Document:

Exhibit 10.2

 

 

Employment Agreement for Robert H. Steinfeld

 

As Amended and Restated as of January 1, 2005

 

 

IMS
HEALTH INCORPORATED

 

Employment
Agreement for Robert H. Steinfeld

 

As
Amended and Restated as of January 1, 2005

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”) by and between IMS HEALTH INCORPORATED, a Delaware
corporation (the “Company”), and Robert H. Steinfeld (“Executive”), which was
first effective as of November 14, 2000 (the “Effective Date”), and
thereafter amended and restated effective as of February 11, 2003 and
amended effective as of January 1, 2005 is hereby amended and restated in
its entirety effective as of January 1, 2005.

 

WITNESSETH

 

WHEREAS, Executive has
served the Company and its predecessors in executive capacities since February 24,
1997;

 

WHEREAS, the Company desires
to continue to employ Executive as Senior Vice President and General Counsel of
the Company, and Executive desires to continue such employment on the terms and
conditions herein set forth; and

 

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

 

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

 

1.             Employment.

 

The Company hereby agrees to
employ Executive as its Senior Vice President and General Counsel (with the
principal executive duties set forth below in Section 3), and Executive
hereby agrees to accept such employment and serve in such capacities, during
the Term as defined in Section 2 (subject to Section 7(c) and
7(e)) and upon the terms and conditions set forth in this Agreement.

 

2.             Term.

 

The term of employment of
Executive under this Agreement (the “Term”) shall be the period commencing on
the Effective Date and ending on December 31, 2002 and any period of
extension thereof in accordance with this Section 2, except that the Term
will end at a date, prior to the end of such period or extension thereof,
specified in Section 6 or 7 in the event of termination of Executive’s
employment. The Term, if not previously ended, shall be extended automatically
without further action by either party by one additional year (added to the end
of the Term) first on December 31, 2002 (extending the Term to
December 31, 2003) and on each succeeding December 31 thereafter,
unless either party shall have served written notice in accordance with
Section 12(d) upon the other party on or before the June 30
preceding a December 31 extension date electing not to extend the Term
further as of that December 31 extension date, in which case employment
shall terminate on that December 31 and the Term shall end at that date,
subject to earlier termination of employment and earlier termination of the
Term in accordance with Section 6 or 7. The foregoing notwithstanding, in
the event there occurs a Potential Change in Control during the period of 180
days prior to the December 31 on which the Term will terminate as a result
of notice given by the Executive or the Company hereunder, the Term shall be
extended automatically at that December 31 until 

 

1

 

the day after the earlier of
(a) the date the Change in Control is consummated; or (b) the date
the Change in Control contemplated by such Potential Change in Control is fully
and finally abandoned. Any termination by the Company of Executive’s employment
without Cause (as defined in Section 8(a)) or any termination by Executive
of his employment for Good Reason (as defined in
Section 8(e)(i) through (viii)) following the occurrence of such
Potential Change in Control but prior to the Change in Control contemplated by
such Potential Change in Control shall be deemed a termination by the Company
without Cause within two years after a Change in Control as set forth in
Section 7(e) and a termination by Executive for Good Reason within
two years after a Change in Control as set forth in Section 7(f), respectively,
upon the occurrence of the Change in Control contemplated by such Potential
Change in Control and the compensation and benefits payable pursuant to
Sections 7(e) or 7(f), as the case may be, shall be paid as provided
therein as though Executive’s date of termination had occurred immediately
following such Change in Control; provided, however, that the provisions of
Sections 7(c) or 7(d), respectively, shall continue to apply in the
interim and there shall be no duplication of any compensation or benefits theretofore
paid or to be paid to Executive pursuant to Sections 7(c) or 7(d).

 

3.             Offices and Duties.

 

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

 

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

 

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

 

4.             Salary and Annual Incentive
Compensation.

 

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

 

(a)           Base Salary. The Company will pay to Executive during the Term a base salary, the
annual rate of which shall be $275,000, payable in cash in substantially equal
semi-monthly installments commencing at the beginning of the Term, and
otherwise in accordance with the Company’s usual payroll practices with respect
to senior executives (except to the extent deferred under Section 5(d)).
Executive’s annual base salary shall be reviewed by the Human Resources
Committee (the Compensation and Benefits Committee before January 1, 2007)
(the “Committee”) of the Board of Directors (the “Board”) at least once in each
calendar year, and may be increased above, but may not be reduced below, the
then-current rate of such base salary. For purposes of this Agreement, “Base
Salary” means Executive’s then-current base salary.

 

2

 

(b)           Annual Incentive Compensation. The Company will pay to Executive during
the Term annual incentive compensation which shall offer to Executive an
opportunity to earn additional compensation based upon performance in amounts
determined by the Committee in accordance with the applicable plan and
consistent with past practices of the Company; provided, however, that the
annual incentive opportunity during the Term shall be not less than the greater
of 51% of Base Salary or the annual target incentive opportunity for the prior
year for achievement of target level performance, with the nature of the
performance and the levels of performance triggering payments of such annual
target incentive compensation for each year to be established and communicated
to Executive during the first quarter of such year by the Committee; provided,
further, that annual incentive payable for performance in 2000 shall be based
on the amount of salary actually paid during the year.  In addition, the
Committee (or the Board) may determine, in its discretion, to increase the
Executive’s annual target incentive opportunity or provide an additional annual
incentive opportunity, in excess of the annual target incentive opportunity,
payable for performance in excess of or in addition to the performance required
for payment of the annual target incentive amount. Any annual incentive
compensation payable to Executive shall be paid in accordance with the
applicable plan (except to the extent deferred under Section 5(d)).

 

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

 

(a)           Executive Compensation Plans.  Executive shall be entitled during
the Term to participate, without discrimination or duplication, in executive
compensation plans and programs intended for general participation by senior
executives of the Company, as presently in effect or as they may be modified or
added to by the Company from time to time, subject to the eligibility and other
requirements of such plans and programs, including without limitation any stock
option plans, plans under which restricted stock/restricted stock units,
performance-based restricted stock/restricted stock units (“PERS”) or
performance-accelerated restricted stock/restricted stock units (“PARS”) may be
awarded, other annual and long-term cash and/or equity incentive plans, and
deferred compensation plans; provided, however, that Executive’s participation
in such plans and programs, in the aggregate, shall provide him with
compensation and incentive award opportunities substantially no less favorable
than those provided by the Company to Executive under such plans and programs
as in effect on February 11, 2003.  The Company makes no commitment
under this Section 5(a) to provide participation opportunities to
Executive in all plans and programs or at levels equal to (or otherwise
comparable to) the participation opportunity of any other executive.  The
foregoing notwithstanding, Executive shall be entitled to participate in the
PERS program based on annual performance commencing with the 2001 performance
year, and will not be granted PERS with respect to the 2000 performance year.

