FORM OF
MANAGEMENT RETENTION AGREEMENT
MANAGEMENT RETENTION AGREEMENT (this "Agreement"), made as of
May 15, 1996 by and between HCIA INC., a Maryland corporation (the "Company"),
and the executive officer named on the signature page of this Agreement (the
"Executive").
WITNESSETH:
WHEREAS, the Executive is currently a valued key
executive of the Company or one of its Affiliates (as defined below); and
WHEREAS, the Compensation Committee (the "Committee") of the
Board of Directors of the Company (the "Board"), recognizes that in the event of
a future change in control of the Company, or any threatened change in control,
uncertainty and questions could rise among management and could result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Company considers it essential to the best
interests of its stockholders to foster to continuous employment of key
management personnel, such as the Executive, in the event of any actual or
threatened change in control by providing for the payment of severance benefits
in the event of the Executive's termination of employment following a change in
control;
NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, the parties hereto agree as follows:
1. Employment and Duties
The Company hereby agrees to employ the Executive
in the capacity indicated on the signature page of this Agreement, and the
Executive hereby accepts such employment. During the Term, as defined in
Section 2 below, the Executive shall have such duties as may be assigned to the
Executive from time to time by the Board or the Board's designee which are
commensurate with the duties of the Executive in the capacity indicated on the
signature page of this Agreement or such other, superior position to which
the Executive may be promoted by the Company in its discretion. The
Executive shall devote substantially all his business time, attention,
skill and efforts during the Term to the faithful performance of his duties
hereunder and shall not accept employment elsewhere during the Term.
2. Term
The term of the Executive's employment under
this Agreement (the "Term") shall commence on the date of any Change in
Control occurring after the date hereof and shall continue in effect
through the second anniversary thereof. The provisions of this Agreement
shall continue in effect beyond the Term to the extent necessary to carry out
the intentions of the parties hereto. As used in this Agreement, a "Change in
Control" shall be deemed to occur on the date on which one of the following
events occurs:
(i) the acquisition by any person (within the
meaning of Sections 13(d) and/or 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), other than an employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
affiliates, of beneficial ownership (within the meaning of the rules
promulgated under Section 13(d) of the Exchange Act) of 30% or more of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors or of equity securities having a value equal to
30% or more of the total value of all equity securities of the Company; or
(ii) individuals who as of the date of this
Agreement constitute the Board, and subsequently elected members of the
Board whose election is approved or recommended by at least majority of
such current members or their successors whose election was so approved or
recommended, cease for any reason to constitute at least a majority of such
Board; or
(iii) a change in the composition of a majority
of the Board within twelve (12) months after any person (as defined above)
is or becomes the beneficial owner (as defined above) of securities of the
Company representing 20% or more of the then outstanding securities of the
Company entitled to vote generally in the election of directors or of equity
securities having a value equal to 20% or more of the total value of all equity
securities of the Company; or
(iv) a change in control of a nature that
would be required to be reported in response to Item 8(a) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act, as in effect on the date
of this Agreement.
3. Compensation
During the Term the Executive shall be entitled to
the following compensation for his services to the Company:
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(a) Base Salary. The Company shall pay,
and the Executive shall accept, a base salary (the "Base Salary") at a
rate no less than the Executive's base salary in effect immediately prior to
the Change in Control, subject to increase in accordance with the immediately
succeeding sentence. The Base Salary shall be reviewed at least annually by
the Committee and may be increased, but not decreased, to reflect the
Executive's performance and shall be increased to provide the Executive
with such other increases as shall be consistent with increases in base
salary awarded in the ordinary course of business to other key executives of the
Company or of any Affiliate.
(b) Cash Bonus. In addition to the Base
Salary, the Executive shall be paid for each full or partial fiscal year of
the Company during the Term, an annual cash bonus (the "Bonus") pursuant to
the current bonus and incentive plans of the Company, as may be amended or
supplemented by the Company during the Term; provided, however, that such
annual Bonus shall be a percentage of the Base Salary payable to the
Executive for the relevant fiscal year, which is no less than the Executive's
bonus for the prior fiscal year was as a percentage of the Executive's Base
Salary for such year. Bonuses shall be paid in cash to the Executive no later
than 30 days following the close of each fiscal year during and immediately
following the Term.
