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SYNAVANT INC.
ANNUAL INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing a program that can help attract and retain employees
of the Company and its subsidiaries who contribute to the growth and
profitability of the Company by providing for incentives in the form of periodic
cash bonus awards to such employees, thereby motivating such employees to attain
corporate performance objectives established under the Plan. The Plan also is
intended to enable the Company to preserve the tax deductibility of certain
Awards under Section 162(m) of the Code.
2. DEFINITIONS
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) ACT: The Securities Exchange Act of 1934, as amended. References to
any provision of the Act or rule thereunder shall include any
successor provision or rule.
(b) AWARD: A bonus potentially payable to a designated Participant if
performance objectives are achieved during a specified Performance
Period and other terms and conditions of the Plan and the bonus
opportunity are met.
(c) BENEFICIAL OWNER: As such term is defined in Rule 13d-3 under the Act.
(d) BOARD: The Board of Directors of the Company.
(e) CHANGE IN CONTROL: The occurrence of any of the following events after
the Effective Date:
(i) any Person (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 20% or more of the
combined voting power of the Company's then-outstanding
securities;
(ii) during any period of twenty-four months or less (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who
has entered into an agreement with the Company to effect a
transaction described in Sections (2)(e)(i), (iii) or (iv) of
the Plan, (B) a director nominated by any Person (including
the Company) who publicly announces an intention to take or to
consider taking actions (including, but not limited to, an
actual or threatened proxy contest) which if consummated would
constitute a Change in Control or (C) a director nominated by
any Person who is the Beneficial Owner, directly or
indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's securities)
whose election by the Board or nomination for election by the
Company's 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
who were new
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directors (subject to the exclusions set forth above in this
Section 2(e)(ii)) 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
(if it is the surviving parent) or such surviving entity;
provided, however, that, if consummation of the corporate
transaction referred to in this Section 2(e)(iii) is
subject, at the time of such approval by stockholders, to
the consent of any government or governmental agency or
approval of the stockholders of another entity or other
material contingency, no Change in Control shall occur
until such time as such consent and approval has been
obtained and any other material contingency has been
satisfied;
(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; provided, however, that, if consummation
of the transaction referred to in this Section 2(e)(iv) is
subject, at the time of such approval by stockholders, to
the consent of any government or governmental agency or
approval of the stockholders of another entity or other
material contingency, no Change in Control shall occur
until such time as such consent and approval has been
obtained and any other material contingency has been
satisfied; or
(v) the Board determines that a Change in Control shall be deemed
to have occurred for purposes of the Plan, provided that the
Board may impose limitations on the effects of a Change in
Control on any Award or otherwise if the Change in Control has
occurred under this Section 2(e)(v) and not under other
subsections of this Section 2(e).
(f) CODE: The Internal Revenue Code of 1986, as amended. References to any
provision of the Code or regulation thereunder shall include any
successor provision or regulation.
(g) COMMITTEE: A committee of two or more directors designated by the
Board to administer the Plan; provided, however, that, directors
appointed or serving as members of a Board committee designated as the
Committee shall not be employees of the Company or any Subsidiary. In
appointing members of the Committee, the Board will consider whether a
member is or will be an "outside director" as defined in Treasury
Regulation 1.162-27(e)(3), but Committee members are not required to
be such "outside directors" at the time of appointment or during their
term of service on the Committee. The full Board may perform any
function of the Committee hereunder, in which case the term
"Committee" shall refer to the Board. Upon effectiveness of the Plan,
the Board shall perform all functions of the Committee hereunder until
the Board has appointed a Compensation and Benefits Committee of the
Board, at which time the Compensation and Benefits Committee shall be
designated as the Committee hereunder.
(h) COMPANY: Synavant Inc., a Delaware corporation.
(i) COVERED PARTICIPANT: A Participant who the Committee designates, at
the time an Award is granted, as reasonably likely to be a "covered
employee", as such term is defined in Section 162(m) of the Code, for
the year in which the Award becomes payable.
(j) EFFECTIVE DATE: The date on which the Plan takes effect, as specified
in Section 12(e) of the Plan.