 

(b)           Employee and Executive Benefit Plans.  Executive shall be entitled during
the Term to participate, without discrimination or duplication, in employee and
executive benefit plans and programs of the Company, as presently in effect or
as they may be modified or added to by the Company from time to time, subject
to the eligibility and other requirements of such plans and programs, including
without limitation plans providing pensions, supplemental pensions,
supplemental and other retirement benefits, medical insurance, life insurance,
disability insurance, and accidental death or dismemberment insurance, as well
as savings, profit-sharing, and stock ownership plans; provided, however, that
Executive’s participation in such benefit plans and programs, in the aggregate,
shall provide Executive with benefits and compensation substantially no less
favorable than those provided by the Company to Executive under such plans and
programs as in effect on February 11, 2003.  The Company makes no
commitment under this Section 5(b) to provide participation
opportunities to Executive in all benefit plans and programs or at levels equal
to (or otherwise comparable to) the participation opportunity of any other
executive.  The foregoing notwithstanding, Executive shall be eligible to
participate or receive compensation and benefits under the Company’s Employee
Protection Plan and his Change-in-Control Agreement, provided that any
compensation and benefits to Executive under the Employee Protection Plan and
the Change-in-Control Agreement shall be payable only if and to the extent that
such benefits would exceed the corresponding benefits payable under this
Agreement.

 

3

 

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

 

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

 

(ii)           The Company will provide Executive with coverage as Senior Vice
President and General Counsel with respect to long-term disability insurance
and benefits substantially no less favorable (including any required
contributions by Executive) than such insurance and benefits in effect on February 11,
2003;

 

(iii)          Executive will be covered by Company-paid group and individual term
life insurance providing a death benefit no less than the death benefit
provided under Company-paid insurance in effect on February 11, 2003;
provided, however, that, with the consent of Executive, such insurance may be
combined with a supplementary retirement funding vehicle; and

 

(iv)          Executive will be entitled to benefits under the IMS Health
Incorporated Executive Pension Plan (“EXPP”), with the effective date of
Executive’s participation therein to be February 11, 2003. 
Notwithstanding anything to the contrary in this Agreement or the EXPP,
Executive’s years of service with the Company (and its predecessor Cognizant
Corporation) prior to the date that his participation in the EXPP commenced
shall be included as Service for purposes of participation, vesting and accrual
of benefits under the EXPP subject to the special rules contained in this
Section 5(b)(iv).  For the period from February 11, 2003 through
January 31, 2006, Executive shall be deemed a participant in both the EXPP
and the IMS Health Incorporated U.S. Executive Retirement Plan (the “USERP”),
with Service apportioned between the two Plans; for this purpose, Executive
shall be credited with additional Service for purposes of the EXPP (the
“Additional Service Credits”), including without limitation, Sections
3.1(b)(i) and 3.2(b)(i) of the EXPP, with a corresponding reduction
in Service for purposes of Sections 3.1(b)(i) and 3.2(b)(i) of the
USERP, as follows:

 

	
  Date

  	
   

  	
  Years of Service

  Under USERP

  	
   

  	
  Years of Service

  Under EXPP

  	
   

  	
  Total Years

  of Service

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Feb. 11,
  2003

  	
   

  	
  6.0833

  	
   

  	
  0

  	
   

  	
  6.0833

  	
   

  
	
  Jan. 31,
  2004

  	
   

  	
  4

  	
   

  	
  3

  	
   

  	
  7

  	
   

  
	
  Jan. 31,
  2005

  	
   

  	
  2

  	
   

  	
  6

  	
   

  	
  8

  	
   

  
	
  Jan. 31,
  2006

  	
   

  	
  0

  	
   

  	
  9

  	
   

  	
  9

  	
   

  

 

From and after
January 31, 2006, such Additional Service Credits shall remain credited under
the EXPP, and Executive’s benefits shall be determined solely under the EXPP,
with Executive’s further Service accruing in accordance with the terms of the
EXPP.  The provisions governing the accrual of Service under the EXPP set
forth herein shall take precedence over any inconsistent provision of the EXPP,
including without limitation Section 1.34(e) of the EXPP (providing
phased-in credit for pre-participation Service).  Years of Service
credited in accordance with the above table shall be determined in accordance
with the rules generally applicable to crediting Service under the EXPP,
including the rules which provide that Service shall be computed in
1/12ths of a year, with a full month being granted for each completed or
partial calendar month.  The foregoing notwithstanding, in the event that
Executive shall become eligible for Retirement Benefits or Deferred Vested
Benefits under the USERP and/or the EXPP, the aggregate benefit payable to
Executive under the USERP and/or the EXPP shall not be less than the Retirement
Benefit or Deferred Vested Benefit, as the case may be, that would have been
payable to Executive under the USERP had Executive continued to participate in
the USERP from February 11, 2003 until the date of his retirement or 

 

4

 

termination of
employment.  Moreover, in the event that Executive’s Surviving Spouse
shall become eligible for death benefits under the USERP and/or the EXPP prior
to the commencement of benefit payments to Executive, the Surviving Spouse’s
Benefit shall not be less than the Surviving Spouse’s Benefit that would have
been payable under the USERP had Executive continued to participate in the
USERP from February 11, 2003 until the date of Executive’s death. 
Furthermore, for purposes of calculating Retirement Benefits, Deferred Vested
Benefits or Surviving Spouse’s Benefits payable under the USERP and/or the
EXPP, Executive’s Average Final Compensation shall not be less than
$465,000.  Capitalized terms used herein and not otherwise defined shall
have the meaning ascribed to them in the EXPP (or if applicable, the USERP).

 

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

 

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

 

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

 

5

 

numerator of which is the
number of days from and including the date on which the award was denominated
in cash until and including the date of payment of such award to Executive and
the denominator of which is 365 and pay such adjusted amount.

 

(d)           Deferral of Compensation.  If the Company has in effect or
adopts any deferral program or arrangement permitting executives to elect to
defer any compensation, Executive will be eligible to participate in such
program.  Any plan or program of the Company which provides benefits based
on the level of salary, annual incentive, or other compensation of Executive
shall, in determining Executive’s benefits, take into account the amount of
salary, annual incentive, or other compensation prior to any reduction for
voluntary contributions made by Executive under any deferral or similar
contributory plan or program of the Company (excluding compensation that would
not be taken into account even if not deferred), but shall not treat any payout
or settlement under such a deferral or similar contributory plan or program to
be additional salary, annual incentive, or other compensation for purposes of
determining such benefits, unless otherwise expressly provided under such plan
or program.