(c) Incentive, Savings and Retirement Plans.
In addition to the Base Salary and Bonuses payable pursuant to this Agreement,
the Executive shall be entitled to participate in incentive, savings and
retirement plans and programs, whether qualified or non-qualified (including,
without limitation, the Company's 1994 Stock and Incentive Plan and the
Company's Savings Incentive Plan), or substantially equivalent successor
or substitute plans) of the Company and its Affiliates applicable to other key
executives, providing an aggregate level of compensation (including target
payouts, where applicable) and benefits no less favorable than in effect prior
to a Change in Control.
(d) Welfare Benefits Plans. The Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under each welfare benefit
plan of the Company applicable to other key executives including without
limitation, all medical, dental, disability, group life, accident death and
travel accident insurance plans and programs of the Company and its
Affiliates, upon terms, and at a level of participation, no less favorable than
applicable to other similarly situated executives of the Company and its
Affiliates.
(e) Expenses. The Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses
incurred by him in the performance of his duties for the Company which shall
be paid to him in accordance with the policies and procedures of the Company
as in effect at any time thereafter with respect to other key executives.
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(f) Fringe Benefits. The Executive shall be
entitled to fringe benefits no less favorable than in effect prior to a Change
in Control.
(g) Office and Support Staff. The Executive
shall be entitled to an office or offices of a size and with furnishings and
other amenities, and to secretarial and other assistance, at least equal to
those available to the Executive prior to a Change in Control.
(h) Vacation. The Executive shall be
entitled to paid vacation, and paid holidays in accordance with the policies
of the Company as in effect upon the commencement of the Term.
(i) Application of Severance Policies After
the Term. Upon the expiration of the Term, the Executive shall become a
participant in the most favorable severance policy applicable to similarly
situated executives of the Company and its Affiliates (other than as
agreed to as part of individual employment agreements), with all years
of service with the Company and any Affiliate counted for purposes of the
calculation of such severance benefits.
(j) Stock Options, etc. Upon the commencement
of the Term, the Executive shall be fully vested in all stock options,
restricted stocks, restricted stock units and any other awards theretofore
awarded under the Company's 1994 Stock and Incentive Plan, as amended, or
any successor thereto.
4. Termination of Employment
(a) Termination for Cause; Resignation without
Good Reason. The Company may terminate the Executive's employment
hereunder for Cause (as defined in Section 7 of this Agreement). If the
Executive's employment is terminated by the Company for Cause, or by the
Executive for reasons other than Good Reason (as defined in Section 7 of this
Agreement) prior to the expiration of the Term, the Company shall be obligated
to make payment of any Compensation (as defined in Section 7 of this
Agreement) earned prior to the Date of Termination (as defined in Section
7 of this Agreement) but not yet paid to the Executive and any payment from
any employee benefit plan described in Section 3 of this Agreement which
shall be paid in accordance with such plan and the continuation of coverage
under any insurance program as required under any such benefit plan or which may
be required by law. The Executive shall also be entitled to the payment of any
Bonus earned but not yet paid, including, without limitation, any deferred
Bonus, and the pro rata amount of the guaranteed minimum Bonus under Section
3(b) of this Agreement if the Date of Termination occurs before the end of any
fiscal year. Except as provided above, the Company shall not be obligated to
make any additional payments of Compensation or
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benefits specified in Section 3 of this Agreement for any periods after the Date
of Termination.