(k) PARTICIPANT: An employee of the Company or any of its Subsidiaries who
is selected by the Committee to participate in the Plan pursuant to
Section 4 of the Plan.
(l) PERFORMANCE PERIOD: The calendar year or any other period that the
Committee, in its sole discretion, may determine.
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(m) PERSON: As such term is used for purposes of Sections 13(d) or 14(d)
of the Act.
(n) PLAN: The Synavant Inc. Annual Incentive Plan.
(o) SHARES: Shares of common stock, par value $0.01 per Share, of the
Company.
(p) SPINOFF: The distribution of the Shares owned by IMS Health
Incorporated to the holders of record of shares of IMS Health
Incorporated.
(q) SUBSIDIARY: A subsidiary corporation, as defined in Section 424(f) of
the Code.
3. ADMINISTRATION
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. Subject to the terms of the Plan, the Committee shall have the
authority to select the employees to be granted Awards under the Plan, to
determine the size and terms of an Award (subject to the limitations imposed on
Awards in Section 6(b) below), to modify the terms of any Award that has been
granted (except for any modification that would increase the amount of the Award
payable to a Covered Participant), to determine the time when Awards will be
made and the Performance Period to which they relate, to establish performance
objectives in respect of such Performance Periods and to certify that such
performance objectives were attained. The Committee is authorized to interpret
the Plan, to establish, amend and rescind any rules and regulations relating to
the Plan, and to make any other determinations that it deems necessary or
desirable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan in the
manner and to the extent the Committee deems necessary or desirable. Any
decision of the Committee in the interpretation and administration of the Plan,
as described herein, shall lie within its sole and absolute discretion and shall
be final, conclusive and binding on all parties concerned. Determinations made
by the Committee under the Plan need not be uniform and may be made selectively
among Participants, whether or not such Participants are similarly situated.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. At any time that a member of
the Committee is not an "outside director" within the meaning of Code Section
162(m), (i) any action of the Committee relating to an Award intended by the
Committee to qualify as "performance-based compensation" within the meaning of
Code Section 162(m) and regulations thereunder may be taken by a subcommittee,
designated by the Committee or the Board, composed solely of two or more
"outside directors." Action authorized by such a subcommittee shall be the
action of the Committee for purposes of the Plan. The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.
(c) DELEGATION. The Committee may delegate to one or more officers or
employees of the Company and its subsidiaries the authority, subject to such
terms as the Committee shall determine, to perform such functions, including the
Committee's functions under the Plan, as the Committee may determine, except
that the Committee may not delegate its authority to grant Awards to Covered
Participants or to make the determinations specified under Section 6(c) of the
Plan relating to Covered Participants, or otherwise to the extent such
delegation would cause Awards intended to qualify as "performance-based
compensation" under Code Section 162(m) to fail to so qualify. In the case of
any such delegation, references to the Committee herein shall be deemed to
include any person to whom authority has been delegated, unless the context
otherwise requires.
(d) LIMITATION OF LIABILITY. The Committee, each member thereof, and any
other person acting pursuant to authority delegated by the Committee shall be
entitled, in good faith, to rely or act upon any report or other information
furnished by any officer or employee of the Company or a Subsidiary, the
Company's independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee or any other person acting
pursuant to authority delegated by the Committee, and any officer or employee of
the Company or a Subsidiary acting at the direction or on behalf of the
Committee or other delegee shall not be personally liable for any action or
determination
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taken or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.
(e) ASSUMPTION OF AWARDS UNDER IMS HEALTH INCORPORATED EXECUTIVE ANNUAL
INCENTIVE PLAN. If the Company assumes liability with respect to any awards
under the IMS Health Incorporated Executive Annual Incentive Plan pursuant to
the Employee Benefits Agreement between the Company and IMS Health Incorporated,
such assumed award shall be deemed to be an award under this Plan. In such case,
actions of the Compensation & Benefits Committee of the Board of Directors of
IMS Health Incorporated shall constitute due approval of the performance goals
and other required matters for purposes of this Plan, and other prior actions of
such Committee and of IMS Health Incorporated shall be binding with respect to
such award to the extent necessary to comply with Treasury Regulation
1.162-27(f)(4).
