Exhibit 10.3
EMPLOYEE BENEFITS AGREEMENT
This EMPLOYEE BENEFITS AGREEMENT is dated as of June 30, 1998 (the
"Agreement"), between COGNIZANT CORPORATION, a Delaware corporation
("Corporation") and IMS HEALTH INCORPORATED, a Delaware corporation ("IMS
Health").
WHEREAS, the Board of Directors of Corporation has determined that it is
appropriate, desirable and in the best interests of the holders of shares of
common stock, par value $.01 per share, of Corporation (the "Corporation Common
Stock") to take certain steps to reorganize Corporation's Subsidiaries (as
defined herein) and businesses and then to distribute to the holders of the
Corporation Common Stock all the outstanding shares of common stock of IMS
Health (the "IMS Health Common Stock"); and
WHEREAS, Corporation and IMS Health have determined that it is necessary
and desirable to allocate and assign responsibility for certain employee benefit
matters in respect of such entities on and after the Effective Time (as defined
herein).
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, Corporation and IMS Health agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used in this Agreement shall
have the following meanings:
"ACNielsen" shall mean ACNielsen Corporation, a Delaware corporation.
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
"Affiliate" shall mean, when used with respect to a specified person,
another person that controls, is controlled by, or is under common control with
the person specified. As used herein, "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, whether through the ownership of voting securities
or other interests, by contract or otherwise.
"Ancillary Agreements" shall mean all of the written agreements,
instruments, assignments or other written arrangements (other than this
Agreement and the Distribution Agreement) entered into in connection with the
transactions
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contemplated by this Agreement and the Distribution Agreement, including,
without limitation, the Conveyancing and Assumption Instruments, the Shared
Transaction Services Agreement, the Tax Allocation Agreement and the Transition
Services Agreement.
"Assets" shall have the meaning set forth in Section 1.1(f) of the
Distribution Agreement.
"Board of Directors" shall mean, when used with respect to a specified
corporation, the board of directors of the corporation so specified.
"Business Entity" shall mean any corporation, partnership, limited
liability company or other entity which may legally hold title to Assets.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and the regulations promulgated thereunder, including any
successor legislation.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, including any successor legislation.
"Conveyancing and Assumption Instruments" shall mean, collectively, the
various agreements, instruments and other documents heretofore entered into and
to be entered into to effect the transfer of Assets and the assumption of
Liabilities in the manner contemplated by the Distribution Agreement, or
otherwise arising out of or relating to the transactions contemplated in the
Distribution Agreement.
"Cognizant" shall mean Cognizant Corporation, a Delaware corporation.
"Corporate Staff Employees" shall mean Corporation Pre-Distribution
Employees who performed administrative functions generally for the Corporation
Group prior to the Effective Time and who were based at the Corporation
headquarters in Westport, CT, aviation department in Purchase, NY or STS
department in Allentown, PA.
"Corporation" shall mean Cognizant Corporation, a Delaware corporation.
"Corporation Committee" shall mean the Compensation and Benefits Committee
of the Board of Directors of Corporation.
"Corporation Common Stock" shall have the meaning set forth in the recitals
hereto.
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"Corporation Disabled Employees" shall mean all employees of the
Corporation Group who are receiving benefits under the Corporation Long-Term
Disability Plan as of the Effective Time, as in effect from time to time.
"Corporation Employee Stock Purchase Plan" shall mean the 1997 Cognizant
Corporation Employee Stock Purchase Plan, as in effect from time to time.
"Corporation Executive Annual Incentive Plan" shall mean the Cognizant
Corporation Executive Annual Incentive Plan, as in effect from time to time.
"Corporation Group" shall mean Cognizant Corporation and each Business
Entity that is a Subsidiary of Corporation, except that Corporation Group shall
not include Walsh International Inc. or any of its Subsidiaries.
"Corporation Long-Term Disability Plan" shall mean The Cognizant Long Term
Disability Plan or any other long-term disability plan sponsored by Corporation
or any Subsidiary of Corporation prior to the Effective Time.
"Corporation LSARs" shall have the meaning set forth in Section 6.2 of this
Agreement.
"Corporation Nonqualified Plans" shall have the meaning as set forth in
Section 4.1 of this Agreement.
"Corporation Nonqualified Plan Participants" shall have the meaning set
forth in Section 4.1.
"Corporation Pension REP" shall mean the Cognizant Retirement Excess Plan,
as in effect from time to time.
"Corporation Post-Distribution Employees" shall mean persons who,
immediately after the Effective Time, are employed by the Corporation Group
(including persons who are absent from work by reason of layoff or leave of
absence and inactive employees treated as such by agreement therewith) other
than IMS Health Transitional Employees.
"Corporation Pre-Distribution Employees" shall mean persons who, at any
time prior to the Effective Time, were employed by the Corporation Group.
"Corporation Ratio" shall have the meaning set forth in Section 6.1(a) of
this Agreement.
"Corporation Restricted Stock" shall have the meaning set forth in Section
6.3 of this Agreement.
"Corporation Retirees" shall mean persons who (i) were Corporation
Pre-Distribution Employees, (ii) terminated
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employment from the Corporation Group prior to the Effective Time or, with
respect to Corporate Staff Employees, terminated employment prior to or as a
result of the Distribution, (iii) are not IMS Health Employees or IMS Health
Transitional Employees after the Effective Time and (iv) would have been
Corporation Post-Distribution Employees had they remained employed, after the
Distribution, by the same employer from which they terminated employment or were
Corporate Staff Employees; but shall not include any person on Schedule 1.1.
"Corporation Retirement Plan" shall mean the Cognizant Retirement Plan, as
in effect from time to time.
"Corporation Savings BEP" shall mean the Cognizant Corporation Savings
Benefit Equalization Plan, as in effect from time to time.
"Corporation Savings Plan" shall mean the Cognizant Corporation Savings
Plan, as in effect from time to time.
"Corporation Stock Option" shall have the meaning set forth in Section 6.1
of this Agreement.
"Corporation Stock Option Plans" shall mean the 1996 Key Employees' Stock
Incentive Plan, the 1996 Replacement Plan for Certain Employees Holding The Dun
& Bradstreet Corporation Equity-Based Awards or any other stock option plan
established by the Corporation prior to the Effective Time.
"Corporation SERP" shall mean the Cognizant Corporation Supplemental
Executive Retirement Plan, as in effect from time to time.
"Corporation Transition Plans" shall mean The Cognizant Corporation
Executive Transition Plan and The Cognizant Corporation Career Transition Plan.
"D&B" shall mean The Dun & Bradstreet Corporation, a Delaware corporation.
"Distribution" shall mean the distribution on the Distribution Date to
holders of record of shares of Corporation Common Stock as of the Distribution
Record Date of the IMS Health Common Stock owned by Corporation on the basis of
one IMS Health Common Share for each outstanding share of Corporation Common
Stock.
