10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark one)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to
Commission file number 001-14049

IMS Health Incorporated
(Exact name of registrant as specified in its charter)
Delaware	06-1506026
(State of Incorporation)	(I.R.S. Employer Identification No.)
1499 Post Road, Fairfield, CT	06824
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code  (203) 319-4700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Title of Class	Shares Outstanding At July 31, 2003
Common Stock, par value $.01 per share	239,100,245

IMS HEALTH INCORPORATED

INDEX TO FORM 10-Q

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PART I. FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS

IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

(Dollars and shares in thousands, except per share data)

	As of June 30, 2003			As of December 31, 2002
Assets:
Current Assets:
Cash and cash equivalents	$	286,529		$	289,261
Short-term marketable securities	27,862			—
Accounts receivable, net of allowances of $7,631 and $5,808 in 2003 and 2002, respectively	240,218			215,868
Other receivable (Note 9)	—			36,116
Other current assets	114,705			110,258
Current assets of discontinued operations	—			175,761
Total Current Assets	669,314			827,264
Securities and other investments	17,082			18,239
TriZetto equity investment (Note 8)	49,232			74,557
Property, plant and equipment, net of accumulated depreciation of $162,507 and $150,606 in 2003 and 2002, respectively	134,094			131,587
Computer software	179,236			168,985
Goodwill	226,135			184,163
Other assets	187,888			159,070
Non-current assets of discontinued operations	—			54,663
Total Assets	$	1,462,981		$	1,618,528
Liabilities, Minority Interests and Shareholders’ Equity:
Current Liabilities:
Accounts payable	$	36,717		$	31,940
Accrued and other current liabilities	171,538			152,201
Short-term debt	250,023			204,812
Accrued income taxes	134,947			143,872
Short-term deferred tax liability	12,119			11,964
Deferred revenues	108,475			94,061
Current liabilities of discontinued operations	—			39,733
Total Current Liabilities	713,819			678,583
Postretirement and postemployment benefits	74,110			73,813
Long-term debt (Note 10)	345,015			325,000
Other liabilities	170,939			107,894
Non-current liabilities of discontinued operations	—			31,622
Total Liabilities	$	1,303,883		$	1,216,912
Commitments and contingencies (Note 9)
Minority Interests	$	103,326		$	102,033
Minority Interests of discontinued operations	—			77,327
Shareholders’ Equity:
Common Stock, par value $.01, authorized 800,000 shares; issued 335,045 shares at June 30, 2003 and December 31, 2002, respectively	$	3,350		$	3,350
Capital in excess of par	500,068			497,562
Retained earnings	1,660,197			1,165,090
Treasury stock, at cost, 95,956 and 53,980 shares at June 30, 2003 and December 31, 2002, respectively	(2,009,931		)	(1,316,354		)
Cumulative translation adjustment	(77,634		)	(106,907		)
Minimum pension liability adjustment, net of taxes of $8,371 at June 30, 2003 and December 31, 2002	(17,487		)	(17,487		)
Unrealized loss on changes in fair value of cash flow hedges, net of tax	(3,270		)	(3,141		)
Unrealized gains on investments, net of taxes of $258 and $76 at June 30, 2003 and December 31, 2002, respectively	479			143
Total Shareholders’ Equity	$	55,772		$	222,256
Total Liabilities, Minority Interests and Shareholders’ Equity	$	1,462,981		$	1,618,528

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

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IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars and shares in thousands, except per share data)

	Three Months Ended June 30,
	2003			2002
Operating Revenue	$	337,776		$	303,900
Operating costs	135,311			119,834
Selling and administrative expenses	85,335			77,775
Depreciation and amortization	19,831			12,014
Operating Income	97,299			94,277
Interest income	1,255			1,379
Interest expense	(3,920		)	(3,625		)
Gains (losses) from investments, net	32			2,470
Gain (loss) on issuance of investees’ stock, net	54			(86		)
Other expense, net	(9,835		)	(15,607		)
Non-Operating Income (Loss), Net	(12,414		)	(15,469		)
Income before provision for income taxes	84,885			78,808
Provision for income taxes (Note 11)	(29,463		)	(24,944		)
TriZetto equity loss, net of income taxes of $43 and $61for 2003 and 2002, respectively	(66		)	(93		)
Income from continuing operations	55,356			53,771
Income from discontinued operations, net of income taxes of $2,322 for 2002 (Note 6)	—			8,242
Net Income	$	55,356		$	62,013
Basic Earnings Per Share of Common Stock:
Income from continuing operations	$	0.23		$	0.19
Income from discontinued operations	—			0.03
Basic Earnings Per Share of Common Stock	$	0.23		$	0.22
Diluted Earnings Per Share of Common Stock:
Income from continuing operations	$	0.23		$	0.19
Income from discontinued operations	—			0.03
Diluted Earnings Per Share of Common Stock	$	0.23		$	0.21
Weighted average number of shares outstanding – basic	241,999			287,660
Dilutive effect of shares issuable as of period-end under stock option plans	813			1,576
Adjustment of shares outstanding applicable to exercised and cancelled stock options during the period	5			34
Weighted Average Number of Shares Outstanding – Diluted	242,817			289,270

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

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IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars and shares in thousands, except per share data)

	Six Months Ended June 30,
	2003			2002
Operating Revenue	$	651,693		$	593,614
Operating costs	268,300			235,085
Selling and administrative expenses	171,095			158,357
Depreciation and amortization	36,629			23,758
Severance, impairment and other charges	37,220			—
Operating Income	138,449			176,414
Interest income	2,518			2,768
Interest expense	(7,974		)	(6,308		)
Gains (losses) from investments, net	(844		)	1,250
Loss on issuance of investees’ stock, net	(261		)	(86		)
Other expense, net	(20,638		)	(16,309		)
Non-Operating Income (Loss), Net	(27,199		)	(18,685		)
Income before provision for income taxes	111,250			157,729
Provision for income taxes (Note 11)	(93,812		)	(49,492		)
TriZetto equity loss, net of income taxes of $258 and $191 for 2003 and 2002, respectively	(399		)	(295		)
TriZetto impairment charge, net of income taxes of $9,565 for 2003	(14,842		)	—
Income from continuing operations	2,197			107,942
Income from discontinued operations, net of income taxes of $1,237 and $4,243 for 2003 and 2002, respectively (Note 6)	2,779			13,250
Gain on discontinued operations (Note 6)	495,053			—
Net Income	$	500,029		$	121,192
Basic Earnings Per Share of Common Stock:
Income from continuing operations	$	0.01		$	0.37
Income from discontinued operations	1.99			0.05
Basic Earnings Per Share of Common Stock	$	1.99		$	0.42
Diluted Earnings Per Share of Common Stock:
Income from continuing operations	$	0.01		$	0.37
Income from discontinued operations	1.98			0.05
Diluted Earnings Per Share of Common Stock	$	1.99		$	0.42
Weighted average number of shares outstanding – basic	250,658			289,720
Dilutive effect of shares issuable as of period-end under stock option plans	663			1,440
Adjustment of shares outstanding applicable to exercised and cancelled stock options during the period	5			66
Weighted Average Number of Shares Outstanding – Diluted	251,326			291,226

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

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IMS HEALTH INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Dollars and shares in thousands, except per share data)

	Six Months Ended June 30,
	2003			2002
Cash Flows from Operating Activities:
Net income	$	500,029		$	121,192
Less income from discontinued operations and gain on disposal	(497,832		)	(13,250		)
Income from continuing operations	2,197			107,942
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	36,629			23,758
Bad debt expense	513			2,307
Nielsen Media Research interest receivable	—			(1,378		)
Deferred income taxes	9,079			6,452
(Gains) losses from investments, net	844			(1,250		)
(Gain) loss on issuance of investees’ stock, net	261			86
TriZetto equity loss, net	399			295
TriZetto impairment charge, net	14,842			—
Minority interests in net income of consolidated companies	5,445			5,277
Non-cash stock compensation charges	1,532			904
Non-cash portion of severance, impairment and other charges	6,480			—
Change in assets and liabilities, excluding effects from acquisitions and dispositions:
Net increase in accounts receivable	(12,984		)	(23,517		)
Net increase in inventory	(857		)	(2,526		)
Net increase in prepaid expenses and other current assets	(13,071		)	(6,711		)
Net increase (decrease) in accounts payable	2,149			(3,568		)
Net (decrease) increase in accrued and other current liabilities	(7,453		)	12,622
Net increase (decrease) in accrued severance, impairment and other charges	18,304			(19,429		)
Net increase (decrease) in deferred revenues	3,300			(5,189		)
Net increase in accrued income taxes	52,210			14,533
Net decrease (increase) in pension assets and liabilities	933			(4,499		)
Net decrease (increase) in other long-term assets	2,065			(10,262		)
Net tax benefit on stock option exercises	78			(1,774		)
Nielsen Media Research payment received in respect of D&B Legacy Tax Matters	37,025			—
Net Cash Provided by Operating Activities	159,920			94,073
Cash Flows Used in Investing Activities:
Capital expenditures	(9,133		)	(8,988		)
Additions to computer software	(37,680		)	(32,100		)
Investments in short-term marketable securities	(27,862		)	—
Payments for acquisitions of businesses, net of cash acquired	(48,966		)	(7,244		)
Proceeds from sale of investments, net	1,296			22,020
Funding of venture capital investments	(1,200		)	(3,000		)
Other investing activities, net	(8,291		)	(2,795		)
Net Cash Used in Investing Activities	(131,836		)	(32,107		)
Cash Flows Used in Financing Activities:
Net (decrease) increase in debt	(91,272		)	161,393
Borrowings under private placement	150,000			—
Payments for purchase of treasury stock	(93,550		)	(192,221		)
Proceeds from exercise of stock options	1,755			11,658
Dividends paid	(9,785		)	(11,626		)
Proceeds from employee stock purchase plan	1,385			1,406
Increase in cash overdrafts	832			8,590
Refund of cash portion of Synavant spin-off dividend	4,863			—
Net Cash Used in Financing Activities	(35,772		)	(20,800		)
Effect of Exchange Rate Changes	4,956			2,160
Increase in Cash and Cash Equivalents	(2,732		)	43,326
Cash and Cash Equivalents, Beginning of Period	289,261			183,409
Cash and Cash Equivalents, End of Period	$	286,529		$	226,735

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

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IMS HEALTH INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars and shares in thousands, except per share data)

Note 1.  Interim Condensed Consolidated Financial Statements (unaudited)

The accompanying Condensed Consolidated Financial Statements (unaudited) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended.  The Condensed Consolidated Financial Statements (unaudited) do not include all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments, all of which are of a normal recurring nature, considered necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented have been included.  The results of operations for interim periods are not necessarily indicative of the results expected for the full year.  The Condensed Consolidated Financial Statements (unaudited) and related notes should be read in conjunction with the Consolidated Financial Statements and related notes of IMS Health Incorporated (the “Company” or “IMS”) included in its 2002 Annual Report on Form 10-K and in its previous filings on Form 10-Q.  Certain prior year amounts have been reclassified to conform with the 2003 presentation.  Amounts presented in the Condensed Consolidated Financial Statements (unaudited) may not add due to rounding.

Note 2.  Basis of Presentation

The Company is a leading global provider of information solutions to the pharmaceutical and healthcare industries.  The Company operates in more than 100 countries and provides market information, sales management and decision-support services to the pharmaceutical and healthcare industries.  Its key products include sales management information to optimize sales force productivity, marketing effectiveness research for prescription and over-the-counter pharmaceutical products, consulting and other services.  The Company also owns a venture capital unit, Enterprise Associates, LLC (“Enterprises”) which is focused on investments in emerging businesses, and a 26.1% equity interest in The TriZetto Group, Inc. (“TriZetto”), at June 30, 2003.

During the year ended December 31, 2002, the Company also included the Cognizant Technology Solutions Corporation Segment (“CTS”), which provides custom Information Technology (“IT”) design, development, integration and maintenance services.  CTS is a publicly traded corporation on the Nasdaq national market system.  IMS owned 55.3% of the common shares outstanding of CTS (92.5% of the outstanding voting power) as of December 31, 2002, and accounted for CTS as a consolidated subsidiary.  On February 6, 2003, the Company divested CTS through a split-off transaction, and as a result, during the three months ended March 31, 2003, the Company recorded a net gain from discontinued operations of $495,053.  The Company’s share of CTS results are presented as discontinued operations for 2003 through the date of divestiture and for the three and six months ended June 30, 2002.  CTS’s assets and liabilities are presented as discontinued operations as of December 31, 2002 (see Note 6.)

