Document:

Exhibit 10.4

 

TIER-1

CHANGE-IN-CONTROL
AGREEMENT

FOR CERTAIN
EXECUTIVES

OF IMS HEALTH
INCORPORATED

 

[Date]

 

PERSONAL AND CONFIDENTIAL

 

[Name
and Title]

IMS
Health Incorporated

901 Main
Avenue, Suite 612

Norwalk,
CT  06851

 

Dear [         ]:

 

IMS Health Incorporated
(the “Company”) considers it essential to the best interests of its
stockholders to foster the continued employment of key management
personnel.  In this connection, the Board
of Directors of the Company (the “Board”) recognizes that the possibility of a
change in ownership or control of the Company may result in the departure or
distraction of such personnel to the detriment of the Company and its
stockholders.  As you are a skilled and
dedicated executive with important management responsibilities and talents, the
Company believes that its best interests will be served if you are encouraged
to remain with the Company.

 

The Company has determined that your
ability to perform your responsibilities and utilize your talents for the
benefit of the Company, and the Company’s ability to retain you as an employee,
will be significantly enhanced if you are provided with fair and reasonable
protection from the risks of a change in ownership or control of the
Company.  Accordingly, in order to induce
you to remain in the employ of the Company, you and the Company agree as
follows:

 

1. Term of Agreement.

 

(a) Generally.  Except as provided in Section 1(b) hereof,
(i) this Agreement shall be effective as of January 1, 2009 and shall
continue in effect through December 31, 2010, and (ii) commencing on January 1,
2011, and each January 1 thereafter, this Agreement shall be automatically
extended for one additional year unless, not later than November 30th of
the preceding year, either party to this Agreement gives notice to the other
that the Agreement shall not be extended under this Section 1(a); provided,
however, that no such notice by the Company shall be effective if a Change
in Control or Potential Change in Control (both as defined herein) shall have
occurred prior to the date of such notice.

 

(b) Upon a Change
in Control.  If a Change in Control
shall have occurred at any time during the period in which this Agreement is
effective, this Agreement shall continue in effect for (i) the remainder
of the month in which the Change in Control occurred and (ii) a term of 24
months beyond the month in which such Change in Control occurred (such entire
period hereinafter referred to as the “Protected Period”).

 

 

2. Change in Control;
Potential Change in Control.

 

(a) 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 (2)(a)(i), (iii) or (iv) hereof,
(B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a director
nominated by any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company’s securities) whose election by the Board or nomination for
election by the Company’s stockholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least a majority thereof;

 

(iii) any
transaction (or series of transactions) is consummated 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) a sale or
disposition by the Company of all or substantially all of the Company’s assets
is consummated or the stockholders of the Company approve a plan of complete
liquidation of the Company; or

 

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

 

(b) A “Potential
Change in Control” shall be deemed to have occurred if:

 

2

 

(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.

 

(c) Employee
Covenants.  You agree that, subject
to the terms and conditions of this Agreement, in the event of a Potential
Change in Control, you will remain in the employ of the Company until the
earliest of (i) a date which is 180 days from the occurrence of such
Potential Change in Control, (ii) the termination of your employment by
reason of Disability (as defined herein) or (iii) the date on which you
first become entitled under this Agreement to receive the benefits provided in Section 3(b) hereof.

 

(d) Company
Covenant Regarding Potential Change in Control or Change in Control.  In the event of a Potential Change in Control
or a 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 and a
subsequent termination of your employment under Section 3(b).  Such rabbi trust(s) shall be irrevocable
and shall provide that the Company may not, directly or indirectly, use or
recover any assets of the trust(s) until such time as all obligations
which potentially could arise hereunder have been settled and paid in full or
otherwise extinguished, 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.

 

(e)    Acceleration
of Awards Upon a Change in Control. In the event of a Change in
Control, all outstanding stock options, restricted stock units, stock
appreciation rights, restricted stock, and other equity-based awards that you
hold 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
Internal Revenue Code of 1986, as amended (the “Code”), cannot be paid to you
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 Treasury Regulations, you will have the right to elect to denominate such
award in cash both at the time of the Change in Control (as defined in Section 2(a) of
this Agreement) and again upon your termination of employment following the
Change in Control.  If you elect 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 

 

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cash until and including
the date of payment of such award to you and the denominator of which is 365
and pay such adjusted amount to you.

 

(f)            Gross-up If Excise Tax Would
Apply.  In the event you become 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 will pay to you at the time specified in Section 2(f)(iii) hereof
an additional amount (the “Gross-Up Payment”) such that the net amount you
retain, 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 this Section 2(f), 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 you in connection with a
Change in Control or other change in ownership or control or your 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 you 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 (I) the total amount of the Total Payments and (II) the
amount of excess parachute payments within the meaning of Section 280G(b)(1) of
the Code (after applying Section 2(f)(i)(A) hereof); and

 

(C) the value of any
non-cash benefits or any deferred payments or benefits shall be determined by a
nationally-recognized accounting firm selected by you 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, you 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 your 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 you.  In the event that the Excise Tax is
subsequently determined to be less than 

 

4

 

the amount taken into
account and paid to you hereunder, you shall file for a refund of such excess
Excise Tax.  You shall repay to the
Company the excess Excise Tax amount actually refunded to you by the Internal
Revenue Service within ten business days after the later of (A) 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 you; provided, however, if no
refund shall be due to you because such overpayment of the Excise Tax has been
applied to satisfy your other tax liabilities, you shall notify the Company of
such application of the overpayment to your other tax liabilities and shall pay
to the Company within ten business days after such application of the
overpayment to your 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 2(f) later than the
last day of the taxable year next following the taxable year in which you remit
the Excise Tax.  Anything in this Section 2(f) 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 3(c) of
this Agreement (including but not limited to Section 3(c)(vi)) in the
event that such payment is made in connection with your termination of
employment and is subject to Section 409A of the Code.

 

(iii) The Gross-Up
Payment provided for in this Section 2(f) 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 any payments giving rise to an Excise Tax are
made, the Company shall pay you 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 2(f)(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 2(f)(ii) above. 
Your right to payments under this Section 2(f) shall be
treated as a right to a series of separate payments under Section 1.409A-2(b)(2)(iii) of
the Treasury Regulations.

 

(iv) All
determinations under this Section 2(f) shall be made by the Company
at its expense using a nationally recognized public accounting firm you have
selected, and such determination shall be binding upon you and the Company.

 

3. Termination.

 

(a) Termination
by the Company for Cause, by You Without Good Reason, or by Reason of Death or
Disability.  If during the Protected
Period your employment by the Company is terminated by the Company for Cause,
by you without Good Reason, or because of your death or Disability, the Company
shall be relieved of its obligation to make any payments to you other than (i) its
payment of amounts otherwise accrued and owing but not yet paid and (ii) any
amounts payable under then-existing equity, compensation or benefit programs at
the time such amounts are due.

 

(b) Termination
by the Company Without Cause or by You for Good Reason.  If during the Protected Period your
employment by the Company is 

 

5

 

terminated by the Company
without Cause or by you for Good Reason, you shall be entitled to the
compensation and benefits described in this Section 3(b).  If your employment by the Company is
terminated by the Company without Cause or by you for Good Reason after a
Potential Change in Control but prior to the Change in Control contemplated by
such Potential Change in Control, the Protected Period shall commence upon the
subsequent occurrence of such Change in Control, your actual termination shall
be deemed a termination occurring during the Protected Period and covered by
this Section 3(b), your Date of Termination shall be deemed to have
occurred immediately following such Change in Control, and Notice of
Termination shall be deemed to have been given by the Company immediately prior
to your actual termination.  Your
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason hereunder.  The compensation and benefits provided under
this Section 3(b) are as follows:

 

(i) The Company
shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, on the fifth day
following the Date of Termination, and you shall receive all other amounts to
which you are entitled under any equity, compensation or benefit plan of the
Company, at the time such payments are due in accordance with the terms of such
equity, compensation or benefit plan.

 

(ii) In the payroll period next
following the payroll period in which your Date of Termination occurs, the
Company shall pay you, in lieu of any further salary, bonus or severance
payments for periods subsequent to the Date of Termination, a lump sum amount
in cash equal to three times the sum of:

 

(A) the greater of (I) your
annual base salary in effect immediately prior to the Change in Control of the
Company or (II) your annual base salary in effect at the time Notice of
Termination is given; and

 

(B) the greater of (I) your
annual target bonus for the year in which the Change in Control occurs or, (II) if
no such target bonus has yet been determined for such year, the annual bonus
actually earned by you in the year immediately preceding the year in which the
Change in Control occurs.

 

(iii) In the payroll
period next following the payroll period in which your Date of Termination
occurs, the Company shall pay to you, in lieu of amounts which may otherwise be
payable to you under the Executive Annual Incentive Plan or any other bonus,
incentive or award plan (the “Bonus Plan”), an amount in cash equal to (A) that
portion of your annual target bonus payable in cash for the year in which the
Change in Control occurs, multiplied by a fraction, (I) the numerator of
which equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (II) the
denominator of which is 365, and (B) the entire target bonus opportunity
with respect to each performance or vesting period in progress under all Bonus
Plans in effect at the time of termination; provided, however, if you have
previously deferred any award payable under any such Bonus Plan, the terms of
the applicable Bonus Plan shall determine the time of payment of the cash
amount that is payable under this Section 3(b)(iii) in lieu of such
award and in the event that any such cash payment must be delayed by reason of
your previous deferral of the corresponding award under such Bonus Plan or by
reason of the application of Section 3(c) of this Agreement, such
cash amount will be adjusted to reflect the deferred payment date by
multiplying the cash amount by the product of the six-month CMT Treasury Bill 

 

6

 

annualized yield rate as published by the U.S. Treasury for the date on
which the cash amount would have been paid to you under this Section 3(b)(iii) but
for such 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 from and including the date on which the cash amount would have been
paid to you under this Section 3(b)(iii) but for such delay and including
the date of payment of such cash amount to you and the denominator of which is
365 and the Company pay such adjusted cash amount to you.

 

(iv) The Company
shall provide you with a cash allowance for outplacement and job search
activities (including, but not limited to, office and secretarial expenses) in
the amount of 20% of your annual base salary and annual target bonus taken into
account under Section 3(b)(ii) hereof, provided that (A) such
cash allowance shall not exceed $100,000 and (B) such cash allowance shall
apply only to those costs or obligations that are incurred by you before the
last day of the second calendar year following the calendar year in which your
Date of Termination occurs. Payments of such cash allowance shall be made on
the fifteenth day following the submission of each receipt to the Company
evidencing costs or obligations incurred by you in connection with outplacement
and job search activities, but in no event later than the last day of the third
calendar year following the calendar year in which your Date of Termination
occurs.

 

(v)  Notwithstanding
the provisions of your Restrictive Covenant Agreement with the Company, your
agreement set forth in such Restrictive Covenant Agreement not to compete with
the Company for one year after your termination of employment shall not apply;
however, the other provisions of your Restrictive Covenant Agreement shall
remain in full force and effect, including without limitation, the
non-solicitation, non-disclosure, confidentiality and non-disparagement
covenants set forth therein.

 

(vi)  If you are an
expatriate, you will be repatriated, at the Company’s expense, to your home
country or to any other country you choose provided that the Company’s cost for
your repatriation will not exceed the cost the Company would have incurred had
it repatriated you to your home country. 
Your repatriation allowances and benefits will be as described in the
Company’s Long-Term Assignment Policy, including the time and form of payment
of such allowances and benefits, but there will be no claw-back of any
relocation costs by reason of the early termination of your assignment.

 

(vii) During the
36-month period following your termination of employment, you will continue to
participate in the Company’s health and life insurance plans and programs in
which you were participating immediately prior to your termination, the terms
of which allow your continued participation, as if you had continued in
employment with the Company during such period, and on terms no less favorable
than the terms applicable to you before the Change in Control. For so long as
you participate in the Company plans and programs referred to in this Section 3(b)(vii),
you shall receive cash payments equal on an after-tax basis to your cost for
participating in such plans and programs, with such 

 

7

 

payments to be made by the Company to you on a monthly basis and in
accordance with Section 3(c) of this Agreement.  If and when the terms of the Company plans
and programs referred to in this Section 3(b)(vii) do not allow your
continued participation, you shall instead be paid cash payments equivalent on
an after-tax basis to the value of the additional benefits described in this Section 3(b)(vii) that
you would have received under such plans or programs had you continued to be
employed during such period, with such payments to be made by the Company to
you on a monthly basis during such period and in accordance with Section 3(c) of
this Agreement (it being understood that the Company payments to you
attributable to these benefits will be equal on an after-tax basis to the full
monthly premium cost to you 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 health or life insurance plan, but shall
not exceed the highest risk premium charged by a carrier having an investment
grade or better credit rating). Notwithstanding the foregoing, the benefits
described in this Section 3(b)(vii) shall constitute secondary
coverage with respect to any health or life insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) during the 36-month period following your termination.  In addition, notwithstanding the foregoing,
nothing in this Section 3(b)(vii) shall alter any right you may have
to participate in any Company health or life insurance plan or program that
covers former employees of the Company in accordance with the generally
applicable terms of such plan or program.

 

(viii) When you
attain age 55, if you are eligible to participate in the Company’s retiree
health and life insurance plans, you will receive monthly payments from the
Company to reimburse you for your cost to participate in those plans, grossed
up for your taxes, for so long as you are eligible to participate in those
plans.  If and when you are not eligible
to participate in the Company’s retiree health and life insurance plans (including,
but not limited to, as a result of such plans’ termination), you will instead
receive cash payments equivalent on an after-tax basis to the value of the
retiree health and life insurance benefits you would have received under the
Company’s retiree health and life insurance plans (providing benefits no less
than those provided in the year in which you first entered into a Change in
Control Agreement with the Company) had you qualified for full retiree health
and life insurance benefits under the Company’s retiree health and life
insurance plans, with such payments to be made by the Company to you on a
monthly basis (it being understood that the Company payments to you
attributable to the retiree health and life insurance benefits will be equal on
an after-tax basis to the full monthly premium cost to you to purchase such
benefits independently, and shall not be limited to the value of the Company
contribution, if any, to the cost of coverage under the Company’s retiree
health and life insurance plans, but shall not exceed the highest risk premium
charged by a carrier having an investment grade or better credit rating).  Notwithstanding the foregoing, the benefits
described in this Section 3(b)(viii) shall constitute secondary
coverage with respect to any health or life insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) or otherwise following your attainment of age 55.

 

(c) Reimbursements;
Section 409A Exemptions; Delayed Payments Under Section 409A.

 

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

 

(B) the
reimbursement of any expense shall be made each calendar quarter and not later
than the last day of the taxable year following 

 

8

 

the 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.

 

(ii) Any
reimbursement under Sections 3(b)(vii) or 3(b)(viii) for expenses for
medical coverage purchased by you that are made during the period of time you
would be entitled (or would, but for such reimbursement, be entitled) to
continuation coverage under the Company’s Health Plan pursuant to COBRA if you
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 Treasury
Regulations.

 

(iii) Any
reimbursement under Section 3(b)(iv) relating to outplacement
expenses 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)(A) of the
Treasury Regulations and shall not be subject to Section 3(c)(i) above.

 

(iv) Your 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 Treasury
Regulations.