"Distribution Agreement" shall mean the Distribution Agreement between
Corporation and IMS Health, dated as of June 30, 1998.
"Distribution Date" shall mean June 30, 1998.
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"Distribution Record Date" shall mean such date as may be determined by
Corporation's Board of Directors as the record date for the Distribution.
"Effective Time" shall mean immediately prior to the midnight, New York
time, ending the 24-hour period comprising June 30, 1998.
"Employee Benefit Dispute" shall include any controversy, dispute or claim
arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Agreement or otherwise
arising out of, or in any way related to this Agreement, including, without
limitation, any claim based on contract, tort, statute or constitution.
"Employee Benefit Litigation Liability" shall mean, with respect to a
Business Entity, a Liability relating to a controversy, dispute or claim arising
out of, in connection with or in relation to the interpretation, performance,
nonperformance, validity or breach of an Employee Benefit Plan of such Business
Entity or otherwise arising out of, or in any way related to such Employee
Benefit Plan, including, without limitation, any claim based on contract, tort,
statute or constitution.
"Employee Benefit Plans" shall mean, with respect to a Business Entity, all
"employee benefit plans" (within the meaning of Section 3(3) of ERISA),
"multiemployer plans" (within the meaning of Section 3(37) of ERISA),
retirement, pension, savings, profit-sharing, welfare, stock purchase, stock
option, equity-based, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation, worker's
compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements (including any funding mechanisms therefor),
whether or not subject to ERISA, whether formal or informal, oral or written,
legally binding or not, under which (i) any past, present or future employee of
the Business Entity or its Subsidiaries has a right to benefits and (ii) the
Business Entity or its Subsidiaries has any Liability.
"Employee Benefit Records" shall mean all agreements, documents, books,
records or files relating to the Employee Benefit Plans of Corporation and IMS
Health.
"Employee Benefit Welfare Plans" shall mean, with respect to a Business
Entity, all Employee Benefit Plans that are "welfare plans" within the meaning
of Section 3(1) of ERISA.
"Employer Stock" shall mean, after the Distribution Date, IMS Health Common
Stock credited to the account of an IMS Health Employee and Corporation Common
Stock credited to the account of a Corporation Post-Distribution Employee in the
pooled
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stock fund of the respective savings plan in which such employee participates,
pursuant to Section 3.4.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder, including any successor
legislation.
"Final IMS Health Retirement Plan Transfer Date" shall have the meaning set
forth in Section 2.2(d) of this Agreement.
"IMS Health" shall mean IMS Health Incorporated, a Delaware corporation.
"IMS Health Committee" shall mean the Compensation and Benefits Committee
of the Board of Directors of IMS Health.
"IMS Health Common Stock" shall have the meaning set forth in the recitals
hereto.
"IMS Health Disabled Employees" shall mean all employees of the IMS Health
Group who are receiving benefits or are in the waiting period to receive
benefits under the Corporation Long-Term Disability Plan immediately prior to
the Effective Time.
"IMS Health Employees" shall mean persons who, immediately after the
Effective Time, are employed by the IMS Health Group (including persons who are
absent from work by reason of layoff or leave of absence and inactive employees
treated as such by agreement therewith).
"IMS Health Employee Stock Purchase Plan" shall mean the Employee Stock
Purchase Plan to be adopted by IMS Health pursuant to Section 6.5.
"IMS Health Group" shall mean IMS Health and each Business Entity which is
contemplated to remain or become a Subsidiary of IMS Health pursuant to the
Distribution Agreement.
"IMS Health Nonqualified Plans" shall mean the nonqualified plans to be
adopted by IMS Health pursuant to Section 4.2.
"IMS Health Nonqualified Plan Participants" shall have the meaning set
forth in Section 4.2.
"IMS Health Pension REP" shall mean the IMS Health Retirement Excess Plan
to be adopted by IMS Health pursuant to Section 4.2.
"IMS Health Ratio" shall have the meaning set forth in Section 6.1(b) of
this Agreement.
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"IMS Health Replacement Plans" shall mean the replacement plans to be
adopted by IMS Health pursuant to Section 6.1(b) of this Agreement.
"IMS Health Restricted Stock" shall have the meaning set forth in Section
6.3 of this Agreement.
"IMS Health Retirees" shall mean persons who (i) were Corporation
Pre-Distribution Employees, (ii) terminated employment from the IMS Health Group
prior to the Effective Time (iii) are not Corporation Post-Distribution
Employees after the Effective Time and (iv) would have been IMS Health Employees
had they remained employed, after the Distribution, by the same employer from
which they terminated employment but shall not include Corporate Staff Employees
included in the definition of Corporation Retirees; and shall include any person
on Schedule 1.1.
"IMS Health Retirement Plan" shall mean the defined benefit plan to be
adopted by IMS Health pursuant to Section 2.2(a) of this Agreement.
"IMS Health Retirement Plan Effective Date" shall have the meaning set
forth in Section 2.2(a) of this Agreement.
"IMS Health Retirement Plan Segregation Ratio" shall equal a fraction, the
numerator of which is the Present Value of the accrued vested and nonvested
benefits (as defined in ERISA Section 4044(a)(1)-(6)) of the IMS Health
Transferred Retirement Plan Employees under the Corporation Retirement Plan at
the Effective Time, and the denominator of which is the Present Value of the
accrued vested and nonvested benefits (as defined in ERISA Section
4044(a)(1)-(6)) of the Corporation Pre-Distribution Employees under the
Corporation Retirement Plan at the Effective Time.
"IMS Health Savings BEP" shall mean the IMS Health Savings Benefit
Equalization Plan to be adopted by IMS Health pursuant to Section 4.2.
"IMS Health Savings Plan" shall mean the defined contribution plan to be
adopted by IMS Health pursuant to Section 3.2(a) of this Agreement.
"IMS Health Savings Plan Transfer Date" shall have the meaning set forth in
Section 3.2(b) of this Agreement.
"IMS Health SERP" shall mean the IMS Health Supplemental Executive
Retirement Plan to be adopted by IMS Health pursuant to Section 4.2.
"IMS Health Transferred Retirement Plan Employees" shall have the meaning
set forth in Section 2.2(a) of this Agreement.
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"IMS Health Transferred Savings Plan Employees" shall have the meaning set
forth in Section 3.2(a) of this Agreement.
"IMS Health Transitional Employees" shall mean Corporate Staff Employees
who are under an agreement to remain employed by the Corporation after the
Effective Time for a fixed period of time either to perform services in
connection with the Distribution or to perform services primarily for the IMS
Health Group.
"Information Statement" shall mean the Information Statement sent to the
holders of shares of Corporation Common Stock in connection with the
Distribution, including any amendment or supplement thereto.