Note 3.  Summary of Recent Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”  SFAS No. 150 establishes standards for how an enterprise classifies and measures certain financial instruments that have characteristics of both

7

liabilities and equity.  SFAS No. 150 requires an enterprise to classify a financial instrument that is within its scope as a liability (or an asset in some circumstances).  SFAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003.  The adoption of SFAS No. 150 effective June 1, 2003 did not have a material impact on the Company’s financial position, results of operations or cash flows for the three months ended June 30, 2003.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.”  SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”  SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.”  SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.  SFAS No. 143 requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of a tangible long-lived asset.  SFAS No. 143 was effective for fiscal years beginning after June 15, 2002.  The adoption of SFAS No. 143 effective January 1, 2003 did not have a material impact on the Company’s financial position, results of operations or cash flows for the three and six months ended June 30, 2003.

Note 4.  Summary of Significant Accounting Policies

Short-term marketable securities.  Short-term marketable securities primarily include highly liquid bonds.  The Company considers all highly liquid investments with maturities of greater than 90 days and less than 365 days at the time of purchase to be short-term marketable securities.

Stock-based compensation.  SFAS No. 123, “Accounting for Stock-Based Compensation,” requires that companies with stock-based compensation plans either recognize compensation expense based on the fair value of options granted or continue to apply the existing accounting rules and disclose pro forma net income and earnings per share assuming the fair value method had been applied.  The Company has chosen to continue applying Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employers” and related interpretations in accounting for its plans.  If the compensation cost for the Company’s stock-based compensation plans was determined based on the fair value at the grant dates for awards under those plans, consistent with the method of SFAS No. 123, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below for the three and six months ended June 30:

8

		Three months ended June 30,						Six months ended June 30,
		2003			2002			2003			2002
Net Income:	As reported	$	55,356		$	62,013		$	500,029		$	121,192
	Add:  Stock-based employee compensation expense included in reported net income, net of tax	620			403			1,175			995
	Deduct:  Total stock-based employee compensation expense under fair value method for all awards, net of tax	(4,837		)	(7,323		)	(10,875		)	(11,485		)
	Pro forma	$	51,139		$	55,093		$	490,329		$	110,702
Earnings Per Share:
Basic	As reported	$	0.23		$	0.22		$	1.99		$	0.42
	Pro forma	$	0.21		$	0.19		$	1.96		$	0.38
Diluted
	As reported	$	0.23		$	0.21		$	1.99		$	0.42
	Pro forma	$	0.21		$	0.19		$	1.95		$	0.38

For a description of the Company’s other critical accounting policies, please refer to the Company’s 2002 Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

Note 5.  Acquisitions

Acquisitions

During the three months ended March 31, 2003, the Company completed two acquisitions with an aggregate cash purchase price of $52,938.  These acquisitions were Data Niche Associates, Inc. (U.S.) and Azyx Polska Geopharma Information Services, Sp.z.o.o. (Poland) and were accounted for under the purchase method of accounting.  As such, the aggregate cash purchase price has been allocated on a preliminary basis to the assets and liabilities acquired based on estimated fair values as of the closing date.  The purchase price allocation will be finalized after completion of the valuation of certain assets and liabilities.  Any adjustments resulting from the finalization of the purchase price allocations are not expected to have a material impact on the Company’s results of operations.  The unaudited Condensed Consolidated Financial Statements include the results of these acquired companies subsequent to the closing of the acquisitions.  Had these acquisitions occurred as of January 1, 2003 or 2002, the impact on the Company’s results of operations would not have been significant.

During the three months ended March 31, 2003, the Company also entered into an agreement to purchase the Azyx business in Portugal.  However, the completion of this acquisition was contingent upon the Company obtaining regulatory approval from Portugal.  During July 2003, the Company received regulatory approval from Portugal and expects to close the acquisition during the third quarter of 2003.

The Company is in the process of completing its purchase price allocation related to its acquisitions of (a) Medcom Canada, (b) Marketing Initiatives, Inc., (c) Rosenblatt-Klauber Group, (d) Battaerd Mansley PTY Limited and (e) Medical Radar Limited, completed during 2002.  In addition, the Company made tax related and other acquisition related payments during the second quarter of 2003.  Accordingly, additional goodwill of $4,251 was recorded as a result of this process for these

9

acquisitions.  This includes a reduction of $3,012 related to the deferred tax liabilities resulting from intangible assets which are not amortizable for tax purposes.

In February 2002, the Company acquired Infoplex Durdaut & Jassmann GmbH, based in Germany.  The purchase price for this acquisition, including direct and incremental transaction costs, amounted to $7,013, paid in cash.  After an allocation of the purchase price to the net assets acquired, the Company recorded goodwill of $3,758.

Note 6.  CTS Split-Off

On February 6, 2003, the Company completed an exchange offer to distribute its majority interest in CTS.  The Company exchanged 0.309 shares of CTS class B common shares for each share of the Company that was tendered.  Under terms of the offer, the Company accepted 36,540 IMS common shares tendered in exchange for all 11,291 CTS common shares that the Company owned.  As the offer was oversubscribed, the Company accepted tendered IMS shares on a pro-rata basis in proportion to the number of shares tendered.  The proration factor was 21.115717%.

As a result of this exchange offer, during the three months ended March 31, 2003, the Company recorded a net gain from discontinued operations of $495,053.  This gain was based on the Company’s closing market price on February 6, 2003 multiplied by the 36,540 shares of IMS common shares accepted in the offer, net of the Company’s carrying value of CTS and after deducting direct and incremental expenses related to the exchange offer.

In accordance with the provisions of SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company recorded the results of CTS through the disposition date and the gain on disposal as income from discontinued operations net of income taxes in the Condensed Consolidated Statements of Income (unaudited) for the six months ended June 30, 2003.  The Company’s share of CTS’s, assets and liabilities are presented as discontinued operations as of December 31, 2002.  The Company’s share of CTS’s results for the three and six months ended June 30, 2002 and the period from January 1, 2003 through the effective date of the exchange offer are presented as discontinued operations.

Direct costs related to the CTS Split-Off approximated $17,300, consisting primarily of investment advisor, legal and accounting fees.  Of this amount, approximately $12,400was paid through June 30, 2003.

Note 7.  Goodwill and Intangible Assets

Effective January 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets.”  SFAS No. 142 addresses the initial recognition and measurement of intangible assets acquired outside of a business combination and the accounting for goodwill and other intangible assets subsequent to their acquisition.  SFAS No. 142 provides that goodwill and intangible assets which have indefinite useful lives will not be amortized but rather will be tested at least annually for impairment.  It also provides that intangible assets that have finite useful lives be amortized.  There was no impairment of goodwill upon adoption of SFAS No. 142 and as such, the Company did not recognize a transition adjustment during the first six months of 2002.

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During the first quarter of 2003, the Company recorded additional goodwill of $31,973 based on a preliminary allocation of purchase price for the two acquisitions completed in 2003 (see Note 5).  During the three months ended June 30, 2003, the Company increased goodwill and reduced certain intangible assets by $3,711 related to certain acquisitions completed during the second half of 2002, as it is in the process of completing its purchase price allocations (see Note 5).  As of June 30, 2003 total goodwill amounted to $226,135.

All of the Company’s other acquired intangibles are subject to amortization.  During the first quarter of 2003, the Company recorded intangible assets of $21,000 based on a preliminary allocation of purchase price for acquisitions completed in 2003.  Intangible asset amortization expense was $2,372 and $4,389 during the three and six months ended June 30, 2003.  At June 30, 2003, intangible assets (principally included in Other assets) were primarily composed of Customer Relationships, Databases and Trade Names.  The gross carrying amounts and related accumulated amortization of these intangibles were $58,612 and $7,597, respectively, at June 30, 2003.  These intangibles are amortized over periods ranging from two to fifteen years.

Amortization expense associated with intangible assets at June 30, 2003 is estimated to be $4,745 for the second half of 2003 and approximately $9,490 for each year beginning in 2004 through 2008.

Note 8.  Investments in Equity Investees

Summary financial information for TriZetto for the three and six months ended June 30, 2003 and 2002 is presented below.  The amounts shown represent TriZetto’s unaudited consolidated operating results, based on publicly available information.

	Three Months ended June 30,						Six Months ended June 30,
	2003			2002			2003			2002
Net Sales	$	76,524		$	66,781		$	145,558		$	126,475
Gross Profit	$	24,035		$	21,920		$	45,127		$	41,215
Loss from Operations	$	(828	)	$	(5,071	)	$	(2,969	)	$	(11,032	)
Net Loss	$	(1,359	)	$	(3,670	)	$	(4,028	)	$	(8,284	)

The investment in TriZetto is accounted for under the equity method of accounting.  Following an initial decline in the market value of TriZetto stock below cost in the latter part of the second quarter of 2002, the Company performed, and continues to perform, a periodic assessment in accordance with its policy to determine whether an other-than-temporary decline in fair value has occurred.  An impairment charge of $14,842, net of taxes of $9,565, was recorded in the three months ended March 31, 2003, to write down the Company’s investment in TriZetto following the continued significant decline in the market value of TriZetto shares below the Company’s carrying value.  As of June 30, 2003, TriZetto shares closed at $5.99 compared to the Company’s carrying value per share of $4.06.

Note 9.  Contingencies

The Company and its subsidiaries are involved in legal and tax proceedings, claims and litigation arising in the ordinary course of business.  Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available.  For

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those matters where management currently believes it is probable that the Company will incur a loss and that the probable loss or range of loss can be reasonably estimated, the Company has recorded reserves in the consolidated financial statements based on its best estimates of such loss.  In other instances, because of the uncertainties related to either the probable outcome or the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any.  However, even in many instances where the Company has recorded a reserve, the Company is unable to predict with certainty the final outcome of the matter or whether resolution of the matter will materially affect the Company’s results of operations, financial position or cash flows.  As additional information becomes available, the Company adjusts its assessment and estimates of such liabilities accordingly.

The Company routinely enters into agreements with its customers to sell data that the Company acquires in the normal course of business.  In these customer agreements the Company agrees to indemnify and hold harmless the customers for any damages they may suffer as a result of potential intellectual property infringement claims.  These indemnities typically have terms of approximately two years.  The Company has not accrued a liability with respect to these matters, as the exposure is considered neither probable nor reasonably estimable.

Based on its review of the latest information available, in the opinion of management, the ultimate liability of the Company in connection with pending tax and legal proceedings, claims and litigation will not have a material effect on the Company’s results of operations, cash flows or financial position, with the possible exception of the matters described below.

Legacy and Related Matters

In order to understand the Company’s exposure to the potential liabilities described below, it is important to understand the relationship between the Company and its predecessors and other parties that, through various corporate reorganizations and contractual commitments, have assumed varying degrees of responsibility with respect to such matters.

In November 1996, the company then known as The Dun & Bradstreet Corporation (“D&B”) separated into three public companies by spinning-off ACNielsen Corporation (“ACNielsen”) and Cognizant Corporation (“Cognizant”) (the “1996 Spin-Off”).  Pursuant to the agreements effecting the 1996 Spin-Off, among other things, certain liabilities, including contingent liabilities relating to the IRI Action (defined below) and tax liabilities arising out of certain prior business transactions (the “D&B Legacy Tax Matters”), described more fully below, were allocated among D&B, ACNielsen and Cognizant.

In June 1998, Cognizant separated into two public companies by spinning off IMS (the “1998 Spin-Off”) and then changed its name to Nielsen Media Research, Inc. (“NMR”).  As a result of the 1998 Spin-Off, the Company and NMR are jointly and severally liable for all liabilities of Cognizant under the agreements effecting the 1996 Spin-Off.  As between themselves, however, the Company and NMR agreed that IMS will assume 75%, and NMR will assume 25%, of any payments to be made in respect of the IRI Action, including any legal fees and expenses related thereto incurred in 1999 or thereafter (IMS agreed to be responsible for legal fees and expenses incurred during 1998).  In addition, the Company and NMR agreed they would share equally Cognizant’s share of liability arising out of the D&B Legacy Tax

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Matters after the Company paid the first $130,000 of such liability.  NMR’s aggregate liability for payments in respect of the IRI Action and the D&B Legacy Tax Matters shall not exceed $125,000.