 

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

 

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

 

(g)           Limitations Under Code Section 409A.  Anything in this Section 5 to
the contrary notwithstanding, with respect to any payment otherwise required
hereunder, in the event of any delay in the payment date as a result of
Section 7(g) of this Agreement (relating to the six-month delay in
payment of certain benefits to Specified Employees as required by
Section 409A of the Code), the Company will adjust the payment to reflect the
deferred payment date by multiplying the payment by the product of the
six-month CMT Treasury Bill annualized yield rate as published by the U.S.
Treasury for the date on which such payment would have been made but for the
delay (or the most appropriate surrogate for such rate if such rate is not
available) multiplied by a fraction, the numerator of which is the number of
days by which such payment was delayed and the denominator of which is 365. The
Company will pay the adjusted payment at the beginning of the seventh month
following Executive’s termination of employment.  Notwithstanding the foregoing, if calculation
of the amounts payable by such payment date is not administratively practicable
due to events beyond the control of Executive (or Executive’s beneficiary or
estate) and for reasons that are commercially reasonable, payment will be made
as soon as administratively practicable in compliance with Section 409A of
the Code and the Regulations. In the event of Executive’s death during such
six-month period, payment will be made in the payroll period next following the
payroll period in which Executive’s death occurs.

 

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

 

(a)           Retirement.  Executive may elect to terminate employment hereunder by
retirement at or after age 55 or, upon the request of Executive, at such
earlier age as may be approved by the Board (in either case,
“Retirement”).  At the time Executive’s employment terminates due to
Retirement, the Term will terminate, all obligations of the Company and
Executive under Sections 1 through 5 of this Agreement will immediately cease
except for obligations which expressly continue after termination of employment

 

6

 

due to Retirement, and the
Company will pay Executive at the time specified in Section 6(d), and
Executive will be entitled to receive, the following:

 

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

 

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

 

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

 

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

 

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

 

(i)            Executive’s Compensation Accrued at
Termination;

 

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

 

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

 

(iv)          All restricted stock and deferred stock
awards, including outstanding PERS awards, all other long-term incentive
awards, and all deferral arrangements under Section 5(d), shall 

 

7

 

be governed by the plans and
programs under which the awards were granted or governing the deferral, and all
rights under the EXPP, USERP and any other benefit plan shall be governed by
such plan subject to, in the case of the EXPP and USERP,
Section 5(b) hereof including without limitation that Additional
Service Credits as provided in Section 5(b)(iv) of this Agreement
that were credited as of Executive’s death shall be fully reflected and
provided additionally that the surviving spouse benefit under the USERP and/or
the EXPP shall be in an amount equal to 50% of the benefit that would have been
payable under Section 3.1 or 3.2 of the EXPP upon Executive’s attainment
of age 65 or Section 3.1 or 3.2 of the USERP upon Executive’s attainment
of age 55 (whichever is applicable or in the appropriate combination thereof)
without actuarial reduction or any other discount except as provided in
Section 5.4 of the EXPP and the USERP with respect to a reduction on
account of a surviving spouse who is more than ten years younger than
Executive, and payment to Executive’s surviving spouse shall be made in a lump
sum on the first day of the month next following the month in which Executive’s
death occurs; and

 

(v)           For a period of 36 months after Executive’s
death, t he Company shall pay to Executive’s surviving spouse on a monthly
basis during such 36-month period and in accordance with
Section 7(g) of this Agreement an amount equal on an after-tax basis
to the total cost of coverage incurred by Executive’s surviving spouse during
such 36-month period for either COBRA continuation coverage or retiree health
coverage for Executive’s surviving spouse (and eligible dependents, if any)
under the Company’s Health Plan, as elected by Executive’s surviving
spouse.  No further benefits shall be paid under this
Section 6(b)(v) after the expiration of such 36-month period.

 

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

 

(i)            Executive’s Compensation Accrued at
Termination;

 

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

 

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

 

(iv)          The performance period under any long-term
incentive plan pursuant to which equity or other awards have been granted shall
be treated as satisfied and any performance objectives upon which the earning
of performance-based restricted stock and deferred stock awards and other
long-term incentive awards is conditioned shall be deemed to have been met at
target level at the date of termination. PERS for the year of termination shall
be awarded which match the dollar value pro-rata amount of annual incentive 

 

8

 

compensation payable
pursuant to Section 6(c)(ii) above and such PERS awards together with
all previously granted and outstanding PERS awards, restricted stock,
restricted stock units, deferred stock awards and other long-term incentive
awards (to the extent then or previously earned, or earned as a result of this
Section) shall become fully vested and non-forfeitable at the date of such
termination, and, in other respects, such awards shall be governed by the plans
and programs and the agreements and other documents pursuant to which such
awards were granted;

 

(v)           Disability benefits shall be payable in
accordance with the Company’s plans, programs and policies, including the EXPP
and USERP, provided; however, that there shall be no duplication of disability
benefits provided under the EXPP and USERP and provided further that
Executive’s retirement benefits under the USERP and/or EXPP shall fully reflect
the Additional Service Credits that were credited as of Executive’s retirement
as provided in Section 5(b)(iv) of this Agreement and the payment of
such retirement benefits under the USERP and/or EXPP shall be made at the time
and in the form provided in the USERP and/or EXPP, as the case may be, in an
amount equal to 100% of the benefit under Sections 3.1 or 3.2 of the EXPP or
Sections 3.1 or 3.2 of the USERP (whichever is applicable or in the appropriate
combination thereof) without actuarial reduction or any other discount, and all
deferral arrangements under Section 5(d) will be settled in
accordance with the plans and programs governing the deferral; and

 

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

 

9

 

(d)           Other Terms of Payment Following Retirement,
Death, or Disability. 
Nothing in this Section 6 shall limit the benefits payable or provided in
the event Executive’s employment terminates due to Retirement, death, or
Disability under the terms of plans or programs of the Company more favorable
to the Executive (or his beneficiaries) than the benefits payable or provided
under this Section 6 (except in the case of annual incentives in lieu of
which amounts are paid hereunder), including plans and programs adopted after
the date of this Agreement.  Amounts payable under this Section 6
following Executive’s termination of employment, other than those expressly
payable following determination of performance for the year of termination for
purposes of annual incentive compensation or otherwise expressly payable on a
deferred basis, will be paid in the payroll period next following the payroll
period in which termination of employment occurs; subject, however, to the
provisions of Section 7(g) of this Agreement relating to the
six-month delay in payment of certain benefits to Specified Employees as
required by Section 409A of the Code. Any payment or reimbursement due
within such six-month period shall be delayed to the end of such six-month
period as required by Section 7(g). The Company will adjust the payment or
reimbursement to reflect the deferred payment date by multiplying the payment
by the product of the six-month CMT Treasury Bill annualized yield rate as
published by the U.S. Treasury for the date on which such payment or
reimbursement would have been made but for the delay (or the most appropriate
surrogate for such rate if such rate is not available) multiplied by a
fraction, the numerator of which is the number of days by which such payment or
reimbursement was delayed and the denominator of which is 365. In the event of
a reimbursement that is required by other terms of this Agreement to be made on
an after-tax basis which is subject to the six-month delay in payment as
described in Section 7(g) of this Agreement, the reimbursement as
adjusted in accordance with this Section 6(d) to reflect the deferred
payment date shall be paid to Executive on an after-tax and fully grossed-up
basis so that Executive is held economically harmless. The Company will pay the
adjusted payment or reimbursement at the beginning of the seventh month
following Executive’s termination of employment.  Notwithstanding the foregoing, if calculation
of the amounts payable by such payment date is not administratively practicable
due to events beyond the control of Executive (or Executive’s beneficiary or
estate) and for reasons that are commercially reasonable, payment will be made
as soon as administratively practicable in compliance with Section 409A of
the Code and the Regulations. In the event of Executive’s death during such
six-month period, payment will be made in the payroll period next following the
payroll period in which Executive’s death occurs.