"Initial IMS Health Retirement Plan Transfer Date" shall have the meaning
set forth in Section 2.2(a) of this Agreement.
"Initial Transferred Assets" shall have the meaning set forth in Section
2.2(b) of this Agreement.
"Liabilities" shall mean any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments, costs
and expenses, sums of money, accounts, reckonings, bonds, specialties,
indemnities and similar obligations, exonerations, covenants, contracts,
controversies, agreements, promises, doings, omissions, variances, guarantees,
make whole agreements and similar obligations, and other liabilities, including
all contractual obligations, whether absolute or contingent, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising, and including those arising under any law, rule, regulation,
Action, threatened or contemplated Action (including the costs and expenses of
demands, assessments, judgments, settlements and compromises relating thereto
and attorneys' fees and any and all costs and expenses (including allocated
costs of in-house counsel and other personnel), whatsoever reasonably incurred
in investigating, preparing or defending against any such Actions or threatened
or contemplated Actions), order or consent decree of any governmental or other
regulatory or administrative agency, body or commission or any award of any
arbitrator or mediator of any kind, and those arising under any contract,
commitment or undertaking, including those arising under this Agreement, the
Distribution Agreement or any Ancillary Agreement, in each case, whether or not
recorded or reflected or required to be recorded or reflected on the books and
records or financial statements of any person.
"Nonemployer Stock" shall mean, after the Distribution Date, IMS Health
Common Stock credited to the account of a Corporation Post-Distribution Employee
and Corporation Common Stock credited to an account of an IMS Health Employee in
the
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pooled stock fund of the respective savings plan in which such employee
participates, pursuant to Section 3.4.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
entity thereto.
"PBGC Assumptions" shall mean the actuarial assumptions set forth in 29
C.F.R. Part 2619, et seq.
"person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Present Value" shall mean the single sum value of a series of future
payments, determined utilizing PBGC Assumptions in effect as of the measurement
date.
"Service" shall mean the Internal Revenue Service or any successor entity
thereto.
"Shared Transaction Services Agreements" shall mean the Shared Transaction
Services Agreements between Corporation and IMS Health.
"Subsidiary" shall mean any corporation, partnership or other entity of
which another entity (i) owns, directly or indirectly, ownership interests
sufficient to elect a majority of the Board of Directors (or persons performing
similar functions) (irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g., a
trustee).
"Tax Allocation Agreement" shall mean the Tax Allocation Agreement between
Corporation and IMS Health.
"Transition Services Agreement" shall mean the Amended and Restated
Transition Services Agreement among Corporation, IMS Health, ACNielsen, D&B and
R.H. Donnelley Corporation.
"Walsh" shall mean Walsh International Inc., a Delaware corporation.
"Walsh Optionees" shall mean individuals whose options to purchase the
common stock of Walsh were converted into options to purchase Corporation Common
Stock (other than those individuals who are IMS Health Employees).
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ARTICLE II
CORPORATION RETIREMENT PLAN
SECTION 2.1. Corporation Retirement Plan. From and after the Effective
Time, Corporation shall continue to sponsor the Corporation Retirement Plan.
Active participation of IMS Health Transferred Retirement Plan Employees in the
Corporation Retirement Plan shall cease immediately after the Effective Time.
Nothing contained in this Article II shall have the effect of accelerating the
degree to which any individual has a vested interest in or eligibility for the
Corporation Retirement Plan or the IMS Health Retirement Plan.
SECTION 2.2. IMS Health Retirement Plan. (a) As of the Effective Time,
(herein referred to as the "IMS Health Retirement Plan Effective Date"), IMS
Health shall establish the IMS Health Retirement Plan for the benefit of IMS
Health Employees, IMS Disabled Employees, IMS Health Retirees and IMS Health
Transitional Employees who were participants in the Corporation Retirement Plan
immediately prior to the Effective Time (the "IMS Health Transferred Retirement
Plan Employees"). On the first business day after the Effective Time (the
"Initial IMS Health Retirement Plan Transfer Date"), Corporation shall cause the
trustee of the Corporation Retirement Plan to segregate, based on a good faith
estimate made in accordance with the spinoff provisions set forth under Section
414(l) of the Code, the assets of the Corporation Retirement Plan allocable to
IMS Health Transferred Retirement Plan Employees in an amount equal to the sum
of (i) and (ii), as follows:
(i) the amount allocable to IMS Health Transferred Retirement Plan
Employees under ERISA Section 4044 as of the Effective Time, determined
using PBGC Assumptions; and
(ii) the excess (if any) of the fair market value of assets of the
Corporation Retirement Plan over the Present Value of the vested and
nonvested benefits accrued thereunder for all the Corporation
Pre-Distribution Employees as of the Effective Time, multiplied by the IMS
Health Retirement Plan Segregation Ratio.
(b) On the Initial IMS Health Retirement Plan Transfer Date, 90% of the
segregated assets determined under Section 2.2(a) of this Agreement (the
"Initial Transferred Assets") shall be transferred to a separate trust
established under the IMS Health Retirement Plan.
(c) From the Effective Time until the Final IMS Health Retirement Transfer
Date (as defined below), the remaining 10% of the segregated assets determined
under Section 2.2(a) of this Agreement shall be invested by the trustee of the
Corporation Retirement Plan with the same investment managers and in the same
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proportions as such assets were invested immediately prior to the Effective
Time, which are set forth in Schedule 2.2 hereof.
(d) As soon as practicable after the Effective Time, the remaining assets
allocable to the IMS Health Transferred Retirement Plan Employees shall be
transferred to a separate trust established under the IMS Health Retirement Plan
(such date herein referred to as the "Final IMS Health Retirement Plan Transfer
Date"); provided, however, that in no event shall such transfer take place until
Corporation shall make all required amendments to the Corporation Retirement
Plan and related trust agreement necessary to provide for the segregation and
transfer of assets described in this Section 2.2. The value of such assets to be
transferred shall equal the value of segregated assets determined based on same
methodology as in Section 2.2(a) of this Agreement, reduced by an amount equal
to the Initial Transferred Assets, adjusted as follows:
(i) reduced by the amount of benefit payments made under the
Corporation Retirement Plan with respect to IMS Health Transferred
Retirement Plan Employees from the Effective Time to the Final IMS Health
Retirement Plan Transfer Date; and
(ii) increased (or decreased) by the share of the net investment
income (or loss) and expenses incurred or for which invoices are submitted
after the Effective Time to the IMS Health Retirement Plan Transfer Date
attributable to the value of such segregated assets.
(e) Unless otherwise agreed to by Corporation and IMS Health, the form of
the assets to be transferred shall consist of an undivided percentage interest
in each asset that is held by the Corporation Retirement Plan on the IMS Health
Retirement Plan Transfer Date, such undivided percentage interest being equal to
the value of assets allocable to the IMS Health Transferred Retirement Plan
Employees, divided by the fair market value of plan assets.