Also during 1998, D&B separated into two public companies by spinning-off The Dun & Bradstreet Corporation (“D&B I”) and then changed its name to R.H. Donnelley (“Donnelley”).  As a result of their separation in 1998, Donnelley and D&B I are each jointly and severally liable for all liabilities of D&B under the agreements effecting the 1996 Spin-Off.

During 2000, D&B I separated into two public companies by spinning off The Dun & Bradstreet Corporation (“D&B II”) and then changed its name to Moody’s Corporation (“Moody’s).  Pursuant to their separation in 2000, Moody’s and D&B II are each jointly and severally liable for all of D&B’s liabilities under the agreements effecting the 1996 Spin-Off.

IRI Litigation.  On July 29, 1996, Information Resources, Inc. (“IRI”) filed a complaint in the United States District Court for the Southern District of New York, naming as defendants the corporation then known as “The Dun and Bradstreet Corporation” and now known as Donnelley, A.C. Nielsen Company (a subsidiary of ACNielsen) and I.M.S. International, Inc. (a predecessor of the Company and then a subsidiary of Cognizant) (the “IRI Action”).  At the time of the filing of the complaint, each of the other defendants was a subsidiary of Donnelley.

The complaint alleges various violations of the antitrust laws of the United States, including alleged violations of Sections 1 and 2 of the Sherman Act.  The complaint also alleges a claim of tortious interference with a contract and a claim of tortious interference with a prospective business relationship.  These latter claims relate to the acquisition by the defendants of Survey Research Group Limited (“SRG”).  IRI alleges that SRG violated an alleged agreement with IRI when it agreed to be acquired by the defendants and that the defendants induced SRG to breach that agreement.  IRI’s complaint alleges damages in excess of $350,000, which amount IRI has asked to be trebled under the antitrust laws.  IRI also seeks punitive damages in an unspecified amount.  A trial date has been set for September 20, 2004.

In connection with the 1996 Spin-Off, D&B, ACNielsen and Cognizant entered into an Indemnity and Joint Defense Agreement pursuant to which they agreed (i) to certain arrangements allocating liabilities that may arise out of or in connection with the IRI Action, and (ii) to conduct a joint defense of such action.  In particular, the Indemnity and Joint Defense Agreement provides that, in the event of an adverse decision, ACNielsen will assume exclusive liability for liabilities up to an amount to be calculated by an investment banking firm, at the time such liabilities, if any, become payable, pursuant to a specified solvency test (the “ACN Maximum Amount”) and that Cognizant and Donnelley will share liability equally for any amounts in excess of the ACN Maximum Amount.  On February 19, 2001, ACNielsen announced that it merged with VNU N.V.  Pursuant to the Indemnity and Joint Defense Agreement, VNU is to be included with ACNielsen for purposes of determining the ACN Maximum Amount.

D&B Legacy and Related Tax Matters.  During the second quarter of 2002, the IRS issued Notices of Proposed Adjustments (“Notices”) with respect to a certain transaction entered into by D&B in 1993.  In these Notices, the IRS proposed to disallow certain royalty expense deductions claimed by D&B on its 1995 and 1996 tax returns and by Cognizant on its 1997 tax return.  The IRS previously

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concluded an audit of the 1993 and 1994 D&B federal income tax returns and did not disallow any similar claimed deductions.  D&B II is the agent for Donnelley in the D&B Legacy Tax Matters.  D&B II and the Company disagree with the position taken by the IRS in its Notices and a responsive brief has been filed to this effect with the IRS.  If the IRS were to issue a formal assessment consistent with such Notices and such assessment were ultimately upheld in full by the courts, the Company’s share of the total liability for 1995 and 1996 (as determined pursuant to the agreements effecting the 1996 and 1998 Spin-Off’s) would be approximately $40,300, net of income tax benefit.  If the IRS were to issue a formal assessment for 1997 consistent with such Notices and such assessment were ultimately upheld in full by the courts, the Company’s total liability would be approximately $17,400, net of income tax benefit.  In addition, the IRS has indicated an intention to assert penalties for 1995 and 1996 based on its interpretation of applicable law.  D&B II has advised the Company that Donnelley would challenge this interpretation.  If the IRS were to prevail in its assertion of penalties and interest thereon, the Company’s share of such penalties and interest would be approximately $8,100, net of income tax benefit.

In addition, in February 2003, the partnership associated with the transaction described above received a Summary Report from the IRS that challenges the tax treatment of certain royalty payments received by the partnership which relate to the royalty expense deductions referred to above.  In the Summary Report, the IRS proposes to reallocate certain partnership income to D&B.  If the IRS were to prevail in the positions taken in the Summary Report, the Company’s share of the additional liability including penalties and interest thereon would be approximately $20,300, net of income tax benefit.  The IRS formalized its position by issuing 30 and 60-day letters to D&B II and the partnership in May of 2003.  Management disagrees with the position taken by the IRS, in part because this position is inconsistent with the IRS’s position with respect to the royalty expense deduction described above, and D&B II has advised the Company that Donnelley intends to vigorously challenge the IRS’s interpretation.

If the IRS were to prevail in the positions taken in the Summary Report, certain deductions taken by the Company subsequent to the 1996 Spin-Off may be disallowed.  The Company believes the deductions are appropriate and will vigorously challenge any disallowance claimed by the IRS.  If the IRS were to issue a formal assessment and such assessment were ultimately upheld in full by the courts, the Company’s liability would be approximately $56,300 net of income tax benefits.

Based on new information received in April 2003, the Company increased its reserve to its anticipated share of the probable liability in connection with the foregoing tax matters.  Accordingly, based on information currently available, management does not believe that these matters will have a material adverse effect on the Company’s consolidated financial position or results of operations but may have a material adverse effect on cash flows in the period in which any such amounts are paid.

In addition to these matters, the Company and its predecessors have entered, and the Company continues to enter, into global tax planning initiatives in the normal course of their businesses.  These activities are subject to review by applicable tax authorities.  As a result of the review process, uncertainties exist and it is possible that some of these matters could be resolved adversely to the Company.

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Sharing Dispute.  In May 2000, the Company paid $212,291 to the IRS in connection with a D&B Legacy Tax Matter.  Pursuant to the terms of the 1998 Spin-Off, NMR was liable for a portion of this amount but was not obligated to pay the Company for its share until January 2, 2001.  In December 2000, the Company requested reimbursement from NMR in the amount of $41,136, which represented NMR’s share of the liability according to the Company’s calculations.  On January 2, 2001, NMR made a payment of $10,530 but refused to pay the remaining $30,606 based on its interpretation of the applicable agreements.  At March 31, 2003, the Company had a receivable of $36,805, which included the outstanding principal and accumulated accrued interest of $6,199.  During each of the three and six months ended June 30, 2003 and 2002, $220, $909, $689 and $1,378, respectively, of interest income was accrued in accordance with the terms of the applicable agreements.  These amounts were reflected in Other receivable in the Condensed Consolidated Statements of Financial Position.  On April 29, 2003, the American Arbitration Association International Center for Dispute Resolution panel issued an award in favor of the Company and ordered that NMR pay the Company the entire principal balance plus simple 9% interest from January 2, 2001, together with all legal fees and costs incurred by the Company in connection with the arbitration.  On April 30, 2003, the Company received $37,025 from NMR in satisfaction of the principal amount plus interest from January 2, 2001 through April 30, 2003.  On May 16, 2003, the Company received an additional $1,332 from NMR as reimbursement of the Company’s legal fees and costs in connection with the arbitration.

Matters Before the European Commission

On December 19, 2000 National Data Corporation (“NDC”) filed a complaint against the Company with the European Commission (“EC” or “Commission”), requesting that the Commission initiate a proceeding against the Company for an alleged infringement of Article 82 of the EC Treaty.  Article 82 of the EC Treaty relates to abuses of a dominant position that adversely affect competition.  The complaint concerned an IMS geographic mapping structure used for the reporting of regional sales data in Germany, which the German courts have ruled is copyright protected.  In addition to seeking a formal Commission proceeding against the Company, the complaint requested that the Commission grant interim relief requiring the Company to grant NDC a compulsory license to enable NDC to use this structure in its competing regional sales data service in Germany.

On March 8, 2001, the Commission initiated formal proceedings against the Company in this matter and on July 3, 2001, the Commission ordered interim measures against the Company pending a final decision (the “Interim Decision”).  Under the Interim Decision, the Company was ordered to grant a license of the geographic mapping structure on commercially reasonable terms without delay to NDC and to any other competitor currently present on the German regional sales data market that requested a license.

On August 6, 2001, the Company filed an appeal with the Court of First Instance (“CFI”) seeking the annulment of the Interim Decision in its entirety (the “Annulment Appeal”) and requesting that operation of the Interim Decision be suspended until the CFI renders judgement on the Annulment Appeal.  On October 26, 2001, the President of the CFI suspended operation of the Interim Decision pending a judgement on the Annulment Appeal.  On April 11, 2002, the European Court of Justice (“ECJ”) denied an appeal by NDC of the October 26 decision.  In October 2002, the CFI informed the Company that it had suspended the Annulment Appeal.  The Annulment Appeal is suspended until the ECJ renders a decision on questions referred to it by the German court that is presiding over certain

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litigations that the Company commenced against NDC and others in Germany for misappropriation of the Company’s intellectual property rights.

The Company intends to continue to vigorously assert that its refusal to grant licenses for the use of its copyright protected geographic mapping structure to its direct competitors in Germany, which compete in the same market for which the copyright exists, is not in contravention of Article 82 of the EC Treaty.  Management of the Company is unable to predict at this time the final outcome of this matter or whether the resolution of this matter could materially affect the Company’s future results of operations, cash flows or financial position.

Other Contingencies

Contingent Consideration.  Under the terms of the purchase agreements related to acquisitions made in 2002 and 2001, the Company may be required to pay additional amounts as contingent consideration based on the achievement of certain targets during 2003 to 2007.  Any additional payments will be recorded as goodwill in accordance with Emerging Issues Task Force Issue No. 95-8, “Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination.”  Based on current estimates, management expects the additional payments under these agreements to total approximately $14,000.  As of June 30, 2003, no amounts were earned under these contingencies.  The annual contingent payments will be resolved within a specified time period after the end of each respective calendar year from 2003 through 2007.

Gartner Spin-Off.  In July 1999, the Company spun off Gartner, Inc.  Pursuant to the terms of that spin-off, Gartner agreed to indemnify the Company and its stockholders for additional taxes that may become payable as a result of certain actions that may be taken by Gartner that adversely affect the tax-free treatment of the spin-off.  However, the Company may become obligated for certain tax liabilities in the event the spin-off is deemed to be a taxable transaction as a result of certain Gartner share transactions that may be undertaken following the spin-off.  In the opinion of management, it is not probable that the Company will incur any material liabilities with respect to this matter.

Synavant Spin-Off.  In August 2000, the Company spun off Synavant, Inc.  Pursuant to the terms of that spin-off, Synavant undertook to be jointly and severally liable to the other parties to the 1996 Spin-Off for any future liabilities of Cognizant under the terms of that spin-off and to NMR for any future liabilities of the Company under the 1998 Spin-Off.  However, as between the Company and Synavant, each agreed to bear 50% of the Company’s share of any future liability arising out of the IRI Action or the D&B Legacy Tax Matters (net of the liability borne by NMR), up to a maximum liability of $9,000 for Synavant.  In connection with the acquisition of Synavant by Dendrite International, Inc., on June 16, 2003, Synavant satisfied its current and future liabilities to the Company in respect of the IRI Action and the D&B Legacy Tax Matters by paying $8,345 to the Company of which approximately $4,900 represented an adjustment to the Synavant Spin dividend, approximately $2,200 represented the reimbursement of previously expensed legal fees and approximately $1,100 was a prepayment of Synavant’s future 50% share of legal fees associated with the IRI litigation.

If, contrary to expectations, the spin-off of Synavant were not to qualify as tax free under Section 355 of the Internal Revenue Code, then, in general, a corporate tax would be payable by the consolidated group, of which the Company is a common parent and Synavant is a member, based on

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the difference between (x) the fair market value of the Synavant common stock on the date of the spin-off and (y) the adjusted basis of such Synavant common stock.  In addition, under the consolidated return rules, each member of the consolidated group would be severally liable for such tax liability.  The Company estimates that the aggregate tax liability in this regard is not expected to exceed $100,000.  Pursuant to the terms of the spin-off, the Company would be liable for the resulting corporate tax, except in certain circumstances.  In the opinion of management and based on the opinion of tax counsel, it is not probable that the Company will incur any liability.