(b) Resignation for Good Reason; Termination
without Cause. If the Executive's employment is terminated by the
Executive for Good Reason or by the Company without Cause, in either case at
any time prior to the expiration of the Term, the Executive shall be entitled to
the following benefits:
(i) In addition to the payment of all
Base Salary and any Bonus earned but not paid, or a pro rata portion
of the guaranteed minimum Bonus under Section 3(b) of this
Agreement if the Date of Termination occurs prior to the end of any
fiscal year, the Executive also shall, subject to Section 5 of this
Agreement, receive payment in cash equal to two times the sum of (x)
his highest Base Salary and (y) the highest Bonus percentage paid
or payable to the Executive at any time prior to his Date of
Termination times his highest Base Salary (the sum of the amounts
described in the foregoing clauses (x) and (y) being referred to as
the "Reference Amount"). (For purposes of calculating the
Reference Amount, "Bonus" shall include cash bonus and the value on
the grant date, as determined by the Committee, of any restricted
stock or restricted stock units or other awards granted in lieu of
cash, but excluding the value of any stock options.)
(ii) For purposes of calculating the
Executive's benefit under any in force retirement plan (the
"Retirement Plan"), the Executive shall receive an additional two
years of credited service.
(iii) Within five business days following
the Termination Date, the Company shall make a lump sum payment to the
Executive equal to the amount that the Company would have
contributed for the Executive's account under the Company's Savings
Incentive Plan (or any successor plan) (the "SIP") in respect of the
two years following the Termination Date, based on (A) the formula
for determining employer contributions in effect on the Termination
Date and (B) the Base Salary (and, if such formula takes account of
bonus compensation, the Bonus) used for purposes of determining the
Reference Amount, and calculated without giving effect to the
limitations provided for in Sections 401(a)(17) and 415 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any
successor provisions thereto.
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(iv) Within five business days following
the Termination Date the Executive shall receive a lump sum
payment of his account balance as of the Date of Termination under
any nonqualified plan, if any, maintained by the Company or any of
its Affiliates to provide benefits in excess of those permitted
under the Code to be provided by the SIP. The Company shall remain
obligated to pay to the Executive or his beneficiaries any benefits
to which he or they may be entitled under any nonqualified plan
maintained by the Company or any of its Affiliates to provide
benefits in excess of those permitted under the Code to be provided by
the Retirement Plan, if any; such payments shall be made in accordance
with the terms of such plans, and benefits thereunder shall take
account of the two years of additional credited service provided for
in clause (ii) above.
(v) For a period of two years
following the Date of Termination (the "Continuation Period"),
the Executive and his dependents, if any, shall continue to
participate (at no greater expense to them than was the case for
such coverage prior to his termination) in the employee benefit
arrangements described in Section 3(d) and 3(f) above; provided,
however, that the benefits described in Section 3(d) shall cease to the
extent the Executive begins coverage under plans of a subsequent
employer.
(vi) At the end of the
Continuation Period, the Executive and his family shall be
entitled for the remainder of his life to retiree medical and dental
benefits under any applicable plans and programs of the Company as
if he retired on the last day of the Continuation Period, with such
benefits to commence immediately at the end of the Continuation
Period and with the amount of contribution by the Executive to be no
greater than that of any other employee of the Company who had retired
on the last day of the Continuation Period (it being understood and
agreed that contribution rates may be changed, and the terms of such
benefits may be modified, to the extent permitted under the relevant
plans, from those in effect on the date hereof).
(vii) During the Continuation Period,
the Company shall provide the Executive with appropriate individual
outplacement services and financial planning at the Company's expense.
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(viii) The Executive shall be fully
vested in all stock options, restricted stock, restricted stock
units and any other awards theretofore awarded to him under the
Company's 1994 Stock and Incentive Plan, as amended, or any successor
thereto.
(ix) The Executive shall receive all
amounts due to him under any compensatory plan or arrangement of
the Company and not specifically addressed above, in accordance
with the terms of the relevant plan or arrangement.
(c) Death Before End of Term. If the Executive
dies prior to the expiration of the Term, the Company shall be under no
obligation to make additional payments of the Compensation and benefits
described in Section 3 of the Agreement to the Executive's estate after the
Date of Termination except, however, for any Compensation earned prior to
the Date of Termination but not yet paid, including, without limitation,
any deferred Bonus and the pro rata amount of the guaranteed minimum Bonus
under Section 3(b) of this Agreement if the Date of Termination occurs
before the end of a fiscal year, and all benefits payable under the various
plans described in Section 3 of this Agreement, which shall be paid in
accordance with the terms of all such applicable plans. The Company shall
also continue to provide any benefits to the Executive's survivors as
required by law.