(f) If the amount of the Initial Transferred Assets exceeds the value of
the assets to be transferred as determined under Section 2.2(d) of this
Agreement, such excess amount shall promptly be transferred from the IMS Health
Retirement Plan trust to the Corporation Retirement Plan trust.
SECTION 2.3. Allocation of Liabilities. The IMS Health Group shall assume
all Liabilities relating to the participation of IMS Health Transferred
Retirement Plan Employees in the Corporation Retirement Plan. The Corporation
Group shall retain all other Liabilities relating to the Corporation Retirement
Plan.
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ARTICLE III
CORPORATION SAVINGS PLAN
SECTION 3.1. Corporation Savings Plan. From and after the Effective Time,
Corporation shall continue to sponsor the Corporation Savings Plan. Active
participation of IMS Health Transferred Savings Plan Employees in the
Corporation Savings Plan shall cease immediately after the Effective Time.
Nothing contained in this Article III shall have the effect of accelerating the
degree to which any individual has a vested interest in the Corporation Savings
Plan or the IMS Health Savings Plan.
SECTION 3.2. IMS Health Savings Plan. (a) As of the Effective Time, IMS
Health shall adopt the IMS Health Savings Plan for the benefit of IMS Health
Employees, IMS Health Disabled Employees, IMS Health Transitional Employees and
IMS Health Retirees who were participants in the Corporation Savings Plan
immediately prior to the Effective Time (the "IMS Health Transferred Savings
Plan Employees").
(b) Prior to the date on which the transfer of assets and liabilities to
the IMS Health Savings Plan shall occur (the "IMS Health Savings Plan Transfer
Date"), which date shall occur as promptly as practicable following the
Effective Time, Corporation shall (A) cause the trustee of the Corporation
Savings Plan to segregate, in accordance with the spinoff provisions set forth
under Section 414(l) of the Code, the assets of the Corporation Savings Plan
representing the full account balances of IMS Health Transferred Savings Plan
Employees for all periods of participation through the Effective Time
(including, as applicable, all contributions and all earnings attributable
thereto); (B) make all required filings and submissions to the appropriate
governmental agencies; and (C) make all required amendments to the Corporation
Savings Plan and related trust agreement necessary to provide for the
segregation and transfer of assets described in this Section 3.2.
(c) On the IMS Health Savings Plan Transfer Date, IMS Health shall cause
the trustee of the Corporation Savings Plan to transfer to the trustee of the
IMS Health Savings Plan the full account balances (inclusive of loans) of IMS
Health Transferred Savings Plan Employees in kind based on those investment
funds in which such account balances are then invested (including, but not
limited to, the pooled stock fund described in Section 3.4); provided, however,
that loans to IMS Health Transferred Savings Plan Employees shall be transferred
in the form of notes. In consideration of the segregation and transfer of assets
described herein, the IMS Health Savings Plan shall, as of the IMS Health
Savings Plan Transfer Date, assume all Liabilities attributable to such assets,
whether incurred prior to or after the Effective Time. If the account balances
of the IMS Health Transferred Savings Plan that are transferred on the IMS
Health Savings Plan Transfer Date are thereafter determined to have been
incorrect,
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the parties agree to make appropriate payments or asset transfers to correct
such error (appropriately adjusted for subsequent investment experience and
expenses incurred).
SECTION 3.3. Outstanding Loans. During their employment with Corporation,
IMS Health Transferred Savings Plan Employees who have outstanding loans
originally made from the Corporation Savings Plan shall be permitted to repay
such loans by way of regular deductions from their paychecks, and, prior to the
IMS Health Savings Plan Transfer Date, Corporation or IMS Health (as the case
may be) shall cause all such deductions to be forwarded to the Corporation
Savings Plan as promptly as practicable.
SECTION 3.4. Employer Stock Fund. (a) Participants in the Corporation
Savings Plan who, immediately prior to the Effective Time, have balances in the
Corporation Common Stock fund shall have such balances converted, as of the
Effective Time, to the extent applicable, to units in a pooled stock fund
consisting of Corporation Common Stock and IMS Health Common Stock. The initial
ratio of stock in the pooled stock fund shall be one share of Corporation Common
Stock to one share of IMS Health Common Stock. The percentage interest of each
participant in the pooled stock fund as of the Effective Time shall equal such
participant's percentage interest in the Corporation Common Stock fund
immediately prior to the Effective Time. The IMS Health Savings Plan shall
maintain a pooled stock fund, to which the pooled stock fund assets of IMS
Health Transferred Savings Plan Employees in the Corporation Savings Plan shall
be transferred on the IMS Health Savings Plan Transfer Date. Notwithstanding the
foregoing, the Corporation Savings Plan shall transfer the units of Corporation
Common Stock from the pooled stock fund into the Corporation Common Stock fund
and the IMS Health Savings Plan shall transfer the units of IMS Health Common
Stock from the pooled stock fund into the IMS Health Common Stock fund.
(b) Within nine months after the Distribution Date, each participant shall
liquidate his or her units of Nonemployer Stock in the pooled stock fund and
invest the proceeds thereof in any other investment option available under the
applicable plan. If the participant does not liquidate such units, such units
shall be liquidated and invested in a fixed income investment option available
under the applicable plan.
(c) A participant may not acquire additional units in the pooled stock fund
from or after the Effective Time.
SECTION 3.5. Allocation of Liabilities. The IMS Health Group shall assume
all Liabilities relating to the participation of IMS Health Transferred Savings
Plan Employees in the Corporation Savings Plan. The Corporation Group shall
retain all other Liabilities relating to the Corporation Savings Plan.
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ARTICLE IV
NONQUALIFIED PLANS
SECTION 4.1. Corporation Nonqualified Plans. From and after the Effective
Time, Corporation shall continue to sponsor the Corporation SERP, the
Corporation Pension REP and the Corporation Savings BEP (collectively, the
"Corporation Nonqualified Plans") for the benefit of Corporation
Post-Distribution Employees and Corporation Retirees who, prior to the Effective
Time, were participants thereunder ("Corporation Nonqualified Plan
Participants").
SECTION 4.2. IMS Health Nonqualified Plans. As of the Effective Time, IMS
Health shall (i) adopt the IMS Health SERP, the IMS Health Pension REP and the
IMS Health Savings BEP (collectively, the "IMS Health Nonqualified Plans") for
the benefit of IMS Health Employees and IMS Health Retirees who were
participants in the Corporation Nonqualified Plans immediately prior to the
Effective Time ("IMS Health Nonqualified Plan Participants") and (ii) assume the
Liabilities for benefits under the Corporation Nonqualified Plans with respect
to such employees.