 

(v) It is intended
that: (A) payments made under this Agreement due to your termination of
employment that are paid on or before the 15th day of the third
month following the end of the taxable year in which your 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 Treasury Regulations (the “Exempt Short-Term Deferral Payments”); and (B) payments
under this Agreement, other than Exempt Short-Term Deferral Payments, that are
made on or before the last day of the second taxable year following the taxable
year in which you terminate employment in an aggregate amount not exceeding two
times the lesser of: (I) the sum of your annualized compensation based on
your annual rate of pay for the taxable year preceding the taxable year in
which you terminate employment (adjusted for any increase during that year that
was expected to continue indefinitely if you had not terminated employment); or
(II) the maximum amount that may be taken into account under a qualified
plan pursuant to Section 401(a)(17) of the Code for the year in which you
terminate employment shall be exempt from compliance with Section 409A of
the Code pursuant to the exception for payments under a separation pay plan as
set forth in Section 1.409A-1(b)(9)(iii) of the Treasury Regulations.

 

(vi) Anything in
this Agreement to the contrary notwithstanding, payments to be made under this
Agreement upon your termination of employment which are subject to Section 409A
of the Code shall be delayed for six months following such termination of
employment if you are a Specified Employee as defined in Section 3(e)(vi) on
the date of your 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 

 

9

 

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 3(c)(vi) to reflect the
deferred payment date shall be paid to you on an after-tax and fully grossed-up
basis so that you are held economically harmless. The Company will pay the
adjusted payment or reimbursement at the beginning of the seventh month following
your termination of employment. Notwithstanding the foregoing, if calculation
of the amounts payable by any payment date specified in this Agreement is not
administratively practicable due to events beyond your control (or the control
of your 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 Treasury Regulations
thereunder.  In the event of your death
during such six-month period, payment will be made in the payroll period next
following the payroll period in which your death occurs.

 

(d) Notice.  During the Protected Period, any purported
termination of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto.

 

(e) Certain
Definitions.  For purposes of this
Agreement and except as otherwise indicated in this Agreement, all definitions
in this Section 3(e) shall be applicable during the Protected Period
only.

 

(i) Cause.  “Cause” shall mean termination on account of (A) the
willful and continued failure by you to substantially perform your duties with
the Company (other than any such failure resulting from your incapacity due to
physical or mental illness or Disability or any failure after the issuance of a
Notice of Termination by you 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 you by the Board,
which demand specifically identifies the manner in which the Board believes
that you have not substantially performed your duties and the demonstrable and
material damage caused thereby or (B) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise.  No act, or
failure to act, on your part shall be deemed “willful” unless done, or omitted
to be done, by you not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to you 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 you and an
opportunity for you, together with your counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, you were guilty of
conduct set forth above in this Section 3(e)(i) and specifying the
particulars thereof in detail.

 

(ii) Date of
Termination.  “Date of Termination”
shall mean (A) if your employment is terminated for Disability, 30 days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such 30-day period) or (B) if
your employment is terminated for 

 

10

 

any other reason, the date specified in the Notice of Termination
(which, in the case of a termination for Cause, shall not be less than 30 days
from the date such Notice of Termination is given and, in the case of a
termination by you for Good Reason, shall not be less than 30 nor more than 60
days from the date such Notice of Termination is given).

 

(iii) Disability.  “Disability” shall mean your absence from the
full-time performance of your duties with the Company for six consecutive
months as a result of your incapacity due to physical or mental illness or
disability, and within 30 days after written Notice of Termination is
thereafter given you shall not have returned to the full-time performance of
your duties.

 

(iv) Good Reason.  “Good Reason” shall mean, without your
express written consent, the occurrence upon or after a Change in Control of
any of the following circumstances provided that you 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:

 

(A) the assignment
to you of any duties materially inconsistent with the position in the Company
that you held immediately prior to the Change in Control, or a materially
adverse alteration in the nature or status of your responsibilities or the
conditions of your employment from those in effect immediately prior to such
Change in Control;

 

(B) a material
reduction by the Company in your annual base salary, any target bonus or
perquisites as in effect immediately prior to the Change in Control or as the
same may be increased from time to time 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;

 

(C) the relocation
of the principal place of your employment to a location more than 50 miles from
the location of such place of employment on the date of this Agreement except
for required travel on the Company’s business to an extent substantially
consistent with your business travel obligations prior to the Change in
Control;

 

(D) the failure by
the Company to pay to you any material portion of your compensation or to pay
to you any material portion of an installment of deferred compensation under
any deferred compensation program of the Company within a reasonable time after
the date such compensation is due;

 

(E) the failure by
the Company to continue in effect any material compensation or benefit plan in
which you participated immediately prior to the 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 your participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amounts of
benefits provided and the level of your participation relative to other
participants, as existed at the time of the Change in Control;

 

(F) the failure of
the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 7 hereof; or

 

11

 

(G) any purported
termination of your employment that is not effected pursuant to a Notice of
Termination that is in material compliance with the requirements of Section 3(e)(v) (and,
if applicable, the requirements of Section 3(e)(i) hereof), which
purported termination shall not be effective for purposes of this Agreement.

 

Notwithstanding anything in this Agreement to the contrary, if you
terminate your 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 you will be deemed to have terminated your
employment for Good Reason upon such Change in Control as provided in Section 3(b) of
this Agreement will be made by substituting “Potential Change in Control” for “Change
in Control” each place it appears in this Section 3(e)(iv) above.

 

(v) Notice of
Termination.  “Notice of Termination”
shall mean notice indicating the specific termination provision in this
Agreement relied upon and setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.

 

(vi) Specified
Employee. “Specified Employee” shall mean an employee of the Company 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).

 

4. Mitigation.  Except as provided in Sections 3(b)(vii) and
(viii) and Section 6 hereof, you shall not be required to mitigate
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for under this Agreement be reduced by any compensation earned by you
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Company, or
otherwise.

 

5.  Release of Employment Claims.  You agree, as a condition to your receipt of
the compensation and benefits provided for under this Agreement, that you will
execute a general release agreement, in substantially the form set forth as
Attachment A to this Agreement, releasing any and all claims arising out of
your employment other than: (a) the enforcement of this Agreement; (b) with
respect to vested rights or rights provided for under any equity, compensation
or benefit plan or arrangement of the Company; or (c) rights to
indemnification under any agreement, law, Company organizational document or
policy, or otherwise.  The Company will
provide you with a copy of such release simultaneously with or as soon as
practicable 

 

12

 

following the delivery of the Notice of Termination but not later than
21 days before (45 days before if your termination is part of an exit incentive
or other employment termination program offered to a group or class of
employees) the Date of Termination.  You
must deliver the executed release to the Company not later than eight days
before the date of payment of your compensation and benefits provided for under
this Agreement.

 

6.  Forfeiture.  Except as otherwise provided in Section 3(b)(v) of
this Agreement, if you willfully and materially fail to comply with the terms
of your Restrictive Covenant Agreement with the Company or if you willfully and
materially fail to comply with Section 2(c) or Section 5 of this
Agreement, all compensation and benefits provided for under this Agreement
shall be immediately forfeited. Notwithstanding the foregoing, you shall not
forfeit any compensation or benefits provided for under this Agreement unless
and until there shall have been delivered to you, within six months after the
Board (a) had knowledge of conduct or an event allegedly constituting
grounds for such forfeiture and (b) 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 at a
meeting of the Board called and held for such purpose (after giving you
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 you the opportunity, together with your counsel, to
be heard before the Board) finding that, in the good faith opinion of the
Board, you have engaged and continue to engage in conduct which constitutes
grounds for forfeiture of your compensation and benefits under this Agreement;
provided, however, that in the event that you shall have already received any compensation
or benefits under this Agreement before the Board makes the determination
described in this sentence, you shall immediately reimburse the Company for
such compensation and/or benefits following such determination by the Board.
The forfeiture of any compensation or benefits provided for under this
Agreement by reason of this Section 6 shall apply to such compensation and
benefits notwithstanding any other term or provision of this Agreement or any
other agreement or plan.

 

7. Successors; Binding
Agreement.

 

(a) 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.

 

(b) This Agreement
shall inure to the benefit of and be enforceable by you and your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  In
the event of your death, all amounts otherwise payable to you hereunder shall,
unless otherwise provided herein, be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.

 

(c)  Neither this
Agreement nor the rights or obligations hereunder of the parties hereto shall
be transferable or assignable by you, except in accordance 

 

13

 

with the laws of descent and distribution or as specified in Section 7(b),
or by the Company except to a successor as defined in Section 7(a).

 

8. Notice.  Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when (a) personally delivered or (b) mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement; provided that all notice to the Company shall be directed to
the attention of the Board with a copy to the General Counsel of the Company,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.

 

9. Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be designated by
the Board.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the time or at any prior or subsequent time.  All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.  The obligations of the Company under this
Agreement shall survive the expiration of this Agreement to the extent
necessary to give effect to this Agreement.

 

10. Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

11. 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.

 

12. Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and during the term of this Agreement cancels and supersedes the
provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereof with respect to the
subject matter contained herein.  No
agreements or representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. 
Notwithstanding anything to the contrary in this Agreement, the
procedural provisions of this Agreement shall apply to all benefits payable as
a result of a Change in Control (or other change in control) under any employee
benefit plan, agreement, program, policy or arrangement of the Company.  The foregoing notwithstanding, in the event
of any conflict or ambiguity between this Agreement and any employment
agreement executed by you and the Company, the provisions of such employment
agreement shall govern; but no payment or benefit under this Agreement shall be
made or extended which duplicates any payment or benefit under any such
employment agreement.

 

13.  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, 

 

14

 

without regard to its conflicts of law principles. 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. 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 Treasury
Regulations so as not to subject you 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 make any payment under this Agreement except
to the extent such action would not subject you 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 you for any
taxable year that is prior to the taxable year in which such payments and/or
benefits are to be paid to you 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 you to the extent
such payment or benefit is required to be included in your income.  If you become subject to any tax penalty or
interest under Section 409A of the Code by reason of this Agreement, the
Company shall reimburse you on a fully grossed-up and after-tax basis for any
such tax penalty or interest (so that you are held economically harmless) ten
business days prior to the date such tax penalty or interest is due and payable
by you to the government.

 

14.   Reimbursement of Expenses in Enforcing Rights.    All reasonable
costs and expenses (including fees and disbursements of counsel) incurred by
you in seeking to interpret this Agreement or enforce rights pursuant to this
Agreement shall be paid on behalf of or reimbursed to you promptly by the
Company, whether or not you are successful in asserting such rights; provided,
however, that no reimbursement shall be made of such expenses relating to any
unsuccessful assertion of rights if and to the extent that your assertion of
such rights was in bad faith or frivolous, as determined by arbitrators in
accordance with Section 15 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 14 and in
accordance with the provisions of Section 3(c) of this Agreement, but
not later than the last day of the year in which the expense was incurred.

 

15.    Arbitration.    Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Fairfield, Connecticut 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 you hereby consent
to the jurisdiction of any or all of the following courts: (a) the United
States District Court for the District of Connecticut, (b) any of the
courts of the State of Connecticut, or (c) any other court having
jurisdiction. The Company and you 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
you 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 you hereby agree that a judgment
upon an award rendered by the arbitrators may be enforced in other jurisdictions
by 

 

15

 

suit on the judgment or
in any other manner provided by law. Subject to Section 14, the Company
shall bear all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section 15 and shall pay such costs and
expenses each calendar quarter in accordance with the provisions of Section 3(c) 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 15,
you shall be paid during the pendency of any dispute or controversy arising
under or in connection with this Agreement.

 

16.    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 Section 15 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 2(e), 3(b)(iii) and 3(c)(vi) of
this Agreement (concerning interest payable with respect to certain delayed
payments that are subject to Section 409A of the Code).

 

If
this letter sets forth our agreement on the subject matter hereof, kindly sign
and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.

 

	
   

  	
   

  	
  IMS HEALTH INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Chairman and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed to this
                                          
  day

  	
   

  	
   

  
	
  of
                                                          ,
  2008.

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

16

 

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 Change-in-Control Agreement with IMS
Health Incorporated (the “Agreement”), by your signature below, you, for
yourself and on behalf of your heirs, executors, agents, representatives,
successors and assigns, hereby release and forever discharge IMS Health
Incorporated, 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, assigns, stockholders, attorneys, agents, insurers,
employee benefit programs (and the trustees, administrators, fiduciaries and
insurers of such programs), and any other persons acting by, through, under or
in concert with any of the persons or entities listed herein, and their
successors (hereinafter “those associated with the Company”) and 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
Family and Medical Leave Act of 1993 and any local, state or federal law,
regulation or order providing workers’ compensation benefits, restricting an
employer’s right to terminate employees or otherwise regulating employment,
enforcing express or implied employment contracts or requiring an employer to
deal with employees fairly or in good faith, or 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. You expressly
waive all rights you might have under any law that is intended to protect you
from waiving unknown claims and by your signature below indicate your
understanding of the significance of doing so. Examples of released claims
include, but are not limited to:  (a) claims
that in any way relate to your employment with the Company, or the termination
of that employment, such as claims for compensation, bonuses, commissions, lost
wages, or unused accrued vacation or sick pay (other than under your
Agreement); (b) claims that in any way relate to the design or
administration of any employee benefit program; (c) claims that you have
irrevocable or vested rights to severance or similar benefits (other than under
your Agreement) or to post-employment health or group insurance benefits (other
than under your Agreement); (d) any claim, such as a benefit claim, that
was explicitly or implicitly denied before you signed this Release; (e) any
claim you might have for extra benefits as a consequence of payments you
receive because of signing this Release; or (f) any claim to attorneys’
fees or other indemnities.  Except to
enforce your Agreement or this 

 

17

 

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) any of your
rights under the Agreement;  (ii) any
rights you may have to indemnification 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 except as otherwise provided in your Agreement or
claims specifically identified in this Release; (iv) any rights or claims
under the Age Discrimination in Employment Act or any other law that arise
after you sign this Release; or (iii) your right to enforce this Release
or any of the foregoing items described in this paragraph.

 

By
signing this Release, you further agree as follows:

 

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

 

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

 

iii.            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;

 

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

 

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

 

vi.            Your agreement to the terms set
forth above is voluntary.

 

(The remainder of this page was
intentionally left blank)

 

18

 

TIER-2

CHANGE-IN-CONTROL
AGREEMENT

FOR CERTAIN
EXECUTIVES

OF IMS HEALTH
INCORPORATED

 

[Date]

 

PERSONAL AND CONFIDENTIAL

 

[Name
and Title]

IMS
Health Incorporated

901 Main
Avenue, Suite 612

Norwalk,
CT  06851

 

Dear [         ]:

 

IMS Health Incorporated
(the “Company”) considers it essential to the best interests of its
stockholders to foster the continued employment of key management
personnel.  In this connection, the Board
of Directors of the Company (the “Board”) recognizes that the possibility of a
change in ownership or control of the Company may result in the departure or
distraction of such personnel to the detriment of the Company and its
stockholders.  As you are a skilled and
dedicated executive with important management responsibilities and talents, the
Company believes that its best interests will be served if you are encouraged to
remain with the Company.