(d) Disability. In the event of the
Executive's Permanent Disability (as defined in Section 7 of this Agreement)
prior to the expiration of the Term, the Executive's employment shall
terminate. In that event, the Executive shall be entitled to continue to
receive payment of the Compensation and benefits described in Section 3 of
the Agreement through the end of the Term, less the amount of any payment
to the Executive on account of disability from any employer sponsored
disability insurance plan. In addition, the Executive shall receive all
benefits payable under the various plans described in Section 3 of this
Agreement, which shall be paid in accordance with the terms of all such
applicable plans.
(e) Retirement. The Executive may
terminate his employment on account of Retirement (as defined in Section 7 of
this Agreement). The Executive shall not be entitled to any further payments
of Compensation or other benefits provided under Section 3 of this Agreement
after the Date of Termination, other than any retirement benefit payments from
any employer sponsored plan, any Compensation earned prior to the date of
Retirement but not yet paid, including, without limitation, any deferred
Bonus and the pro rata amount of the guaranteed minimum Bonus under Section
3(b) of this Agreement if the Date of Termination occurs before the end of a
fiscal year, and all benefits payable under the various plans described
in Section 3 of this Agreement, which shall be paid in accordance with
the terms of all such applicable plans.
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(f) Notice of Termination Required. No
termination of employment by the Executive or by the Company pursuant to this
Section 4 shall be effective unless the terminating party shall have
delivered a Notice of Termination (as defined in Section 7 of this Agreement)
to the other party.
(h) Nature of Payments. Any amounts due under
this Section 4 are in the nature of severance payments, liquidated damages, or
both, and are not in the nature of a penalty.
5. Form of Payment; Mitigation and Offset Provisions
(a) Executive's Election.
(i) In the event of a termination of
employment under Section 4(b) of this Agreement, the Executive
shall have an election, which shall be made by written notice to
the Company no later than the Date of Termination and which shall
be subject to subsection (ii) below, to be paid under Section 4(b)(i)
an amount equal to one times the Reference Amount either in the form of
a lump sum payment, which shall be paid no later than five business
days following the Date of Termination, or to receive the benefits
provided for in Section 4(b)(i) periodically during the
Continuation Period, in which case the portion of such benefits
corresponding to the Base Salary will be paid in substantially equal
installments at such intervals (not less frequently than monthly)
during the first year of the Continuation Period as may be determined
by the Company in accordance with its payroll practices as established
from time to time, and the portion of such payment corresponding to the
Bonus will be paid at such times as bonuses are generally payable to
executives of the Company and its Affiliates, but in any event not more
than 30 days following the end of the Company's relevant fiscal year.
The Executive's failure to make an election in writing prior to the
Termination Date shall be treated as an election to receive the lump
sum payment provided for in the preceding sentence. The Executive shall
not have an election as to the form of payment with respect to amounts
in excess of one times the Reference Amount to which he is entitled
under Section 4(b)(i); such amounts shall be paid to the Executive
periodically, commencing as of the first anniversary of the Termination
Date, in the manner provided for periodic payments in the first
sentence of this Section 5(a), and shall be subject to the offset
provisions of Section 5(b).
(ii) Notwithstanding anything in
subsection (i) above, if during the Continuation Period the
Executive becomes employed by, or is engaged to provide services for
pay as a consultant or other independent contractor (but
excluding service solely as a member of a board of directors), to
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any party other than the Company or any of its Affiliates (a
"Third Party Employer"), then any election by the Executive to
receive payments under Section 4(b)(i) periodically shall no longer be
in effect, and the Company shall make a lump sum payment to the
Executive within five business days after having received notice of
such other employment or services arrangement of any amount that
remains due to the Executive under Section 4(b)(i), such amount to be
determined as provided in Section 5(b) of this Agreement.