 

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

 

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

 

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

 

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

 

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

 

(b)           Termination by Executive Other Than For Good
Reason.  Executive may
terminate his employment hereunder voluntarily for reasons other than Good
Reason (as defined in Section 8(e)) at any time upon 90 days’ written
notice to the Company.  An election by Executive not to extend the Term 

 

10

 

pursuant to Section 2 hereof shall be deemed to be a termination of
employment by Executive for reasons other than Good Reason at the date of
expiration of the Term, unless a Change in Control (as defined in Section 8(b))
occurs prior to, and there exists Good Reason at, such date of expiration.  At the time Executive’s employment is
terminated by Executive other than for Good Reason the Term will terminate, all
obligations of the Company and Executive under Sections 1 through 5 of this
Agreement will immediately cease, and the Company will pay Executive at the
time specified in Section 7(g), and Executive will be entitled to receive, the
following:

 

 

(i)            Executive’s Compensation Accrued at
Termination;

 

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

 

(iii)          All deferral arrangements under Section 5(d) will
be settled in accordance with the plans and programs governing the deferral,
and all rights under the EXPP, USERP and any other benefit plan shall be
governed by such plan, subject to Section 5(b) hereof, including
without limitation that Additional Service Credits that were credited as of
Executive’s termination as provided in Section 5(b)(iv) of this
Agreement shall be fully reflected.

 

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

 

(i)            Executive’s Compensation Accrued at
Termination;

 

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

 

11

 

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

 

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

 

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

 

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

 

(vii)         All rights under the EXPP and USERP shall be
governed by such plan, subject to Section 5(b) hereof including
without limitation that Additional Service Credits that were credited as of
Executive’s termination as provided in Section 5(b)(iv) of this
Agreement shall be fully reflected; and

 

(viii)        For a period of two years after such
termination, Executive shall continue to participate in those employee and
executive benefit plans and programs under Section 5(b) to the extent
such plans and programs provide medical, disability and life insurance benefits
in which Executive was participating immediately prior to termination, the
terms of which allow Executive’s continued participation, as if Executive had
continued in employment with the Company during such period; provided, however,
that such participation shall terminate, or the benefits under such plans and
programs shall be reduced, if and to the extent Executive becomes covered (or
is eligible to become covered) by plans of a subsequent employer or other
entity to which Executive provides services during such period providing
comparable benefits. For so long as Executive shall participate in the Company
plans and programs referred to in this Section 7(c)(viii), Executive shall
receive cash payments equal on an after-tax basis to his cost for participating
in such plans and programs, with such payments to be made by the Company to
Executive on a monthly basis and in accordance with Section 7(g) of
this Agreement.  If or when the terms of
the Company plans and programs referred to in this
Section 7(c)(viii) do not allow Executive’s continued participation,
Executive shall instead be paid cash payments equivalent on an after-tax basis
to the value of the additional benefits described in this 

 

12

 

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

 

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

 

(i)            Executive’s Compensation Accrued at
Termination;

 

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

 

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

 

13

 

days Executive was employed
in the year of termination and the denominator of which is the total number of
days in the year of termination;

 

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

 

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

 

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

 

(vii)         All rights under the EXPP and USERP shall be
governed by such plan, subject to Section 5(b) hereof including
without limitation that Additional Service Credits that were credited as of
Executive’s termination as provided in Section 5(b)(iv) of this
Agreement shall be fully reflected; and

 

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

 

14

 

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

 

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

 

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

 

(i)            Executive’s Compensation Accrued at
Termination;

 

(ii)           Cash in an aggregate amount equal to three
times the sum of (A) Executive’s Base Salary under
Section 4(a) immediately prior to termination plus (B) an amount
equal to the greater of (x) the portion of Executive’s annual target
incentive compensation potentially payable in cash to Executive (i.e.,
excluding the portion payable in PERS or in other non-cash awards) for the year
of termination or (y) the portion of Executive’s annual incentive
compensation that became payable in cash to Executive (i.e., excluding the
portion payable in PERS or in other non-cash awards) for the latest year
preceding the year of 

 

15

 

termination based on
performance actually achieved in that latest year.  The amount determined
to be payable under this Section 7(e)(ii) shall be paid by the
Company in a lump sum;

 

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

 

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

 

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

 

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

 

(vii)         All rights under the EXPP and USERP shall be
governed by such plan, subject to Section 5(b) hereof including
without limitation that Additional Service Credits that were credited as of
Executive’s termination as provided in Section 5(b)(iv) of this
Agreement shall be fully reflected; provided additionally that
(a) payments under the EXPP and USERP shall be made as provided in
Section 3.8 of the EXPP and the USERP in an amount equal to 100% of the
benefit under Section 3.1 or 3.2 of the EXPP or Section 3.1 or 3.2 of
the USERP (whichever is applicable or in the appropriate combination thereof)
without actuarial reduction or any other discount and (b) any additional
years of Service credited as a result of Section 3.8 of the EXPP or the
USERP (governing Change in Control) shall be credited in calculating the
benefits payable under the EXPP or the USERP, as the case may be; and

 

(viii)        For a period of three years after such
termination, Executive shall continue to participate in those employee and
executive benefit plans and programs under Section 5(b) to the extent
such plans and programs provide medical, disability and life insurance benefits
in which Executive was participating immediately prior to termination, the
terms of which allow Executive’s continued participation, as if Executive had
continued in employment 

 