CTS Split-Off.  The Company completed the CTS Split-Off exchange offer on February 6, 2003 (see Note 6).  If, contrary to expectations, the CTS distribution were not to qualify as tax free under Section 355 of the Internal Revenue Code, then, in general, a corporate tax would be payable by the Company based on the difference between (x) the fair market value of the CTS class B common stock at the time of the exchange offer and (y) the Company’s adjusted tax basis in such class B common stock.  Such corporate tax would be material in amount because the Company’s adjusted tax basis in the CTS class B common stock is zero.  Pursuant to the distribution agreement entered into between the Company and CTS in connection with the distribution, CTS agreed to indemnify the Company in the event the transaction is taxable as a result of a breach of certain representations made by CTS, subject to certain exceptions.  In the opinion of management and based on the opinion of tax counsel, it is not probable that the Company will incur any liability for taxes in this matter.

Other Litigation.  On January 17, 2003, the Company was served with a summons in a new litigation matter.  Also named as defendants in this litigation are approximately 50 software vendors from which the Company purchased prescription data in the 1990’s (and, for many of these vendors, from which the Company continues to purchase data).  In this action, it is alleged the Company misappropriated the trade secrets (i.e., prescription data) of thousands of pharmacies in the United States and used this information either without authorization or outside the scope of any authorization.  This same conduct is alleged to breach contracts between the Company and the software vendors from which the Company had purchased this prescription data.

The action has been brought in state court in southern Illinois (Circuit Court of the 20^th Judicial Circuit) by two pharmacies.  Plaintiffs are seeking class action status, representing all pharmacies whose data was sold to the Company by their pharmacy dispensary software vendors from 1990 to the present.  The pharmacies are seeking $100,000 in actual damages plus an unspecified amount of unjust enrichment damages (i.e., share of the Company profits) derived from use of the prescription data by the Company and the other defendants, or, in the alternative, a reasonable royalty paid for the use of the prescription data.

The Company is currently investigating the circumstances surrounding the claims and is unable at this time to predict the manner in which this matter may eventually be resolved or, if resolved adversely to the Company, the range of possible liability.  However, the Company believes that its practices with respect to the acquisition and use of this prescription data are consistent with applicable law and industry practices, and that the claims are without merit.

The Company is a defendant in another litigation brought in state court in southern Illinois (Circuit Court of the 20^th Judicial Circuit).  This lawsuit was originally brought in 1994 against Mayberry Systems, a small developer of pharmacy dispensary software in the Midwest.  Two pharmacy

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customers alleged Mayberry Systems was taking prescription data from their systems without authorization, and selling it to others (including the Company).  The Company was subsequently added to the lawsuit in 1996, alleging the Company knew or should have known that Mayberry Systems was taking the data and selling it without authorization (i.e., misappropriation of trade secrets).  The lawsuit was later certified as a class action on behalf of all former and current customers of Mayberry Systems (approximately 350 pharmacies).  Plaintiffs are demanding damages in the amount of $20,000 plus punitive damages and attorneys fees.  The Company denies any of the wrongdoing alleged by the plaintiffs and plans to vigorously defend this action.  The trial is scheduled to start during August, 2003.  In the opinion of management of the Company, it is remote that the Company will incur any material liabilities with respect to this matter.

During the second quarter of 2003 and up to the date of this filing, the Company has been served with 19 complaints filed with the labor court in Frankfurt, Germany.  The plaintiffs are part of a group of approximately 110 employees of GIC Global Information Technology and Consulting GmbH (“GIC Global”) whose employment was terminated in the second quarter in connection with GIC Global’s insolvency proceedings.  GIC Global is owned by former senior managers of what was once the Company’s data processing center in Frankfurt, Germany.  GIC Global purchased the assets and business of the Frankfurt data processing center from the Company in September 2000 as part of a management buyout.  Thereafter, the Company moved its data processing to its data center in the United States.  The plaintiffs are seeking reemployment and/or severance from the Company.  The Company is currently investigating the claims made by these plaintiffs and is unable at this time to predict the manner in which this matter may eventually be resolved or, if resolved adversely to the Company, the range of possible liability.  However, the Company believes that these claims are without merit and intends to vigorously defend these actions.

Limited Partnership.  The Company consolidates the assets, liabilities, results of operations and cash flows of businesses and investments over which it has control.  Third parties’ ownership interests are reflected as minority interests on the Company’s financial statements.  Two of the Company’s subsidiaries contributed assets to, and participate in, a limited partnership.  One subsidiary serves as general partner, and all other partners hold limited partnership interests.  The partnership, which is a separate and distinct legal entity, is in the business of licensing database assets and computer software.  In 1997, third-party investors contributed $100,000 to the partnership in exchange for minority ownership interests.  The Company and its subsidiaries maintain a controlling (88%) interest in the partnership and consolidates the assets, liabilities, results of operations and cash flows of the partnership.  Under the terms of the partnership agreements, the third-party investors had the right to take steps that would result in the liquidation of their partnership interest on June 30, 2003.  On July 1, 2003, the Company and the third party investors entered into agreements extending the date on which the third party investors could liquidate their interests to June 30, 2006.

With respect to the matters described in this Note, management of the Company is unable to predict at this time the final outcome or whether their resolution could materially affect the Company’s future results of operations, cash flows or financial position.

Note 10.  Financial Instruments

Foreign Exchange Risk Management

The Company transacts business in more than 100 countries and is subject to risks associated with changing foreign exchange rates.  The Company’s objective is to reduce earnings and cash flow volatility associated with foreign exchange rate changes.  Accordingly, the Company enters into foreign currency forward contracts to minimize the impact of foreign exchange movements on net income and on the value of non-functional currency assets and liabilities.

It is the Company’s policy to enter into foreign currency transactions only to the extent necessary to meet its objectives as stated above.  The Company does not enter into foreign currency transactions for investment or speculative purposes.  The principal currencies hedged are the Japanese Yen, the Euro, the Swiss Franc and the Canadian Dollar.

The impact of foreign exchange risk management activities on pre-tax income resulted in net pre-tax losses of $9,282 and $16,984, and $12,491 and $10,064, during the three and six months ended

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June 30, 2003 and 2002, respectively.  In addition, at June 30, 2003, the Company had approximately $349,867 in foreign exchange forward contracts outstanding with various expiration dates through September 2003 relating to non-functional currency assets and liabilities and estimated 2003 operating income.  Gains and losses on these contracts are not deferred and are included in the Condensed Consolidated Statements of Income (Unaudited) in Other expense, net.

Fair Value of Financial Instruments

At June 30, 2003, the Company’s financial instruments included cash, cash equivalents, short-term marketable securities, accounts receivable, accounts payable, short-term debt, including short-term borrowings reclassified as long-term debt, long-term debt, interest rate swaps and foreign currency forward contracts.  At June 30, 2003, the fair values of cash, cash equivalents, short-term marketable securities, accounts receivable, accounts payable and short-term debt approximated carrying values due to the short-term nature of these instruments.  The contractual value of the Company’s foreign currency forward contracts was approximately $349,867 at June 30, 2003, and all contracts mature in 2003.  The estimated fair values of the forward contracts were determined based on quoted market prices.

Credit Concentrations

The Company continually monitors its positions with, and the credit quality of, the financial institutions which are counterparties to its financial instruments and does not anticipate non-performance by the counterparties.  The Company would not realize a material loss as of June 30, 2003 in the event of non-performance by any one counterparty.  The Company enters into transactions only with financial institution counterparties that have a credit rating of A or better.  In addition, the Company limits the amount of credit exposure with any one institution.

The Company maintains accounts receivable balances ($240,218 and $215,868, net of allowances, at June 30, 2003 and December 31, 2002, respectively), principally from customers in the pharmaceutical industry.  The Company’s trade receivables do not represent significant concentrations of credit risk at June 30, 2003, due to the high quality of its customers and their dispersion across many geographic areas.

Lines of Credit and Liquidity

The Company has borrowing arrangements with several domestic and international banks to provide lines of credit up to $632,500 at June 30, 2003.  Total borrowings under these existing lines totaled $438,200 and $523,900 at June 30, 2003 and December 31, 2002, respectively.  In general, the terms of these lines of credit give the Company the option to borrow at an interest rate equal to LIBOR plus 37.5 basis points for short-term lines and LIBOR plus 65.0 basis points for long-term lines.  The weighted average interest rates for the short-term lines were 1.67% and 1.99% at June 30, 2003 and December 31, 2002, respectively.  The weighted average interest rates for the long-term lines were 1.89% and 2.21% at June 30, 2003 and December 31, 2002, respectively.  The commitment fee associated with the unused short-term lines of credit is 22.5 basis points per year, increasing to 28.75 basis points per year if the facilities are less than 50% utilized.  Under the long-term lines the commitment fee is 52.5 basis points on the unused portion per year.  The borrowing arrangements require the Company to comply with certain financial covenants and at June 30, 2003, the Company

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was in compliance with all such covenants.  Total debt of $595,038 and $529,812 at June 30, 2003 and December 31, 2002, respectively, included $150,000 of five-year private placement debt (as further discussed below) at June 30, 2003, and $6,838 and $5,912 at June 30, 2003 and December 31, 2002, respectively, related primarily to cash overdrafts, certain capital leases, mortgages and an adjustment to the carrying amount of fair value hedged debt.

During the fourth quarter of 2001, the Company renegotiated with several banks and entered into three-year lines of credit for borrowings of up to $175,000.  During the second quarter of 2003, the Company renegotiated with a bank and increased the amount available under an existing three-year line by $25,000.  Borrowings under these three-year facilities are short-term in nature; however, the Company has the ability and the intent to refinance the short-term borrowings as they come due through December 2004.  As such, at June 30, 2003 and December 31, 2002, the Company reclassified $190,000 and $175,000, respectively, of its then outstanding debt as long-term debt pursuant to the provisions of SFAS No. 6.  Borrowings have maturity dates of up to 90 days from their inception.

In March and April 2002, the Company entered into interest rate swaps on a portion of its variable rate debt portfolio.  These arrangements convert the variable interest rates to a fixed interest rate on a notional amount of $75,000 and mature at various times from March 2005 through April 2006.  The fixed rates range from 4.05% to 5.08%.  The interest rate swaps are accounted for as cash flow hedges and any changes in fair value are recorded in Other comprehensive income, in the Consolidated Statements of Shareholders’ Equity (Unaudited).  The mark-to-market adjustment for the three and six months ended June 30, 2003 was an unrealized net loss of $87 and $129, respectively.

In January 2003, the Company closed a private placement transaction pursuant to which the Company issued $150,000 of five-year debt to several highly rated insurance companies at a fixed rate of 4.60%.  The proceeds were used to pay down short-term debt.  At December 31, 2002, the Company reclassified $150,000 of its short-term debt outstanding as long-term debt in accordance with the provisions of SFAS No. 6, “Classification of Short-Term Obligations Expected to be Refinanced.”  The Company also swapped $100,000 of the fixed rate debt to floating rate based on six-month LIBOR plus a margin of approximately 107 basis points.  These swaps have been accounted for as fair value hedges under the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”

At June 30, 2003, the Company’s Total Current Liabilities exceed its Total Current Assets by $44,505 primarily as a result of management’s decision to maintain a greater proportion of short-term borrowings versus longer-term debt instruments.  This strategy allows the Company to achieve lower borrowing costs while providing flexibility to repay debt with cash flow from operations and proceeds from the exercise of stock options and the liquidation of equity holdings.  Based on estimated future cash flows from operations, the continued monetization of its venture capital investments, the ability to monetize other assets as well as IMS’s ability to utilize unused existing lines of credit, the Company believes it will have sufficient cash and other resources to fund its short-term and long-term business plans, including its current and long-term obligations, its contingent payments, its stock repurchase program and its operations.

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Note 11.  Income Taxes

The Company operates in more than 100 countries around the world and its earnings are taxed at the applicable income tax rate in each of these countries.

In the six months ended June 30, 2003 the Company’s effective tax rate was impacted by approximately $69,600 due to the Company’s reassessment, based on information received in April 2003, of its liability associated with certain D&B Legacy Tax Matters and related subsequent transactions.  This is more fully described in Note 9.  Further, the effective tax rate was affected by the favorable settlement of a non-U.S. audit which approximated $13,900.  In the six months ended June 30, 2002, the Company’s effective tax rate reflected true-ups of current and deferred income tax liabilities.