(b) Offset. In the event of any termination of
the Executive's employment, the Executive shall be under no obligation to
seek other employment or otherwise to mitigate damages resulting from his
termination of employment. In addition, there shall be no offset against
amounts due to the Executive under Section 4(b)(i) equal to one times the
Reference Amount, or against amounts due the Executive under any other
provision of this Agreement, on account of any remuneration to which the
Executive becomes entitled from a Third Party Employer, other than as
provided in Section 4(b)(v) relating to continuation of benefits coverage.
With respect to amounts under Section 4(b)(i) in excess of one times the
Reference Amount, such amounts shall be offset by the amount of cash
compensation to which the Executive becomes entitled, or which is
voluntarily deferred at his request, during the Continuation Period, from a
Third Party Employer. Promptly upon becoming engaged by a Third Party Employer,
the Executive shall provide the Company with written notice of such engagement
and shall set forth the terms of his compensation, including any amount of
guaranteed or target bonus; within five business days of the receipt of such
notice, the Company shall make a lump-sum payment to the Executive equal to:
(X) one times the Reference Amount less
any amount previously paid to the Executive pursuant to Section
4(b)(i); plus
(Y) (1) the amount that remains due to the Executive
under Section 4(b)(i) after giving effect to the preceding clause (X),
reduced by (2) the amount of cash compensation to which the Executive
will become entitled during the Continuation Period from the Third
Party Employer (including any amounts which are to be voluntarily
deferred at his request) based on the compensation information set
forth in his notice to the Company, including therein a pro rata
portion (based on the number of days remaining in the Continuation
Period) of any guaranteed or target bonus. The Company and the
Executive shall use their good faith efforts to agree upon the offset
amount, but in the event they are unable to agree, the amount proposed
by the Executive, and certified by an independent certified public
account selected by the Executive, shall control.
6. Protection of the Company's Interests
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(a) Confidential Information. Except for
actions taken in the course of his employment hereunder or as required
by law, at no time shall the Executive divulge, furnish or make accessible
to any person any information of a confidential or proprietary nature
obtained by him while in the employ of the Company. Upon termination of his
employment with the Company, the Executive shall return to the Company all
such information which exists in written or other physical form and all
copies thereof in his possession or under his control.
(b) Remedies. The Executive
acknowledges that a breach of any of the covenants contained in this
Section 6 may result in material irreparable injury to the Company or its
Affiliates for which there is no adequate remedy at law, that will not be
possible to measure damages for such injuries precisely and that, in the
event of such breach or threat thereof, the Company shall be entitled, in
addition to any other rights or remedies it may have, to obtain a temporary
restraining order and/or a preliminary or permanent injunction enjoining
or restraining the Executive from engaging in activities prohibited by this
Section 6. If there occurs a breach of this Section 6 above, the Company
shall be entitled to cease all payments and benefits required under this
Agreement.
7. Definitions
As used in this Agreement, the following terms shall
have the following meanings:
(a) Cause. Each of the following shall
constitute "Cause":
(i) the willful commission by the
Executive of acts that are dishonest and demonstrably and
materially injurious to the Company or any of its Affiliates,
monetarily or otherwise;
(ii) the conviction of the Executive
for a felonious act resulting in material harm to the financial
condition or business reputation of the Company or any of its
Affiliates; or
(iii) a material breach of any of the
covenants set forth in Section 6 of this Agreement.