16

 

with the Company during such
period, and on terms no less favorable than the terms applicable to Executive
before the Change in Control; provided, however, that such participation shall
terminate, or the benefits under such plans and programs shall be reduced, if
and to the extent Executive becomes covered (or is eligible to become covered)
by plans of a subsequent employer or other entity to which Executive provides
services during such period providing comparable benefits. For so long as
Executive shall participate in the Company plans and programs referred to in
this Section 7(e)(viii), Executive shall receive cash payments equal on an
after-tax basis to his cost for participating in such plans and programs, with
such payments to be made by the Company to Executive on a monthly basis and in
accordance with Section 7(g) of this Agreement.  If or when the terms of the Company plans and
programs referred to in this Section 7(e)(viii) do not allow
Executive’s continued participation, Executive shall instead be paid cash
payments equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(e)(viii) that Executive would
have received under such plans or programs had Executive continued to be
employed during such period, with such payments to be made by the Company to
Executive on a monthly basis during such period and in accordance with
Section 7(g) of this Agreement (it being understood that the Company
payments to Executive attributable to these benefits will be equal on an
after-tax basis to the full monthly premium cost to Executive to purchase such
benefits independently, and shall not be limited to the value of the Company
contribution, if any, to the cost of an employee’s coverage under any such
medical, disability or life benefits plan, but shall not exceed the highest
risk premium charged by a carrier having an investment grade or better credit
rating). Notwithstanding the foregoing, Executive must continue to satisfy the
conditions set forth in Section 10 in order to continue receiving the
benefits provided under this Section 7(e)(viii).  Executive agrees to promptly notify the
Company of any employment or other arrangement by which Executive provides
services during the benefits-continuation period and of the nature and extent
of benefits for which Executive becomes eligible during such period which would
reduce or terminate benefits under this Section 7(e)(viii); and the
Company shall be entitled to recover from Executive any payments and the fair
market value of benefits previously made or provided to Executive hereunder
which would not have been paid under this Section 7(e)(viii) if the
Company had received adequate prior notice as required by this sentence.
Notwithstanding the foregoing, nothing in this
Section 7(e)(viii) shall alter any right Executive may have to
participate in any Company medical, disability or life insurance benefits plan
or program that covers former employees of the Company in accordance with the
generally applicable terms of such plan or program nor shall it alter
Executive’s right to health coverage as provided by Section 5(b) of
this Agreement.

 

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

 

(i)            Executive’s Compensation Accrued at
Termination;

 

17

 

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

 

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

 

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

 

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

 

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

 

(vii)         All rights under the EXPP and USERP shall be
governed by such plan, subject to Section 5(b) hereof including
without limitation that Additional Service Credits that were credited as of
Executive’s termination as provided in Section 5(b)(iv) of this
Agreement shall be fully reflected; provided additionally that
(a) payments under the EXPP and USERP shall be made as provided in
Section 3.8 of the EXPP and the USERP in an amount equal to 100% of the
benefit under Section 3.1 or 3.2 of the EXPP or Section 3.1 or 3.2 of
the USERP (whichever is applicable or in the appropriate combination thereof)
without actuarial reduction or any other discount and (b) any additional
years of Service credited as a result of Section 3.8 of the EXPP or the
USERP (governing Change in Control) shall be credited in calculating the
benefits payable under the EXPP or the USERP, as the case may be; and

 

18

 

(viii)        For a period of three years after such
termination, Executive shall continue to participate in those employee and
executive benefit plans and programs under Section 5(b) to the extent
such plans and programs provide medical, disability and life insurance benefits
in which Executive was participating immediately prior to termination, the
terms of which allow Executive’s continued participation, as if Executive had
continued in employment with the Company during such period, and on terms no
less favorable than the terms applicable to Executive before the Change in
Control; provided, however, that such participation shall terminate, or the
benefits under such plans and programs shall be reduced, if and to the extent
Executive becomes covered (or is eligible to become covered) by plans of a
subsequent employer or other entity to which Executive provides services during
such period providing comparable benefits. For so long as Executive shall
participate in the Company plans and programs referred to in this
Section 7(f)(viii), Executive shall receive cash payments equal on an
after-tax basis to his cost for participating in such plans and programs, with
such payments to be made by the Company to Executive on a monthly basis and in
accordance with Section 7(g) of this Agreement.  If or when the terms of the Company plans and
programs referred to in this Section 7(f)(viii) do not allow
Executive’s continued participation, Executive shall instead be paid cash
payments equivalent on an after-tax basis to the value of the additional
benefits described in this Section 7(f)(viii) that Executive would
have received under such plans or programs had Executive continued to be
employed during such period, with such payments to be made by the Company to
Executive on a monthly basis during such period and in accordance with
Section 7(g) of this Agreement (it being understood that the Company
payments to Executive attributable to these benefits will be equal on an
after-tax basis to the full monthly premium cost to Executive to purchase such
benefits independently, and shall not be limited to the value of the Company
contribution, if any, to the cost of an employee’s coverage under any such
medical, disability or life benefits plan, but shall not exceed the highest
risk premium charged by a carrier having an investment grade or better credit
rating). Notwithstanding the foregoing, Executive must continue to satisfy the
conditions set forth in Section 10 in order to continue receiving the
benefits provided under this Section 7(f)(viii).  Executive agrees to
promptly notify the Company of any employment or other arrangement by which
Executive provides services during the benefits-continuation period and of the
nature and extent of benefits for which Executive becomes eligible during such
period which would reduce or terminate benefits under this
Section 7(f)(viii); and the Company shall be entitled to recover from
Executive any payments and the fair market value of benefits previously made or
provided to Executive hereunder which would not have been paid under this
Section 7(f)(viii) if the Company had received adequate prior notice
as required by this sentence. Notwithstanding the foregoing, nothing in this
Section 7(f)(viii) shall alter any right Executive may have to
participate in any Company medical, disability or life insurance benefits plan
or program that covers former employees of the Company in accordance with the
generally applicable terms of such plan or program nor shall it alter
Executive’s right to health coverage as provided by Section 5(b) of
this Agreement.

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi) Anything in this
Agreement to the contrary notwithstanding, payments to be made under this
Agreement upon termination of Executive’s employment which are subject to 

 

20

 

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

 

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

 

8.             Definitions Relating to
Termination Events.

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)           All vested, nonforfeitable amounts owing or
accrued at the date of Executive’s termination of employment under any
compensation and benefit plans, programs, and arrangements set forth or
referred to in Sections 4(b) and 5(a) and 5(b) hereof (including
any earned and vested annual incentive compensation and long-term incentive
award) in which Executive theretofore participated, payable in accordance with
the terms and 

 

22

 

conditions of the plans,
programs, and arrangements (and agreements and documents thereunder) pursuant
to which such compensation and benefits were granted or accrued; and

 

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

 

(d)           “Disability.”  For purposes of this Agreement,
“Disability” shall have the meaning ascribed to it under the EXPP.