4. ELIGIBILITY AND PARTICIPATION
The Committee shall designate those persons who shall be Participants for
each Performance Period. Participants shall be selected from among the employees
of the Company and any of its Subsidiaries, based on the Committee's
determination that such employee's performance can positively effect the results
of the operations of the Company or any of its Subsidiaries. The designation of
Participants may be made individually or by groups or classifications of
employees, as the Committee deems appropriate.
5. DENOMINATION OF AWARDS
The Committee may authorize the payout of an Award in cash, in shares of
the Company's Common Stock or in other share-based awards, provided that, in the
case of shares and share-based awards, the issuance of the shares or awards is
authorized under the Company's 2000 Stock Incentive Plan (or other Company plan)
and have been approved by any other committee or body necessary to authorize the
award under such other plan. In such case, any shares of Common Stock issued in
connection with such Award will count against the aggregate number shares
reserved and available for issuance under such other plan in accordance with the
applicable provisions thereof. Unless otherwise specifically authorized by the
Committee, any such authorization relating to a Covered Participant shall be
undertaken at such time and on such terms as will ensure that the Award
hereunder and any award granted under such other plan will continue to qualify
as "performance-based compensation" for purposes of Code Section 162(m) or will
not otherwise result in payment of compensation for which the Company may not
claim a tax deduction under Code Section 162(m).
6. AWARDS
(a) PERFORMANCE OBJECTIVES. A Participant's Award shall be earned based on
the attainment of written performance objectives approved by the Committee for a
Performance Period established by the Committee. In the case of Covered
Participants, such performance objectives shall be established (i) while the
outcome for that Performance Period is substantially uncertain and (ii) no more
than 90 days after the commencement of the Performance Period to which the
performance objective relates or, if less than 90 days, the number of days which
is equal to 25% of the relevant Performance Period. In the case of Covered
Participants, the performance objectives shall be objective and shall be based
upon one or more of the following criteria: (i) consolidated earnings before or
after taxes (including earnings before interest, taxes, depreciation and
amortization); (ii) net income; (iii) operating income; (iv) earnings per Share;
(v) book value per Share; (vi) return on stockholders' equity; (vii) return on
investment; (viii) return on capital; (ix) improvements in capital structure;
(x) expense management; (xi) profitability of an identifiable business unit or
product; (xii) maintenance or improvement of profit margins; (xiii) stock price
or total stockholder return; (xiv) market share; (xv) revenues or sales; (xvi)
costs; (xvii) cash flow; (xviii) working capital; (xix) return on assets; (xx)
economic wealth created, and (xxi) strategic business criteria, consisting of
one or more objectives based on meeting specified market penetration, geographic
business expansion goals, cost targets, customer satisfaction, employee
satisfaction, management of employment practices and employee benefits,
supervision of litigation and information technology, goals relating to
acquisitions or divestitures of subsidiaries, affiliates or joint ventures, and
execution of pre-approved
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corporate strategy. In addition, with respect to Participants who are not
Covered Participants, the Committee may approve performance objectives based on
other criteria, which may or may not be objective. The foregoing criteria may
relate to the Company, one or more of its Subsidiaries or one or more of its
divisions, units, partnerships, joint venturers or minority investments, product
lines or products or any combination of the foregoing. The targeted level or
levels of performance with respect to such business criteria may be established
at such levels and in such terms as the Committee may determine, in its
discretion, including on an absolute basis, in relation to performance in a
prior period, and/or be relative to one or more peer group companies or indices,
or any combination thereof. In addition, the performance objectives may be
calculated without regard to extraordinary items, except as may be limited under
Section 162(m) in the case of a Covered Participant.
