[On March 28, 2000, IMS Health entered into letter agreements with its Chairman
and its Chief Executive Officer pursuant to which each of them would receive a
bonus for extraordinary efforts in negotiating a proposed strategic business
combination with TriZetto. Those letter agreements are reproduced below. In
light of the adverse market reaction to the proposed IMS Health-TriZetto merger
announced on March 29, 2000, on April 2, 2000 the Chairman and the Chief
Executive Officer requested IMS Health to terminate these letter agreements as
of that date. The Chairman of the Compensation & Benefits Committee of the Board
of Director's of IMS Health agreed to that request on April 2, 2000, and IMS
Health formalized that agreement by letter agreements dated April 19, 2000 which
are reproduced below.]
IMS HEALTH [LOGO]
Ms. Victoria R. Fash
Chief Executive Officer and President
IMS Health Incorporated
200 Nyala Farms
Westport, CT 06880
March 28, 2000
Mr. Robert E. Weissman
Chairman of the Board
IMS Health Incorporated
200 Nyala Farms
Westport, CT 06880
Re: Transaction Completion Incentive
Dear Bob:
The Compensation & Benefits Committee of the Board of Directors of IMS
Health Incorporated (the "Company") has authorized and approved a bonus
arrangement intended to reward you for your extraordinary efforts in negotiating
the proposed strategic business combination between the Company and TriZetto or
such other transaction determined by the Board, in its discretion, to be of
comparable magnitude and benefit to shareholders (the "Transaction"), and to
provide you with a substantial incentive to bring the Transaction to a
successful completion. We believe that the Transaction will greatly strengthen
the Company (combined with its Transaction partner) and confer a great benefit
upon the Company's stockholders.
Therefore, subject to your agreement to the terms of this letter, the
Company hereby provides to you the opportunity to earn a cash bonus (the
"Transaction Completion Incentive") on the terms and conditions set forth as
follows:
(1) You will have the opportunity to earn the Transaction Completion
Incentive if and only if the Board of Directors of the Company has
approved, and the Company has entered into, a definitive agreement,
on or before April 1, 2000, binding the Company and TriZetto (or
such other party determined by the Board to be comparable) to
consummate the Transaction, subject to customary conditions (the
"Transaction Agreement").
(2) If the Transaction is consummated pursuant to the terms of the
Transaction Agreement (as that Agreement may be amended from time to
time, with the approval of the Board of Directors), on or before
December 31, 2000 (the "Expiration Date"), the Company will pay you,
at the time of the closing of the Transaction, a cash amount equal
to $5,500,000.
(3) You will be responsible for payment of Federal income and other
taxes resulting from any payment of the Transaction Completion
Incentive, except to the extent that Section 9(b) (relating to taxes
resulting from golden parachute excise taxes) of your Employment
Agreement, as amended and restated (the "Employment Agreement"),
applies. The Company will withhold from any payment of the
Transaction Completion Incentive any such taxes it is required to
withhold by applicable tax withholding laws and regulations, and you
may direct the Company to withhold additional amounts to pay taxes
calculated at your applicable marginal rates.
(4) In the event of your termination of employment with the Company for
any reason prior to the time the Transaction Completion Incentive
becomes payable and prior to the Expiration Date, other than a
termination by the Company for Cause (as defined in your
Mr. Robert E. Weissman
March 28, 2000
Page 2
Employment Agreement) or your voluntary termination not for Good
Reason (as defined in your Employment Agreement), the Transaction
Completion Incentive opportunity will neither be canceled nor deemed
earned, but will instead remain outstanding according to its terms.
In the event the Company terminates you for Cause or you voluntarily
terminate employment not for Good Reason prior to the time the
Transaction Completion Incentive becomes payable and prior to the
Expiration Date, the Transaction Completion Incentive will be
immediately canceled. The provisions of this paragraph (4) override
any contrary provisions in your Employment Agreement.
(5) It is understood that your relinquishing the title of Chairman of
the Board of the Company and being appointed Vice Chairman of the
Board of the entity resulting from the Transaction, upon
consummation of the Transaction, will not constitute "Good Reason"
within the meaning of your Employment Agreement.
(6) The Transaction Completion Incentive shall not represent base salary
or annual incentive or annual bonus, for purposes of your Employment
Agreement or otherwise, and shall not be taken into account as
"compensation" for purposes of the Company's Supplemental Executive
Retirement Plan, any calculation of a severance benefit, or other
plans or programs of the Company.
If you are in agreement with the terms and conditions set forth in this
letter, please sign below (and on the duplicate copy of this letter, which
represents one and the same agreement) and return this letter to me within five
days after your receipt.