While the Company intends to continue to seek global tax planning initiatives, there can be no assurance that the Company will be able to successfully implement such initiatives to reduce or maintain its overall tax rate.

Note 12.  IMS Health Capital Stock

On April 15, 2003, the Board of Directors authorized a stock repurchase program to buy up to 10,000 shares, marking the sixth consecutive repurchase program the Company has implemented.  Shares acquired through the repurchase program will be open-market purchases or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18.

On July 19, 2000, the Board of Directors authorized a stock repurchase program to buy up to 40,000 shares, marking the fifth consecutive repurchase program the Company has implemented.  Shares acquired through this repurchase program were open-market purchases in compliance with Securities and Exchange Commission Rule 10b-18.

During the six months ended June 30, 2003, the Company repurchased approximately 5,700 shares of outstanding common stock under these programs at a total cost of $93,550, compared with total repurchases of approximately 9,400 shares at a total cost of $192,221 for the six months ended June 30, 2002.  As of June 30, 2003, approximately 500 shares of the 5,700 shares purchased in the second quarter of 2003 had been repurchased since the inception of the April 2003 program, at a total cost of $9,799.

As discussed in Note 6, during the three months ended March 31, 2003, the Company completed the CTS Split-Off exchange offer and accepted 36,540 IMS common shares tendered in exchange for all 11,291 CTS common shares that the Company owned.

The Company re-issued approximately 54 treasury shares under option exercises for proceeds of $846 during the three months ended June 30, 2003.  During the six months ended June 30, 2003, the Company re-issued approximately 115 treasury shares under option exercises for proceeds of $1,755.  In addition, the Company paid dividends of $0.02 per share for a total of $4,882 during the three months ended June 30, 2003.  For the six months ended June 30, 2003, the Company paid dividends of $0.04 per share for a total of $9,785.

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Note 13.  Comprehensive Income

The following table sets forth the components of comprehensive income, net of income tax expense:

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
Net Income	$	55,356		$	62,013		$	500,029		$	121,192
Other comprehensive income, net of taxes:
Unrealized gains (losses) on:
Available-for-sale equity securities	834			532			718			(3,442		)
Reclassification adjustment	(560		)	(8,007		)	(201		)	(7,515		)
Tax benefit on above	(96		)	2,616			(181		)	3,835
Change in unrealized gains (losses) on investments	178			(4,859		)	336			(7,122		)
Foreign currency translation gains	24,464			26,327			29,273			18,068
Changes in fair value of cash flow hedges	(87		)	(1,215		)	(129		)	(1,215		)
Total other comprehensive income	24,555			20,253			29,480			9,731
Comprehensive Income	$	79,911		$	82,266		$	529,509		$	130,923

Included in the reclassification adjustments of $(560) and $(201) for the three and six months ended June 30, 2003, respectively, are $296 and $655, respectively of write downs related to other-than-temporary declines in value of the venture capital investments.

Note 14.  Severance, Impairment and Other Charges

During the three months ended March 31, 2003, the Company recorded $37,220 of Severance, impairment and other charges (the “first quarter charge”) as a component of operating income.  These charges were designed to further streamline operations and increase productivity.

Approximately $9,958 was charged to expense in the first quarter of 2003, related to a worldwide reduction in headcount of approximately 80 employees.  These severance benefits were calculated pursuant to the terms of established employee protection plans, in accordance with local statutory minimum requirements or individual employee contracts, as applicable.

The Company recorded approximately $22,303 in contract-related charges, including $16,500 in charges to exit data supply and processing contracts and $5,803 related to lease obligations associated with abandoned properties.  These costs are incremental and either relate to existing contractual obligations that do not have any future economic benefit or represent a contract cancellation penalty.

Approximately $4,959 was charged to expense to write down computer software to its net realizable value.  These write-downs resulted from the Company’s decision to abandon certain products.

The cash portion of this charge amounts to $32,261, of which the Company paid approximately $4,814 during the first half of 2003 related primarily to employee termination payments and contract-related charges.  The remaining accrual of $25,926 at June 30, 2003 relates to lease obligations and continuing payments related to employee terminations.

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During the three months ended June 30, 2003, the Company reversed approximately $3,000 of severance charges and contract-related charges originally included in the first quarter charge due to the Company’s refinement of estimates and change in headcount reductions.  The Company also recorded additional charges during the three months ended June 30, 2003 of approximately $3,000 related primarily to a software impairment and severance action.

During the fourth quarter of 2001, the Company completed the assessment of its Competitive Fitness Program (the “Program”).  This program was designed to streamline operations, increase productivity, and improve client service.  In connection with this program, the Company recorded $94,616 of Severance, impairment and other charges during the fourth quarter of 2001 as a component of operating income.

During the first six months of 2003, the Company paid approximately $7,640 under the Program, related primarily to employee termination payments and costs related to a facility shutdown.  Since the program’s inception $52,540 has been paid by the Company.  As expected, all actions under the Program were completed by December 31, 2002.  The remaining accrual of $11,164 at June 30, 2003 relates primarily to lease obligations and continuing payments related to completed employee terminations.

Note 15.  Operations by Business Segment

Operating segments are defined as components of an enterprise about which financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making groups, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment.  The Company has one reportable segment; it operates globally and is principally managed by way of and delivers information, software and related services through one reporting segment.

The chief operating decision-makers evaluate performance and allocate resources based on revenue and operating income data.

A summary of the Company’s revenue by product line, as of and for the three and six months ended June 30, 2003 and 2002 is presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2003		2002		2003		2002
Operating Revenue by product line:
Sales management	$	205,283	$	184,469	$	392,920	$	359,200
Market research	$	119,657	$	106,202	$	234,607	$	209,140
Other services	$	12,836	$	13,229	$	24,166	$	25,274
Total Operating Revenue	$	337,776	$	303,900	$	651,693	$	593,614

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
(Dollars and shares in thousands, except per share data)

This discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements (unaudited) and related notes.

IMS Health Incorporated (“IMS” or the “Company”) is a leading global provider of information solutions to the pharmaceutical and healthcare industries.  IMS operates in more than 100 countries and provides market information, sales management and decision-support services to the pharmaceutical and healthcare industries.  Its key products include sales management information to optimize sales force productivity, marketing effectiveness research for prescription and over-the-counter pharmaceutical products, consulting and other services.  IMS also owns a venture capital unit, Enterprise Associates, LLC (“Enterprises”) which is focused on investments in emerging businesses, and a 26.1% equity interest in The TriZetto Group, Inc. (“TriZetto”), at June 30, 2003.

During the year ended December 31, 2002, IMS also included the Cognizant Technology Solutions Corporation Segment (“CTS”), which provides custom Information Technology (“IT”) design, development, integration and maintenance services.  CTS is a publicly traded corporation on the Nasdaq national market system.  IMS owned 55.3% of the common shares outstanding of CTS (92.5% of the outstanding voting power) as of December 31, 2002, and accounted for CTS as a consolidated subsidiary.  On February 6, 2003, the Company divested CTS through a split-off transaction, and as a result, during the three months ended March 31, 2003, the Company recorded a net gain from discontinued operations of $495,053.  The Company’s share of CTS results are presented as discontinued operations for 2003 through the date of divestiture and for the three and six months ended June 30, 2002.  CTS’s assets and liabilities are presented as discontinued operations as of December 31, 2002 (see Note 6 to the unaudited Condensed Consolidated Financial Statements.)

Three Months Ended June 30, 2003 compared with Three Months Ended June 30, 2002

Operating Results

The reference to constant dollar throughout this report is made so that IMS’s results can be viewed without the impacts of changing foreign currency exchange rates and therefore facilitates a comparative view of business growth.  In the first half of 2003 the U.S. Dollar generally weakened against other currencies, so growth at constant dollar exchange rates was lower than growth at actual currency exchange rates.

Operating revenue for the three months ended June 30, 2003 grew 11.1% to $337,776 from $303,900 in the three months ended June 30, 2002.  On a constant dollar basis revenue growth was 3.0%.  Sales Management revenue of $205,283 in the three months ended June 30, 2003 reflects an increase of 11.3% from the three months ended June 30, 2002, with growth of 2.8% on a constant dollar basis, driven by new product sales.  Market Research revenue improved 12.7% to $119,657 in the three months ended June 30, 2003, and grew 4.5% constant dollar, reflecting growth from new clients and expansion of product capabilities.  Other Services revenue declined 3.0% to $12,836 for the three months ended June 30, 2003, a decline of 6.6% on a constant dollar basis, primarily due to a very strong second quarter in 2002 for Cambridge Pharma Consultancy, Limited (“Cambridge”).

IMS’s operating costs include data processing costs, the costs of data collection and production, and costs attributable to personnel involved in production, data management and the processing and delivery of IMS’s services.  IMS’s operating costs grew 12.9% to $135,311 in the three months ended

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June 30, 2003, from $119,834 in the three months ended June 30, 2002.  The increase resulted primarily from foreign exchange and higher operating costs resulting from acquisitions made during the latter half of 2002 and the first half of 2003.

Selling and administrative expenses consist primarily of the costs attributable to sales, marketing, client service and administration, including personnel, promotion, communications, management, finance, and occupancy.  IMS’s selling and administrative expenses grew 9.7% in the three months ended June 30, 2003, to $85,335 from $77,775 in the three months ended June 30, 2002, primarily due to foreign exchange and higher selling and administrative costs resulting from acquisitions made during the latter half of 2002 and the first half of 2003.

Depreciation and amortization charges increased 65.1% to $19,831 in the three months ended June 30, 2003, from $12,014 in the three months ended June 30, 2002, primarily due to foreign exchange, higher amortization of intangible assets resulting from acquisitions made during the latter half of 2002 and the first half of 2003 and increased software amortization associated with new products.

Operating income for the three months ended June 30, 2003, increased 3.2% to $97,299 from $94,277 in the three months ended June 30, 2002.  On a constant dollar basis operating income declined by 4.4%.

Net interest expense was $2,665 in the three months ended June 30, 2003, compared with $2,246 in the three months ended June 30, 2002, primarily due to higher levels of debt and lower interest income from Nielsen Media Research, Inc. (“NMR”) in 2003.  See Note 9 to the unaudited Condensed Consolidated Financial Statements.

Gains (losses) from investments, net, amounted to a net gain of $32 in the three months ended June 30, 2003, as compared to a net gain of $2,470 in the three months ended June 30, 2002.  The net gain in 2003 is due to a gain of $856 from the sale of an investment in the Enterprises portfolio, net of write downs of $296 related to other-than-temporary declines in value of the venture capital investments, and management fees relating to the portfolio of $528.  The gain in the three months ended June 30, 2002 was due primarily to $8,008 of net gains realized on the sale of investments within IMS’s Enterprises portfolio, offset by a write down related to the assessment of other-than-temporary declines in value of the venture capital investments amounting to $4,235 and management fees of $1,301.

Gain (loss) on issuance of investees’ stock, net, amounted to $54 in the three months ended June 30, 2003, relating to the exercise of stock options by TriZetto employees and TriZetto share repurchases, compared to $(86) in the three months ended June 30, 2002.  This gain (loss) has been recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 51, “Accounting for Sales of Stock by a Subsidiary.”

Other expense, net, decreased in the three months ended June 30, 2003, to $9,835 from $15,607 in the three months ended June 30, 2002.  This was primarily due to net foreign exchange losses of $9,282 in the three months ended June 30, 2003, compared with net foreign exchange losses of $12,491 in the three months ended June 30, 2002, and a $2,210 cash refund from Synavant received during the second quarter of 2003 relating to their share of fees for the IRI litigation.

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In the three months ended June 30, 2003 and June 30, 2002, IMS’s effective tax rate was reduced as a result of global tax planning initiatives.  While IMS intends to continue to seek global tax planning initiatives, there can be no assurance that IMS will be able to successfully implement such initiatives to reduce or maintain its overall tax rate.

A TriZetto equity loss, net, of $66 was recorded in the three months ended June 30, 2003, compared with a net loss of $93 in the three months ended June 30, 2002.

On February 6, 2003, the Company divested CTS through a split-off transaction, and as a result, CTS’s results are presented as income from discontinued operations for 2003 through the date of divestiture and for the three months ended June 30, 2002 (see Note 6 to the unaudited Condensed Consolidated Financial Statements).  Income from discontinued operations net of $8,242 was recorded in the three months ended June 30, 2002.  As a result of the divestiture there was no comparable income in the three months ended June 30, 2003.

Six Months Ended June 30, 2003 compared with Six Months Ended June 30, 2002

Operating Results

Operating revenue for the six months ended June 30, 2003 grew 9.8% to $651,693 from $593,614 in the six months ended June 30, 2002.  On a constant dollar basis revenue growth was 2.0%.  Sales Management revenue of $392,920 in the six months ended June 30, 2003 reflects an increase of 9.4% from the six months ended June 30, 2002, with growth of 1.4% on a constant dollar basis, driven by new product sales.  Market Research revenue improved 12.2% to $234,607 in the six months ended June 30, 2003, and grew 4.1% constant dollar, reflecting growth from new clients and expansion of product capabilities.  Other Services revenue declined 4.4% to $24,166 for the six months ended June 30, 2003, a decline of 7.6% on a constant dollar basis primarily due to a very strong first half in 2002 for Cambridge.

IMS’s operating costs grew 14.1% to $268,300 in the six months ended June 30, 2003, from $235,085 in the six months ended June 30, 2002.  The increase resulted primarily from foreign exchange and higher operating costs resulting from acquisitions made during the latter half of 2002 and the first half of 2003.

IMS’s selling and administrative expenses grew 8.0% in the six months ended June 30, 2003, to $171,095 from $158,357 in the six months ended June 30, 2002, primarily due to foreign exchange and higher selling and administrative costs resulting from acquisitions made during the latter half of 2002 and the first half of 2003.

Depreciation and amortization charges increased 54.2% to $36,629 in the six months ended June 30, 2003, from $23,758 in the six months ended June 30, 2002, primarily due to foreign exchange, higher amortization of intangible assets resulting from acquisitions made during the latter half of 2002 and the first half of 2003 and increased software amortization associated with new products.

During the first quarter of 2003, IMS recorded a $37,220 pretax charge for Severance, impairments and other charges consisting primarily of severance charges of approximately $9,958 for approximately 80 employees, charges to exit data supply and processing contracts of $16,500, lease

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obligations associated with abandoned properties of $5,803, and approximately $4,959 to write down computer software to its net realizable value.  There was no comparable charge during the six months ended June 30, 2002.  See Note 14 to the unaudited Condensed Consolidated Financial Statements.

Operating income for the six months ended June 30, 2003, decreased 21.5% to $138,449 from $176,414 in the six months ended June 30, 2002, primarily due to the Severance, impairment and other charges of $37,220 recorded in the first quarter of 2003.  On a constant dollar basis operating income declined by 7.6%.

Net interest expense was $5,456 in the six months ended June 30, 2003, compared with $3,540 in the six months ended June 30, 2002, primarily due to higher levels of debt and lower interest income from NMR.  See Note 9 to the unaudited Condensed Consolidated Financial Statements.

Gains (losses) from investments, net, amounted to a net loss of $844 in the six months ended June 30, 2003, as compared to a net gain of $1,250 in the six months ended June 30, 2002.  The net loss in 2003 is due primarily to management fees relating to IMS’s Enterprises portfolio of $1,046 and $655 of write downs related to other-than-temporary declines in value of the venture capital investments, offset by gains realized on the sale of such investments of $856.  The gain in the six months ended June 30, 2002 was due primarily to $7,515 of net gains realized on the sale of investments within IMS’s Enterprises portfolio, offset by write downs related to the assessment of other-than-temporary declines in value of the venture capital investments amounting to $4,907.

Loss on issuance of investees’ stock, net, amounted to $261 in the six months ended June 30, 2003, relating to the exercise of stock options by TriZetto employees and TriZetto share repurchases, compared to a net loss of $86 in the six months ended June 30, 2002.  This loss has been recognized in accordance with SAB No. 51.

Other expense, net, increased in the six months ended June 30, 2003, to $20,638 from $16,309 in the six months ended June 30, 2002, primarily due to net foreign exchange losses of $16,984 in the six months ended June 30, 2003, compared with net foreign exchange losses of $10,064 in the six months ended June 30, 2002, and a $2,210 cash refund from Synavant received during the second quarter of 2003 relating to their share of fees for the IRI litigation.

In the six months ended June 30, 2003, IMS’s effective tax rate was impacted by approximately $69,600 due to IMS’s reassessment, based on information received in April 2003, of its liability associated with certain D&B Legacy Tax Matters and related subsequent transactions.  This is more fully described in Note 9 to the unaudited Condensed Consolidated Financial Statements.  Further, the effective tax rate was affected by the favorable settlement of a non-U.S. audit which approximated $13,900.  In the six months ended June 30, 2002, IMS’s effective tax rate reflected true-ups of current and deferred income tax liabilities.

For all periods presented, IMS’s effective tax rate was reduced as a result of global tax planning initiatives.  While IMS intends to continue to seek global tax planning initiatives, there can be no assurance that IMS will be able to successfully implement such initiatives to reduce or maintain its overall tax rate.

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A TriZetto equity loss, net, of $399 was recorded in the six months ended June 30, 2003, compared with a net loss of $295 in the six months ended June 30, 2002.

An impairment charge of $14,842, net of taxes of $9,565, was recorded in the three months ended March 31, 2003 to write down IMS’s investment in TriZetto following the continued significant decline in the market value of TriZetto shares below IMS’s carrying value, including a further substantial decline subsequent to December 31, 2002.  As of June 30, 2003, TriZetto shares closed at $5.99 compared to IMS’s carrying value per share of $4.06.

On February 6, 2003, the Company divested CTS through a split-off transaction, and as a result, CTS’s results are presented as income from discontinued operations for 2003 through the date of divestiture and for the six months ended June 30, 2002 (see Note 6 to the unaudited Condensed Consolidated Financial Statements).  Income from discontinued operations net in the six months ended June 30, 2003 decreased to $2,779 from $13,250 in the six months ended June 30, 2002.  The decrease is due to only 37 days of IMS’s share of CTS net income (January 1, 2003 through February 6, 2003) being included for 2003 compared with a full six months in 2002.  As a result of the divestiture, the Company recorded a net gain from discontinued operations during the six months ended June 30, 2003, of $495,053.

Liquidity and Capital Resources

Cash and cash equivalents decreased $2,732 during the first six months of 2003 to $286,529 at June 30, 2003 compared to $289,261 at December 31, 2002.  The decrease reflects cash used in investing and financing activities of $131,836 and $35,772, respectively, offset by cash generated from operating activities of $159,920 and exchange rate changes of $4,956.  Including the change in short-term marketable securities, which is included in cash used in investing activities, cash and cash equivalents and short-term marketable securities increased to $314,391 at June 30, 2003 compared to $289,261 at December 31, 2002, an increase of $25,130.  On February 6, 2003, the Company divested CTS through a split-off transaction, and as a result, the Company’s share of CTS’s, assets and liabilities is presented as discontinued operations as of June 30, 2003 and December 31, 2002.  The Company’s share of CTS’s results for the six months ended June 30, 2002 and the period from January 1, 2003 through the effective date of the exchange offer are presented as discontinued operations, and the Condensed Consolidated Statements of Cash Flows exclude CTS Cash Flows for the six months ended June 30, 2003 and 2002 (see Note 6 to the unaudited Condensed Consolidated Financial Statements.)

Net cash provided by operating activities amounted to $159,920 for the six months ended June 30, 2003, an increase of $65,847 over the comparable period in 2002.  The increase relates primarily to the NMR payment received in respect of Legacy D&B Tax Matters, lower cash requirements for accrued income taxes, severance, impairment and other charges and lower funding of accounts receivables balances due to improved collection.  These items were partially offset by lower income from continuing operations in 2003.

Net cash used in investing activities amounted to $131,836 for the six months ended June 30, 2003, an increase in cash used of $99,729 over the comparable period in 2002.  The greater cash requirements during 2003 relate primarily to $41,722 in higher spending on acquisitions, $27,862 of investments in short-term marketable securities in 2003 with no comparable investment in 2002, a

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$20,724 reduction in cash receipts received for sales of investments and an increase of $5,580 in spending on deferred software relating to new product development.  These items were partially offset by a required $3,000 funding of a venture capital investment in the prior period compared with a cash outlay of $1,200 in 2003.

Net cash used in financing activities amounted to $35,772 for the six months ended June 30, 2003, an increase of $14,972 over the comparable period in 2002.  This increase was primarily due to a $9,903 decrease in proceeds from exercise of stock options and a $7,758 decrease in cash overdrafts.

At June 30, 2003, IMS’s Total Current Liabilities exceed its Total Current Assets by $44,505 primarily as a result of management’s decision to maintain a greater proportion of short-term borrowings versus longer-term debt instruments.  This strategy allows IMS to achieve lower borrowing costs while providing flexibility to repay debt with cash flow from operations and proceeds from the exercise of stock options and the liquidation of equity holdings.  Based on estimated future cash flows from operations, the continued monetization of its venture capital investments, the ability to monetize other assets as well as IMS’s ability to utilize unused existing lines of credit (see Note 10 to the unaudited Condensed Consolidated Financial Statements), IMS believes it will have sufficient cash and other resources to fund its short-term and long-term business plans, including its current and long-term obligations, its contingent payments, its stock repurchase program and its operations.

On April 15, 2003, the Board of Directors authorized a stock repurchase program to buy up to 10,000 shares, marking the sixth consecutive repurchase program the Company had implemented.  Shares acquired through this repurchase program were open-market purchases or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18.

On July 19, 2000, the Board of Directors authorized a stock repurchase program to buy up to 40,000 shares, marking the fifth consecutive repurchase program the Company has implemented.  Shares acquired through the repurchase program will be open-market purchases in compliance with Securities and Exchange Commission Rule 10b-18.

During the six months ended June 30, 2003, the Company repurchased approximately 5,700 shares of outstanding common stock under these programs at a total cost of $93,550, compared with total repurchases of approximately 9,400 shares at a total cost of $192,221 for the six months ended June 30, 2002.  As of June 30, 2003, approximately 500 shares of the 5,700 shares purchased in the second quarter of 2003, had been repurchased since the inception of the April 2003 program, at a total cost of $9,799.

IMS believes that its available funds, credit facilities and the cash flows expected to be generated from operations will be adequate to satisfy its current and planned operations and needs and contingent payments for at least the next 12 months including an estimate of approximately $4,900 in fees associated with the CTS Split-Off (see Note 6 to the unaudited Condensed Consolidated Financial Statements).  IMS’s ability to expand and grow its business in accordance with current plans, to make acquisitions, repurchase stock and to meet its long-term capital requirements beyond this 12-month period will depend on many factors, including the rate, if any, at which its cash flow increases, its ability and willingness to accomplish acquisitions, repurchase treasury stock and the

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availability to IMS of public and private debt and equity financing, including its current ability to secure bank lines of credit.  IMS cannot be certain that additional financing, if required, will be available on terms favorable to it, if at all.

Recently Issued Accounting Standards

In May 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”  SFAS No. 150 establishes standards for how an enterprise classifies and measures certain financial instruments that have characteristics of both liabilities and equity.  SFAS No. 150 requires an enterprise to classify a financial instrument that is within its scope as a liability (or an asset in some circumstances).  SFAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003.  The adoption of SFAS No. 150 effective June 1, 2003 did not have a material impact on the Company’s financial position, results of operations or cash flows for the three months ended June 30, 2003.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.”  SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”  SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.”  SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.  SFAS No. 143 requires an enterprise to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of a tangible long-lived asset.  SFAS No. 143 was effective for fiscal years beginning after June 15, 2002.  The adoption of SFAS No. 143 effective January 1, 2003 did not have a material impact on the Company’s financial position, results of operations or cash flows for the three and six months ended June 30, 2003.

Forward-Looking Statements

This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by IMS, contain statements that, in the opinion of IMS, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  The words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “project,” “estimate,” “will,” “may,” “should,” “future,” “predicts,” “potential,” “continue” and similar expressions identify these forward-looking statements, which appear in a number of places in this Quarterly Report and include, but are not limited to, all statements relating to plans for future growth and other business development activities as well as capital expenditures, financing sources, dividends and the effects of regulation and competition, foreign currency conversion and all other statements regarding the intent, plans, beliefs or expectations of IMS or its directors or officers.  Investors are cautioned that such forward-looking statements are not assurances

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for future performance or events and involve risks and uncertainties that could cause actual results and developments to differ materially from those covered in such forward-looking statements.  These risks and uncertainties include, but are not limited to:

•risks associated with operating on a global basis, including fluctuations in the value of foreign currencies relative to the U.S. Dollar, and the ability to successfully hedge such risks – IMS derived approximately 59% of its revenue in 2002 from non-US operations;

•to the extent IMS seeks growth through acquisitions, alliances or joint ventures, the ability to identify, consummate and integrate acquisitions, alliances and ventures on satisfactory terms;

•the ability to develop new or advanced technologies, including sophisticated information systems, software and other technology used to deliver its products and services and to do so on a timely and cost-effective basis, and the exposure to the risk of obsolescence or incompatibility of these technologies with those of its customers or suppliers;

•the ability of IMS to maintain and defend its intellectual property rights in jurisdictions around the world;

•the ability to identify and implement cost-containment measures;

•the ability to successfully maintain historic effective tax rates;

•competition, particularly in the markets for pharmaceutical information;

•regulatory, legislative and enforcement initiatives to which IMS is or may become subject, relating particularly to tax and to patient privacy and the collection and dissemination of data and specifically, the use of anonymized patient-specific information, which IMS anticipates to be an increasingly important tool in the design, development and marketing of pharmaceuticals;

•regulatory, legislative and enforcement initiatives to which customers of IMS in the pharmaceutical industry are or may become subject restricting the prices that may be charged for subscription or other pharmaceutical products or the manner in which such products may be marketed or sold;

•deterioration in economic conditions, particularly in the pharmaceutical, healthcare, or other industries in which IMS’s customers may operate;

•consolidation in the pharmaceutical industry and the other industries in which IMS’s customers operate;

•the imposition of additional restrictions on IMS’s use of or access to data, or the refusal by data suppliers to provide data to IMS;

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•conditions in the securities markets which may affect the value or liquidity of portfolio investments, including the investment in TriZetto and management’s estimates of lives of assets, recoverability of assets, fair market value, estimates and liabilities and accrued income tax benefits and liabilities;

•to the extent unforeseen cash needs arise, the ability to obtain financing on favorable terms; and

•terrorist activity, the threat of such activity, and responses to and results of such activity and threats, including but not limited to effects, domestically and/or internationally, on IMS, its personnel and facilities, its customers and suppliers, financial markets and general economic conditions.

Consequently, all the forward-looking statements contained in this Quarterly Report on Form 10-Q are qualified by the information contained herein, including, but not limited to, the information contained under this heading and the Condensed Consolidated Financial Statements (unaudited) and notes thereto for the three and six month periods ended June 30, 2003 and by the material set forth under the headings “Business” and “Factors That May Affect Future Results” in IMS’s Annual Report on Form 10-K for the year ended December 31, 2002.  IMS is under no obligation to publicly release any revision to any forward-looking statement contained or incorporated herein to reflect any future events or occurrences.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Information in response to this Item is set forth in “Note 10. Financial Instruments” in the Notes to the Condensed Consolidated Financial Statements (unaudited) on pages 18 through 20 hereof.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits to the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company’s are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company’s Chief Executive Officer andChief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14c and 15d-14c under the Exchange Act) as of June 30, 2003 (the “Evaluation Date”).  Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic filings under the Exchange Act.

(b)Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Information in response to this Item is incorporated by reference to the information set forth in “Note 9. Contingencies” in the Notes to the Condensed Consolidated Financial Statements (unaudited) on pages 11 through 18 hereof.

Item 2.  Changes in Securities and Use of Proceeds

On April 14, 2003, in reliance upon the exemption provided in Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), the Company issued to each of Curtis C. Cutter and Joseph L. Ebersole 30,907 shares of its Common Stock without registration under the Securities Act.  These shares were issued in satisfaction of the Company’s deferred contingent purchase price obligation under the Agreement and Plan of Merger between ChinaMetric, Inc., the Stockholders of ChinaMetric, Inc. and IMS (as successor to Cognizant Corporation) dated March 31, 1998, pursuant to which the Company purchased ChinaMetric, Inc.

Item 4.  Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders of IMS Health Incorporated was held on May 2, 2003.

The following nominees for director named in the Proxy Statement dated March 31, 2003 were elected at the Meeting by the votes indicated:

	For	Withheld
John P. Imlay,  Jr.	192,161,214	20,931,977
Robert J. Kamerschen	192,188,441	20,904,750
H. Eugene Lockhart	192,003,946	21,089,245

The votes in favor of the election of the nominees represent at least 90% of the shares present at the meeting.

Approval of the appointment of PricewaterhouseCoopers LLP as Independent Public Accountants was approved by the following vote:

	For	Against	Abstain
Number of Shares	186,307,513	25,748,396	1,307,282

Approval of the Amended and Restated 1998 IMS Health Incorporated Non-Employee Directors’ Stock Incentive Plan:

Number of Shares 132,616,034 47,501,020 1,762,167

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Approval of the Amended and Restated 1998 IMS Health Incorporated Employees’ Stock Incentive Plan:

Number of Shares 130,695,679 49,472,266 1,701,677

Reapproval of Performance Goals Under the 1998 IMS Health Incorporated Employees’ Stock Incentive Plan and Executive Annual Incentive Plan:

Number of Shares 199,552,397 11,979,396 1,557,396

Approval of the Floor Proposal for the Removal of the Staggered Board:

Number of Shares 400 213,093,191 0

Item 6.  Exhibits and Reports on Form 8-K

(a)Exhibits:

Exhibit Number	Description of Exhibits
10.1	First Amendment to the IMS Health Incorporated U.S. Executive Retirement Plan (As amended effective April 17, 2001)*
10.2	First Amendment to the IMS Health Incorporated Supplemental Executive Retirement Plan (As amended effective April 17, 2001)*
10.3	IMS Health Incorporated Executive Pension Plan effective as of April 17, 2001*
10.4	Employment Agreement for Nancy E. Cooper (As amended and restated as of February 11, 2003)*
10.5	Employment Agreement for Robert H. Steinfeld (As amended and restated as of February 11, 2003)*
31.1	CEO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a)
31.2	CFO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Joint CEO/CFO Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002

*Management Contract or Compensatory Plan Arrangement

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(b)Reports on 8-K:

A report on Form 8-K was filed on June 23, 2003 to present under Item 9, Regulation FD Disclosure, Certifications of IMS Health’s Vice President Global Compensation and Benefits and the Senior Vice President and Chief Financial Officer accompanying the Annual Report on Form 11-K of the IMS Health Incorporated Savings Plan filed June 23, 2003.

A report on Form 8-K was filed on May 7, 2003 to present under Item 9, Regulation FD Disclosure, Certifications of IMS Health’s Chief Executive Officer and Chief Financial Officer accompanying the IMS Health Incorporated Quarterly Report on Form 10-Q filed May 7, 2003.

A report on Form 8-K was filed on April 15, 2003 to present under Item 9, Regulation FD Disclosure, Press Release regarding IMS Health’s financial results for its first quarter of fiscal 2003.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		IMS Health Incorporated
	By:	/s/ Nancy E. Cooper
Date: August 5, 2003		Nancy E. Cooper Senior Vice President and Chief Financial Officer (principal financial officer)
		/s/ Leslye G. Katz
Date: August 5, 2003		Leslye G. Katz Vice President, Controller (principal accounting officer)

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EXHIBIT INDEX

Exhibit Number	Description of Exhibits
10.1	First Amendment to the IMS Health Incorporated U.S. Executive Retirement Plan (As amended and restated effective April 17, 2001)*
10.2	First Amendment to the IMS Health Incorporated Supplemental Executive Retirement Plan (As amended and restated effective April 17, 2001)*
10.3	IMS Health Incorporated Executive Pension Plan effective as of April 17, 2001*
10.4	Employment Agreement for Nancy E. Cooper (As amended and restated as of February 11, 2003)*
10.5	Employment Agreement for Robert H. Steinfeld (As amended and restated as of February 11, 2003)*
31.1	CEO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a)
31.2	CFO 302 Certification pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Joint CEO/CFO Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002

*Management Contract or Compensatory Plan Arrangement

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EX-10.1

Exhibit 10.1

First Amendment to the
IMS Health Incorporated
U.S. Executive Retirement Plan

The IMS Health Incorporated U.S. Executive Retirement Plan (the “Plan”) is amended effective April 17, 2001, except as otherwise provided herein, as follows:

1.Section 1.34 of the Plan is deleted.

2.Section 1.1 of the Plan is amended to read in its entirety as follows:

“1.1“Actuarial Equivalent Value” shall mean a benefit of equivalent value computed on the basis of the mortality table and interest rate used to calculate accrued benefits under the Basic Plan.”

3.The first paragraph of Section 1.9 of the Plan is amended to read in its entirety as follows:

“1.9“Cause”. A Member shall not be deemed to have been terminated for “Cause” under this Plan unless such Member shall have been terminated for “Cause” under the terms of such Member’s employment agreement or Change in Control Agreement with the Company, if any.  If no such employment agreement or Change in Control Agreement containing a definition of “Cause” shall be in effect, for purposes of this Plan  “Cause” shall mean a Member’s:”

4.The following new Section 1.10 is added to the Plan and subsequent sections of the Plan are renumbered accordingly:

“1.10‘CEO’ shall mean the Chief Executive Officer of the Company.”

5.The first paragraph of Section 1.11 of the Plan is amended to read in its entirety as follows:

“1.11“Change in Control” If a “Change in Control” shall have occurred or shall be deemed to have occurred under the terms of a Member’s or Vested Former Member’s Change in Control Agreement or employment agreement with the Company, if any, then a “Change in Control” shall be deemed to have occurred under this Plan.  Otherwise a “Change in Control” shall be deemed to have occurred if:”

6.The first sentence of Section 1.15 of the Plan is amended to read as follows:

“1.15“Compensation” shall mean base salary, annual bonuses, commissions, overtime and shift pay, in each case prior to reductions for elective contributions under Sections 401(k), 125 and 132(f)(4) of the Code and deferred compensation under any nonqualified deferred compensation plan.”

7.The first paragraph of section 1.22 of the Plan is amended to read in its entirety as follows:

“1.22“Good Reason” If a Member shall have terminated employment for “Good Reason” under the terms of such Member’s Change in Control Agreement or employment agreement with the Company, if any, then such Member shall be deemed to have terminated employment for “Good Reason” under this Plan.  Otherwise “Good Reason” shall mean, without the Member’s express written consent, the occurrence of any of the following circumstances unless such circumstances are fully corrected prior to the date of termination specified in the notice of termination given in respect thereof:”

8.Section 1.22(g) of the Plan is amended to read in its entirety as follows:

“(g)with respect to any Member who is a party to an employment agreement or a Change in Control Agreement, any purported termination of such Member’s employment that is not effected pursuant to the notice provisions, if any, in such Member’s employment agreement or Change in Control Agreement.”

9.Section 1.23 of the Plan is amended to read in its entirety as follows:

“1.23“Lump Sum Election” shall mean an election to receive all or a portion of the benefits payable hereunder in a lump sum pursuant to Section 3.4 hereof.”

10.The following new Section 1.28 is added to the Plan and subsequent sections are renumbered accordingly:

“1.28“Plan Administrator” shall mean the Company, except that any action authorized to be taken by the Plan Administrator hereunder may also be taken by any committee or person(s) duly authorized by the Board or the duly authorized delegees of such duly authorized committee or person(s).”

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11.Section 1.29(b) of the Plan is amended to read in its entirety as follows:

“(b)any Person (including the Company), as defined in Section 1.11(a) hereof, publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or”

12.Section 1.30 of the Plan is amended to read in its entirety as follows:

“1.30“Retirement” shall mean the termination of a Member’s or Vested Former Member’s employment with the Company or an Affiliated Employer other than by reason of death or Disability (a) after attaining age 55 and completing one year of Service, or (b) if Disability Benefits have been paid under the Plan to a Member or Vested Former Member, the later of the cessation of the payment of such Disability Benefits or the  Member’s or Vested Former Member’s attainment of age 55.  In determining whether age 55 has been attained under clause (a) of this definition, there shall be included as years of age the number of additional years credited as “age” for purposes of the Plan to the Member or Vested Former Member under this Plan, a then-effective employment agreement between the Company and such person, a then-effective Change in Control Agreement between the Company and such person, or otherwise as approved in writing by the CEO.”