SECTION 4.3. Joint and Several Liability. Corporation and IMS Health
acknowledge joint and several liability under the Employee Benefits Agreement
dated as of October 28, 1996 among D&B, Corporation and ACNielsen with respect
to certain nonqualified plans maintained by D&B prior to such date. To the
extent such joint and several liability is imposed on Corporation in respect of
a liability assumed by IMS Health under this Agreement, Corporation shall be
entitled to contribution from IMS Health for the amount of such liability
imposed. To the extent joint and several liability is imposed on IMS Health in
respect of a liability assumed by Corporation under this Agreement, IMS Health
shall be entitled to contribution from Corporation for the amount of such
liability imposed.
SECTION 4.4. Third-Party Beneficiaries. It is the intention of the parties
to this Agreement that the provisions of Section 4.3 shall be enforceable by (a)
Corporation and IMS Health Nonqualified Plan Participants and (b) their
respective surviving beneficiaries.
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ARTICLE V
WELFARE PLANS
SECTION 5.1. Employee Benefit Welfare Plans. Prior to the Effective Time,
the Corporation shall continue to sponsor its Employee Benefit Welfare Plans for
the benefit of Corporation Pre-Distribution Employees. Except as provided in
Section 5.4 and Section 5.5 below, from and after the Effective Time,
Corporation shall sponsor its Employee Benefit Welfare Plans solely for the
benefit of Corporation Post-Distribution Employees, Corporation Disabled
Employees and Corporation Retirees. From and after Effective Time, IMS Health
shall sponsor its Employee Benefit Welfare Plans solely for the benefit of IMS
Health Employees, IMS Health Retirees and IMS Health Disabled Employees.
Notwithstanding the foregoing, neither Corporation nor IMS Health shall have any
obligation to sponsor any Employee Benefit Welfare Plan from or after Effective
Time.
SECTION 5.2. Dollar Limits. With respect to any medical and dental plan
that may be sponsored by IMS Health after the Effective Time, IMS Health shall
give effect, in determining any deductible, maximum out-of-pocket limitations
and annual plan maximums, to claims incurred during 1998 prior to the Effective
Time by IMS Health Employees, IMS Health Retirees and IMS Health Disabled
Employees under similar plans maintained by Corporation (or any Affiliate
thereof) for their benefit immediately prior to the Effective Time.
SECTION 5.3. Severance Plans. The Corporation Group shall retain all
Liabilities with respect to severance payments made or to be made to Corporation
Retirees including any liabilities for severance payments under the Corporation
Transition Plans. The IMS Health Group shall retain all Liabilities with respect
to severance payments made or to be made to IMS Health Retirees including any
liabilities for severance payments under the Corporation Transition Plans. For
purposes of this Section 5.3, the term "severance payments" shall include any
welfare benefit coverage provided under severance plans.
SECTION 5.4. Flexible Spending Accounts. From the Effective Time until
December 31, 1998, Corporation shall continue to sponsor its flexible spending
accounts for all Corporation Pre-Distribution Employees; provided, however, that
IMS Health shall cause all deductions from participant paychecks to be forwarded
to Corporation within two business days thereafter; provided, further, that IMS
Health shall reimburse Corporation for the administrative costs incurred with
respect to IMS Health Employees. All unused funds remaining in the flexible
spending accounts of IMS Health Employees after April 30, 1999 shall be paid to
IMS Health.
SECTION 5.5. Allocation of Liabilities. (a) The IMS Health Group shall
retain responsibility for and continue to pay all claims relating to the
Corporation self-insured Medical and
16
Dental Plans with respect to claims incurred prior to the Effective Time, but
which are paid after the Effective Time, by IMS Health Employees, IMS Health
Disabled Employees, IMS Health COBRA participants, IMS Health Transitional
Employees and IMS Health Retirees as well as their covered dependents. Any
claims relating to the Corporation self-insured Medical and Dental Plans with
respect to claims incurred prior to the Effective Time, but which are paid after
the Effective Time, by Corporation Pre-Distribution Employees who are not IMS
Health Employees will remain the responsibility of The Corporation Group.
(b) The Corporation Group shall retain responsibility for and continue to
pay all premiums, expenses and benefits relating to the Corporation Employee
Welfare Plans with respect to claims incurred (for self-insured plans) or
premiums due (for insured plans) from and after the Effective Time by
Corporation Post-Distribution Employees, Corporation Disabled Employees,
Corporation COBRA participants and Corporation Retirees as well as their covered
dependents.
(c) The IMS Health Group shall retain responsibility for and continue to
pay all premiums, expenses and benefits relating to the Employee Welfare Plans
with respect to claims incurred (for self-insured plans) or premiums due (for
insured plans) from and after the Effective Time by IMS Health Employees, IMS
Health Disabled Employees, IMS Health COBRA participants, IMS Health
Transitional Employees and IMS Health Retirees as well as their covered
dependents.
(d) For the purposes of this Section 5.5, a claim is deemed incurred when
the services that are the subject of the claim are performed; in the case of
life insurance, when the death occurs; in the case of long-term disability, when
the disability occurs; and, in the case of a hospital stay, when the employee
first enters the hospital. Notwithstanding the foregoing, claims incurred by any
employee of a pre-Distribution Subsidiary of Corporation or their covered
dependents under any welfare plan maintained by such Subsidiary solely for the
benefit of its employees and their dependents shall, whether incurred prior to,
on or after the Effective Time, be the sole responsibility and liability of that
Subsidiary.
(e) The Corporation Group shall be responsible for all COBRA coverage for
any Corporation Retiree and his or her covered dependents who participated in a
Corporation Employee Benefit Welfare Plan and who had or have a loss of health
care coverage due to a qualifying event occurring prior to the Effective Time.
The IMS Health Group shall be responsible for all COBRA coverage for any IMS
Health Retiree and his or her covered dependents who participated in a
Corporation Employee Benefit Welfare Plan and who had or have a loss of health
care coverage due to a qualifying event occurring prior to the Effective Time.
Notwithstanding the foregoing, a pre-Distribution Subsidiary of Corporation
shall be responsible for all COBRA coverage for its
17
former employees and covered dependents who participated in a plan maintained
solely for their benefit whether the applicable event occurs prior to, on or
after the Effective Time. COBRA coverage to which a Corporation
Post-Distribution Employee is entitled as a result of a qualifying event
occurring at or after the Effective Time shall be the responsibility of the
Corporation Group.
SECTION 5.6. Allocation of the Corporation's Self-Insured Medical and
Dental Plans Reserve for Claims Incurred But Not Yet Reported (IBNR). The IBNR
reserve of which is estimated to be approximately $2.5 million as of June 30,
1998 will be allocated 61.9% to the Corporation Group and 38.1% to IMS Health.
SECTION 5.7. Retiree Welfare Plans. The Corporation Group shall be
responsible for providing retiree welfare benefits, where applicable, to
Corporation Retirees and Corporation Post-Distribution Employees. The IMS Health
Group shall be responsible for providing retiree welfare benefits, where
applicable, to IMS Health Retirees and IMS Health Employees.
ARTICLE VI
EQUITY-BASED PLANS
SECTION 6.1. Corporation Stock Options. Stock options awarded under the
Corporation Stock Option Plans ("Corporation Stock Options") shall be treated as
follows:
(a) Corporation Post-Distribution Employees; and Corporation Disabled
Employees. From and after the Effective Time, each unexercised Corporation Stock
Option held by Corporation Post-Distribution Employees, Corporation Disabled
Employees and the specified options held by the persons listed on Schedule 6.1
shall remain outstanding pursuant to the terms of the award agreements and the
Corporation Stock Option Plans; provided, however, that from and after such
time, each unexercised Corporation Stock Option shall be adjusted as follows:
(i) the number of shares of Corporation Common Stock covered by the adjusted
stock option shall be determined by (A) multiplying the number of shares of
Corporation Common Stock covered by the Corporation Stock Option by a fraction,
the numerator of which equals the average of high and low trading prices of a
share of Corporation Common Stock for the five trading days immediately
preceding the ex-dividend date, and the denominator of which equals the average
of high and low trading prices of a share of Corporation Common Stock for the
five trading days starting on the ex-dividend trading Date ("Corporation Ratio")
and (B) rounding down the result to a whole number of shares and (ii) the
exercise price of the adjusted stock option shall equal the original exercise
price divided by the Corporation Ratio.
18
(b) IMS Health Employees; IMS Health Transitional Employees; IMS Health
Disabled Employees; and Walsh Optionees. As of the Effective Time, (i) each
unexercised Corporation Stock Option held by IMS Health Employees, IMS Health
Transitional Employees, IMS Health Disabled Employees and Walsh Optionees shall
be cancelled except as provided in Schedule 6.1 and (ii) such individuals shall
except as provided in Schedule 6.1 receive replacement stock options awarded
under the IMS Health Replacement Plans, which shall be adopted by IMS Health
prior to the Effective Time. The number of shares of IMS Health Common Stock
covered by each replacement stock option shall be determined by (i) multiplying
the number of shares of Corporation Common Stock covered by the cancelled
Corporation Stock Option by a fraction, the numerator of which equals the
average of high and low trading prices of a share of Corporation Common Stock
for the five trading days immediately preceding the ex-dividend date, and the
denominator of which equals the average of high and low trading prices of an IMS
Health Common Share for the five trading days starting on the regular way
trading date ("IMS Health Ratio") and (ii) rounding down the result to a whole
number of shares. The exercise price of each replacement stock option shall be
determined by dividing the exercise price of the cancelled Corporation Stock
Option by the IMS Health ratio. Except as otherwise provided in the IMS Health
Replacement Plans, all other terms of the replacement stock options shall remain
substantially identical to the terms of the cancelled Corporation Stock Options.
(c) IMS Health Retirees; and Corporation Retirees. As of the Effective
Time, (i) each unexercised Corporation Stock Option held by IMS Health Retirees
and Corporation Retirees shall be adjusted in substantially the same manner as
employees of the Corporation Group and (ii) IMS Health may offer to such IMS
Health Retirees and Corporation Retirees, and the IMS Health Committee may
determine, alternative adjustments or substitutions, provided such Retirees
agree to surrender their adjusted Corporation Stock Options.
SECTION 6.2. Corporation LSARs. All limited stock appreciation rights
awarded under the Corporation Stock Option Plans ("Corporation LSARs") shall be
adjusted or substituted (as the case may be) in substantially the same manner as
the Corporation Stock Options described in Section 6.1 above.
SECTION 6.3. Restricted Stock Plan. Restricted stock awarded under the
Corporation Stock Option Plans ("Corporation Restricted Stock") and restricted
stock received as a result of the Distribution ("IMS Health Restricted Stock")
shall be treated as follows:
(a) Corporation Post-Distribution Employees. As of Effective Time, IMS
Health Restricted Stock credited to Corporation Post-Distribution Employees
shall be adjusted pursuant to the Corporation Stock Option Plans and each such
19
individual shall receive a number of additional shares of Corporation Restricted
Stock, determined by multiplying the number of shares of forfeited IMS Health
Restricted Stock by the Corporation Ratio and the reciprocal of the IMS Health
Ratio, having the same terms as the Corporation Restricted Stock from which they
arose.
(b) IMS Health Employees. As of the Effective Time, Corporation Restricted
Stock and IMS Health Restricted Stock credited to IMS Health Employees and IMS
Health Transitional Employees shall be forfeited and such individuals shall
receive replacement IMS Health Restricted Stock equal to (i) the number of
shares of forfeited IMS Health Restricted Stock plus (ii) the number of shares
of forfeited Corporation Restricted Stock multiplied by the IMS Health Ratio and
the reciprocal of the Corporation Ratio, such replacement shares of IMS Health
Restricted Stock to have the same terms as the Corporation Restricted Stock from
which they arose.
SECTION 6.4. Executive Annual Incentive Plan. Outstanding awards under the
Corporation Executive Annual Incentive Plan shall be treated as determined by
the Corporation and IMS Health, respectively.
SECTION 6.5. Corporation Employee Stock Purchase Plan. (a) From and after
the Effective Time, Corporation shall continue to sponsor the Corporation
Employee Stock Purchase Plan.
(b) As of the Effective Time, IMS Health shall adopt the IMS Health
Employee Stock Purchase Plan for the benefit of IMS Health Employees.
SECTION 6.6. Allocation of Liabilities. The IMS Health Group shall assume
all Liabilities with respect to awards granted to IMS Health Employees, IMS
Health Retirees, Corporation Retirees and IMS Health Disabled Employees pursuant
to the IMS Health Replacement Option Plan. The Corporation Group shall retain
all other Liabilities with respect to awards granted pursuant to the Corporation
Stock Option Plans (including, but not limited to, awards granted to Corporation
Post-Distribution Employees).
ARTICLE VII
FOREIGN EMPLOYEE BENEFIT PLANS
SECTION 7.1. Foreign Plans. Except as set forth in Schedule 7.1,
Corporation and IMS Health shall continue to sponsor and retain liability for
any Employee Benefits Plans maintained outside the United States with respect to
their respective employees.
ARTICLE VIII
20
OTHER EMPLOYEE BENEFIT ISSUES
SECTION 8.1. Employee Benefit Litigation Liabilities. Except as otherwise
expressly provided in this agreement, the IMS Health Group shall assume all
Employee Benefit Litigation Liabilities that are asserted by Corporation
Pre-Distribution Employees who were employees of the IMS Health Group or
Corporate Staff Employees and the Corporation Group shall assume all Employee
Benefit Litigation Liabilities that are asserted by all other Corporation
Pre-Distribution Employees.