(b) Good Reason. For purposes of this
Agreement, "Good Reason" shall mean, without the Executive's express written
consent, any of the following:
(i) a substantial adverse alteration
in the nature or status of the Executive's duties or
responsibilities or in the Executive's title;
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(ii) the failure of the Company to
pay when due the Executive any Compensation or provide other
benefits as specified in this Agreement or a reduction by the
Company in the Executive's Compensation or benefits or a failure
by the Company to increase the Executive's Compensation as
required in Section 3 of this Agreement;
(iii) the relocation of the office of
the Executive to a location more than 25 miles from the location where
the Executive is employed immediately prior to the Change in Control;
(iv) the failure by the Company to
continue in effect any compensation plan in which the Executive
participates, including but not limited to all plans described in
Section 3 of this Agreement, or any substitute plans adopted after
the date hereof, 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 the
Executive's participation therein on at least as favorable a basis as
that enjoyed by other similarly situated executives of the Company
and its Affiliates;
(v) the failure by the Company to
continue to provide the Executive with benefits at least as
favorable to those enjoyed by other similarly situated executives
of the Company and its Affiliates under any of the Company's pension,
life insurance, medical, dental, health and accident,
disability, deferred compensation or savings plans, or the taking of
any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive; or
(vi) the failure to obtain a
satisfactory agreement from any successor of the Company to assume
and agree to perform this Agreement, as contemplated in Section 8
hereof or, if the business of the Company for which the Executive's
services are principally performed is sold, the purchaser of such
business shall fail to agree to provide the Executive with the same or
a comparable position, duties, salary and benefits as provided to the
Executive by the Company hereunder.
(c) Notice of Termination. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
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(d) Date of Termination. "Date of
Termination" shall mean (A) in the case of Retirement or death, the date of
such event, (B) if the Executive's employment is terminated for Permanent
Disability, thirty (30) days after a Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (C) 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 thirty (30) days, and
in the case of a termination by the Executive for Good Reason shall not be
less than thirty (30) nor more than sixty (60) days from the date such Notice
of Termination is given); provided that (except in the case of a termination by
the Executive for Good Reason or by the Company without Cause) if within thirty
(30) days after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment,
order or decree of a court of competent jurisdiction (which is not appealable
or the time for appeal there from having expired and no appeal having been
perfected); provided further that the Date of Termination shall be extended by a
notice only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence. In the
case of any Notice of Termination, notwithstanding the pendency of any such
dispute, the Company will continue to pay the Executive the Executive's
Compensation in effect when the notice giving rise to the dispute was given and
continue to provide the Executive with all additional benefits provided for in
Section 3 of this Agreement until the dispute is finally resolved in accordance
with this Subsection, without regard to whether the dispute extends beyond the
Term. Amounts paid under this Subsection in connection with a termination by the
Executive for Good Reason or by the Company without Cause shall be subtracted
from any other amounts due under this Agreement, and amounts paid in connection
with any other termination are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement.
(e) Permanent Disability. "Permanent
Disability" shall mean a disability within the meaning of the long-term
disability plan of the Company which covers the Executive immediately prior to
the Change in Control.
(f) Retirement. "Retirement" shall mean
the voluntary termination of the Executive's employment by the Executive in
accordance with the Retirement Plan, if any, or any other plan or the retirement
policy of the Company.
(g) Affiliate. The term "Affiliate"
includes any company or other entity or person controlling, controlled by or
under common control with the Company.
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(h) Compensation. The term "Compensation"
shall mean all amounts paid or payable to the Executive pursuant to
Sections 3(a), 3(b) and 3(c) of this Agreement.
8. Successors; Binding Agreement
(a) The Company will 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. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as the Executive
would be entitled hereunder if the Executive had terminated his
employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination.
(b) This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would
still be payable hereunder if the Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee or other designee
or, if there is no such designee, to the Executive's estate.
9. Indemnification
The Company will indemnify the Executive to the
fullest extent permitted (including payment of express in advance of final
disposition of a proceeding) by the laws of the State of Maryland, as in
effect at the time of the subject act or omission, or by the Articles of
Incorporation and Bylaws of the Company, as in effect at such time or on the
date of this Agreement, whichever affords or afforded greatest protection
to the Executive, and the Executive shall be entitled to the protection of
any insurance policies the Company may elect to maintain generally for the
benefit of its directors and officers (and to the extent the Company maintains
such an insurance policy or policies, the Executive shall be covered by such
policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage provided for any Company officer or director), against
all costs, charges and expenses whatsoever incurred or sustained by him or
his legal representatives at the time such costs, charges and expenses are
incurred or sustained, in connection with any action, suit or proceeding to
which he may be made a party by reason of his being or having been a director,
officer or employee of the Company or any subsidiary thereof, or his serving
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or having served any other enterprise as a director, officer or employee at the
request of the Company.