Sincerely yours,
IMS Health Incorporated
By: /s/ Victoria R. Fash
---------------------------------
Victoria R. Fash
Chief Executive Officer and President
I have read, understand and agree to the terms and conditions set forth in this
letter.
/s/ Robert E. Weissman March 28, 2000
- - --------------------------------- -------------------------------------
Robert E. Weissman Date
[In connection with discussions with another company about a possible strategic
business combination, which discussions were subsequently terminated, IMS Health
entered into a letter agreement dated February 4, 2000 with Mr. Weissman
substantially identical to that set forth above. The February 4 Agreement, which
is no longer in effect, is not reproduced here because of a confidentiality
agreement with that other company.]
IMS HEALTH [LOGO]
Mr. Robert E. Weissman
Chairman of the Board
IMS Health Incorporated
200 Nyala Farms
Westport, CT 06880
March 28, 2000
Ms. Victoria R. Fash
Chief Executive Officer and President
IMS Health Incorporated
200 Nyala Farms
Westport, CT 06880
Re: Transaction Completion Incentive
Dear Vickie:
The Compensation & Benefits Committee of the Board of Directors of IMS
Health Incorporated (the "Company") has authorized and approved a bonus
arrangement intended to reward you for your extraordinary efforts in negotiating
the proposed strategic business combination between the Company and TriZetto or
such other transaction determined by the Board, in its discretion, to be of
comparable magnitude and benefit to shareholders (the "Transaction"), and to
provide you with a substantial incentive to bring the Transaction to a
successful completion. We believe that the Transaction will greatly strengthen
the Company (combined with its Transaction partner) and confer a great benefit
upon the Company's stockholders.
Therefore, subject to your agreement to the terms of this letter, the
Company hereby provides to you the opportunity to earn a cash bonus (the
"Transaction Completion Incentive") on the terms and conditions set forth as
follows:
(1) You will have the opportunity to earn the Transaction Completion
Incentive if and only if the Board of Directors of the Company has
approved, and the Company has entered into, a definitive agreement,
on or before April 1, 2000, binding the Company and TriZetto (or
such other party determined by the Board to be comparable) to
consummate the Transaction, subject to customary conditions (the
"Transaction Agreement").
(2) If the Transaction is consummated pursuant to the terms of the
Transaction Agreement (as that Agreement may be amended from time to
time, with the approval of the Board of Directors), on or before
December 31, 2000 (the "Expiration Date"), the Company will pay you,
at the time of the closing of the Transaction, a cash amount equal
to $5,500,000.
(3) You will be responsible for payment of Federal income and other
taxes resulting from any payment of the Transaction Completion
Incentive, except to the extent that Section 9(b) (relating to taxes
resulting from golden parachute excise taxes) of your Employment
Agreement, as amended and restated (the "Employment Agreement"),
applies. The Company will withhold from any payment of the
Transaction Completion Incentive any such taxes it is required to
withhold by applicable tax withholding laws and regulations, and you
may direct the Company to withhold additional amounts to pay taxes
calculated at your applicable marginal rates.
(4) You agree that if, at the time the Transaction Completion Incentive
becomes payable, there remains any principal or interest outstanding
under the loan from the Company to
Ms. Victoria R. Fash
March 28, 2000
Page 2
you described in Section 5(g) of your Employment Agreement, you will
pay over to the Company, out of the portion of the Transaction
Completion Incentive remaining after taxes have been withheld
(including taxes in excess of mandatory withholding taxes, if so
directed by you), the amount of such remaining principal or interest
so as to retire the loan. It is understood that you will not be
obligated at that time to retire the loan to the extent that the
remaining principal and interest exceeds the after-tax portion of
the Transaction Completion Incentive. If any event has occurred
prior to payment of the Transaction Completion Incentive whereby the
Company has forgiven your obligation to repay the outstanding
principal and interest under the loan, the amount of principal and
interest forgiven shall represent an offset against the Company's
obligation to pay the Transaction Completion Incentive, so that the
amount of the Transaction Completion Incentive payable to you will
be reduced by the amount of the principal and interest forgiven.
(5) In the event of your termination of employment with the Company for
any reason prior to the time the Transaction Completion Incentive
becomes payable and prior to the Expiration Date, other than a
termination by the Company for Cause (as defined in your Employment
Agreement) or your voluntary termination not for Good Reason (as
defined in your Employment Agreement), the Transaction Completion
Incentive opportunity will neither be canceled nor deemed earned,
but will instead remain outstanding according to its terms
(including the obligation to repay the loan and the loan forgiveness
offset provision specified in paragraph (4)). In the event the
Company terminates you for Cause or you voluntarily terminate
employment for Good Reason prior to the time the Transaction
Completion Incentive becomes payable and prior to the Expiration
Date, the Transaction Completion Incentive will be immediately
canceled. The provisions of this paragraph (5) override any contrary
provisions in your Employment Agreement.
(6) It is understood that your relinquishing the title of Chief
Executive Officer and being appointed Chairman of the Board of the
entity resulting from the Transaction (with duties comparable in all
material respects to those of the Chairman of the company resulting
from the Transaction immediately following consummation thereof)
three years after consummation of the transaction will not
constitute "Good Reason" within the meaning of your Employment
Agreement.
(7) The Transaction Completion Incentive shall not represent base salary
or annual incentive or annual bonus, for purposes of your Employment
Agreement or otherwise, and shall not be taken into account as
"compensation" for purpose of the Company's Supplemental Executive
Retirement Plan, any calculation of a severance benefit, or other
plans or programs of the Company.
Ms. Victoria R. Fash
March 28, 2000
Page 3
If you are in agreement with the terms and conditions set forth in this
letter, please sign below (and on the duplicate copy of this letter, which
represents one and the same agreement) and return this letter to me within five
days after your receipt.
Sincerely yours,
IMS Health Incorporated
By: /s/ Robert E. Weissman
-------------------------
Robert E. Weissman
Chairman of the Board
I have read, understand and agree to the terms and conditions set forth in this
letter.
/s/ Victoria R. Fash March 28, 2000
- - ---------------------------- -----------------------------
Victoria R. Fash Date
[In connection with discussions with another company about a possible strategic
business combination, which discussions were subsequently terminated, IMS Health
entered into a letter agreement dated February 4, 2000 with Ms. Fash
substantially identical to that set forth above. The February 4 Agreement, which
is no longer in effect, is not reproduced here because of a confidentiality
agreement with that other company.]
April 19, 2000
IMS HEALTH [LOGO]
Robert E. Weissman
Chairman
IMS HEALTH
200 Nyala Farms
Westport, Connecticut 06880
Tel. 203-222-4242
Fax 203-222-4247
rweissman@imshealth.com
Victoria R. Fash
President and Chief Executive Officer
IMS Health Incorporated
200 Nyala Farms
Westport, CT 06880
Re: Termination of Transaction Completion Incentive Agreement
Dear Vickie
On February 4, 2000 and March 28, 2000, we entered into Transaction
Completion Incentive Agreements (the "Agreements"), pursuant to which you would
be awarded a cash bonus of $5.5 million upon the closing of a business
consolidation between the Company and [Name] (under the February 4th Agreement)
or The TriZetto Group, Inc. (under the March 28th Agreement) or upon the
consummation of another transaction of comparable magnitude. The purpose of this
letter is to document our subsequent agreement, which was reached between you
and the Chairman of the Compensation & Benefits Committee of the Board of
Directors on April 2, 2000, to terminate the Agreements as of that date.
Please sign your name where indicated below and return one copy of this
letter to the undersigned. Keep the other copy for your records.
Sincerely,
/s/ Robert E. Weissman
ACKNOWLEDGED:
/s/ Victoria R. Fash
- - --------------------------
Victoria R. Fash
ACKNOWLEGED:
/s/ Bernard Puckett
- - --------------------------
Bernard Puckett
Dated: _____________
April 19, 2000
IMS HEALTH [LOGO]
Victoria R. Fash
President and
Chief Executive Officer
IMS HEALTH
7 Harewood Avenue
London, NWI 6JB, U.K.
Telephone +44-171-393 5141
Fax +44-171-393 5802
vfash@imshealth.com
Robert E. Weissman
Chairman of the Board
IMS Health Incorporated
200 Nyala Farms
Westport, CT 06880
Re: Termination of Transaction Completion Incentive Agreement
Dear Bob:
On February 4, 2000 and March 28, 2000, we entered into Transaction
Completion Incentive Agreements (the "Agreements"), pursuant to which you would
be awarded a cash bonus of $5.5 million upon the closing of a business
consolidation between the Company and [Name] (under the February 4th Agreement)
or The TriZetto Group, Inc. (under the March 28th Agreement) or upon the
consummation of another transaction of comparable magnitude. The purpose of this
letter is to document our subsequent agreement, which was reached between you
and the Chairman of the Compensation & Benefits Committee of the Board of
Directors on April 2, 2000, to terminate the Agreements as of that date.
Please sign your name where indicated below and return one copy of this
letter to the undersigned. Keep the other copy for your records.
Sincerely,
/s/ Victoria R. Fash
ACKNOWLEDGED:
/s/ Robert E. Weissman
- - -----------------------------
Robert E. Weissman
ACKNOWLEGED:
/s/ Bernard Puckett
- - -----------------------------
Bernard Puckett
Dated: _____________