SECTION 8.2. Indemnification. To the extent that any claim or litigation is
asserted against Corporation by a Corporation Retiree who was a Corporate Staff
Employee prior to the Distribution, Corporation shall be entitled to
indemnification from IMS Health for the amount of any liability imposed.
SECTION 8.3. Workers' Compensation. The Corporation Group shall retain all
Liabilities relating to workers' compensation claims that were incurred (a)
prior to the Effective Time with respect to Corporation Pre-Distribution
Employees who were employed by the Corporation Group (not including the IMS
Health Group) and Corporate Staff Employees allocated to Corporation as a result
of the Distribution and (b) on and after the Effective Time with respect to
Corporation Post-Distribution Employees. The IMS Health Group shall retain all
Liabilities relating to workers' compensation claims that were incurred (a)
prior to the Effective Time with respect to Corporation Pre-Distribution
Employees who were employed by the IMS Health Group and Corporate Staff
Employees allocated to IMS Health as a result of the Distribution and (b) on and
after the Effective Time with respect to IMS Health Employees. For purposes of
this paragraph, a claim is deemed incurred when the injury that is the subject
of the claim occurs.
SECTION 8.4. Cash Funding. Sufficient cash shall be left with Corporation
upon the Distribution, based on a good faith estimate, to fund all severance
(and related benefits) Liabilities of Corporate Staff Employees retained by
Corporation Group pursuant to Section 5.3(a) hereof as well as the unfunded
amounts payable by Corporation to Corporation Retirees hereunder who were
Corporate Staff Employees (including the actuarially determined value of
payments under non-qualified plans pursuant to Section 4.1 hereof and the value
of retiree welfare benefits pursuant to Section 5.7 hereof). Such cash amount
shall include amounts sufficient to fund all such payments as well as any
related tax, social security and similar government-mandated payments and
employee plan contributions, (i) without giving effect to any present-value
calculation and (ii) with respect to severance (and related benefits)
liabilities, net of tax benefits calculated at a 40% rate. If the estimated cash
amounts result in an excess or deficit over or under the amounts actually
expended by Corporation for such items, appropriate payments will
21
be made between the parties to eliminate any such excess or deficit no later
than December 31, 1998.
ARTICLE IX
BENEFIT PLAN PARTICIPATION
SECTION 9.1. Corporation Plans. Except as specifically provided herein, all
IMS Health Employees shall cease participation in all Corporation Employee
Benefit Plans as of the Effective Time.
SECTION 9.2. IMS Health Plans. Except as provided in Section 5.7 herein,
(a) with respect to any newly created Employee Benefit Plan sponsored by the IMS
Health Group after the Effective Time, the IMS Health Group shall cause to be
recognized (to the extent applicable) each IMS Health Employee's (i) past
service with the Corporation Group to the extent recognized under similar plans
maintained by the Corporation Group immediately prior to the Effective Time and
(ii) accrued but unused vacation time and sick days, and (b) any IMS Health
Employee who participated in a Corporation Employee Benefit Plan immediately
prior to the Effective Time shall be entitled to immediate participation in a
similar newly created Employee Benefit Plan sponsored by the IMS Health Group.
SECTION 9.3. Subsequent Employer. Except as provided in Section 5.6 herein,
if, during the one-year period following the Effective Time, a Corporation
Post-Distribution Employee or a IMS Health Employee terminates employment with
his or her employer and then immediately commences employment with the
Corporation Group or the IMS Health Group, the subsequent employer shall cause
to be recognized (to the extent applicable) such employee's past service with
the Corporation Group or the IMS Health Group to the extent recognized under
similar plans maintained by the prior employer. Notwithstanding the foregoing,
no past service shall be recognized with respect to pension accruals under the
defined benefit plans of the subsequent employer.
SECTION 9.4. Right to Amend or Terminate. Except as specifically provided
herein, nothing in this Agreement shall be construed or interpreted to restrict
the Corporation Group's or the IMS Health Group's right or authority to amend or
terminate any of their Employee Benefit Plans following the Effective Time.
22
ARTICLE X
ACCESS TO INFORMATION
SECTION 10.1. Access to Information. Article IV of the Distribution
Agreement shall govern the rights of the Corporation Group and the IMS Health
Group with respect to access to information. The term "Records" in that Article
shall be read to include all Employee Benefit Records.
ARTICLE XI
INDEMNIFICATION
SECTION 11.1. Indemnification. Article III of the Distribution Agreement
shall govern the rights of the Corporation Group and the IMS Health Group with
respect to indemnification. The term "Corporation Liabilities" in that Article
shall be read to include all Liabilities assumed or retained by the Corporation
Group pursuant to this Agreement. The term "IMS Health Liabilities" in that
Article shall be read to include all Liabilities assumed or retained by the IMS
Health Group pursuant to this Agreement.
ARTICLE XII
DISPUTE RESOLUTION
SECTION 12.1. Dispute Resolution. Article VI of the Distribution Agreement
shall govern the rights of the Corporation Group and the IMS Health Group with
respect to dispute resolution. The term "Agreement Dispute" in that Article
shall be read to include all Employee Benefit Disputes.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Complete Agreement; Construction. This Agreement, including
the Exhibits and Schedules (if any), and the Distribution Agreement shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.
Other than Sections 2.7 and 4.5 and Article VI of the Distribution Agreement,
which shall prevail over any inconsistent or conflicting provisions in this
Agreement, notwithstanding any other provisions in this Agreement to the
contrary, in the event and to the extent that there shall be a conflict between
the provisions of this Agreement and the provisions of the Distribution
Agreement, this Agreement shall control.
23
SECTION 13.2. Ancillary Agreements. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements.
SECTION 13.3. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 13.4. Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
SECTION 13.5. Expenses. Except as otherwise set forth in this Agreement,
the Distribution Agreement or any Ancillary Agreement, all costs and expenses
incurred and for which invoices have been submitted on or prior to the Effective
Time (whether or not paid on or prior to the Distribution Date) in connection
with the preparation, execution, delivery and implementation of this Agreement,
the Distribution Agreement, any Ancillary Agreement, the Information Statement
(including any registration statement on Form 10 of which such Information
Statement may be a part) and the Distribution and the consummation of the
transactions contemplated thereby, as well as all administrative costs, fees or
expenses relating to any Employee Benefit Plan, shall be charged to and paid by
Corporation, provided that, if such expenses are not paid by Corporation prior
to the Effective Time, they shall be charged to and paid by IMS Health. Except
as otherwise set forth in this Agreement, the Distribution Agreement or any
Ancillary Agreement, all such costs, fees and expenses incurred or for which
invoices are submitted after the Effective Time shall be charged to and paid by
IMS Health. Any amount or expense to be paid or reimbursed by any party hereto
to any other party hereto shall be so paid or reimbursed promptly after the
existence and amount of such obligation is determined and demand therefor is
paid.