10. Notices
Any notice hereunder by either party to the
other shall be given in writing by personal delivery, telex, telecopy or
certified mail, return receipt requested, to the address first set forth
below in the case of the Company, and to the address set forth on the
signature page hereof in the case of the Executive (or, in either case, to such
other address as may from time to time be designated by notice by any party
hereto for such purpose):
HCIA Inc.
300 East Lombard Street
Baltimore, Maryland 21202
Attn: Corporate Secretary
Notice shall be deemed given, if by personal delivery, on the date of such
delivery or, if by telex or telecopy, on the business day following receipt of
answer back or telecopy confirmation or, if by certified mail, on the date shown
on the applicable return receipt.
11. Amendment and Waiver
No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver
or discharge is agreed to in writing and signed by the Executive and such
officer as may be specifically 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 same or at any prior or subsequent
time.
12. Merger of Prior Negotiations
This Agreement sets forth all of the
promises, agreements, conditions and understandings between the parties
hereto respecting the subject matter hereof and supersedes all prior
negotiations, conversations, discussions, correspondence, memoranda and
agreements between the parties concerning such subject matter.
13. Partial Invalidity
If the final determination of a court of
competent jurisdiction or arbitrator declares, after the expiration of the
time within which judicial review (if
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permitted) of such determination may be perfected, that any term or provision
hereof is invalid or unenforceable, (a) the remaining term and provisions hereof
shall be unimpaired and (b) the invalid or unenforceable term or provision shall
be deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
14. Governing Law
This Agreement is to be governed by and interpreted
in accordance with the laws of the State of Maryland, exclusive of its conflict
of laws principles.
15. Counterparts
This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Reduction of Payments In Certain Cases
Notwithstanding anything herein to the contrary,
if any amounts due to the Executive under this Agreement (including without
limitation any amount due pursuant to Section 4) and any other plan or program
of the Company constitute a "parachute payment," as such term is defined in
Section 280G(b)(2) of the Code, and the amount of the parachute payment,
reduced by all federal, state and local taxes applicable thereto, including the
excise tax imposed pursuant to Section 4999 of the Code, is less than the amount
the Executive would receive if the Executive were paid three times the
Executive's "base amount," as defined in Section 280G(b)(3) of the Code,
less $1.00, reduced by all federal, state and local taxes applicable
thereto, then the aggregate of the amounts constituting the parachute payment
shall be reduced to an amount that will equal three times the Executive's base
amount less $1.00. The determinations to be made with respect to this Section
16 shall be made by an accounting firm (the "Auditor") jointly selected by
the Company and the Executive and paid by the Company. If the Executive
and the Company cannot agree on the firm to serve as the Auditor, then the
Executive and the Company shall each select one accounting firm and these two
firms shall jointly select the accounting firm to serve as the Auditor. If a
determination is made by the Auditor that a reduction in the aggregate of all
payments due to the Executive upon a Change in Control is required by this
Section 16, the Executive shall have the right to specify the portion of such
reduction, if any, that will be made under this Agreement and each plan or
program of the Company. If the Executive does not so specify within 60 days
following the date of a determination by the Auditor pursuant to the preceding
sentence, the Company shall determine, in its sole discretion, the portion of
such reduction, if any, to be made under this Agreement and each plan or program
of the Company.
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17. Arbitration
Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Baltimore, Maryland in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that the Executive
shall be entitled to seek specific performance of the Executive's right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. The Company
shall promptly reimburse the Executive for all legal fees and expenses incurred
by the Executive in connection with a successful claim to enforce his rights
under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal as of the day and year first above written.
HCIA INC.
By: ___________________________________(SEAL)
George D. Pillari
Chairman, President and Chief
Executive Officer
EXECUTIVE
_______________________________________(SEAL)
Name:
Title:
Address: