)    Release of Employment Claims.    Executive
agrees, as a condition to receipt of any termination payments and benefits
provided for in Sections 6 and 7 herein (other than Compensation Accrued at
Termination), that he will execute a general release agreement, in substantially
the form set forth in Attachment A to this Agreement, releasing any and all
claims arising out of Executive’s employment other than enforcement of this
Agreement and other than with respect to vested rights or rights


 


27
















 


provided
for under any equity plan, any compensation plan or any benefit plan or
arrangement of the Company or rights to indemnification under any agreement,
law, Company organizational document or policy, or otherwise.  The Company will provide Executive with a
copy of such release simultaneously with or as soon as administratively
practicable following the delivery of the notice of termination provided in
Sections 6 and 7 of this Agreement, but not later than 21 days before (45 days
before if Executive’s termination is part of an exit incentive or other
employment termination program offered to a group or class of employees)
Executive’s termination of employment. 
Executive shall deliver the executed release to the Company eight days
before the date provided in Section 7(g) of this Agreement for the
payment of the termination payments and benefits payable under Sections 6 and 7
of this Agreement.


 


(f)    Forfeiture
of Outstanding Options.    The provisions of
Sections 6 and 7 notwithstanding, if Executive willfully and materially fails
to substantially comply with any restrictive covenant under this Section 10,
all options to purchase Common Stock granted by the Company and then held by
Executive or a transferee of Executive shall be immediately forfeited and
thereupon such options shall be cancelled. Notwithstanding the foregoing,
Executive shall not forfeit any option unless and until there shall have been
delivered to him, within six months after the Board (i) had knowledge of
conduct or an event allegedly constituting grounds for such forfeiture and (ii) had
reason to believe that such conduct or event could be grounds for such
forfeiture, a copy of a resolution duly adopted by a majority affirmative vote
of the membership of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after giving Executive reasonable notice
specifying the nature of the grounds for such forfeiture and not less than 30
days to correct the acts or omissions complained of, if correctable, and affording
Executive the opportunity, together with his counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, Executive has
engaged and continues to engage in conduct set forth in this Section 10(f) which
constitutes grounds for forfeiture of Executive’s options; provided, however,
that if any option is exercised after delivery of such notice and the Board
subsequently makes the determination described in this sentence, Executive
shall be required to pay to the Company an amount equal to the difference
between the aggregate value of the shares acquired upon such exercise at the
date of the Board determination and the aggregate exercise price paid by
Executive. Any such forfeiture shall apply to such options notwithstanding any
term or provision of any option agreement. In addition, options granted to
Executive on or after the Effective Date, and gains resulting from the exercise
of such options, shall be subject to forfeiture in accordance with the Company’s
standard policies relating to such forfeitures and clawbacks, as such policies
are in effect at the time of grant of such options.


 


(g)    Survival.    The
provisions of this Section 10 shall survive the termination of the Term
and any termination or expiration of this Agreement.


 


11.           Governing Law; Disputes;
Arbitration.


 


(a)    Governing
Law.    This Agreement is governed by and is to
be construed, administered, and enforced in accordance with the laws of the
State of Connecticut, without regard to conflicts of law principles, except
insofar as federal laws and regulations and the Delaware General Corporation
Law may be applicable. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to any successor provisions to such
sections. If under the governing law, any portion of this Agreement is at any
time deemed to be in conflict with any applicable statute, rule, regulation,
ordinance, or other principle of law, such portion shall be deemed to be
modified or altered to the extent necessary to conform thereto or, if that is
not possible, to be omitted from this Agreement. The invalidity of any such
portion shall not affect the force, effect, and validity of the remaining
portion hereof. If any court determines that any provision of Section 10
is unenforceable because of the duration or geographic scope of such provision,
it is the parties’ intent that such court shall have the power to modify the
duration or geographic scope of such provision, as the case may be, to the
extent necessary to render the provision enforceable and, in its modified form,
such provision shall be enforced. Anything in this Agreement to the contrary
notwithstanding, the terms of this Agreement shall be interpreted and applied
in a manner consistent with the requirements of Section 409A of the Code
and the Regulations so as not to subject Executive to the payment of any tax
penalty or interest which may be imposed by Section 409A of the Code and
the Company shall have no right to accelerate or


 