(b) MAXIMUM AWARD PAYABLE TO ANY ONE PARTICIPANT. Other provisions of the
Plan notwithstanding, the maximum amount of awards that become earned by any one
Participant in any one fiscal year shall not exceed the Participant's Annual
Limit. For purposes of this Plan, a Participant's Annual Limit shall equal $5
million plus the amount of the Participant's unused Annual Limit as of the close
of the previous year. For this purpose, a Participant's Annual Limit is used if
it may be potentially earned or paid under an Award, regardless of whether it is
in fact earned or paid.
(c) PAYMENT. The Committee shall determine whether, with respect to a
Performance Period, the applicable performance objectives and other requirements
to payment of the Award have been met with respect to a given Participant and,
if they have, to so certify and ascertain the amount of the applicable Award. No
Awards will be paid to a Covered Participant for such performance period until
such certification is made, in writing, by the Committee. The amount of the
Award actually paid to a given Participant may be less or, with respect to
Participants who are not Covered Participants, more than the amount determined
by the applicable performance goal formula, at the discretion of the Committee.
The amount of the Award determined by the Committee for a performance period
shall be paid to the Participant at such time as determined by the Committee in
its sole discretion after the end of such Performance Period, including in
installments or on a deferred basis.
(d) TERMINATION OF EMPLOYMENT AND OTHER EVENTS; COVENANTS. The Committee
shall specify the circumstances in which Awards shall be paid or forfeited in
the event of termination of employment by the Participant or other event prior
to the end of a Performance Period or settlement of such Awards. Unless
otherwise determined by the Committee, if a Participant dies, retires, is
assigned to a different position, is granted a leave of absence, or if the
Participant's employment is otherwise terminated (except for cause by the
Company) during a Performance Period, a pro rata share of the Participant's
award based on the period of actual participation may, at the Committee's
discretion, be paid to the Participant after the end of the Performance Period
if it would have become earned and payable had the Participant's employment
status not changed. The Committee may require a Participant, as a condition of
the designation or payout of an Award, to have entered into agreements or
covenants with the Company or a specified Subsidiary obligating the Participant
to not compete, to not interfere the relationships of the Company or its
subsidiaries or affiliates with customers, suppliers or employees in any way, to
refrain from disclosing or misusing confidential or proprietary information of
the Company or its subsidiaries or affiliates, and to take or refrain from such
other actions adverse to the Company as the Committee may specify. The form of
such agreements or covenants shall be specified by the Committee, which may vary
such form from time to time and require renewal of the agreements or covenants,
as then specified by the Committee, in connection with the allocation or payout
of any Award.
(e) COMPLIANCE WITH CODE SECTION 162(M). The Company intends that
compensation under the Plan to Covered Participants will constitute qualified
"performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder, unless otherwise determined by the Committee at the time
an Award is authorized. Accordingly, the terms of this Section 6 and other
provisions of the Plan shall be administered and interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. If any provision
of the Plan or any Award document relating to an Award to a Covered Participant
that is designated as intended to comply with Code Section 162(m) does not
comply or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to
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such requirements, and no provision shall be deemed to confer upon the Committee
or any other person discretion to increase the amount of compensation otherwise
payable in connection with any such Award upon attainment of the applicable
performance objectives.
7. AMENDMENTS OR TERMINATION
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would materially impair any of
the rights of a Participant under any Award theretofore granted under the Plan
without such Participant's consent; provided, however, that the Committee may
amend the Plan in such manner as it deems necessary to permit the granting of
Awards meeting the requirements of the Code or other applicable laws.
Notwithstanding anything to the contrary herein, the Board may not amend, alter
or discontinue the provisions relating to the proviso to Section 11(b) of the
Plan after the occurrence of a Change in Control without the consent of any
Participant adversely affected by such amendment.
8. NO RIGHT TO EMPLOYMENT
Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant or other person any right to continue to be employed by
or perform services for the Company or any Subsidiary, and the right to
terminate the employment of or performance of services by any Participant at any
time and for any reason is specifically reserved to the Company and its
Subsidiaries.
9. NONTRANSFERABILITY OF AWARDS
An Award and other rights under the Plan shall not be transferable or
assignable by the Participant otherwise than by will or by the laws of descent
and distribution.