 

(e)           “Good Reason.”  For purposes of this Agreement, “Good
Reason” shall mean, without Executive’s express written consent, the occurrence
of any of the following circumstances unless, in the case of subsections (i),
(iv), (vi) or (viii) hereof, such circumstances are fully corrected
prior to the date of termination specified in the notice of termination given
in respect thereof:

 

(i)            the assignment to Executive of duties
inconsistent with Executive’s position and status as Senior Vice President and
General Counsel, or an alteration, adverse to Executive, in Executive’s
position and status as Senior Vice President and General Counsel or in the
nature of Executive’s duties, responsibilities, and authorities or conditions
of Executive’s employment from those relating to Executive position and status
as Senior Vice President and General Counsel (excluding changes in assignments
permitted under Section 3 and excluding inadvertent actions which are
promptly remedied); except the foregoing shall not constitute Good Reason if
occurring in connection with the termination of Executive’s employment for Cause,
Disability, Retirement, as a result of Executive’s death, or as a result of
action by or with the consent of Executive;

 

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

 

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

 

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

 

(v)           the failure by the Company to continue in
effect any material compensation or benefit plan in which Executive
participated immediately prior to a Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue
Executive’s 

 

23

 

participation therein (or in
such substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amounts of compensation or benefits provided and the level
of Executive’s participation relative to other participants, as existed at the
time of the Change in Control;

 

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

 

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

 

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

 

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

 

Notwithstanding the
foregoing provisions of this Section 8(e), and solely for purposes of the
payment of restricted stock units, stock appreciation rights, PERS and other
equity-based awards that are potentially subject to Section 409A of the
Code and which become payable as a result of Executive’s termination of
employment for “Good Reason” prior to or more than two years after a Change in
Control under Section 7(d)(v) of this Agreement and not for any other
purpose (it being understood that such awards are automatically accelerated
upon a Change in Control pursuant to Section 5(c) of this Agreement),
the following definition of Good Reason shall apply in lieu of the foregoing
definition:

 

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

 

(A)          the assignment to Executive of duties materially
inconsistent with Executive’s position and status as Senior Vice President and
General Counsel, or an alteration, materially adverse to Executive, in
Executive’s position and status as Senior Vice President and General Counsel or
in the nature of Executive’s duties, responsibilities, and authorities or
conditions of Executive’s employment from those relating to Executive position
and status as Senior Vice President and General Counsel (excluding changes in
assignments permitted under Section 3 and excluding inadvertent actions
which are promptly remedied); except the foregoing shall not constitute Good
Reason if occurring in connection with the termination of Executive’s
employment for Cause, Disability, Retirement, as a result of Executive’s death,
or as a result of action by or with the consent of Executive;

 

(B)           (I) a material reduction by the Company
in Executive’s Base Salary, (II) the setting of Executive’s annual target
incentive opportunity or payment of earned annual incentive in amounts
materially less than specified under or otherwise not in material conformity
with Section 4 hereof, or (III) a material change in compensation or
benefits not in material conformity with Section 5;

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

(a)           Rabbi Trust Funded Upon Potential Change in
Control. In the event of a
Potential Change in Control or Change in Control, the Company shall, not later
than 15 days thereafter, have established one or more rabbi trusts and shall
deposit therein cash in an amount sufficient to provide for full payment of all
potential obligations of the Company that would arise assuming consummation of
a Change in Control, or has arisen in the case of an actual Change in Control,
and a subsequent termination of Executive’s employment under
Section 7(e) or (f), and potential obligations under the last
sentence of Section 2 of this Agreement. Such rabbi trust(s) shall be
irrevocable and shall provide that the Company may not, directly or indirectly,
use or recover any assets of the trust(s) until such time as all
obligations which potentially could arise hereunder have been settled and paid
in full, subject only to the claims of creditors of the Company in the event of
insolvency or bankruptcy of the Company; provided, however, that if no Change
in Control has occurred within two years after such Potential Change in
Control, such rabbi trust(s) shall at the end of such two-year period
become revocable and may thereafter be revoked by the Company.

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

(a)           Non-Competition. Without the consent in writing of the
Board, Executive will not, at any time during the Term and for a period of two
years following termination of Executive’s employment for any reason, acting
alone or in conjunction with others, directly or indirectly (i) engage
(either as owner, investor, partner, stockholder, employer, employee,
consultant, advisor, or director) in any business in 

 

27

 

which he has been directly
engaged on behalf of the Company or any affiliate, or has supervised as an
executive thereof, during the last two years prior to such termination, or
which was engaged in or planned by the Company or an affiliate at the time of
such termination, in any geographic area in which such business was conducted
or planned to be conducted; (ii) induce any customers of the Company or
any of its affiliates with whom Executive has had contacts or relationships,
directly or indirectly, during and within the scope of his employment with the
Company or any of its affiliates, to curtail or cancel their business with the
Company or any such affiliate; (iii) induce, or attempt to influence, any
employee of the Company or any of its affiliates to terminate employment; or
(iv) solicit, hire or retain as an employee or independent contractor, or
assist any third party in the solicitation, hire, or retention as an employee
or independent contractor, any person who during the previous 12 months was an
employee of the Company or any affiliate; provided, however, that the
limitation contained in clause (i) above shall not apply if Executive’s
employment is terminated as a result of a termination by the Company without
Cause within two years following a Change in Control or is terminated by
Executive for Good Reason within two years following a Change in Control, and
provided further, that activities engaged in by or on behalf of the Company are
not restricted by this covenant. The provisions of subparagraphs (i), (ii),
(iii), and (iv) above are separate and distinct commitments independent of
each of the other subparagraphs.  It is agreed that the ownership of not
more than one percent of the equity securities of any company having securities
listed on an exchange or regularly traded in the over-the-counter market shall
not, of itself, be deemed inconsistent with clause (i) of this
Section 10(a).

 

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

 

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

 

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

 

28

 

(e)           Release of Employment Claims.  Executive agrees, as a condition to
receipt of any termination payments and benefits provided for in Sections 6 and
7 herein (other than Compensation Accrued at Termination), that he will execute
a general release agreement, in substantially the form set forth in Attachment
A to this Agreement, releasing any and all claims arising out of Executive’s
employment other than enforcement of this Agreement and other than with respect
to vested rights or rights provided for under Executive’s Change in Control
Agreement, any equity plan, any compensation plan or any benefit plan or
arrangement of the Company or rights to indemnification under any agreement,
law, Company organizational document or policy, or otherwise.  The Company will provide Executive with a
copy of such release simultaneously with or as soon as administratively
practicable following the delivery of the notice of termination provided in
Sections 6 and 7 of this Agreement, but not later than 21 days before (45 days
before if Executive’s termination is part of an exit incentive or other
employment termination program offered to a group or class of employees)
Executive’s termination of employment. 
Executive shall deliver the executed release to the Company eight days
before the date provided in Section 7(g) of this Agreement for the
payment of the termination payments and benefits payable under Sections 6 and 7
of this Agreement.

 

(f)            Forfeiture of Outstanding Options.  The provisions of Sections 6 and 7
notwithstanding, if Executive willfully and materially fails to substantially
comply with any restrictive covenant under this Section 10 or willfully
and materially fails to substantially comply with any material obligation under
this Agreement, all options to purchase Common Stock granted by the Company and
then held by Executive or a transferee of Executive shall be immediately
forfeited and thereupon such options shall be cancelled. Notwithstanding the
foregoing, Executive shall not forfeit any option unless and until there shall
have been delivered to him, within six months after the Board (i) had
knowledge of conduct or an event allegedly constituting grounds for such
forfeiture and (ii) had reason to believe that such conduct or event could
be grounds for such forfeiture, a copy of a resolution duly adopted by a
majority affirmative vote of the membership of the Board (excluding Executive)
at a meeting of the Board called and held for such purpose (after giving
Executive reasonable notice specifying the nature of the grounds for such
forfeiture and not less than 30 days to correct the acts or omissions
complained of, if correctable, and affording Executive the opportunity,
together with his counsel, to be heard before the Board) finding that, in the
good faith opinion of the Board, Executive has engaged and continues to engage
in conduct set forth in this Section 10(f) which constitutes grounds
for forfeiture of Executive’s options; provided, however, that if any option is
exercised after delivery of such notice and the Board subsequently makes the determination
described in this sentence, Executive shall be required to pay to the Company
an amount equal to the difference between the aggregate value of the shares
acquired upon such exercise at the date of the Board determination and the
aggregate exercise price paid by Executive. Any such forfeiture shall apply to
such options notwithstanding any term or provision of any option agreement. In
addition, options granted to Executive on or after January 1, 2000, and
gains resulting from the exercise of such options, shall be subject to
forfeiture in accordance with the Company’s standard policies relating to such
forfeitures and clawbacks, as such policies are in effect at the time of grant
of such options.

 

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

 

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

 

29

 

11.           Governing Law; Disputes;
Arbitration.

 

(a)           Governing Law.  Anything in the USERP or the EXPP to
the contrary notwithstanding, this Agreement and the rights and obligations of
the Company and Executive under the USERP and the EXPP are governed by and are
to be construed, administered, and enforced in accordance with the laws of the
State of Connecticut, without regard to conflicts of law principles, except
insofar as federal laws and regulations and the Delaware General Corporation
Law may be applicable. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to any successor provisions to such
sections. If under the governing law, any portion of this Agreement or the
USERP or the EXPP 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 therefrom. The invalidity of
any such portion shall not affect the force, effect, and validity of the
remaining portion thereof. If any court determines that any provision of
Section 10 of this Agreement is unenforceable because of the duration or
geographic scope of such provision, it is the parties’ intent that such court
shall have the power to modify the duration or geographic scope of such
provision, as the case may be, to the extent necessary to render the provision
enforceable and, in its modified form, such provision shall be enforced.  Anything in this Agreement to the contrary
notwithstanding, the terms of this Agreement shall be interpreted and applied
in a manner consistent with the requirements of Section 409A of the Code
and the Regulations so as not to subject Executive to the payment of any tax
penalty or interest which may be imposed by Section 409A of the Code and
the Company shall have no right to accelerate or make any payment under this
Agreement except to the extent such action would not subject Executive to the
payment of any tax penalty or interest under Section 409A of the Code.  If all or a portion of the benefits and
payments provided under this Agreement constitute taxable income to Executive
for any taxable year that is prior to the taxable year in which such payments
and/or benefits are to be paid to Executive as a result of the Agreement’s
failure to comply with the requirements of Section 409A of the Code and
the Regulations, the applicable payment or benefit shall be paid immediately to
Executive to the extent such payment or benefit is required to be included in
income.  If Executive becomes subject to
any tax penalty or interest under Section 409A of the Code by reason of
this Agreement, the Company shall reimburse Executive on a fully grossed-up and
after-tax basis for any such tax penalty or interest (so that Executive is held
economically harmless) ten business days prior to the date such tax penalty or
interest is due and payable by Executive to the government.

 

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

 

(c)           Arbitration.  Anything in the USERP or the EXPP to the contrary
notwithstanding, any dispute or controversy arising under or in connection with
this Agreement or the USERP or the EXPP shall be settled exclusively by
arbitration in Fairfield, CT, by three arbitrators in accordance with the
rules of the American Arbitration Association in effect at the time of submission
to arbitration. Judgment may be entered on the arbitrators’ award in any court
having jurisdiction. For purposes of entering any judgment upon an award
rendered by the arbitrators, the Company and Executive hereby consent to the
jurisdiction of any or all of the following courts: (i) the United States
District Court for the District of Connecticut, (ii) 

 

30

 

any of the courts of the
State of Connecticut, or (iii) any other court having jurisdiction. The
Company and Executive further agree that any service of process or notice
requirements in any such proceeding shall be satisfied if the rules of
such court relating thereto have been substantially satisfied. The Company and
Executive hereby waive, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to such jurisdiction and any
defense of inconvenient forum. The Company and Executive hereby agree that a
judgment upon an award rendered by the arbitrators may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to Section 11(b) of this Agreement, the Company shall bear
all costs and expenses arising in connection with any arbitration proceeding
pursuant to this Section 11 and shall pay such costs and expenses each
calendar quarter in accordance with the provisions of Section 7(g) of
this Agreement, but not later than the last day of the year in which the
expense was incurred. Notwithstanding any provision in this Section 11,
Executive shall be paid and shall be entitled to seek specific performance of
Executive’s right to be paid during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

 

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

 

12.           Miscellaneous.

 

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

 

31

 

duplicates a payment or
benefit received or receivable by Executive under any prior agreements and
understandings or under any benefit or compensation plan of the Company which
are in effect.

 

(b)           Successors; Transferability. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.

 

As used in this Agreement,
“Company” shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise and, in the case of an
acquisition of the Company in which the corporate existence of the Company
continues, the ultimate parent company following such acquisition. Neither this
Agreement nor the rights or obligations hereunder of the parties hereto shall
be transferable or assignable by Executive, except in accordance with the laws
of descent and distribution or as specified in Section 12(c), or by the
Company except to a successor as defined in this Section 12(b).

 

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

 

(d)           Notices. Whenever under this Agreement it becomes necessary to give notice,
such notice shall be in writing, signed by the party or parties giving or
making the same, and shall be served on the person or persons for whom it is intended
or who should be advised or notified, by Federal Express or other similar
overnight service or by certified or registered mail, return receipt requested,
postage prepaid and addressed to such party at the address set forth below or
at such other address as may be designated by such party by like notice:

 

If to the Company:

 

IMS HEALTH INCORPORATED

901 Main Avenue,
Suite 612

Norwalk, CT  06851

Attention: Chief Executive
Officer

 

If to Executive:

 

Mr. Robert H. Steinfeld

Senior Vice President and
General Counsel

IMS Health Incorporated

901 Main Avenue,
Suite 612

Norwalk, CT  06851

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

13.           Indemnification.

 

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

 

33

 

IN WITNESS WHEREOF,
Executive has hereunto set his hand and the Company has caused this instrument
to be duly executed this 24th day of October, 2008.

 

 

	
   

  	
  IMS HEALTH INCORPORATED

  
	
   

  	
   

  
	
   

  	
  /s/ David R. Carlucci

  
	
   

  	
  By: David R. Carlucci

  
	
   

  	
  Chairman of the Board,
  Chief Executive Officer and President

  
	
   

  	
   

  
	
   

  	
  /s/ Robert H. Steinfeld

  
	
   

  	
  Robert H. Steinfeld

  

 

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

 

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

 

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

 

By signing this Release, you
further agree as follows:

 

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

 

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

 

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

 

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

 

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

 

1

 

Your agreement to the terms
set forth above is voluntary.