 

The Company has determined that your
ability to perform your responsibilities and utilize your talents for the
benefit of the Company, and the Company’s ability to retain you as an employee,
will be significantly enhanced if you are provided with fair and reasonable protection
from the risks of a change in ownership or control of the Company.  Accordingly, in order to induce you to remain
in the employ of the Company, you and the Company agree as follows:

 

1. Term of Agreement.

 

(a) Generally.  Except as provided in Section 1(b) hereof,
(i) this Agreement shall be effective as of January 1, 2009 and shall
continue in effect through December 31, 2010, and (ii) commencing on January 1,
2011, and each January 1 thereafter, this Agreement shall be automatically
extended for one additional year unless, not later than November 30th of
the preceding year, either party to this Agreement gives notice to the other
that the Agreement shall not be extended under this Section 1(a); provided,
however, that no such notice by the Company shall be effective if a Change
in Control or Potential Change in Control (both as defined herein) shall have
occurred prior to the date of such notice.

 

(b) Upon a Change
in Control.  If a Change in Control
shall have occurred at any time during the period in which this Agreement is
effective, this Agreement shall continue in effect for (i) the remainder
of the month in which the Change in Control occurred and (ii) a term of 24
months beyond the month in which 

 

19

 

such Change in Control occurred (such entire period hereinafter
referred to as the “Protected Period”).

 

2. Change in Control;
Potential Change in Control.

 

(a) 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 (2)(a)(i), (iii) or (iv) hereof, (B) a
director nominated by any Person (including the Company) who publicly announces
an intention to take or to consider taking actions (including, but not limited
to, an actual or threatened proxy contest) which if consummated would
constitute a Change in Control or (C) a director nominated by any Person
who is the Beneficial Owner, directly or indirectly, of securities of the
Company representing 10% or more of the combined voting power of the Company’s
securities) whose election by the Board or nomination for election by the
Company’s stockholders was approved in advance by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;

 

(iii) any
transaction (or series of transactions) is consummated 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) a sale or
disposition by the Company of all or substantially all of the Company’s assets
is consummated or the stockholders of the Company approve a plan of complete
liquidation of the Company; or

 

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

 

20

 

(b) A “Potential
Change in Control” shall be deemed to have occurred if:

 

(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.

 

(c) Employee
Covenants.  You agree that, subject
to the terms and conditions of this Agreement, in the event of a Potential
Change in Control, you will remain in the employ of the Company until the
earliest of (i) a date which is 180 days from the occurrence of such
Potential Change in Control, (ii) the termination of your employment by
reason of Disability (as defined herein) or (iii) the date on which you
first become entitled under this Agreement to receive the benefits provided in Section 3(b) hereof.

 

(d) Company
Covenant Regarding Potential Change in Control or Change in Control.  In the event of a Potential Change in Control
or a 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 and a
subsequent termination of your employment under Section 3(b).  Such rabbi trust(s) shall be irrevocable
and shall provide that the Company may not, directly or indirectly, use or
recover any assets of the trust(s) until such time as all obligations
which potentially could arise hereunder have been settled and paid in full or
otherwise extinguished, 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.

 

(e)    Acceleration
of Awards Upon a Change in Control. In the event of a Change in
Control, all outstanding stock options, restricted stock units, stock
appreciation rights, restricted stock, and other equity-based awards that you
hold 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
Internal Revenue Code of 1986, as amended (the “Code”), cannot be paid to you
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 Treasury Regulations, you will have the right to elect to denominate such
award in cash both at the time of the Change in Control (as defined in Section 2(a) of
this Agreement) and again upon your termination of employment following the
Change in Control.  If you elect 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 

 

21

 

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 you and the denominator of which
is 365 and pay such adjusted amount to you.

 

(f)            Gross-up If Excise Tax Would
Apply.  In the event you become 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 will pay to you at the time specified in Section 2(f)(iii) hereof
an additional amount (the “Gross-Up Payment”) such that the net amount you
retain, 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 this Section 2(f), 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 you in connection with a
Change in Control or other change in ownership or control or your 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 you 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 (I) the total amount of the Total Payments and (II) the
amount of excess parachute payments within the meaning of Section 280G(b)(1) of
the Code (after applying Section 2(f)(i)(A) hereof); and

 

(C) the value of any
non-cash benefits or any deferred payments or benefits shall be determined by a
nationally-recognized accounting firm selected by you 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, you 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 your 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 

 

22

 

by you.  In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account and paid to you hereunder, you shall file for a refund of such excess
Excise Tax.  You shall repay to the
Company the excess Excise Tax amount actually refunded to you by the Internal
Revenue Service within ten business days after the later of (A) 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 you; provided, however, if no
refund shall be due to you because such overpayment of the Excise Tax has been
applied to satisfy your other tax liabilities, you shall notify the Company of
such application of the overpayment to your other tax liabilities and shall pay
to the Company within ten business days after such application of the
overpayment to your 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 2(f) later
than the last day of the taxable year next following the taxable year in which
you remit the Excise Tax.  Anything in
this Section 2(f) 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 3(c) of this Agreement (including but not limited to Section 3(c)(vi))
in the event that such payment is made in connection with your termination of
employment and is subject to Section 409A of the Code.

 

(iii) The Gross-Up
Payment provided for in this Section 2(f) 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 any payments giving rise to an Excise Tax are
made, the Company shall pay you 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 2(f)(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 2(f)(ii) above. 
Your right to payments under this Section 2(f) shall be
treated as a right to a series of separate payments under Section 1.409A-2(b)(2)(iii) of
the Treasury Regulations.

 

(iv) All
determinations under this Section 2(f) shall be made by the Company
at its expense using a nationally recognized public accounting firm you have
selected, and such determination shall be binding upon you and the Company.

 

3. Termination.

 

(a) Termination
by the Company for Cause, by You Without Good Reason, or by Reason of Death or
Disability.  If during the Protected
Period your employment by the Company is terminated by the Company for Cause,
by you without Good Reason, or because of your death or Disability, the Company
shall be relieved of its obligation to make any payments to you other than (i) its
payment of amounts otherwise accrued and owing but not yet paid and (ii) any
amounts payable under then-existing equity, compensation or benefit programs at
the time such amounts are due.

 

23

 

(b) Termination
by the Company Without Cause or by You for Good Reason.  If during the Protected Period your
employment by the Company is terminated by the Company without Cause or by you
for Good Reason, you shall be entitled to the compensation and benefits
described in this Section 3(b).  If
your employment by the Company is terminated by the Company without Cause or by
you for Good Reason after a Potential Change in Control but prior to the Change
in Control contemplated by such Potential Change in Control, the Protected
Period shall commence upon the subsequent occurrence of such Change in Control,
your actual termination shall be deemed a termination occurring during the
Protected Period and covered by this Section 3(b), your Date of
Termination shall be deemed to have occurred immediately following such Change
in Control, and Notice of Termination shall be deemed to have been given by the
Company immediately prior to your actual termination.  Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.  The
compensation and benefits provided under this Section 3(b) are as
follows:

 

(i) The Company
shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, on the fifth day
following the Date of Termination, and you shall receive all other amounts to
which you are entitled under any equity, compensation or benefit plan of the
Company, at the time such payments are due in accordance with the terms of such
equity, compensation or benefit plan.

 

(ii) In the payroll period next
following the payroll period in which your Date of Termination occurs, the
Company shall pay you, in lieu of any further salary, bonus or severance
payments for periods subsequent to the Date of Termination, a lump sum amount
in cash equal to two times the sum of:

 

(A) the greater of (I) your
annual base salary in effect immediately prior to the Change in Control of the
Company or (II) your annual base salary in effect at the time Notice of
Termination is given; and

 

(B) the greater of (I) your
annual target bonus for the year in which the Change in Control occurs or, (II) if
no such target bonus has yet been determined for such year, the annual bonus
actually earned by you in the year immediately preceding the year in which the
Change in Control occurs.

 

(iii) In the payroll
period next following the payroll period in which your Date of Termination
occurs, the Company shall pay to you, in lieu of amounts which may otherwise be
payable to you under the Executive Annual Incentive Plan or any other bonus,
incentive or award plan (the “Bonus Plan”), an amount in cash equal to (A) that
portion of your annual target bonus payable in cash for the year in which the
Change in Control occurs, multiplied by a fraction, (I) the numerator of
which equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (II) the
denominator of which is 365, and (B) the entire target bonus opportunity
with respect to each performance or vesting period in progress under all Bonus
Plans in effect at the time of termination; provided, however, if you have
previously deferred any award payable under any such Bonus Plan, the terms of
the applicable Bonus Plan shall determine the time of payment of the cash
amount that is payable under this Section 3(b)(iii) in lieu of such
award and in the event that any such cash payment must be delayed by reason of
your previous deferral of the corresponding award under such Bonus Plan or by
reason of the application of Section 3(c) of this Agreement, such
cash amount will be adjusted to reflect the deferred payment date 

 

24

 

by multiplying the cash
amount 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 cash amount would
have been paid to you under this Section 3(b)(iii) but for such 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 from and
including the date on which the cash amount would have been paid to you under
this Section 3(b)(iii) but for such delay and including the date of
payment of such cash amount to you and the denominator of which is 365 and the
Company pay such adjusted cash amount to you.

 

(iv) The Company
shall provide you with a cash allowance for outplacement and job search
activities (including, but not limited to, office and secretarial expenses) in
the amount of 20% of your annual base salary and annual target bonus taken into
account under Section 3(b)(ii) hereof, provided that (A) such
cash allowance shall not exceed $100,000 and (B) such cash allowance shall
apply only to those costs or obligations that are incurred by you before the
last day of the second calendar year following the calendar year in which your
Date of Termination occurs. Payments of such cash allowance shall be made on
the fifteenth day following the submission of each receipt to the Company
evidencing costs or obligations incurred by you in connection with outplacement
and job search activities, but in no event later than the last day of the third
calendar year following the calendar year in which your Date of Termination
occurs.

 

(v)  Notwithstanding
the provisions of your Restrictive Covenant Agreement with the Company, your
agreement set forth in such Restrictive Covenant Agreement not to compete with
the Company for one year after your termination of employment shall not apply;
however, the other provisions of your Restrictive Covenant Agreement shall
remain in full force and effect, including without limitation, the
non-solicitation, non-disclosure, confidentiality and non-disparagement
covenants set forth therein.

 

(vi)  If you are an
expatriate, you will be repatriated, at the Company’s expense, to your home
country or to any other country you choose provided that the Company’s cost for
your repatriation will not exceed the cost the Company would have incurred had
it repatriated you to your home country. 
Your repatriation allowances and benefits will be as described in the
Company’s Long-Term Assignment Policy, including the time and form of payment
of such allowances and benefits, but there will be no claw-back of any
relocation costs by reason of the early termination of your assignment.

 

(vii) During the
24-month period following your termination of employment, you will continue to
participate in the Company’s health and life insurance plans and programs in which
you were participating immediately prior to your termination, the terms of
which allow your continued participation, as if you had continued in employment
with the Company during such period, and on terms no less favorable than the
terms applicable to you before the Change in Control. For so long as you
participate in the Company plans and programs referred to in this Section 3(b)(vii),
you shall receive cash payments equal on an after-tax basis to your cost for
participating in such plans and programs, with such payments to be made by the
Company to you on a monthly basis and in accordance with Section 3(c) of
this Agreement.  If and when the terms of
the Company plans and programs referred to in this Section 3(b)(vii) do
not allow your continued participation, you shall instead be paid cash payments
equivalent on an after-tax basis to the value of the additional benefits
described in this Section 3(b)(vii) that you would have received
under such 

 

25

 

plans or programs had you continued to be employed during such period,
with such payments to be made by the Company to you on a monthly basis during
such period and in accordance with Section 3(c) of this Agreement (it
being understood that the Company payments to you attributable to these
benefits will be equal on an after-tax basis to the full monthly premium cost
to you 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 health or life insurance plan, but shall not exceed the
highest risk premium charged by a carrier having an investment grade or better
credit rating). Notwithstanding the foregoing, the benefits described in this Section 3(b)(vii) shall
constitute secondary coverage with respect to any health or life insurance
benefits actually received by you in connection with any subsequent employment
(or self-employment) during the 24-month period following your termination.  In addition, notwithstanding the foregoing,
nothing in this Section 3(b)(vii) shall alter any right you may have
to participate in any Company health or life insurance plan or program that
covers former employees of the Company in accordance with the generally
applicable terms of such plan or program.

 

(viii) When you
attain age 55, if you are eligible to participate in the Company’s retiree
health and life insurance plans, you will receive monthly payments from the
Company to reimburse you for your cost to participate in those plans, grossed
up for your taxes, for so long as you are eligible to participate in those
plans.  If and when you are not eligible
to participate in the Company’s retiree health and life insurance plans
(including, but not limited to, as a result of such plans’ termination), you
will instead receive cash payments equivalent on an after-tax basis to the
value of the retiree health and life insurance benefits you would have received
under the Company’s retiree health and life insurance plans (providing benefits
no less than those provided in the year in which you first entered into a
Change in Control Agreement with the Company) had you qualified for full
retiree health and life insurance benefits under the Company’s retiree health
and life insurance plans, with such payments to be made by the Company to you
on a monthly basis (it being understood that the Company payments to you
attributable to the retiree health and life insurance benefits will be equal on
an after-tax basis to the full monthly premium cost to you to purchase such
benefits independently, and shall not be limited to the value of the Company
contribution, if any, to the cost of coverage under the Company’s retiree
health and life insurance plans, but shall not exceed the highest risk premium
charged by a carrier having an investment grade or better credit rating).  Notwithstanding the foregoing, the benefits
described in this Section 3(b)(viii) shall constitute secondary
coverage with respect to any health or life insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) or otherwise following your attainment of age 55.

 

(c) Reimbursements;
Section 409A Exemptions; Delayed Payments Under Section 409A.

 

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

 

(B) the
reimbursement of any expense shall be made each calendar quarter and not later
than the last day of the taxable year following 

 

26

 

the 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.

 

(ii) Any
reimbursement under Sections 3(b)(vii) or 3(b)(viii) for expenses for
medical coverage purchased by you that are made during the period of time you
would be entitled (or would, but for such reimbursement, be entitled) to continuation
coverage under the Company’s Health Plan pursuant to COBRA if you 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 Treasury Regulations.

 

(iii) Any
reimbursement under Section 3(b)(iv) relating to outplacement
expenses 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)(A) of the
Treasury Regulations and shall not be subject to Section 3(c)(i) above.

 

(iv) Your 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 Treasury
Regulations.

 

(v) It is intended
that: (A) payments made under this Agreement due to your termination of
employment that are paid on or before the 15th day of the third
month following the end of the taxable year in which your 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 Treasury Regulations (the “Exempt Short-Term Deferral Payments”); and (B) payments
under this Agreement, other than Exempt Short-Term Deferral Payments, that are
made on or before the last day of the second taxable year following the taxable
year in which you terminate employment in an aggregate amount not exceeding two
times the lesser of: (I) the sum of your annualized compensation based on
your annual rate of pay for the taxable year preceding the taxable year in
which you terminate employment (adjusted for any increase during that year that
was expected to continue indefinitely if you had not terminated employment); or
(II) the maximum amount that may be taken into account under a qualified
plan pursuant to Section 401(a)(17) of the Code for the year in which you
terminate employment shall be exempt from compliance with Section 409A of
the Code pursuant to the exception for payments under a separation pay plan as
set forth in Section 1.409A-1(b)(9)(iii) of the Treasury Regulations.

 

(vi) Anything in
this Agreement to the contrary notwithstanding, payments to be made under this
Agreement upon your termination of employment which are subject to Section 409A
of the Code shall be delayed for six months following such termination of
employment if you are a Specified Employee as defined in Section 3(e)(vi) on
the date of your 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 

 

27

 

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 3(c)(vi) to reflect the
deferred payment date shall be paid to you on an after-tax and fully grossed-up
basis so that you are held economically harmless. The Company will pay the
adjusted payment or reimbursement at the beginning of the seventh month
following your termination of employment. Notwithstanding the foregoing, if
calculation of the amounts payable by any payment date specified in this
Agreement is not administratively practicable due to events beyond your control
(or the control of your 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 Treasury
Regulations thereunder.  In the event of
your death during such six-month period, payment will be made in the payroll
period next following the payroll period in which your death occurs.

 

(d) Notice.  During the Protected Period, any purported
termination of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto.

 

(e) Certain
Definitions.  For purposes of this
Agreement and except as otherwise indicated in this Agreement, all definitions
in this Section 3(e) shall be applicable during the Protected Period
only.

 

(i) Cause.  “Cause” shall mean termination on account of (A) the
willful and continued failure by you to substantially perform your duties with
the Company (other than any such failure resulting from your incapacity due to
physical or mental illness or Disability or any failure after the issuance of a
Notice of Termination by you 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 you by the Board,
which demand specifically identifies the manner in which the Board believes
that you have not substantially performed your duties and the demonstrable and
material damage caused thereby or (B) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise.  No act, or
failure to act, on your part shall be deemed “willful” unless done, or omitted
to be done, by you not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to you 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 you and an
opportunity for you, together with your counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, you were guilty of
conduct set forth above in this Section 3(e)(i) and specifying the
particulars thereof in detail.

 

(ii) Date of
Termination.  “Date of Termination”
shall mean (A) if your employment is terminated for Disability, 30 days
after Notice of Termination is given (provided that you shall not have returned
to the full-time performance of your duties during such 30-day period) or (B) if
your employment is terminated for 

 

28

 

any other reason, the date specified in the Notice of Termination
(which, in the case of a termination for Cause, shall not be less than 30 days
from the date such Notice of Termination is given and, in the case of a
termination by you for Good Reason, shall not be less than 30 nor more than 60
days from the date such Notice of Termination is given).

 

(iii) Disability.  “Disability” shall mean your absence from the
full-time performance of your duties with the Company for six consecutive
months as a result of your incapacity due to physical or mental illness or
disability, and within 30 days after written Notice of Termination is
thereafter given you shall not have returned to the full-time performance of
your duties.

 

(iv) Good Reason.  “Good Reason” shall mean, without your
express written consent, the occurrence upon or after a Change in Control of
any of the following circumstances provided that you 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:

 

(A) the assignment
to you of any duties materially inconsistent with the position in the Company
that you held immediately prior to the Change in Control, or a materially
adverse alteration in the nature or status of your responsibilities or the
conditions of your employment from those in effect immediately prior to such
Change in Control;

 

(B) a material
reduction by the Company in your annual base salary, any target bonus or
perquisites as in effect immediately prior to the Change in Control or as the
same may be increased from time to time 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;

 

(C) the relocation
of the principal place of your employment to a location more than 50 miles from
the location of such place of employment on the date of this Agreement except
for required travel on the Company’s business to an extent substantially
consistent with your business travel obligations prior to the Change in
Control;

 

(D) the failure by
the Company to pay to you any material portion of your compensation or to pay
to you any material portion of an installment of deferred compensation under
any deferred compensation program of the Company within a reasonable time after
the date such compensation is due;

 

(E) the failure by
the Company to continue in effect any material compensation or benefit plan in
which you participated immediately prior to the 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 your participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amounts of
benefits provided and the level of your participation relative to other
participants, as existed at the time of the Change in Control;

 

(F) the failure of
the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 7 hereof; or

 

29

 

(G) any purported
termination of your employment that is not effected pursuant to a Notice of
Termination that is in material compliance with the requirements of Section 3(e)(v) (and,
if applicable, the requirements of Section 3(e)(i) hereof), which
purported termination shall not be effective for purposes of this Agreement.

 

Notwithstanding anything
in this Agreement to the contrary, if you terminate your 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 you will be
deemed to have terminated your employment for Good Reason upon such Change in
Control as provided in Section 3(b) of this Agreement will be made by
substituting “Potential Change in Control” for “Change in Control” each place
it appears in this Section 3(e)(iv) above.

 

(v) Notice of
Termination.  “Notice of Termination”
shall mean notice indicating the specific termination provision in this
Agreement relied upon and setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.

 

(vi) Specified
Employee. “Specified Employee” shall mean an employee of the Company 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).

 

4. Mitigation.  Except as provided in Sections 3(b)(vii) and
(viii) and Section 6 hereof, you shall not be required to mitigate
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for under this Agreement be reduced by any compensation earned by you
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Company, or
otherwise.

 

5.  Release of Employment Claims.  You agree, as a condition to your receipt of
the compensation and benefits provided for under this Agreement, that you will
execute a general release agreement, in substantially the form set forth as
Attachment A to this Agreement, releasing any and all claims arising out of
your employment other than: (a) the enforcement of this Agreement; (b) with
respect to vested rights or rights provided for under any equity, compensation
or benefit plan or arrangement of the Company; or (c) rights to
indemnification under any agreement, law, Company organizational document or
policy, or otherwise.  The Company will
provide you with a copy of such release simultaneously with or as soon as
practicable

 

30

 

following the delivery of
the Notice of Termination but not later than 21 days before (45 days before if
your termination is part of an exit incentive or other employment termination
program offered to a group or class of employees) the Date of Termination.  You must deliver the executed release to the
Company not later than eight days before the date of payment of your
compensation and benefits provided for under this Agreement.

 

6.  Forfeiture.  Except as otherwise provided in Section 3(b)(v) of
this Agreement, if you willfully and materially fail to comply with the terms
of your Restrictive Covenant Agreement with the Company or if you willfully and
materially fail to comply with Section 2(c) or Section 5 of this
Agreement, all compensation and benefits provided for under this Agreement
shall be immediately forfeited. Notwithstanding the foregoing, you shall not
forfeit any compensation or benefits provided for under this Agreement unless
and until there shall have been delivered to you, within six months after the
Board (a) had knowledge of conduct or an event allegedly constituting
grounds for such forfeiture and (b) 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 at a
meeting of the Board called and held for such purpose (after giving you
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 you the opportunity, together with your counsel, to
be heard before the Board) finding that, in the good faith opinion of the
Board, you have engaged and continue to engage in conduct which constitutes
grounds for forfeiture of your compensation and benefits under this Agreement;
provided, however, that in the event that you shall have already received any compensation
or benefits under this Agreement before the Board makes the determination
described in this sentence, you shall immediately reimburse the Company for
such compensation and/or benefits following such determination by the Board.
The forfeiture of any compensation or benefits provided for under this
Agreement by reason of this Section 6 shall apply to such compensation and
benefits notwithstanding any other term or provision of this Agreement or any
other agreement or plan.

 

7. Successors; Binding
Agreement.

 

(a) 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.

 

(b) This Agreement
shall inure to the benefit of and be enforceable by you and your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  In
the event of your death, all amounts otherwise payable to you hereunder shall,
unless otherwise provided herein, be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.

 

(c)  Neither this
Agreement nor the rights or obligations hereunder of the parties hereto shall
be transferable or assignable by you, except in accordance 

 

31

 

with the laws of descent
and distribution or as specified in Section 7(b), or by the Company except
to a successor as defined in Section 7(a).

 

8. Notice.  Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when (a) personally delivered or (b) mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement; provided that all notice to the Company shall be directed to
the attention of the Board with a copy to the General Counsel of the Company,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.

 

9. Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be designated by
the Board.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the time or at any prior or subsequent time.  All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.  The obligations of the Company under this
Agreement shall survive the expiration of this Agreement to the extent
necessary to give effect to this Agreement.

 

10. Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

11. 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.

 

12. Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and during the term of this Agreement cancels and supersedes the
provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereof with respect to the
subject matter contained herein.  No
agreements or representations, oral or otherwise, express or implied, with respect
to the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. 
Notwithstanding anything to the contrary in this Agreement, the
procedural provisions of this Agreement shall apply to all benefits payable as
a result of a Change in Control (or other change in control) under any employee
benefit plan, agreement, program, policy or arrangement of the Company.  The foregoing notwithstanding, in the event
of any conflict or ambiguity between this Agreement and any employment
agreement executed by you and the Company, the provisions of such employment
agreement shall govern; but no payment or benefit under this Agreement shall be
made or extended which duplicates any payment or benefit under any such
employment agreement.

 

13.  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, 

 

32

 

without regard to its
conflicts of law principles. 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. 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 Treasury Regulations so as not to subject you 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 make any
payment under this Agreement except to the extent such action would not subject
you 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 you for any taxable year that is prior to the taxable year in which such
payments and/or benefits are to be paid to you 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
you to the extent such payment or benefit is required to be included in your
income.  If you become subject to any tax
penalty or interest under Section 409A of the Code by reason of this
Agreement, the Company shall reimburse you on a fully grossed-up and after-tax
basis for any such tax penalty or interest (so that you are held economically
harmless) ten business days prior to the date such tax penalty or interest is
due and payable by you to the government.

 

14.    Reimbursement of Expenses in Enforcing Rights.    All reasonable
costs and expenses (including fees and disbursements of counsel) incurred by
you in seeking to interpret this Agreement or enforce rights pursuant to this
Agreement shall be paid on behalf of or reimbursed to you promptly by the
Company, whether or not you are successful in asserting such rights; provided,
however, that no reimbursement shall be made of such expenses relating to any
unsuccessful assertion of rights if and to the extent that your assertion of
such rights was in bad faith or frivolous, as determined by arbitrators in
accordance with Section 15 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 14 and in
accordance with the provisions of Section 3(c) of this Agreement, but
not later than the last day of the year in which the expense was incurred.

 

15.    Arbitration.    Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Fairfield, Connecticut 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 you hereby consent
to the jurisdiction of any or all of the following courts: (a) the United
States District Court for the District of Connecticut, (b) any of the
courts of the State of Connecticut, or (c) any other court having
jurisdiction. The Company and you 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
you 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 you hereby agree that a judgment
upon an award rendered by the arbitrators may be enforced in other jurisdictions
by 

 

33

 

suit on the judgment or
in any other manner provided by law. Subject to Section 14, the Company
shall bear all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section 15 and shall pay such costs and
expenses each calendar quarter in accordance with the provisions of Section 3(c) 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 15,
you shall be paid during the pendency of any dispute or controversy arising
under or in connection with this Agreement.

 

16.    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 Section 15 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 2(e), 3(b)(iii) and 3(c)(vi) of
this Agreement (concerning interest payable with respect to certain delayed
payments that are subject to Section 409A of the Code).

 

If
this letter sets forth our agreement on the subject matter hereof, kindly sign
and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.

 

	
   

  	
   

  	
  IMS HEALTH INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Chairman and Chief
  Executive Officer

  

 

 

Agreed to this
                                        
day

 

of
                                                        ,
2008.

 

 

34

 

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 Change-in-Control Agreement
with IMS Health Incorporated (the “Agreement”), by your signature below, you,
for yourself and on behalf of your heirs, executors, agents, representatives,
successors and assigns, hereby release and forever discharge IMS Health
Incorporated, 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, assigns, stockholders, attorneys, agents, insurers,
employee benefit programs (and the trustees, administrators, fiduciaries and
insurers of such programs), and any other persons acting by, through, under or
in concert with any of the persons or entities listed herein, and their
successors (hereinafter “those associated with the Company”) and 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
Family and Medical Leave Act of 1993 and any local, state or federal law,
regulation or order providing workers’ compensation benefits, restricting an
employer’s right to terminate employees or otherwise regulating employment,
enforcing express or implied employment contracts or requiring an employer to
deal with employees fairly or in good faith, or 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. You
expressly waive all rights you might have under any law that is intended to
protect you from waiving unknown claims and by your signature below indicate
your understanding of the significance of doing so. Examples of released claims
include, but are not limited to:  (a) claims
that in any way relate to your employment with the Company, or the termination
of that employment, such as claims for compensation, bonuses, commissions, lost
wages, or unused accrued vacation or sick pay (other than under your
Agreement); (b) claims that in any way relate to the design or
administration of any employee benefit program; (c) claims that you have
irrevocable or vested rights to severance or similar benefits (other than under
your Agreement) or to post-employment health or group insurance benefits (other
than under your Agreement); (d) any claim, such as a benefit claim, that
was explicitly or implicitly denied before you signed this Release; (e) any
claim you might have for extra benefits as a consequence of payments you
receive because of signing this Release; or (f) any claim to attorneys’
fees or other indemnities.  Except to
enforce your Agreement or this 

 

35

 

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) any of your
rights under the Agreement;  (ii) any
rights you may have to indemnification 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 except as otherwise provided in your Agreement or
claims specifically identified in this Release; (iv) any rights or claims
under the Age Discrimination in Employment Act or any other law that arise
after you sign this Release; or (iii) your right to enforce this Release
or any of the foregoing items described in this paragraph.

 

By
signing this Release, you further agree as follows:

 

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

 

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

 

iii.            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;

 

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

 

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

 

vi.            Your agreement to the terms set
forth above is voluntary.

 

(The remainder of this page was
intentionally left blank)

 

36

 

TIER-3

CHANGE-IN-CONTROL
AGREEMENT

FOR CERTAIN
EXECUTIVES

OF IMS HEALTH
INCORPORATED

 

[Date]

 

PERSONAL AND CONFIDENTIAL

 

[Name
and Title]

IMS
Health Incorporated

901 Main
Avenue, Suite 612

Norwalk,
CT  06851

 

Dear [         ]:

 

IMS Health Incorporated
(the “Company”) considers it essential to the best interests of its
stockholders to foster the continued employment of key management personnel.  In this connection, the Board of Directors of
the Company (the “Board”) recognizes that the possibility of a change in
ownership or control of the Company may result in the departure or distraction
of such personnel to the detriment of the Company and its stockholders.  As you are a skilled and dedicated executive
with important management responsibilities and talents, the Company believes
that its best interests will be served if you are encouraged to remain with the
Company.

 

The Company has determined that your
ability to perform your responsibilities and utilize your talents for the
benefit of the Company, and the Company’s ability to retain you as an employee,
will be significantly enhanced if you are provided with fair and reasonable
protection from the risks of a change in ownership or control of the
Company.  Accordingly, in order to induce
you to remain in the employ of the Company, you and the Company agree as
follows:

 

1. Term of Agreement.

 

(a) Generally.  Except as provided in Section 1(b) hereof,
(i) this Agreement shall be effective as of January 1, 2009 and shall
continue in effect through December 31, 2010, and (ii) commencing on January 1,
2011, and each January 1 thereafter, this Agreement shall be automatically
extended for one additional year unless, not later than November 30th of
the preceding year, either party to this Agreement gives notice to the other
that the Agreement shall not be extended under this Section 1(a); provided,
however, that no such notice by the Company shall be effective if a Change
in Control or Potential Change in Control (both as defined herein) shall have
occurred prior to the date of such notice.

 

(b) Upon a Change
in Control.  If a Change in Control
shall have occurred at any time during the period in which this Agreement is
effective, this Agreement shall continue in effect for (i) the remainder
of the month in which the Change in Control occurred and (ii) a term of 24
months beyond the month in which 

 

37

 

such Change in Control
occurred (such entire period hereinafter referred to as the “Protected Period”).

 

2. Change in Control;
Potential Change in Control.

 

(a) 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 (2)(a)(i), (iii) or (iv) hereof,
(B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a director
nominated by any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company’s securities) whose election by the Board or nomination for
election by the Company’s stockholders was approved in advance by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least a majority thereof;

 

(iii) any
transaction (or series of transactions) is consummated 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) a sale or
disposition by the Company of all or substantially all of the Company’s assets
is consummated or the stockholders of the Company approve a plan of complete
liquidation of the Company; or

 

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

 

38

 

(b) A “Potential
Change in Control” shall be deemed to have occurred if:

 

(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.

 

(c) Employee
Covenants.  You agree that, subject
to the terms and conditions of this Agreement, in the event of a Potential
Change in Control, you will remain in the employ of the Company until the
earliest of (i) a date which is 180 days from the occurrence of such
Potential Change in Control, (ii) the termination of your employment by
reason of Disability (as defined herein) or (iii) the date on which you
first become entitled under this Agreement to receive the benefits provided in Section 3(b) hereof.

 

(d) Company
Covenant Regarding Potential Change in Control or Change in Control.  In the event of a Potential Change in Control
or a 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 and a
subsequent termination of your employment under Section 3(b).  Such rabbi trust(s) shall be irrevocable
and shall provide that the Company may not, directly or indirectly, use or
recover any assets of the trust(s) until such time as all obligations
which potentially could arise hereunder have been settled and paid in full or
otherwise extinguished, 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.

 

(e)    Acceleration
of Awards Upon a Change in Control. In the event of a Change in
Control, all outstanding stock options, restricted stock units, stock
appreciation rights, restricted stock, and other equity-based awards that you
hold 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
Internal Revenue Code of 1986, as amended (the “Code”), cannot be paid to you
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 Treasury Regulations, you will have the right to elect to denominate such
award in cash both at the time of the Change in Control (as defined in Section 2(a) of
this Agreement) and again upon your termination of employment following the
Change in Control.  If you elect 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 

 

39

 

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 you and the denominator of which
is 365 and pay such adjusted amount to you.

 

(f)    Gross-up
If Excise Tax Would Apply.  In the event you become 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 will pay to you at the time specified in
Section 2(f)(iii) hereof an additional amount (the “Gross-Up Payment”)
such that the net amount you retain, 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 this Section 2(f),
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 you in connection with a
Change in Control or other change in ownership or control or your 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 you 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 (I) the total amount of the Total Payments and (II) the
amount of excess parachute payments within the meaning of Section 280G(b)(1) of
the Code (after applying Section 2(f)(i)(A) hereof); and

 

(C) the value of any
non-cash benefits or any deferred payments or benefits shall be determined by a
nationally-recognized accounting firm selected by you 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, you 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 your 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

 

40

 

 by you. 
In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account and paid to you hereunder, you shall file
for a refund of such excess Excise Tax. 
You shall repay to the Company the excess Excise Tax amount actually
refunded to you by the Internal Revenue Service within ten business days after
the later of (A) 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 you; provided, however, if no refund shall be due to you because such
overpayment of the Excise Tax has been applied to satisfy your other tax
liabilities, you shall notify the Company of such application of the
overpayment to your other tax liabilities and shall pay to the Company within
ten business days after such application of the overpayment to your 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 2(f) later than the last day of the taxable
year next following the taxable year in which you remit the Excise Tax.  Anything in this Section 2(f) 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 3(c) of
this Agreement (including but not limited to Section 3(c)(vi)) in the
event that such payment is made in connection with your termination of employment
and is subject to Section 409A of the Code.

 

(iii) The Gross-Up
Payment provided for in this Section 2(f) 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 any payments giving rise to an Excise Tax are
made, the Company shall pay you 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 2(f)(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 2(f)(ii) above. 
Your right to payments under this Section 2(f) shall be
treated as a right to a series of separate payments under Section 1.409A-2(b)(2)(iii) of
the Treasury Regulations.

 

(iv) All
determinations under this Section 2(f) shall be made by the Company
at its expense using a nationally recognized public accounting firm you have
selected, and such determination shall be binding upon you and the Company.

 

3. Termination.

 

(a) Termination
by the Company for Cause, by You Without Good Reason, or by Reason of Death or
Disability.  If during the Protected
Period your employment by the Company is terminated by the Company for Cause,
by you without Good Reason, or because of your death or Disability, the Company
shall be relieved of its obligation to make any payments to you other than (i) its
payment of amounts otherwise accrued and owing but not yet paid and (ii) any
amounts payable under then-existing equity, compensation or benefit programs at
the time such amounts are due.

 

41

 

(b) Termination
by the Company Without Cause or by You for Good Reason.  If during the Protected Period your
employment by the Company is terminated by the Company without Cause or by you
for Good Reason, you shall be entitled to the compensation and benefits
described in this Section 3(b).  If
your employment by the Company is terminated by the Company without Cause or by
you for Good Reason after a Potential Change in Control but prior to the Change
in Control contemplated by such Potential Change in Control, the Protected
Period shall commence upon the subsequent occurrence of such Change in Control,
your actual termination shall be deemed a termination occurring during the
Protected Period and covered by this Section 3(b), your Date of
Termination shall be deemed to have occurred immediately following such Change
in Control, and Notice of Termination shall be deemed to have been given by the
Company immediately prior to your actual termination.  Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.  The
compensation and benefits provided under this Section 3(b) are as
follows:

 

(i) The Company
shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, on the fifth day
following the Date of Termination, and you shall receive all other amounts to
which you are entitled under any equity, compensation or benefit plan of the
Company, at the time such payments are due in accordance with the terms of such
equity, compensation or benefit plan.

 

(ii) In the payroll period next
following the payroll period in which your Date of Termination occurs, the
Company shall pay you, in lieu of any further salary, bonus or severance
payments for periods subsequent to the Date of Termination, a lump sum amount
in cash equal to one times the sum of:

 

(A) the greater of (I) your
annual base salary in effect immediately prior to the Change in Control of the
Company or (II) your annual base salary in effect at the time Notice of
Termination is given; and

 

(B) the greater of (I) your
annual target bonus for the year in which the Change in Control occurs or, (II) if
no such target bonus has yet been determined for such year, the annual bonus
actually earned by you in the year immediately preceding the year in which the
Change in Control occurs.

 

(iii) In the payroll
period next following the payroll period in which your Date of Termination
occurs, the Company shall pay to you, in lieu of amounts which may otherwise be
payable to you under the Executive Annual Incentive Plan or any other bonus,
incentive or award plan (the “Bonus Plan”), an amount in cash equal to (A) that
portion of your annual target bonus payable in cash for the year in which the
Change in Control occurs, multiplied by a fraction, (I) the numerator of
which equals the number of full or partial days in such annual performance
period during which you were employed by the Company and (II) the
denominator of which is 365, and (B) the entire target bonus opportunity
with respect to each performance or vesting period in progress under all Bonus
Plans in effect at the time of termination; provided, however, if you have
previously deferred any award payable under any such Bonus Plan, the terms of
the applicable Bonus Plan shall determine the time of payment of the cash
amount that is payable under this Section 3(b)(iii) in lieu of such
award and in the event that any such cash payment must be delayed by reason of
your previous deferral of the corresponding award under such Bonus Plan or by
reason of the application of Section 3(c) of this 

 

42

 

Agreement, such cash
amount will be adjusted to reflect the deferred payment date by multiplying the
cash amount 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 cash amount
would have been paid to you under this Section 3(b)(iii) but for such
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 from and
including the date on which the cash amount would have been paid to you under
this Section 3(b)(iii) but for such delay and including the date of
payment of such cash amount to you and the denominator of which is 365 and the
Company shall pay such adjusted cash amount to you.

 

(iv) The Company
shall provide you with a cash allowance for outplacement and job search
activities (including, but not limited to, office and secretarial expenses) in
the amount of 20% of your annual base salary and annual target bonus taken into
account under Section 3(b)(ii) hereof, provided that (A) such
cash allowance shall not exceed $100,000 and (B) such cash allowance shall
apply only to those costs or obligations that are incurred by you before the
last day of the second calendar year following the calendar year in which your
Date of Termination occurs. Payments of such cash allowance shall be made on
the fifteenth day following the submission of each receipt to the Company
evidencing costs or obligations incurred by you in connection with outplacement
and job search activities, but in no event later than the last day of the third
calendar year following the calendar year in which your Date of Termination
occurs.

 

(v)  Notwithstanding
the provisions of your Restrictive Covenant Agreement with the Company, your
agreement set forth in such Restrictive Covenant Agreement not to compete with
the Company for one year after your termination of employment shall not apply;
however, the other provisions of your Restrictive Covenant Agreement shall
remain in full force and effect, including without limitation, the
non-solicitation, non-disclosure, confidentiality and non-disparagement
covenants set forth therein.

 

(vi)  If you are an
expatriate, you will be repatriated, at the Company’s expense, to your home
country or to any other country you choose provided that the Company’s cost for
your repatriation will not exceed the cost the Company would have incurred had
it repatriated you to your home country. 
Your repatriation allowances and benefits will be as described in the
Company’s Long-Term Assignment Policy, including the time and form of payment
of such allowances and benefits, but there will be no claw-back of any
relocation costs by reason of the early termination of your assignment.

 

(vii) During the
12-month period following your termination of employment, you will continue to
participate in the Company’s health and life insurance plans and programs in
which you were participating immediately prior to your termination, the terms
of which allow your continued participation, as if you had continued in
employment with the Company during such period, and on terms no less favorable
than the terms applicable to you before the Change in Control. For so long as
you participate in the Company plans and programs referred to in this Section 3(b)(vii),
you shall receive cash payments equal on an after-tax basis to your cost for
participating in such plans and programs, with such payments to be made by the
Company to you on a monthly basis and in accordance with Section 3(c) of
this Agreement.  If and when the terms of
the Company plans and programs referred to in this Section 3(b)(vii) do
not allow your continued participation, you shall instead be paid cash payments
equivalent on an after-tax basis to the value of the additional 

 

43

 

benefits described in
this Section 3(b)(vii) that you would have received under such plans
or programs had you continued to be employed during such period, with such
payments to be made by the Company to you on a monthly basis during such period
and in accordance with Section 3(c) of this Agreement (it being
understood that the Company payments to you attributable to these benefits will
be equal on an after-tax basis to the full monthly premium cost to you 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 health or life insurance plan, but shall not exceed the highest risk
premium charged by a carrier having an investment grade or better credit
rating). Notwithstanding the foregoing, the benefits described in this Section 3(b)(vii) shall
constitute secondary coverage with respect to any health or life insurance
benefits actually received by you in connection with any subsequent employment
(or self-employment) during the 12-month period following your termination.  In addition, notwithstanding the foregoing,
nothing in this Section 3(b)(vii) shall alter any right you may have
to participate in any Company health or life insurance plan or program that
covers former employees of the Company in accordance with the generally applicable
terms of such plan or program.

 

(viii) When you
attain age 55, if you are eligible to participate in the Company’s retiree
health and life insurance plans, you will receive monthly payments from the
Company to reimburse you for your cost to participate in those plans, grossed
up for your taxes, for so long as you are eligible to participate in those
plans.  If and when you are not eligible
to participate in the Company’s retiree health and life insurance plans
(including, but not limited to, as a result of such plans’ termination), you
will instead receive cash payments equivalent on an after-tax basis to the
value of the retiree health and life insurance benefits you would have received
under the Company’s retiree health and life insurance plans (providing benefits
no less than those provided in the year in which you first entered into a
Change in Control Agreement with the Company) had you qualified for full
retiree health and life insurance benefits under the Company’s retiree health
and life insurance plans, with such payments to be made by the Company to you
on a monthly basis (it being understood that the Company payments to you
attributable to the retiree health and life insurance benefits will be equal on
an after-tax basis to the full monthly premium cost to you to purchase such
benefits independently, and shall not be limited to the value of the Company
contribution, if any, to the cost of coverage under the Company’s retiree
health and life insurance plans, but shall not exceed the highest risk premium
charged by a carrier having an investment grade or better credit rating).  Notwithstanding the foregoing, the benefits
described in this Section 3(b)(viii) shall constitute secondary
coverage with respect to any health or life insurance benefits actually
received by you in connection with any subsequent employment (or
self-employment) or otherwise following your attainment of age 55.

 

(c) Reimbursements;
Section 409A Exemptions; Delayed Payments Under Section 409A.

 

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

 

44

 

(B) the
reimbursement of any expense shall be made each calendar quarter and not later
than the last day of the taxable year following the 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.

 

(ii) Any
reimbursement under Sections 3(b)(vii) or 3(b)(viii) for expenses for
medical coverage purchased by you that are made during the period of time you
would be entitled (or would, but for such reimbursement, be entitled) to
continuation coverage under the Company’s Health Plan pursuant to COBRA if you
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 Treasury
Regulations.

 

(iii) Any
reimbursement under Section 3(b)(iv) relating to outplacement
expenses 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)(A) of the
Treasury Regulations and shall not be subject to Section 3(c)(i) above.

 

(iv) Your 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 Treasury
Regulations.

 

(v) It is intended
that: (A) payments made under this Agreement due to your termination of
employment that are paid on or before the 15th day of the third
month following the end of the taxable year in which your 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 Treasury Regulations (the “Exempt Short-Term Deferral Payments”); and (B) payments
under this Agreement, other than Exempt Short-Term Deferral Payments, that are
made on or before the last day of the second taxable year following the taxable
year in which you terminate employment in an aggregate amount not exceeding two
times the lesser of: (I) the sum of your annualized compensation based on
your annual rate of pay for the taxable year preceding the taxable year in
which you terminate employment (adjusted for any increase during that year that
was expected to continue indefinitely if you had not terminated employment); or
(II) the maximum amount that may be taken into account under a qualified
plan pursuant to Section 401(a)(17) of the Code for the year in which you
terminate employment shall be exempt from compliance with Section 409A of
the Code pursuant to the exception for payments under a separation pay plan as
set forth in Section 1.409A-1(b)(9)(iii) of the Treasury Regulations.

 

(vi) Anything in
this Agreement to the contrary notwithstanding, payments to be made under this
Agreement upon your termination of employment which are subject to Section 409A
of the Code shall be delayed for six months following such termination of
employment if you are a Specified Employee as defined in Section 3(e)(vi) on
the date of your 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 

 

45

 

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 3(c)(vi) to
reflect the deferred payment date shall be paid to you on an after-tax and
fully grossed-up basis so that you are held economically harmless. The Company
will pay the adjusted payment or reimbursement at the beginning of the seventh
month following your termination of employment. Notwithstanding the foregoing,
if calculation of the amounts payable by any payment date specified in this
Agreement is not administratively practicable due to events beyond your control
(or the control of your 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 Treasury
Regulations thereunder.  In the event of
your death during such six-month period, payment will be made in the payroll
period next following the payroll period in which your death occurs.

 

(d) Notice.  During the Protected Period, any purported
termination of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto.

 

(e) Certain
Definitions.  For purposes of this
Agreement and except as otherwise indicated in this Agreement, all definitions
in this Section 3(e) shall be applicable during the Protected Period
only.

 

(i) Cause.  “Cause” shall mean termination on account of (A) the
willful and continued failure by you to substantially perform your duties with
the Company (other than any such failure resulting from your incapacity due to
physical or mental illness or Disability or any failure after the issuance of a
Notice of Termination by you 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 you by the Board,
which demand specifically identifies the manner in which the Board believes
that you have not substantially performed your duties and the demonstrable and
material damage caused thereby or (B) the willful engaging by you in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise.  No act, or
failure to act, on your part shall be deemed “willful” unless done, or omitted
to be done, by you not in good faith and without reasonable belief that your
action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to you 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 you and an
opportunity for you, together with your counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, you were guilty of
conduct set forth above in this Section 3(e)(i) and specifying the
particulars thereof in detail.

 

(ii) Date of
Termination.  “Date of Termination” shall
mean (A) if your employment is terminated for Disability, 30 days after
Notice of Termination 

 

46

 

is given (provided that
you shall not have returned to the full-time performance of your duties during such
30-day period) or (B) if your employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of
a termination for Cause, shall not be less than 30 days from the date such
Notice of Termination is given and, in the case of a termination by you for
Good Reason, shall not be less than 30 nor more than 60 days from the date such
Notice of Termination is given).

 

(iii) Disability.  “Disability” shall mean your absence from the
full-time performance of your duties with the Company for six consecutive
months as a result of your incapacity due to physical or mental illness or
disability, and within 30 days after written Notice of Termination is
thereafter given you shall not have returned to the full-time performance of
your duties.

 

(iv) Good Reason.  “Good Reason” shall mean, without your
express written consent, the occurrence upon or after a Change in Control of
any of the following circumstances provided that you 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:

 

(A) the assignment
to you of any duties materially inconsistent with the position in the Company
that you held immediately prior to the Change in Control, or a materially
adverse alteration in the nature or status of your responsibilities or the
conditions of your employment from those in effect immediately prior to such
Change in Control;

 

(B) a material
reduction by the Company in your annual base salary, any target bonus or
perquisites as in effect immediately prior to the Change in Control or as the
same may be increased from time to time 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;

 

(C) the relocation
of the principal place of your employment to a location more than 50 miles from
the location of such place of employment on the date of this Agreement except
for required travel on the Company’s business to an extent substantially
consistent with your business travel obligations prior to the Change in
Control;

 

(D) the failure by
the Company to pay to you any material portion of your compensation or to pay
to you any material portion of an installment of deferred compensation under
any deferred compensation program of the Company within a reasonable time after
the date such compensation is due;

 

(E) the failure by
the Company to continue in effect any material compensation or benefit plan in
which you participated immediately prior to the 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 your participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amounts of benefits
provided and the level of your participation relative to other participants, as
existed at the time of the Change in Control;

 

47

 

(F) the failure of
the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 7 hereof; or

 

(G) any purported
termination of your employment that is not effected pursuant to a Notice of
Termination that is in material compliance with the requirements of Section 3(e)(v) (and,
if applicable, the requirements of Section 3(e)(i) hereof), which
purported termination shall not be effective for purposes of this Agreement.

 

Notwithstanding anything
in this Agreement to the contrary, if you terminate your 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 you will be
deemed to have terminated your employment for Good Reason upon such Change in
Control as provided in Section 3(b) of this Agreement will be made by
substituting “Potential Change in Control” for “Change in Control” each place
it appears in this Section 3(e)(iv) above.

 

(v) Notice of
Termination.  “Notice of Termination”
shall mean notice indicating the specific termination provision in this
Agreement relied upon and setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.

 

(vi) Specified
Employee. “Specified Employee” shall mean an employee of the Company 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).

 

4. Mitigation.  Except as provided in Sections 3(b)(vii) and
(viii) and Section 6 hereof, you shall not be required to mitigate
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for under this Agreement be reduced by any compensation earned by you
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Company, or otherwise.

 

5.  Release of Employment Claims.  You agree, as a condition to your receipt of
the compensation and benefits provided for under this Agreement, that you will
execute a general release agreement, in substantially the form set forth as
Attachment A to this Agreement, releasing any and all claims arising out of
your employment other than: (a) the enforcement of this Agreement; (b) with
respect to vested rights or rights provided for under any equity, compensation
or benefit plan or

 

48

 

arrangement of the
Company; or (c) rights to indemnification under any agreement, law,
Company organizational document or policy, or otherwise.  The Company will provide you with a copy of
such release simultaneously with or as soon as practicable following the
delivery of the Notice of Termination but not later than 21 days before (45
days before if your termination is part of an exit incentive or other
employment termination program offered to a group or class of employees) the
Date of Termination.  You must deliver
the executed release to the Company not later than eight days before the date
of payment of your compensation and benefits provided for under this Agreement.

 

6.  Forfeiture.  Except as otherwise provided in Section 3(b)(v) of
this Agreement, if you willfully and materially fail to comply with the terms
of your Restrictive Covenant Agreement with the Company or if you willfully and
materially fail to comply with Section 2(c) or Section 5 of this
Agreement, all compensation and benefits provided for under this Agreement
shall be immediately forfeited. Notwithstanding the foregoing, you shall not
forfeit any compensation or benefits provided for under this Agreement unless
and until there shall have been delivered to you, within six months after the
Board (a) had knowledge of conduct or an event allegedly constituting
grounds for such forfeiture and (b) 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 at a
meeting of the Board called and held for such purpose (after giving you
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 you the opportunity, together with your counsel, to
be heard before the Board) finding that, in the good faith opinion of the
Board, you have engaged and continue to engage in conduct which constitutes
grounds for forfeiture of your compensation and benefits under this Agreement;
provided, however, that in the event that you shall have already received any
compensation or benefits under this Agreement before the Board makes the
determination described in this sentence, you shall immediately reimburse the
Company for such compensation and/or benefits following such determination by
the Board. The forfeiture of any compensation or benefits provided for under
this Agreement by reason of this Section 6 shall apply to such
compensation and benefits notwithstanding any other term or provision of this
Agreement or any other agreement or plan.

 

7. Successors; Binding
Agreement.

 

(a) 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.

 

(b) This Agreement
shall inure to the benefit of and be enforceable by you and your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  In
the event of your death, all amounts otherwise payable to you hereunder shall,
unless otherwise provided herein, be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.

 

49

 

(c)  Neither this
Agreement nor the rights or obligations hereunder of the parties hereto shall
be transferable or assignable by you, except in accordance with the laws of
descent and distribution or as specified in Section 7(b), or by the
Company except to a successor as defined in Section 7(a).

 

8. Notice.  Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when (a) personally delivered or (b) mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement; provided that all notice to the Company shall be directed to
the attention of the Board with a copy to the General Counsel of the Company,
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.

 

9. Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be designated by
the Board.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the time or at any prior or subsequent time.  All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.  The obligations of the Company under this
Agreement shall survive the expiration of this Agreement to the extent
necessary to give effect to this Agreement.

 

10. Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

11. 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.

 

12. Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and during the term of this Agreement cancels and supersedes the
provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereof with respect to the
subject matter contained herein.  No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. 
Notwithstanding anything to the contrary in this Agreement, the
procedural provisions of this Agreement shall apply to all benefits payable as
a result of a Change in Control (or other change in control) under any employee
benefit plan, agreement, program, policy or arrangement of the Company.  The foregoing notwithstanding, in the event
of any conflict or ambiguity between this Agreement and any employment
agreement executed by you and the Company, the provisions of such employment
agreement shall govern; but no payment or benefit under this Agreement shall be
made or extended which duplicates any payment or benefit under any such
employment agreement.

 

50

 

13.  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 its
conflicts of law principles. 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. 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 Treasury Regulations so as not to subject you 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 make any
payment under this Agreement except to the extent such action would not subject
you 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 you for any taxable year that is prior to the taxable year in which such
payments and/or benefits are to be paid to you 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
you to the extent such payment or benefit is required to be included in your
income.  If you become subject to any tax
penalty or interest under Section 409A of the Code by reason of this
Agreement, the Company shall reimburse you on a fully grossed-up and after-tax
basis for any such tax penalty or interest (so that you are held economically
harmless) ten business days prior to the date such tax penalty or interest is
due and payable by you to the government.

 

14.    Reimbursement of Expenses in Enforcing Rights.    All reasonable
costs and expenses (including fees and disbursements of counsel) incurred by
you in seeking to interpret this Agreement or enforce rights pursuant to this
Agreement shall be paid on behalf of or reimbursed to you promptly by the
Company, whether or not you are successful in asserting such rights; provided,
however, that no reimbursement shall be made of such expenses relating to any
unsuccessful assertion of rights if and to the extent that your assertion of
such rights was in bad faith or frivolous, as determined by arbitrators in accordance
with Section 15 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 14 and in accordance with
the provisions of Section 3(c) of this Agreement, but not later than
the last day of the year in which the expense was incurred.

 

15.    Arbitration.    Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration in Fairfield, Connecticut 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 you hereby consent
to the jurisdiction of any or all of the following courts: (a) the United
States District Court for the District of Connecticut, (b) any of the
courts of the State of Connecticut, or (c) any other court having
jurisdiction. The Company and you 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
you hereby waive, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to such jurisdiction and any 

 

51

 

defense of inconvenient
forum. The Company and you 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 14,
the Company shall bear all costs and expenses arising in connection with any
arbitration proceeding pursuant to this Section 15 and shall pay such
costs and expenses each calendar quarter in accordance with the provisions of Section 3(c) 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 15,
you shall be paid during the pendency of any dispute or controversy arising
under or in connection with this Agreement.

 

16.    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 Section 15 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 2(e), 3(b)(iii) and 3(c)(vi) of
this Agreement (concerning interest payable with respect to certain delayed
payments that are subject to Section 409A of the Code).

 

If
this letter sets forth our agreement on the subject matter hereof, kindly sign
and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.

 

	
   

  	
   

  	
  IMS HEALTH INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Chairman and Chief
  Executive Officer

  

 

 

Agreed to this
                                                                    
day

 

of
                                                                                    ,
2008.

 

 

52

 

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 Change-in-Control Agreement
with IMS Health Incorporated (the “Agreement”), by your signature below, you,
for yourself and on behalf of your heirs, executors, agents, representatives,
successors and assigns, hereby release and forever discharge IMS Health
Incorporated, 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, assigns, stockholders, attorneys, agents, insurers,
employee benefit programs (and the trustees, administrators, fiduciaries and
insurers of such programs), and any other persons acting by, through, under or
in concert with any of the persons or entities listed herein, and their
successors (hereinafter “those associated with the Company”) and 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 Family
and Medical Leave Act of 1993 and any local, state or federal law, regulation
or order providing workers’ compensation benefits, restricting an employer’s
right to terminate employees or otherwise regulating employment, enforcing
express or implied employment contracts or requiring an employer to deal with
employees fairly or in good faith, or 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. You
expressly waive all rights you might have under any law that is intended to
protect you from waiving unknown claims and by your signature below indicate
your understanding of the significance of doing so. Examples of released claims
include, but are not limited to:  (a) claims
that in any way relate to your employment with the Company, or the termination
of that employment, such as claims for compensation, bonuses, commissions, lost
wages, or unused accrued vacation or sick pay (other than under your
Agreement); (b) claims that in any way relate to the design or
administration of any employee benefit program; (c) claims that you have
irrevocable or vested rights to severance or similar benefits (other than under
your Agreement) or to post-employment health or group insurance benefits (other
than under your Agreement); (d) any claim, such as a benefit claim, that
was explicitly or implicitly denied before you signed this Release; (e) any
claim you might have for extra benefits as a consequence of payments you
receive because of signing this Release; or (f) any claim to attorneys’
fees or other indemnities.  Except to
enforce your Agreement or this 

 

53

 

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) any of your
rights under the Agreement;  (ii) any
rights you may have to indemnification 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 except as otherwise provided in your Agreement or
claims specifically identified in this Release; (iv) any rights or claims
under the Age Discrimination in Employment Act or any other law that arise
after you sign this Release; or (iii) your right to enforce this Release
or any of the foregoing items described in this paragraph.

 

By
signing this Release, you further agree as follows:

 

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

 

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

 

iii.            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;

 

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

 

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

 

vi.            Your agreement to the terms set
forth above is voluntary.

 

(The remainder of this page was
intentionally left blank)

 

54Exhibit 10.5

 

1998 IMS
HEALTH INCORPORATED

NON-EMPLOYEE DIRECTORS’ STOCK INCENTIVE PLAN

 

(As Amended and Restated as
of October 20, 2008)

 

1.  Purpose of the Plan

 

The purpose of the Plan is
to aid the Company in attracting, retaining and compensating non-employee
directors and to enable them to increase their proprietary interest in the
Company. The Plan is intended to benefit the Company and its shareholders by
enabling non-employee directors of the Board to have a greater personal
financial stake in the Company, and reinforcing such directors’ common interest
with shareholders in increasing the value of the Shares on a long-term basis. In
furtherance of this purpose, the Plan provides for periodic grants of Options,
Restricted Stock, and Restricted Stock Units, and the opportunity for
non-employee directors to elect deferred and alternative forms of compensation
in lieu of cash fees for service as a director, including Options, Shares, and
Deferred Share Units.

 

2.    Definitions

 

The following capitalized
terms used in the Plan have the respective meanings set forth in this Section:

 

(a)   Act:  The Securities Exchange Act
of 1934, as amended, or any successor thereto.

 

(b) Award: 
An Option, a Share of Restricted Stock, or Restricted Stock Unit granted
under the Plan, or an Option, Share, or Deferred Share Unit granted in lieu of
cash directors fees under the Plan.

 

(c) Beneficial Owner:  As such term is defined in Rule 13d-3
under the Act (or any successor rule thereto).

 

(d) Board: 
The Board of Directors of the Company.

 

(e) Change in Control: The occurrence of any of
the following events:

 

(i)    any Person (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 shareholders of the Company
in substantially the same proportions as their ownership of stock of the
Company), becomes the Beneficial Owner, 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 Effective Date), 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 2(e)(i), (iii) or (iv) of
the Plan, (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 shareholders was approved in advance by a vote of at
least two-thirds (2/3) of the
directors then still in office who either were 

 

 

directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;

 

(iii)  the shareholders 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 662/3% 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; or

 

(iv)  the shareholders 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.

 

(f)   Committee: The Compensation and Benefits Committee of the Board.

 

(g)   Company: IMS Health Incorporated, a Delaware corporation.

 

(h)   Deferred Share Unit: An Award granted under Section 8 upon
deferral of cash compensation representing a contractual commitment of the
Company to deliver to the Participant, at a specified future date, one Share in
settlement of the deferral. Dividend equivalents equal to the value of
dividends on outstanding shares shall be paid or credited on Deferred Share
Units, if and subject to such terms as may be specified by the Committee,
including terms ensuring convenient administration of the Plan.

 

(i) Disability: Inability to continue to serve
as a non-employee director of the Board due to a medically determinable
physical or mental impairment which constitutes a permanent and total
disability, as determined by the Committee (excluding any member thereof whose
own Disability is at issue in a given case) based upon such evidence as it
deems necessary and appropriate. A Participant shall not be considered disabled
unless he or she furnishes such medical or other evidence of the existence of
the Disability as the Committee, in its sole discretion, may require.

 

(j) Effective Date: June 30, 1998.

 

(k) Fair Market Value: On a given date, the
arithmetic mean of the high and low prices of the Shares as reported for such
date, or if no trade was reported for such date then on the latest preceding
date for which a trade was reported, by a recognized reporting service
designated by the Committee.

 

(l) Option: A stock option granted under the
Plan.

 

(m) Participant: Any director of the Company
who has been granted an Award under the Plan, for so long as the Award is
outstanding.

 

(n) Person: As such term is used for purposes
of Section 13(d) or 14(d) of the Act (or any successor section thereto).

 

(o) Plan: The 1998 IMS Health Incorporated
Non-Employee Directors’ Stock Incentive Plan, as amended and restated.

 

 

(p) Restricted Stock: An Award of a Share
subject to a risk of forfeiture and non-transferability restrictions granted
under Section 7 of the Plan.

 

(q) Restricted Stock Unit or RSU: An Award,
granted under Section 7, representing a contractual commitment of the
Company to deliver to the Participant, at a specified future date, one Share,
if specified vesting conditions are met. Dividend equivalents equal to the
value of dividends on outstanding shares shall be paid or credited on RSUs, if
and subject to such terms as may be specified by the Committee, including terms
that may provide for forfeiture of such dividend equivalents if the
corresponding RSU is forfeited and terms ensuring convenient administration of
the Plan.

 

(r) Retirement: Termination of service with the
Company after such Participant has attained age 70, regardless of the length of
such Participant’s service; or, with the prior written consent of the Committee
(excluding any member thereof whose own Retirement is at issue in a given
case), termination of service at an earlier age after the Participant has
completed six or more years of service with the Company.

 

(s) Shares: Shares of common stock, par value
$0.01 per share, of the Company.

 

3.    Shares
Subject to the Plan

 

Subject to adjustment as
provided in Section 9(a), the total number of Shares reserved and
available for delivery under the Plan for Awards outstanding at May 2,
2003 or thereafter granted shall be 909,962. The Shares delivered under the
Plan may consist, in whole or in part, of authorized and unissued Shares or
treasury Shares. Shares subject to an Award under the Plan that is canceled,
expired, forfeited, settled in cash, or otherwise terminated without a delivery
of Shares to the Participant, including the number of Shares withheld or
surrendered in payment of any exercise or purchase price of an Award, will
become available for Awards under the Plan.

 

4.    Administration

 

(a) Administrative
Authority.    The Plan shall be administered by
the Board or Committee, provided that any determination increasing the amount
or value of Awards that may granted in any year shall be subject to the
approval of the Board. The Committee may delegate its duties and powers in
whole or in part to any subcommittee thereof consisting solely of at least two “non-employee
directors” within the meaning of Rule 16b-3 under the Act (or any
successor rule thereto). In addition, the Committee may delegate
administrative responsibilities, including with respect to deferrals
implemented under the Plan, to an executive officer or committee of executive
officers and employees. The Board and the Committee are authorized to interpret
the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determinations that either deems
necessary or desirable for the administration of the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan in the manner and to the extent the Committee deems necessary or
desirable. Any decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned (including, but not limited to, Participants and their beneficiaries
or successors).

 

(b) Restriction
on Option Repricing.    Without the prior
approval of the Company’s stockholders, Options granted under the Plan will not
be repriced, replaced or regranted through cancellation or by lowering the
Option Price of a previously granted Option. For this purpose, “repriced”
means: (i) amending the terms of an Option after it is granted to lower
its exercise price; (ii) any other action that is treated as a repricing
under generally accepted accounting principles; and (iii) canceling an
Option at a time when its strike price is equal to or greater than the fair
market value of the underlying Stock, in exchange for another Option,
Restricted Stock, or other equity, 

 

 

unless the cancellation and exchange occurs in
connection with a merger, acquisition, spin-off or other similar corporate
transaction. A cancellation and exchange described in clause (iii) of
the preceding sentence will be considered a repricing regardless of whether the
Option, Restricted Stock or other equity is delivered simultaneously with the
cancellation, regardless of whether it is treated as a repricing under
generally accepted accounting principles, and regardless of whether it is
voluntary on the part of the Participant.

 

5.    Eligibility

 

A director who is not an
employee of the Company or any subsidiary of the Company as of the date that an
Award is granted shall be eligible to participate under this Plan.

 

6.    Terms and
Conditions of Options

 

Options granted under the
Plan shall be non-qualified stock options for federal income tax purposes, as
evidenced by the related Option agreements, and shall be subject to the
foregoing and the following terms and conditions and to such other terms and
conditions, not inconsistent therewith, as the Board or the Committee shall
determine:

 

(a) Grants.    A
Participant may receive grants of Options, on such dates and authorizing the
purchase of such number of Shares as determined by the Board or Committee in
its sole discretion. In addition, the Board or Committee may authorize the
grant of Options in lieu of payment of fees to eligible directors, upon the election
of the director, in accordance with Section 8. The Board or Committee may
set such other terms of Options granted hereunder, subject to the explicit
provisions of the Plan.

 

(b) Option
Price.    The exercise price per Share of an
Option shall be determined by the Committee, but shall not be less than 100% of
the Fair Market Value of the Shares on the date an Option is granted.

 

(c) Exercisability.    Options
granted under the Plan shall be exercisable at such time and upon such terms
and conditions as may be determined by the Committee, but in no event shall an
Option be exercisable more than ten years after the date it is granted.

 

(d) Exercise
of Options.    Except as otherwise provided in
the Plan or in a related Option agreement, an Option may be exercised for all,
or from time to time any part, of the Shares for which it is then exercisable.
For purposes of Section 6 of the Plan, the exercise date of an Option
shall be the later of the date a notice of exercise is received by the Company
and, if applicable, (A) the date payment is received by the Company
pursuant to clauses (i), (ii) or (iii) in the following sentence or (B) the
date of sale by a broker of all or a portion of the Shares being purchased
pursuant to clause (iv) in the following sentence. The exercise price
for the Shares as to which an Option is exercised shall be paid to the Company
in full at the time of exercise at the election of the Participant (i) in
cash, (ii) in Shares having a Fair Market Value equal to the aggregate
Option exercise price for the Shares being purchased and satisfying such other
requirements as may be imposed by the Committee, including, if no additional
accounting expense to the Company will result, by directing the withholding of
Shares issuable upon exercise of the Option, (iii) partly in cash and
partly in such Shares, or (iv) through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the aggregate Option exercise price for the Shares being purchased not later
than the time of delivery of the Shares to the broker, subject to limitations
under applicable law. No Participant shall have any rights to dividends or
other rights of a shareholder with respect to Shares subject to an Option until
the Participant has given written notice of exercise of the Option, paid in
full for such Shares and, if applicable, has satisfied any other conditions
imposed by the Committee pursuant to the Plan. The Committee may impose
restrictions on Option shares, subject to applicable law.

 

 

(e) Termination
Provisions Relating to Certain Options.    An
Option granted under this Section 6 not in lieu of fees under Section 8
shall be subject to the following vesting and exercise terms in the event of
termination of a Participant’s service as a director:

 

(i)    Death.    If
a Participant’s service as a director of the Company terminates by reason of
death after the date of grant of an Option, the unexercised portion of such
Option shall immediately vest in full and the Option may thereafter be
exercised only during the shorter of (A) the remaining stated term of the
Option or (B) five years after the date of death.

 

(ii)   Disability or Retirement.    If
a Participant’s service as a director of the Company terminates by reason of
Disability or Retirement after the date of grant of an Option, the unexercised
portion of such Option shall immediately vest in full and such Option may
thereafter be exercised only during the shorter of (A) the remaining
stated term of the Option or (B) five years after the date of such
termination of service; provided, however, that if a Participant dies within a
period of five years after such termination of service, the unexercised portion
of the Option may thereafter be exercised, during the shorter of (A) the
remaining stated term of the Option or (B) the period that is the longer
of five years after the date of such termination of service or one year after
the date of death.

 

(iii)  Other Termination of Service.    Unless
otherwise specified by the Board not later than the time of grant of an Option,
if a Participant’s service as a director of the Company terminates for any
reason other than death, Disability or Retirement after the date of grant of an
Option as described above, the unexercised portion of an Option may thereafter
be exercised only during the period ending 90 days after the date of such
termination of service, but only to the extent to which such Option was
exercisable at the time of such termination of service.

 

7.    Terms and
Conditions of Restricted Stock and Restricted Stock Units

 

Restricted Stock or RSUs
granted under the Plan shall be subject to the foregoing and the following
terms and conditions and to such other terms and conditions, not inconsistent
therewith, as the Board or Committee shall determine:

 

(a)           Grants.    A
Participant may receive, on such dates as determined by the Committee in its
sole discretion, grants consisting of such amounts of Restricted Stock or RSUs
as determined by the Committee in its sole discretion.

 

(b)           Restrictions.    Restricted
Stock and RSUs granted under the Plan shall be subject to such vesting and
forfeiture terms as may be specified by the Board or Committee not later than
the time of grant of the Award. For so long as such Award is subject to a risk
of forfeiture, such Award may not be sold, transferred, pledged, assigned or
otherwise disposed of under any circumstances. Restricted Stock Units shall
remain subject to restrictions on transferability and deferral of settlement,
in accordance with Section 12, for such periods, after the risk of
forfeiture has lapsed, as may be specified by the Committee. Thus, deferral of
RSUs at the election of the Participant is specifically authorized, provided
that, in order to comply with Section 409A of the Internal Revenue Code
(the “Code”), any election to defer RSUs may be made in accordance with Section 13(a)(i) and
(ii).

 

(c)           Acceleration.
Notwithstanding anything in the Plan to the contrary except for applicable
provisions of Section 13, (i) the restrictions set forth in Section 7(b) of
the Plan (including any elected deferral period) shall automatically lapse in
the event that a Participant terminates service as a director of the Company as
a result of death or Disability, (ii) the risk of forfeiture of RSUs 

 

 

shall automatically lapse upon a Change in Control,
and shares shall be distributed in settlement of such RSUs in accordance with Section 9(b),
and (iii) the Committee (excluding any member thereof whose own Award is
at issue in a given case) may, in its sole discretion, accelerate the lapsing
of the restrictions set forth in Section 7(b) of the Plan in the
event that a Participant terminates service as a director of the Company for
any other reason. In the case of RSUs which constitute a deferral of compensation
subject to Code Section 409A, no discretion may be exercised to change the
time of distribution of such RSUs except as may be permitted under Section 409A.
In the absence of acceleration under this Section 7(c), all Shares of
Restricted Stock and all RSUs as to which the risk of forfeiture has not
previously lapsed pursuant to Section 7(b) of the Plan shall be
forfeited upon the Participant’s separation from service as a director of the
Company.

 

(d)           Settlement
of RSUs. Unless a different
settlement date for RSUs is specified by the Board or Committee as a term of
the Award at grant or has been validly elected as a deferral by the Participant
or is required by this Plan (including Section 13), the settlement date
for RSUs will be the applicable vesting date. Shares will be delivered to the
Participant on or within 15 days following the applicable settlement date,
subject to Section 13.

 

8.    Issuance
of Shares, Deferred Share Units, and Options in Lieu of Cash Fees

 

The Board or Committee may
authorize the grant of Shares, Deferred Share Units, or Options in lieu of cash
fees otherwise payable to a non-employee director for service to the Company in
their capacity as a director, if and to the extent elected by the director.
Cash fees for these purposes includes annual retainer, meeting fees, such fees
for service as a member of a Board committee, and fees for service in a
leadership capacity with respect to the Board or a committee. Elections and
other terms of any deferral of cash fees will be subject to Section 13
hereof. Deferral will occur under this Section 8 as of the date the cash
fees would otherwise have been payable but for the valid election to defer,
even if the date at which the deferred amount is deemed invested in Shares or
Options are granted in lieu of cash fees is a later date. Awards granted under
this Section 8 shall be subject to the foregoing and the following terms
and conditions and to such other terms and conditions, not inconsistent
therewith, as the Board or Committee shall determine:

 

(a) Grant of
Shares or Deferred Share Units.    The number of
Shares or Deferred Share Units granted in lieu of cash fees shall be determined
by dividing the amount of cash fees being forgone or deferred by the director
by the Fair Market Value of a Share at the date such fees were otherwise
payable or another date designated by the Committee, not later than
90 days after the date such fees were otherwise payable, provided that the
Committee’s designation of a date other than the fee-payment date shall be made
prior to the affected fee-payment date.

 

(b) Grant of
Options.    The number of Options granted in
lieu of cash fees shall be determined by dividing the amount of cash fees being
forgone by the director by the Option value at the date such fees were
otherwise payable or another date designated by the Committee. Such designated
date may be at any time within a reasonable period, not exceeding approximately
one year, over which the director’s fees being forgone otherwise would have
been payable; provided, however, that the Committee’s designation of a date or
dates other than the fee-payment date shall be made prior to the affected
fee-payment date. The Committee may specify vesting and forfeiture terms to
provide that the Option will not be retained if the service for which the
director would have received the cash fees is not in fact performed. Option
value shall be determined from time to time by the Committee, based on a
reasonable stock option valuation methodology consistently applied, provided
that the Committee may specify a uniform Option value or a formula for
determining such value that may remain in effect for a period of approximately
one year, for administrative convenience and to provide predictable terms to
Participants committing to forgo fees.

 

(c) Other
Terms of Deferred Share Units and Options In Lieu of Fees.    Subject
to Section 6 and other provisions of the Plan, the Board or Committee may
specify the duration of Deferred Share 

 

 

Units and Options, settlement dates of Deferred
Share Units, any post-termination exercise periods of Options, and all other
terms of Awards to be granted in lieu of fees, including terms relating to the
deferral of such fees.

 

9.    Adjustments
Upon Certain Events

 

Notwithstanding any other
provision in the Plan to the contrary, the following provisions shall apply to
all Awards granted under the Plan:

 

(a) Generally.    In the event of any change in the outstanding Shares after the Effective Date by reason of any Share dividend or split, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of Shares of other corporate exchange, or any large, special, and non-recurring distribution to Shareholders, the Committee in its sole discretion and without liability to any person may make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or kind of Shares or other securities issued or reserved for issuance pursuant to the Plan or pursuant to outstanding Awards, (ii) the Option exercise price and/or (iii) any other affected terms of such Awards, and the Committee make such adjustments to outstanding Awards as it deems necessary or appropriate to preserve without enlarging the rights of each Participant with respect to his or her Award. The forgoing notwithstanding, in the case of outstanding Awards, the Committee shall adjust such Awards upon the occurrence of any equity restructuring within the meaning of Statement of Financial Accounting Standards No. 123(R) in order to preserve without enlarging the rights of each Participant with respect to such Awards.
 

(b) Change
in Control.    In the event of a Change in
Control, the Committee in its sole discretion and without liability to any
person may take such actions, if any, as it deems necessary or desirable with
respect to any Award (including, without limitation, (i) the acceleration
of an Award, (ii) the payment of a cash amount in exchange for the
cancellation of an Award (in the case of an Option, not to exceed intrinsic
value at the date of Committee action or a single specified date thereafter)
and/or (iii) the requiring of the issuance of substitute Awards that will
substantially preserve the value, rights and benefits of any affected Awards
previously granted hereunder) as of the date of the consummation of the Change
in Control. In furtherance of this authority, upon a Change in Control, any
outstanding RSUs or Deferred Share Units shall become immediately vested. RSUs
and Deferred Share Units that do not constitute deferrals of compensation under
Code Section 409A will be settled within five business days after such
Change in Control (subject to earlier settlement as provided below). RSUs and
Deferred Share Units, and deferred cash under the NEDDCP (as defined below)
that constitute deferrals of compensation under Section 409A (“409A Awards”)
will be settled within five business days after (i) the occurrence of a
409A Change in Control (as defined below) occurring at the time of or following
the Change in Control or (ii) upon occurrence of the Change in Control
occurring within 90 days after the 409A Change in Control, but only if the
occurrence of the Change in Control is non-discretionary and objectively
determinable at the time of the 409A Change in Control (in this case, the Participant
shall have no influence on when during such 90-day period the settlement shall
occur). If a Change in Control occurs but settlement of a 409A Award does not
occur under the preceding sentence, such 409A Award shall be settled at the
earliest of (i) the earliest permitted time of settlement that would have
applied in the absence of a Change in Control, (ii) the occurrence of a
409A Change in Control, or (iii) the Participant’s separation from
service, subject to the six-month delay rule set forth in Section 13(a)(iii)(B).
In the event that any such 409A Award cannot be settled upon a Change in
Control or immediately upon the Participant’s separation from service after a
Change in Control, the Participant will have the right to elect to denominate such
409A Award in cash (based on the then Fair Market Value of Shares) both at the
time of the Change in Control and again upon separation from service following
the Change in Control. If the Participant elects to denominate such a 409A
Award in cash, the Company will adjust the cash payment to reflect the deferred
settlement date by multiplying the cash amount 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 409A Award was denominated in
cash until and including the date of payment of such award to the Participant
and the denominator of which is 365, and pay such adjusted amount at settlement.
In the case of RSUs and Deferred Share Units, settlement that otherwise could
occur in the five business days after a Change in Control under the foregoing
provisions shall, if possible, occur early enough to permit the Participant to
participate in a transaction that is related to the Change in Control, such as
a tender offer or a cash election merger)

 

10.  Successors and
Assigns

 

The Plan shall be binding on
all successors and assigns of the Company and a Participant, including without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the Participant’s creditors, or any designated beneficiary.

 

11.  Amendments and
Termination

 

The Board may amend, alter,
discontinue or terminate the Plan, except that any amendment or alteration
shall be subject to the approval of the Company’s shareholders at or before the
next annual meeting of shareholders for which the record date is after the date
of such Board action if (a) such shareholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Shares may then be listed or quoted, or
(b) such amendment or alteration would materially increase the number of
shares reserved for the purposes of the Plan, materially broaden the class of persons
eligible to participate in the Plan or materially increase benefits accruing to
Participants. The Board may, in its discretion, determine to submit other
amendments or alterations to the Plan to shareholders for approval. The
Committee may act to amend or alter the Plan, but only if the amendment would
not require shareholder approval and otherwise does not materially increase the
cost of the Plan to the Company. The Board or Committee can act to amend
outstanding Awards. The foregoing notwithstanding, no amendment or other change
to the Plan or to the terms of an outstanding Award shall be made which would
materially and adversely affect the rights of a Participant under any Award
theretofore granted without such Participant’s consent.

 

12.  Nontransferability
of Awards

 

An Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution, and the additional restrictions on
transferability will apply to certain awards under Section 13(a)(viii). During
the lifetime of a Participant, an Award, if exercisable, shall be exercisable
only by such Participant. An Award exercisable after the death of a Participant
may be exercised by the legatees, personal representatives or distributees of
the Participant or a beneficiary designated in accordance with procedures
specified by the Company. Notwithstanding
anything to the contrary herein, the Committee, in its sole discretion, shall
have the authority to waive this Section 12 (or any part thereof) with
respect to Awards that do not constitute a deferral of compensation under Code Section 409A
(certain RSUs and Deferred Share Units will constitute such Section 409A
deferrals of compensation) to the extent that this Section 12 (or any part
thereof) is not required under the rules promulgated under any law, rule or
regulation applicable to the Company.

 

13.   Compliance
With Code Section 409A

 

(a)     409A Deferrals. Other provisions of the Plan notwithstanding,
the terms of any Award that constitutes a deferral of compensation under Code Section 409A,
and any other such deferral of compensation under the 1998 IMS Health
Incorporated Non-Employee Directors Deferred Compensation Plan (the “NEDDCP”)
implemented under this Plan (together, “409A Deferrals,” which includes cash
deferrals under the NEDDCP), including any authority of the Company and 

 

 

rights
of the Participant with respect to the 409A Deferrals, shall be limited to
those terms permitted under Section 409A, and any terms not permitted
under Section 409A shall be automatically modified and limited to the
extent necessary to conform with Section 409A but only to the extent that
such modification or limitation is permitted under Code Section 409A and
the regulations and guidance issued thereunder. The following rules will
apply to 409A Deferrals:

 

(i)            Elections. If a Participant is permitted to elect to defer compensation
and in lieu thereof receive a 409A Deferral, or is permitted to elect to defer
any payment under an Award resulting in a 409A Deferral, such election will be
permitted only at times in compliance with Section 409A (including
transition rules thereunder). Such election shall be made in accordance
with Exhibit A to the 1998 Employees’ Stock Incentive Plan;

 

(ii)           Changes in Distribution Terms. The Committee may, in its discretion,
require or permit on an elective basis a change in the distribution terms
applicable to 409A Deferrals (and Awards that are not 409A Deferrals if they
qualify for the short-term deferral exemption under Section 409A) in
accordance with, and to the fullest extent permitted by, applicable guidance of
the Internal Revenue Service (including Proposed Treasury Regulation § 1.409A,
Preamble § XI.C and IRS Notice 2005-1), and otherwise in accordance with Section 409A
and regulations thereunder. The Senior Vice President — Human Resources and
General Counsel of the Company are authorized to modify any such outstanding
Awards to permit election of different deferral periods provided that any such
modifications may not otherwise increase the benefits to Participants or the
costs of such Awards to the Company. Other provisions of this Plan
notwithstanding, changes to
distribution timing resulting from amendments to this Plan or changes in
Participant elections in 2008 shall not have the affect of accelerating
distributions into 2008 or causing distributions that otherwise would have
occurred in 2008 to be deferred until a year after 2008;

 

(iii)          Exercise and Distribution. Except as provided
in Section 13(a)(iv) hereof, no right relating to a 409A Deferral
shall be exercisable (if the exercise would result in a distribution) or a
deferred amount otherwise distributable to a Participant (or his or her
beneficiary) except upon the occurrence of one of the following (or a date
related to the occurrence of one of the following), which must be specified in
a written document governing such 409A Deferral and otherwise meet the
requirements of Treasury Regulation § 1.409A-3:

 

(A)          Specified Time. A specified time or a fixed
schedule;

 

(B)           Separation from Service. The Participant’s
separation from service (within the meaning of Treasury Regulation
§ 1.409A-1(h) and other applicable rules under Code Section 409A);
provided, however, that if the Participant is a “specified employee” under
Treasury Regulation § 1.409A-1(i), settlement under this Section 13(a)(iii)(B) shall
instead occur at the expiration of the six-month period following separation
from service under Section 409A(a)(2)(B)(i). During such six-month delay
period, no acceleration of settlement may occur, except (1) acceleration
shall occur in the event of death of the Participant, (2), if the distribution
date was specified as the earlier of separation from service or a fixed date
and the fixed date falls within the delay period, the distribution shall be
triggered by the fixed date, and (3) acceleration may be permitted
otherwise if and to the extent permitted under Section 409A. In the case
of installments, this delay shall not affect the timing of any installment
otherwise payable after the six-month delay period. With respect to any 409A
Deferral, a reference in any agreement or other governing document to a
termination of service as a director (or a termination of employment
interpreted to refer to a director’s service) 

 

 

which
triggers a distribution shall be deemed to mean a “separation from service”
within the meaning of Treasury Regulation § 1.409A-1(h);

 

(C)           Death. The death of the Participant. Unless a
specific time otherwise is stated for payment of a 409A Deferral upon death,
such payment shall occur in the calendar year in which falls the 30th
day after death;

 

(D)          Disability. The date the Participant has
experienced a 409A Disability (as defined below); and

 

(E)           409A Change in Control. The occurrence of a
409A Change in Control (as defined below).

 

(iv)          No Acceleration. The exercise or distribution
of a 409A Deferral may not be accelerated prior to the time specified in
accordance with Section 13(a)(iii) hereof, except in the case of one
of the following events:

 

(A)          Unforeseeable Emergency. The occurrence of an
Unforeseeable Emergency, as defined below, but only if the net amount payable
upon such settlement does not exceed the amounts necessary to relieve such
emergency plus amounts necessary to pay taxes reasonably anticipated as a
result of the settlement, after taking into account the extent to which the
emergency is or may be relieved through reimbursement or compensation from
insurance or otherwise or by liquidation of the Participant’s other assets (to
the extent such liquidation would not itself cause severe financial hardship),
or by cessation of deferrals under the Plan. Upon a finding that an
Unforeseeable Emergency has occurred with respect to a Participant, any
election of the Participant to defer compensation that will be earned in whole
or part by services in the year in which the emergency occurred or is found to
continue will be immediately cancelled.

 

(B)           Domestic Relations Order. The 409A Deferral
may permit the acceleration of the exercise or distribution time or schedule to
an individual other than the Participant as may be necessary to comply with the
terms of a domestic relations order (as defined in Section 414(p)(1)(B) of
the Code).

 

(C)           Conflicts of Interest. Such 409A Deferral may
permit the acceleration of the settlement time or schedule as may be necessary
to comply with an ethics agreement with the Federal government or to comply
with a Federal, state, local or foreign ethics law or conflict of interest law
in compliance with Treasury Regulation § 1.409A-3(j)(4)(iii).

 

(D)          Change. The Committee may exercise the
discretionary right to accelerate the lapse of the substantial risk of
forfeiture of any unvested compensation deemed to be a 409A Deferral upon a
409A Change in Control or to terminate the Plan upon or within 12 months after
a 409A Change in Control, or otherwise to the extent permitted under Treasury
Regulation § 1.409A-3(j)(4)(ix), or accelerate settlement of such 409A
Deferral in any other circumstance permitted under Treasury Regulation
§ 1.409A-3(j)(4).

 

(v)           Definitions. For purposes of this Section 13,
the following terms shall be defined as set forth below:

 

(A)          “409A Change in Control” shall be deemed to
have occurred if, in connection with a Change in Control (or any other event
defined as a change in control 

 

 

relating
to a 409A Deferral under any applicable Company document), there occurs a
change in the ownership of the Company, a change in effective control of the
Company, or a change in the ownership of a substantial portion of the assets of
the Company, as defined in Treasury Regulation § 1.409A-3(i)(5).

 

(B)           “409A Disability” means an event which
results in the Participant being (i) unable to engage in any substantial
gainful activity 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, or (ii), 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, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Company or its subsidiaries.

 

(C)           “Unforeseeable Emergency” means a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in Code Section 152,
without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)) of the
Participant, loss of the Participant’s property due to casualty, or similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, and otherwise meeting the definition set
forth in Treasury Regulation § 1.409A-3(i)(3).

 

(vi)          Time of Distribution. In the case of any
distribution of a 409A Deferral, if the timing of such distribution is not
otherwise specified in the Plan or an Award agreement or other governing
document, the distribution shall be made within 60 days after the date at which
the settlement of the Award is specified to occur. In the case of any
distribution of a 409A Deferral during a specified period following a
settlement date, the maximum period shall be 90 days, and the Participant shall
have no influence (other than permitted deferral elections) on any
determination as to the tax year in which the distribution will be made during
any period in which a distribution may be made;

 

 (vii)        “Specified
Employee.”  “Specified
Employee” means an employee of the Company, at a time that any stock of the
Company is publicly traded, who satisfies the requirements for being designated
a “key employee” under Code Section 416(i)(1)(A)(i), (ii) or (iii) 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 Treasury Regulation §  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 Treasury Regulation Section § 
1.409A-1(i)(6)..

 

 (viii)       Non-Transferability. The provisions of Section 13 notwithstanding,
no 409A Award409A Deferral or right relating thereto shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant or the Participant’s
Beneficiary.

 

 

(ix)           Limitation on Setoffs. If the Company has a
right of setoff that could apply to a 409A Award409A Deferral, such right may
only be exercised at the time the 409A Award 409A Deferral would have been
distributed to the Participant or his or her Beneficiary.

 

(x)            409A Rules Do Not Constitute Waiver of
Other Restrictions. The rules applicable to 409A Deferrals under this Section 13(a) constitute
further restrictions on terms of Awards set forth elsewhere in this Plan.

 

(b)           Separate Payments. Unless
otherwise specified in the applicable Award agreement, each vesting tranche of
an Award shall be deemed to be a separate payment for purposes of Code Section 409A,
and any portion of a vesting tranche that would vest on a pro rata basis in the
event of a separation from service on December 31 of a given year, and the
portion of such vesting tranche that would not so vest, each shall be deemed to
be a separate payment for purposes of Code Section 409A.

 

(c)           Distributions Upon Vesting. In the case of any Non-409A Deferral providing for a distribution upon
the lapse of a substantial risk of forfeiture, if the timing of such
distribution is not otherwise specified in the Plan or an Award agreement or
other governing document, the distribution shall be made not later than March 15
of the year following the year in which the substantial risk of forfeiture
lapsed. In all cases, the Participant shall have no influence (aside from any
permitted deferral election) on any determination as to the tax year in which
the distribution will be made.

 

(d)           Limitation
on Adjustments. Any
adjustment under Section 9 shall be implemented in a way that complies
with applicable requirements under Section 409A so that Option and SARs
that are not 409A Deferrals do not, due to the adjustment, become 409A
Deferrals, and otherwise so that no adverse consequences under Section 409A
result to Participants.

 

(e)           Limit
on Authority to Amend. The
authority to adopt amendments under Section 11 does not include authority
to take action by amendment that would have the effect of causing Awards to
fail to meet applicable requirements of Section 409A.

 

(f)            Scope and Application of this Provision. For purposes of this Section 13,
references to a term or event (including any authority or right of the Company
or a Participant) being “permitted” under Section 409A mean that the term
or event will not cause the Participant to be deemed to be in constructive
receipt of compensation relating to the 409A Deferral prior to the distribution
of cash, Shares or other property or to be liable for payment of interest or a
tax penalty under Section 409A.

 

(g)           Unanticipated Early Taxation of Awards In the case of any vested Award other than
Award as to which the Participant has elected to be subject to taxation at
grant under Code Section 83(b), if the Participant is deemed to receive
taxable income for any taxable year that is prior to the taxable year in which
such Award is to be settled as a result of the failure of the Award terms
hereunder to comply with the requirements of Code Section 409A, the vested
Award shall be settled immediately and cash or Shares delivered to the
Participant to the extent such Award (or the value thereof) is required to be
included in the Participant’s income. If the Participant becomes subject to any
tax penalty or interest under Code Section 409A by reason of such Award,
the Company will reimburse the Participant on a fully grossed-up and after-tax
basis for any such tax penalty or interest (so that the Participant is held
economically harmless) ten business days prior to the date such tax penalty or
interest is due and payable by the Participant to the government.

 

14.  Nonexclusivity of
the Plan

 

Neither the adoption of the
Plan by the Board nor any submission of the Plan or amendments thereto to a
vote of shareholders of the Company shall be construed as creating any
limitations on the 

 

 

power of the Board or Committee to adopt such other
compensatory arrangements as it may deem desirable, including, without
limitation, the granting of awards otherwise than under the Plan, and such
other arrangements may be either applicable generally or only in specific
cases.

 

15.  Choice of Law

 

The Plan shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed in the State of New York.

 

16.  Effectiveness of the
Plan and Plan Termination

 

The Plan became effective as
of the Effective Date. The Plan will terminate at such time as no Shares remain
available for issuance and the Company has no further obligations with respect
to outstanding Awards.

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