10. REDUCTION OF AWARDS
Notwithstanding anything to the contrary herein, the Committee, in its sole
discretion (but subject to applicable law), may apply any amounts payable to any
Participant hereunder as a setoff to satisfy any liabilities owed to the Company
or any of its Subsidiaries by the Participant.
11. ADJUSTMENTS UPON CERTAIN EVENTS; CHANGE IN CONTROL
(a) ADJUSTMENTS. The Committee is authorized at any time during or after a
Performance Period, in its sole discretion, to adjust or modify the terms of
Awards or performance objectives, or specify new Awards, (i) in the event of any
large, special and non-recurring dividend or distribution, recapitalization,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, forward or reverse split, stock dividend, liquidation, dissolution or
other similar corporate transaction, (ii) in recognition of any other unusual or
nonrecurring event affecting the Company or the financial statements of the
Company (including events described in (i) above as well as acquisitions and
dispositions of businesses and assets and extraordinary items determined under
generally accepted accounting principles), or in response to changes in
applicable laws and regulations, accounting principles, and tax rates (and
interpretations thereof) or changes in business conditions or the Committee's
assessment of the business strategy of the Company. No such adjustment shall be
authorized or made if and to the extent that the existence of such authority or
the making of such adjustment (i) would cause Awards granted under the Plan to
Covered Participants and intended to qualify as "performance-based compensation"
under Code Section 162(m) and regulations thereunder to fail to so qualify, or
(ii) would cause the Committee to be deemed to have authority to change the
targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the
performance objectives relating to Awards granted to Covered Participants and
intended to qualify as "performance-based compensation" under Code Section
162(m) and regulations thereunder.
(b) CHANGE IN CONTROL. Notwithstanding any other provision in the Plan
to the contrary, in the event of a Change in Control, the Committee in its sole
discretion and without liability to any person may take such actions, if any, as
it deems necessary or desirable with respect to any Award, including, without
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limitation, (A) the acceleration of an Award, (B) the payment of a cash amount
in exchange for the cancellation of an Award and/or (C) the requiring of the
issuance of substitute Awards that will substantially preserve the value, rights
and benefits of any affected Awards previously granted hereunder; provided,
however, that the Committee may not exercise any discretion under the Plan to
reduce the amount payable in respect of any Award relating to a Performance
Period which ended prior to the date of such Change in Control but which Award
had not been paid out at the time of the Change in Control and such Awards shall
be paid out entirely in cash as promptly as practicable following the Change in
Control, unless this right has been waived by the Participant.
12. MISCELLANEOUS PROVISIONS
(a) COMPANY OBLIGATIONS; UNFUNDED PLAN. The Company is the sponsor and
legal obligor under the Plan and shall make all payments hereunder, other than
any payments to be made by any of the Subsidiaries (in which case shall be made
by such Subsidiary, as appropriate). The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to ensure the payment of any amounts under the Plan, and the
Participants' rights to the payment hereunder shall be no greater than the
rights of the Company's (or Subsidiary's) unsecured creditors. All expenses
involved in administering the Plan shall be borne by the Company.
(b) CHOICE OF LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Georgia applicable to contracts made
and to be performed therein, without regard to principles of conflicts of law,
and applicable federal law.
(c) TAX WITHHOLDING. The Committee shall have the right to deduct from any
payment made under the Plan any federal, state, local or foreign income or other
taxes required by law to be withheld with respect to such payment.
(d) NON-EXCLUSIVITY. Neither the adoption of the Plan by the Board nor any
submission of the Plan, specific Plan terms, or amendments thereto to a vote of
stockholders of the Company shall be construed as creating any limitations on
the power of the Board to adopt such other compensatory arrangements as it may
deem desirable, including, without limitation, the granting of awards otherwise
than under the Plan, and such other arrangements may be either applicable
generally or only in specific cases.
(e) EFFECTIVENESS OF THE PLAN. The Plan shall become effective as of the
date on which the Shares that are owned by IMS Health Incorporated become
distributable to the holders of record of shares of IMS Health Incorporated in
the Spinoff.