28

















 


make
any payment under this Agreement except to the extent such action would not
subject Executive to the payment of any tax penalty or interest under Section 409A
of the Code.  If all or a portion of the
benefits and payments provided under this Agreement constitute taxable income
to Executive for any taxable year that is prior to the taxable year in which
such payments and/or benefits are to be paid to Executive as a result of the
Agreement’s failure to comply with the requirements of Section 409A of the
Code and the Regulations, the applicable payment or benefit shall be paid
immediately to Executive to the extent such payment or benefit is required to
be included in income.  If Executive
becomes subject to any tax penalty or interest under Section 409A of the
Code by reason of this Agreement, the Company shall reimburse Executive on a
fully grossed-up and after-tax basis for any such tax penalty or interest (so
that Executive is held economically harmless) ten business days prior to the
date such tax penalty or interest is due and payable by Executive to the
government.


 


(b)    Reimbursement
of Expenses in Enforcing Rights.    The Company
shall promptly pay or reimburse all reasonable costs and expenses (including
fees and disbursements of counsel and pension experts) incurred by Executive or
Executive’s surviving spouse in seeking to interpret this Agreement or enforce
rights pursuant to this Agreement or in any proceeding in connection therewith
brought by Executive or Executive’s surviving spouse, whether or not Executive
or Executive’s surviving spouse is ultimately successful in enforcing such
rights or in such proceeding; provided, however, that no reimbursement shall be
owed with respect to expenses relating to any unsuccessful assertion of rights
or proceeding if and to the extent that such assertion or proceeding was
initiated or maintained in bad faith or was frivolous, as determined by the
arbitrators in accordance with Section 11(c) or a court having
jurisdiction over the matter.  Any such
payment or reimbursement shall be made on an after-tax basis each calendar
quarter for all costs and expenses actually incurred as provided in this Section 11(b) and
in accordance with the provisions of Section 7(g) of this Agreement,
but not later than the last day of the year in which the expense was incurred.


 


(c)    Arbitration.    Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Fairfield, CT by three arbitrators in
accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association in effect at the time of
submission to arbitration. Judgment may be entered on the arbitrators’ award in
any court having jurisdiction. For purposes of entering any judgment upon an
award rendered by the arbitrators, the Company and Executive hereby consent to
the jurisdiction of any or all of the following courts: (i) the United
States District Court for the District of Connecticut, (ii) any of the
courts of the State of Connecticut, or (iii) any other court having
jurisdiction. The Company and Executive further agree that any service of
process or notice requirements in any such proceeding shall be satisfied if the
rules of such court relating thereto have been substantially satisfied.
The Company and Executive hereby waive, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to such
jurisdiction and any defense of inconvenient forum. The Company and Executive
hereby agree that a judgment upon an award rendered by the arbitrators may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Subject to Section 11(b) of this Agreement, the
Company shall bear all costs and expenses arising in connection with any
arbitration proceeding pursuant to this Section 11 and shall pay such
costs and expenses each calendar quarter in accordance with the provisions of Section 7(g) of
this Agreement, but not later than the last day of the year in which the
expense was incurred. Notwithstanding any provision in this Section 11,
Executive shall be paid and shall be entitled to seek specific performance of
Executive’s right to be paid during the pendency of any dispute or controversy
arising under or in connection with this Agreement.


 


(d)    Interest
on Unpaid Amounts.    Any amount which has
become payable pursuant to the terms of this Agreement or any decision by
arbitrators or judgment by a court of law pursuant to this Section 11 but
which has not been timely paid shall bear interest at the prime rate in effect
at the time such amount first becomes payable, as quoted by the Company’s
principal bank, except as otherwise provided in Sections 5(c), 5(g) and 7(g) of
this Agreement (concerning interest payable with respect to certain delayed
payments that are subject to Section 409A of the Code).


 


29

















 


12.  Miscellaneous.


 


(a)    Integration.   During
the Term of this Agreement, this Agreement cancels and supersedes any and all
prior agreements and understandings between the parties hereto with respect to
the employment of Executive by the Company, any parent or predecessor company,
and the Company’s subsidiaries during the Term, except for contracts, plans or
arrangements relating to compensation, equity or benefits under executive
compensation, equity or benefit plans of the Company and its subsidiaries.
Notwithstanding the foregoing, Executive shall not participate in the Company’s
Employee Protection Plan unless the aggregate benefits provided under such plan
would exceed the aggregate benefits provided to Executive under this Agreement
upon termination of employment. Executive shall remain entitled to any
provision, right or benefit under the Employee Protection Plan or a
Change-in-Control Agreement executed by the Company and Executive, for so long
as such plan or agreement remains in effect, if and to the extent that such
provision, right or benefit in such plan or agreement is more favorable to
Executive than a corresponding provision, right or benefit under this Agreement
(or if there is no corresponding provision, right or benefit under this
Agreement).  If any provision, right or
benefit under the Employee Protection Plan or any such Change-in-Control
Agreement is more favorable to Executive than a corresponding provision, right
or benefit under this Agreement (or if there is no corresponding provision,
right or benefit under this Agreement), such provision, right or benefit under
the Employee Protection Plan or any such Change-in-Control Agreement, as the
case may be, shall be deemed included in this Agreement without any requirement
to give effect to the entirety of the Employee Protection Plan or
Change-in-Control Agreement from which such provision, right or benefit
arose.  In the event that the benefit
payable under the Employee Protection Plan is more favorable to Executive than
a corresponding provision of this Agreement, the benefit calculated in
accordance with the terms of the Employee Protection Plan shall be paid in a
lump sum at the time provided in Section 7(g) of this Agreement in
lieu of installments as provided under the Employee Protection Plan.
Notwithstanding the foregoing, no payment or benefit under the Employee
Protection Plan or Change-in-Control Agreement shall be made or extended which
duplicates any payment or benefit hereunder. If and to the extent that this
Agreement may provide enhanced benefits to Executive under the SERP which
benefits are not explicitly provided for under the SERP, the SERP shall be
deemed amended by this Agreement (but only insofar as it pertains to
Executive). This Agreement constitutes the entire agreement among the parties
with respect to the matters herein provided, and no modification or waiver of
any provision hereof shall be effective unless in writing and signed by the
parties hereto. Executive shall not be entitled to any payment or benefit under
this Agreement which duplicates a payment or benefit received or receivable by
Executive under such prior agreements and understandings or under any benefit
or compensation plan of the Company.


 


(b)    Successors;
Transferability.    The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, “Company”
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise and, in the case of an acquisition
of the Company in which the corporate existence of the Company continues, the
ultimate parent company following such acquisition. Neither this Agreement nor
the rights or obligations hereunder of the parties hereto shall be transferable
or assignable by Executive, except in accordance with the laws of descent and
distribution or as specified in Section 12(c) or by the Company
except to a successor as defined in this Section 12(b).


 


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


 


(d)    Notices.    Whenever
under this Agreement it becomes necessary to give notice, such notice shall be
in writing, signed by the party or parties giving or making the same, and shall
be served on the person or persons for whom it is intended or who should be
advised or notified, by Federal Express or other 


 


30

















 


similar
overnight service or by certified or registered mail, return receipt requested,
postage prepaid and addressed to such party at the address set forth below or
at such other address as may be designated by such party by like notice:


 


	
  If to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  IMS
  HEALTH INCORPORATED

  
	
   

  	
   

  	
  901 Main Avenue, Suite 612  

  
	
   

  	
   

  	
  Norwalk, CT 06851

  
	
   

  	
   

  	
  Attention:
  General Counsel

  
	
   

  	
   

  	
   

  
	
  If to Executive:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  David
  R. Carlucci

  
	
   

  	
   

  	
  901
  Main Avenue, Suite 612

  
	
   

  	
   

  	
  Norwalk,
  CT 06851

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Arthur
  Woodard, Esq.

  
	
   

  	
   

  	
  Kaye
  Scholer LLP

  
	
   

  	
   

  	
  425
  Park Avenue

  
	
   

  	
   

  	
  New
  York, NY 10022-3598

  
	
   

  	
   

  	
  (212)
  836-8005

  



 


If
the parties by mutual agreement supply each other with telecopier numbers for
the purposes of providing notice by facsimile, such notice shall also be proper
notice under this Agreement. In the case of Federal Express or other similar
overnight service, such notice or advice shall be effective when sent, and, in
the cases of certified or registered mail, shall be effective two days after
deposit into the mails by delivery to the U.S. Post Office.


 


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


 


(f)    Headings.    The
headings of this Agreement are for convenience of reference only and do not
constitute a part hereof.


 


(g)    No
General Waivers.    The failure of any party at
any time to require performance by any other party of any provision hereof or
to resort to any remedy provided herein or at law or in equity shall in no way
affect the right of such party to require such performance or to resort to such
remedy at any time thereafter, nor shall the waiver by any party of a breach of
any of the provisions hereof be deemed to be a waiver of any subsequent breach
of such provisions. No such waiver shall be effective unless in writing and
signed by the party against whom such waiver is sought to be enforced.


 


(h)    No
Obligation To Mitigate.    Executive shall not
be required to seek other employment or otherwise to mitigate Executive’s
damages upon any termination of employment; provided, however, that, to the
extent Executive receives from a subsequent employer health or other insurance
benefits that are substantially similar to the benefits referred to in Section 5(b) hereof,
any such benefits to be provided by the Company to Executive following the Term
shall be correspondingly reduced.


 


(i)    Offsets;
Withholding.    The amounts required to be paid
by the Company to Executive pursuant to this Agreement shall not be subject to
offset other than with respect to any amounts that are owed to the Company by
Executive due to his receipt of funds as a result of his fraudulent activity.
The foregoing and other provisions of this Agreement notwithstanding, all
payments to be made to Executive under this Agreement, including under Sections
6 and 7, or otherwise by the Company, will be subject to withholding to satisfy
required withholding taxes and other required deductions.


 


31

















 


(j)    Successors
and Assigns.    This Agreement shall be binding
upon and shall inure to the benefit of Executive, his heirs, executors,
administrators and beneficiaries, and shall be binding upon and inure to the benefit
of the Company and its successors and assigns.


 


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


 


(l)    Due
Authority and Execution.    The execution,
delivery and performance of this Agreement has been duly authorized by the
Company and this Agreement represents the valid, legal and binding obligation
of the Company, enforceable against the Company according to its terms.


 


(m)    Representations
of Executive.    Executive represents and
warrants to the Company that he has the legal right to enter into this
Agreement and to perform all of the obligations on his part to be performed
hereunder in accordance with its terms and that he is not a party to any
agreement or understanding, written or oral, which prevents him from entering
into this Agreement or performing all of his obligations hereunder. In the
event of a breach of such representation or warranty on Executive’s part or if
there is any other legal impediment which prevents him from entering into this
Agreement or performing all of his obligations hereunder, the Company shall
have the right to terminate this Agreement forthwith in accordance with the
same notice and hearing procedures specified above in respect of a termination
by the Company for Cause pursuant to Section 7(a) and shall have no
further obligations to Executive hereunder. Notwithstanding a termination by
the Company under this Section 12(m), Executive’s obligations under Section 10
of this Agreement shall survive such termination.


 


13.  Indemnification.


 


All rights to indemnification by the Company now existing in favor of
Executive as provided in the Company’s Certificate of Incorporation or By-laws
or pursuant to other agreements in effect on or immediately prior to the
Effective Date shall continue in full force and effect from the Effective Date
(including all periods after the expiration of the Term), and the Company shall
also advance expenses on a fully grossed-up and after-tax basis for which
indemnification may be ultimately claimed as such expenses are incurred to the
fullest extent permitted under applicable law, subject to any requirement that
Executive provide an undertaking to repay such advances if it is ultimately
determined that Executive is not entitled to indemnification; provided,
however, that any determination required to be made with respect to whether Executive’s
conduct complies with the standards required to be met as a condition of
indemnification or advancement of expenses under applicable law and the Company’s
Certificate of Incorporation, By-laws, or other agreement shall be made by
independent counsel mutually acceptable to Executive and the Company (except to
the extent otherwise required by law) which determination shall be subject to
arbitration in accordance with Section 11(c) of this Agreement. The
standard for indemnification or advancement of costs and expenses incurred by
Executive or Executive’s spouse in seeking to interpret this Agreement or
enforce rights pursuant to this Agreement or in any proceeding in connection
therewith shall be governed by Section 11(b) of this Agreement. After
the date hereof, the Company shall not amend its Certificate of Incorporation
or By-laws or any agreement in any manner which adversely affects the rights of
the Executive to indemnification thereunder. Any provision contained herein
notwithstanding, this Agreement shall not limit or reduce any rights of the
Executive to indemnification pursuant to applicable law.  In addition, the
Company will maintain directors’ and officers’ liability insurance in effect
and covering acts and omissions of Executive during the Term and for a period
of six years thereafter on terms substantially no less favorable than those in
effect on the date of execution of this Agreement.


 


IN WITNESS WHEREOF, Executive has hereunto set his hand and the Company
has caused this instrument to be duly executed this 19th day of December, 2008.


 


32

















 


 


	
   

  	
  IMS
  HEALTH INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karla L. Packer

  
	
   

  	
   

  	
  Name:
    Karla L. Packer

  
	
   

  	
   

  	
  Title:
      Senior Vice President, Human Resources

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David R. Carlucci

  
	
   

  	
  David
  R. Carlucci

  



 


33

















 


ATTACHMENT A


 


RELEASE


 


We
advise you to consult an attorney before you sign this Release. You have until
the date which is seven (7) days after the Release is signed and returned
to IMS Health Incorporated to change your mind and revoke your Release. Your
Release shall not become effective or enforceable until after that date.


 


In
consideration for the benefits provided under your Employment Agreement with
IMS Health Incorporated as amended and restated effective January 1, 2005
(the “Employment Agreement”), and more specifically enumerated in Exhibit 1
hereto, by your signature below, you, for yourself and on behalf of your heirs,
executors, agents, representatives, successors and assigns, hereby release and
forever discharge the Company, its past and present parent corporations,
subsidiaries, divisions, subdivisions, affiliates and related companies
(collectively, the “Company”) and the Company’s past, present and future
agents, directors, officers, employees, representatives, successors and assigns
(hereinafter “those associated with the Company”) with respect to any and all
claims, demands, actions and liabilities, whether in law or equity, which you
may have against the Company or those associated with the Company of whatever
kind, including but not limited to those arising out of your employment with
the Company or the termination of that employment. You agree that this release
covers, but is not limited to, claims arising under the Age Discrimination in
Employment Act of 1967, 29 U.S.C. § 621 et seq., Title VII of the Civil Rights
Act of 1964, 42 U.S.C. § 2000e et seq., the Americans with Disabilities Act of
1990, 42 U.S.C. § 12101 et seq., the Fair Labor Standards Act, 29 U.S.C. § 201
et seq., the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001
et seq., the Connecticut Fair Employment Practices Act, C.G.S. § 46a-51 et
seq., and any other local, state or federal law, regulation or order dealing
with discrimination in employment on the basis of sex, race, color, national
origin, veteran status, marital status, religion, disability, handicap, or age.
You also agree that this release includes claims based on wrongful termination
of employment, breach of contract (express or implied), tort, or claims otherwise
related to your employment or termination of employment with the Company and
any claim for attorneys’ fees, expenses or costs of litigation.


 


This
Release covers all claims based on any facts or events, whether known or
unknown by you, that occurred on or before the date of this Release. Except to
enforce this Release, you agree that you will never commence, prosecute, or
cause to be commenced or prosecuted any lawsuit or proceeding of any kind
against the Company or those associated with the Company in any forum and agree
to withdraw with prejudice all complaints or charges, if any, that you have
filed against the Company or those associated with the Company.


 


Anything
in this Release to the contrary notwithstanding, this Release does not include
a release of (i) your rights under the Employment Agreement or your right
to enforce the Employment Agreement; (ii) any rights you may have to
indemnification or insurance under any agreement, law, Company organizational
document or policy, or otherwise; (iii) any rights you may have to equity,
compensation or benefits under the Company’s equity, compensation or benefit
plans; or (iv) your right to enforce this Release.


 


By
signing this Release, you further agree as follows:


 


You
have read this Release carefully and fully understand its terms;


 


You
have had at least twenty-one (21) days to consider the terms of the Release;


 


You
have seven (7) days from the date you sign this Release to revoke it by
written notification to the Company. After this seven (7) day period, this
Release is final and binding and may not be revoked;


 

















 


You
have been advised to seek legal counsel and have had an opportunity to do so;


 


You
would not otherwise be entitled to the benefits provided under your Employment
Agreement had you not agreed to execute this Release; and


 


Your
agreement to the terms set forth above is voluntary.


 


	
  Name:

  	
   

  
	
  Signature:

  	
  Date:

  
	
  Received
  by:

  	
  Date:

  



 


 


Attachment:  Exhibit 1


 


2