 

 

	
  Name:

  	
   

  
	
  Signature:

  	
  Date:

  
	
  Received by:

  	
  Date:

  

 

 

Attachment:  Exhibit 1

 

2Exhibit 10.3

 

TIER-2

CHANGE-IN-CONTROL
AGREEMENT

FOR CERTAIN
EXECUTIVES

OF IMS HEALTH
INCORPORATED

 

PERSONAL AND CONFIDENTIAL

 

Mr. Robert
H. Steinfeld

Senior
Vice President, General Counsel & Corporate Secretary

IMS
Health Incorporated

901 Main
Avenue, Suite 612

Norwalk,
CT  06851

 

Dear Mr. Steinfeld:

 

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 to amend and restate this Change in Control
Agreement (the “Agreement”) as follows effective as of November 1, 2008:

 

1. Term of Agreement.

 

(a) Generally.  Except as provided in Section 1(b) hereof,
(i) this Agreement shall be effective as of the date on which the shares
of common stock of the Company that are owned by Cognizant Corporation (“Cognizant”)
are distributed to the holders of record of shares of Cognizant (July 1,
1998) and shall continue in effect through December 31, 2001, and (ii) commencing
on January 1, 2002, and each January 1 thereafter, this Agreement
shall be automatically extended for one additional year unless, not later than September 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) the
stockholders of the Company approve any transaction or series of transactions
under which the Company is merged or consolidated with any other company, other
than a merger or consolidation (A) which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 66 2/3% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and (B) after
which no Person holds 20% or more of the combined voting power of the
then-outstanding securities of the Company or such surviving entity;

 

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

 

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

 

2

 

(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,
subject only to the claims of creditors of the Company in the event of
insolvency or bankruptcy of 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 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.

 

3

 

(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 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 

 

4

 

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 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 

 

5

 

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 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 

 

6

 

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) 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)(v),
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)(v) 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)(v) 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)(v) 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)(v) 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.

 

(vi) 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

 

7

 

under the Company’s
retiree health and life insurance plans (providing benefits no less than those
provided on August 6, 1998) 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)(vi) 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 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)(v) or 3(b)(vi) 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 payments made under this Agreement due to your termination of employment
which are paid on or before the 15th day of 

 

8

 

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.

 

(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 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 

 

9

 

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 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 15 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 unless, in the case of Sections 3(e)(iv)(A),
(E), (F) or (G) hereof, such circumstances are fully corrected prior
to the Date of Termination specified in the Notice of Termination given in
respect thereof:

 

(A) the assignment
to you of any duties inconsistent with the position in the Company that you
held immediately prior to the Change in Control, or an 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 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 portion of your compensation or to pay to you any
portion of an installment of deferred compensation under any deferred
compensation program of the Company within seven days of the date such
compensation is due;

 

10

 

(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 6 hereof;

 

(G) any purported
termination of your employment that is not effected pursuant to a Notice of
Termination satisfying 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; or

 

(H) the lapse of
twelve months following the last day of the month in which the Change in
Control occurs.

 

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 except Section 3(e)(iv)(H).

 

(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)(v) and (vi) 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 

 

11

 

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.  Costs of Proceedings  The Company shall pay all costs and expenses,
including all attorneys’ fees and disbursements, of the Company and you in
connection with any legal proceedings, whether or not instituted by the Company
or you, relating to the interpretation or enforcement of any provision of this
Agreement; provided that if you instituted the proceeding and a finding (no
longer subject to appeal) is entered that you instituted the proceeding in bad
faith, you shall pay all of your costs and expenses, including attorneys’ fees
and disbursements. The Company shall pay prejudgment interest on any money
judgment obtained by you as a result of such proceeding, calculated at the rate
provided in Section 13 of this Agreement. 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 5 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.

 

6. 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 with the laws of
descent and distribution or as specified in Section 6(b), or by the
Company except to a successor as defined in Section 6(a).

 

7. Notice. 
Whenever under this Agreement it becomes necessary to give notice, such
notice shall be in writing, signed by the party or parties giving or making the
same, and shall be served on the person or persons for whom it is intended or
who should be advised or notified, by Federal Express or other similar
overnight service or by certified or registered mail, return receipt requested,
postage prepaid and addressed to such party at the respective address set forth
on the first page of this Agreement, or to such other address as may be
designated by such party by like notice, provided that any notice to the
Company shall be directed to the attention of the Chief Executive Officer.  If the parties by mutual agreement supply
each other with telecopier numbers for the purposes of providing notice by
facsimile, such notice shall also be proper notice under this Agreement. In the
case of Federal Express or other similar overnight service, such notice or
advice shall be effective when sent, 

 

12

 

and, in the cases of certified or registered mail, shall be effective
two days after deposit into the mails by delivery to the U.S. Post Office.

 

8. 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.

 

9. 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.

 

10. 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.

 

11. Entire Agreement.  During the term of this Agreement, this
Agreement cancels and supersedes any and all prior agreements and
understandings between you and the Company with respect to the subject matter
contained herein, except for your Employment Agreement with the Company and
contracts, plans or arrangements relating to compensation, equity or benefits
under executive compensation, equity or benefit plans of the Company and its
subsidiaries.  Notwithstanding the foregoing, in the event of any conflict
or ambiguity between this Agreement and your Employment Agreement with the
Company or the Employee Protection Plan as applicable to you or the Executive
Pension Plan (“EXPP”) or U.S. Executive Retirement Plan (“USERP”), the
provisions of your Employment Agreement shall govern except that you shall
remain entitled to any provision, right or benefit under this Agreement or the
Employee Protection Plan or the EXPP or the USERP for so long as such plan or
agreement remains in effect, if and to the extent that such provision, right or
benefit in such plan or agreement is more favorable to you than a corresponding
provision, right or benefit under your Employment Agreement (or if there is no
corresponding provision, right or benefit under your Employment
Agreement).  If any provision, right or
benefit under this Agreement or the Employee Protection Plan or the EXPP or the
USERP is more favorable to you than a corresponding provision, right or benefit
under your Employment Agreement (or if there is no corresponding provision,
right or benefit under your Employment Agreement), such provision, right or benefit
under this Agreement or the Employee Protection Plan or the EXPP or the USERP,
as the case may be, shall be deemed included in your Employment Agreement
without any requirement to give effect to the entirety of this Agreement or the
Employee Protection Plan or the EXPP or the USERP from which such provision, right
or benefit arose.  Notwithstanding the
foregoing, no payment or benefit under this Agreement or the Employee
Protection Plan or the EXPP or the USERP shall be made or extended which
duplicates any payment or benefit under your Employment Agreement.

 

12.  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, 

 

13

 

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.

 

13.  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 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:

  	
  /s/ David R.
  Carlucci

  
	
   

  	
   

  	
   

  	
  Chairman and Chief
  Executive Officer

  

 

 

Agreed to this 24th
day

 

of October, 2008.

 

	
  /s/ Robert H. Steinfeld

  	
   

  	
   

  	
   

  

 

 

14

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