SECTION 13.6. Notices. All notices and other communications hereunder shall
be in writing and hand delivered or mailed by registered or certified mail
(return receipt requested) or sent by any means of electronic message
transmission with delivery confirmed (by voice or otherwise) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and will be deemed given on the date on which such
notice is received:
24
To Nielsen Media Research, Inc.:
299 Park Avenue
New York, NY 10171
Telecopy: (212) 708-6927
Attn: Chief Legal Officer
To IMS Health Incorporated:
200 Nyala Farms
Westport, CT 06880
Telecopy: (203) 222-4313
Attn: General Counsel
SECTION 13.7. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
SECTION 13.8. Amendments. Subject to the terms of Section 13.11 hereof,
this Agreement may not be modified or amended except by an agreement in writing
signed by each of the parties hereto.
SECTION 13.9. Assignment. This Agreement shall not be assignable, in whole
or in part, directly or indirectly, by any party hereto without the prior
written consent of the other parties hereto, and any attempt to assign any
rights or obligations arising under this Agreement without such consent shall be
void.
SECTION 13.10. Successors and Assigns. The provisions to this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.
SECTION 13.11. Termination. This Agreement (including, without limitation,
Section 4.4 and Article XI hereof) may be terminated and may be amended,
modified or abandoned at any time prior to the Distribution by and in the sole
discretion of Corporation without the approval of the shareholders of
Corporation. In the event of such termination, no party shall have any liability
of any kind to any other party or any other person. After the Distribution, this
Agreement may not be terminated except by an agreement in writing signed by the
parties; provided, however, that Section 4.4 and Article XI shall not be
terminated or amended after the Distribution in respect of the third party
beneficiaries thereto without the consent of such persons.
SECTION 13.12. Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth
25
herein to be performed by any Subsidiary of such party or by any entity that is
contemplated to be a Subsidiary of such party on and after the Distribution
Date.
SECTION 13.13. Third Party Beneficiaries. Except as provided in Section 4.4
and Article XI, this Agreement is solely for the benefit of the parties hereto
and their respective Subsidiaries and Affiliates and should not be deemed to
confer upon third parties any remedy, claim, liability, reimbursement, claim of
action or other right in excess of those existing without reference to this
Agreement.
SECTION 13.14. Title and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
SECTION 13.15. Exhibits and Schedules. The Exhibits and Schedules, if any,
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
SECTION 13.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
26
SECTION 13.17. Consent to Jurisdiction. Without limiting the provisions of
Article XII hereof, each of the parties irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the parties agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
the parties further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 13.17. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 13.18. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 13.19. Governmental Notices; Cooperation. Notwithstanding anything
in this Agreement to the contrary, all actions contemplated herein with respect
to Employee Benefit Plans which are to be consummated pursuant to this Agreement
shall be subject to such notices to, and/or approvals by, the Service or the
PBGC (or any other governmental agency or entity) as are required or deemed
appropriate by such Employee Benefit Plan's sponsor. Each of Corporation and IMS
Health agrees to use its commercially reasonable efforts to cause all such
notices and/or approvals to be filed or obtained, as the case may be. Each party
hereto shall reasonably cooperate with the other parties with respect to any
government filings, employee notices or any other actions reasonably necessary
to maintain and implement the Employee Benefit Plans covered by this Agreement.
27
SECTION 13.20. Further Assurances. From time to time, as and when
reasonably requested by any other party hereto, each party hereto shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions as such other party may reasonably deem necessary or desirable to effect
the purposes of this Agreement and the transactions contemplated hereunder.
IN WITNESS WHEREOF, the parties have duly executed and entered into this
Agreement, as of the date first above written.
COGNIZANT CORPORATION
by
/s/ Robert E. Weissman
---------------------------------
Name: Robert E. Weissman
Title: Chairman and Chief Executive Officer
IMS HEALTH INCORPORATED
by
/s/ Victoria R. Fash
---------------------------------
Name: Victoria R. Fash
Title: Chief Operating Officer
Schedule 1.1 to Employee Benefits Agreement
IMS HEALTH Retirees
- - -------------------
Tom Crawford
Schedule 2.2 to Employee Benefits Agreement
Target % of
Investment Manager Fund Name Portfolio (1)
- - ------------------ --------- -------------
Barclays Global Investors US Debt Index Fund 34.5%
Barclays Global Investors US Equity Index Fund 27.5%
J.P. Morgan Investment Management Research Optimized Equity Fund 27.5%
Wellington Trust Company, N.A. International Research Equity Fund 10.0%
Bank of New York Cash/Collective Trust Fund 0.5%
Short Term Investment Fund
- - ----------
(1) The actual percent of the portfolio for any one fund may vary plus or minus
three percentage points compared to the target percentages.
Schedule 6.1 to Employee Benefits Agreement
William G. Jacobi:
- - ------------------
The following Corporation Stock Options of Mr. Jacobi shall remain outstanding
(and be adjusted as provided for in this Agreement), with the balance of his
options to be converted to IMS Health Options:
Purchased Options (vest 11/15/02) 20,834
Regular Options (vest 11/15/02) 45,834
Regular Options (vest 11/15/01) 33,332
-------
100,000
James R. Peterson:
- - ------------------
Directors' Options 2,000 Corporation
5,000 IMS HEALTH
M. Bernard Puckett:
- - -------------------
The Directors' options held by Mr. Puckett shall be cancelled and replaced with
IMS HEALTH options and Corporation options in proportion to the relative value
of a share of IMS HEALTH Common Stock and Corporation Common Stock immediately
after the Distribution, based on the average of the high and low trading prices
of each such share for the five trading days starting on the first IMS Health
"regular-way" and Corporation "ex-dividend" trading dates.
Schedule 7.1 to Employee Benefits Agreement
1 Corporation shall, as soon as practicable after the Effective Time,
transfer the Corporation multinational insurance pooling arrangement to IMS
Health, which shall be entitled to all dividends payable thereon from and
after the Effective Time.
2 IMS Health shall continue to maintain Harry Holland and Richard James on
the IMS Health U.K. payroll, and, as promptly as practicable after the
Effective time, shall transfer (i) related pension assets for these
individuals to individual pension accounts to be established for them by
Corporation, based on national valuations to be prepared by Watson Wyatt,
and (ii) the lease contracts for the 2 automobiles used by said individuals
to Corporation. Corporation shall be responsible for, and shall reimburse
IMS Health U.K. for, all costs and expenses associated with the continued
employment of said individuals, including without limitation, salary,
benefits, pension, social security, taxes, insurance and automobile
expenses, and shall indemnify and hold harmless IMS Health and its
Affiliates from any and all liabilities relating to or arising out of the
employment of said individuals, except for those arising out of the gross
negligence or willful misconduct of IMS Health U.K.