13.Section 1.32 of the Plan is amended to read in its entirety as follows:

“1.32“Service” shall mean a Member’s service defined as Vesting Service in the Basic Plan, which is taken into account for vesting purposes thereunder (including any such service prior to the date such individual becomes a Member but not including any such service after participation hereunder terminates), except that (i) Service will also include that period of time during which the Member is receiving Disability Benefits under this Plan; (ii) if a Member was employed by a company acquired by the Company or an Affiliated Employer after the Effective Date, such Member’s service with that company prior to the date of acquisition will not constitute Service hereunder unless otherwise approved in writing by the CEO; (iii) upon commencement of participation hereunder in accordance with Section 2.1 hereof, the CEO may limit any service otherwise to constitute Service hereunder with respect to periods prior to the date of participation in the Plan; and (iv) no service of a Former Member or Vested Former Member during any period after removal from participation under Section 2.2 shall constitute Service for purposes of the Plan.  The foregoing notwithstanding, there shall be included as Service for all purposes under the Plan the number of additional years (or other additional period) credited as “service” for purposes of the Plan to the

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Member or Former Member or Vested Former Member under this Plan,  an employment agreement between the Company or an Affiliated Employer and such person or a Change in Control Agreement in effect at the time of such person’s termination of employment, or otherwise approved in writing by the CEO.”

14.Section 2.1 of the Plan is amended to read in its entirety as follows:

“2.1Commencement of Participation. Such key executives of the Corporation and its Affiliated Employers as are designated by the CEO in writing and, in the case of officers of the Company or its Affiliated Employers, approved by the Compensation and Benefits Committee of the Board, shall participate in the Plan as of a date determined by the CEO.”

15.Section 2.2 of the Plan is amended to read in its entirety as follows:

“2.2Termination of Participation.  A Member’s participation in the Plan shall terminate upon termination of his or her employment with the Company or any Affiliated Employer. Prior to termination of employment, a Member may be removed, upon written notice by the CEO, and, in the case of officers of the Company or its Affiliated Employers, as approved by the Compensation and Benefits Committee of the Board, from further participation in the Plan. As of the date of termination or removal, no further benefits shall accrue to such individual hereunder.”

16.Section 3.3(a) of the Plan is amended to read in its entirety as follows:

“(a)Except as provided under Section 3.3(b) or Section 3.3(c), the Retirement Benefit or Deferred Vested Benefit under this Plan, as the case may be, shall be payable in monthly installments in the form of a straight life annuity and without regard to any optional form of benefits elected under the Basic Plan.  Payments shall commence as of the first day of the calendar month coinciding with or next following (i) the earlier of the date the Member or Vested Former Member attains age 65 or the date of the Member’s or Vested Former Member’s Retirement, in the case of Retirement Benefits or (ii) the later of the date the Member or Vested Former Member attains age 55 or terminates employment, in the case of Deferred Vested Benefits, and shall commence to be paid on such date or as soon as administratively practicable thereafter, with interest as determined by the Plan Administrator for any delay in payment.”

17.Section 3.3(b) of the Plan is amended to read in its entirety as follows:

“(b)If a Member or Vested Former Member has made a Lump Sum Election pursuant to Section 3.4 and such Lump Sum Election becomes effective (i)

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prior to the date of such Member’s or Vested Former Member’s Retirement or termination of employment with the Company or an Affiliated Employer and (ii) while he or she was still a Member, the Retirement Benefit, or Deferred Vested Benefit under this Plan, as the case may be, shall be payable in the form or combination of forms of payment elected pursuant to such Lump Sum Election under Section 3.4 and without regard to any optional form of benefits elected under the Basic Plan.  Any portion of the benefits hereunder payable in a lump sum shall be paid within 60 days following (i) the earlier of the date the Member or Vested Former Member attains age 65 or the date of the Member’s or Vested Former Member’s Retirement, in the case of Retirement Benefits or (ii) the later of the date the Member or Vested Former Member attains age 55 or terminates employment, in the case of Deferred Vested Benefits.”

18.Section 3.4(a) of the Plan is amended to read in its entirety as follows:

“(a)A Member or Vested Former Member may elect to receive all, none, or a specified portion, as provided in Section 3.4(c), of his or her Retirement Benefit or Deferred Vested Benefit under the Plan as a lump sum and to receive any balance of such benefit in the form of an annuity; provided that any such Lump Sum Election shall be effective for purposes of this Plan only if the conditions of Section 3.4(b) are satisfied.  Effective January 1, 2003, a Lump Sum Election made by a Member or Vested Former Member in accordance with the terms of any plan maintained by the Company described in Section 201(2) of ERISA shall be effective with respect to this Plan. A Member or Vested Former Member may elect a payment form different than the payment form previously elected by him or her under this Section 3.4(a) by filing a revised election form; provided that any such new election shall be effective only if the conditions of Section 3.4(b) are satisfied with respect to such new election.  Any prior Lump Sum Election made by a Member that has satisfied the conditions of Section 3.4(b) shall remain effective for purposes of the Plan until such Member has made a new election satisfying the conditions of Section 3.4(b).  The amount of any portion of a Member’s or a Vested Former Member’s Retirement Benefit or Deferred Vested Benefit payable as a lump sum under this Section 3.4 shall equal the present value of such portion of the benefit, and such present value shall be determined (i) on the assumption that it is payable in the form of a joint and 50 percent survivor annuity if such Member or Vested Former Member is married; and (ii) on the basis of (1) a discount rate equal to 85% of the average of the 15-year non-callable U.S. Treasury bond yields (or, in the event that 15-year non-callable U.S. Treasury bond yields are unavailable, such proxy for the same as the Plan Administrator may reasonably select) as of the close of business on the last business day of each of the three months immediately preceding the date provided in Section 3.3(a) as of which

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monthly installments would otherwise commence, as modified by Section 3.8(a)(i) if applicable and (2) using the 1983 Group Annuity Mortality Table.”

19.Section 3.4(d) of the Plan is amended to read in its entirety as follows:

“(d)Effective January 1, 2003, in the event a Member who has made an Election pursuant to Section 3.4(a) dies or becomes Disabled while employed by the Company or an Affiliated Employer and such death or Disability occurs during the 12 calendar-month period immediately following the Election Date, the condition under Section 3.4(b)(i) shall be deemed satisfied with respect to such Member.”

20.Section 3.7(a) of the Plan is amended to read in its entirety as follows:

“(a)Subject to Section 3.8 hereof, a Member or Vested Former Member who receives in a lump sum any portion of his or her Retirement Benefit or Deferred Vested Benefit pursuant to a Lump Sum Election, shall receive such lump sum portion of such Retirement Benefit or Deferred Vested Benefit subject to the condition that if such Member or Vested Former Member engages in any of the acts described in Section 3.5, then such Member or Vested Former Member shall, within 60 days after written notice by the Company, repay to the Company the amount described in Section 3.7(b).”

21.Section 3.8(a)(i) of the Plan is amended to read in its entirety as follows:

“(i)Any Member, whose employment with the Company or an Affiliated Employer is involuntarily terminated by the Company or an Affiliated Employer at or within two years following a Change in Control for a reason other than Cause or whose employment is voluntarily terminated by the Member with Good Reason at or within two years following a Change in Control shall be deemed to have completed three years of Service for purposes of Sections 3.1(a) and 3.2(a) hereof and shall be credited with three additional years of Service for purposes of calculating the benefits payable under Sections 3.1(b) or 3.2(b) hereof, as the case may be.  Notwithstanding the provisions of Section 3.3 of this Plan to the contrary, payment of the Actuarial Equivalent Value of such benefits shall be made in the form provided in Section 3.3 commencing as provided in Section 3.3(a) or (b), as the case may be, provided that with respect to Deferred Vested Benefits, the commencement of payment shall be determined without regard to whether the Member has attained age 55 and, provided further, that the Actuarial Equivalent Value of such benefits shall be determined by crediting such Member with three additional years of age and on the assumption that unreduced benefits are payable upon the Member’s attainment of age 55.  Moreover, for purposes of determining

6

the Actuarial Equivalent Value of such benefits payable in the form of a lump sum, the interest and mortality factors specified in Section 3.4(a) shall apply.  In addition, in the event that a Member’s Service shall have been limited pursuant to Section 1.30(iii) to disregard Service prior to such Member’s participation in the Plan, such limitation shall be eliminated in the event of such Member’s termination of employment at or within two years following a Change in Control as provided above in this subsection (i).”

22.Section 3.8(a)(iii) of the Plan is amended to read in its entirety as follows:

“(iii)The provisions of Sections 3.5 through 3.7 shall be of no force or effect with respect to Members who Retire or terminate employment within a two-year period following a Change in Control.”

23.Section 4.1(b) of the Plan is amended to read in its entirety as follows:

“(b)Amount. The Disability Benefit of a Member entitled thereto shall be an annual benefit payable in monthly installments under this Plan during the same period as disability benefits are actually paid by the Basic Disability Plan, in an amount equal to 60% of the Member’s Covered Earnings, offset by the Member’s (i) Basic Disability Plan Benefit, (ii) Basic Plan Benefit, if the Basic Disability Plan Benefit is offset by such Basic Plan Benefit, and (iii) Other Disability Income.”

24.Section 5.1 of the Plan is amended to read in its entirety as follows:

“5.1Death Prior to Benefit Commencement. Upon the death of a Member or Vested Former Member, prior to the commencement of his or her Retirement Benefit or Deferred Vested Benefit hereunder, any such Member shall be deemed to have completed three years of Service for purposes of Section 3.1(a) and Section 3.2(a) and his or her Surviving Spouse will be entitled to a Surviving Spouse’s Benefit under this Plan equal to 50% of the Retirement or Deferred Vested Benefit that would have been provided from the Plan had the Member or Vested Member retired from or terminated employment with the Company or an Affiliated Employer on the date of death and commenced benefits on the later of the date the Member would have attained age 55 or the date of the Member’s death.”

25.Section 5.3 of the Plan is amended to read in its entirety as follows:

“5.3Commencement of Surviving Spouse’s Benefit.  Except as provided in Section 5.4, the Surviving Spouse’s Benefit provided under Sections 5.1 or 5.2 will be payable monthly, at the same time as the Surviving Spouse’s

7

benefits under the Basic Plan.  Such benefits shall continue until the first day of the month in which the Surviving Spouse dies.”

26.Section 6.2 of the Plan is amended to read in its entirety as follows:

“6.2Presentation of Claims. The claims procedures set forth in Sections 6.2 through 6.6 shall be effective January 1, 2003.  Claims for benefits shall be filed in writing with the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be furnished to the claimant within 90 days after the claim is filed (or within 180 days if special circumstances require an extension of time for processing the claim and if notice of such extension and circumstances is provided to the claimant within the initial 90-day period.)”

27.The following new Section 6.3 is added to the Plan:

“6.3Claims Denial Notification.  If a claim is wholly or partially denied, the Plan Administrator shall furnish to the claimant a written notice setting forth in a manner calculated to be understood by the claimant:

(a)the specific reason(s) for denial;

(b)specific reference(s) to pertinent Plan provisions on which any denial is based;

(c)a description of any additional material or information necessary for the claimant to perfect the claim, and an explanation of why such material or information is necessary;

(d)an explanation of the Plan’s claims review procedures and the applicable time limits for such procedures; and

(e)a statement that the claimant has a right to bring a civil action under Section 502(a) of ERISA following an adverse determination on review.”

28.The following new Section 6.4 is added to the Plan:

“6.4Claims Review Procedure.  Upon a denial, the claimant is entitled (either in person or by his duly authorized representative) to:

(a)request a subsequent review of the claim by the Plan Administrator upon written application for review made to the Plan Administrator.  In the case of a denial as to which written notice of denial has been given to the claimant, any such request for review of the claim must be made within 60 days after receipt by the claimant of such notice.  A claimant must submit a written application for review before the claimant is permitted to bring a civil action for benefits;

(b)review pertinent documents relating to the denial; and

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(c)submit written comments, documents, records and other information relating to the claim.”

29.The following new Section 6.5 is added to the Plan:

“6.5Timing.  The Plan Administrator shall make its decision and notify the claimant with respect to a claim not later than 60 days after receipt of the request.  Such 60-day period may be extended for another period of 60 days if the Plan Administrator finds that special circumstances require an extension of time for processing and notice of the extension and special circumstances is provided to the claimant within the initial 60-day period.”

30.The following new Section 6.6 is added to the Plan:

“6.6Final Decision.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant with written or electronic notice of the decision in a manner calculated to be understood by the claimant.  The notice shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement that the claimant has a right to bring a civil action under Section 502(a) of ERISA, and a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the claim.  A document is relevant to the claim if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that Plan provisions have been applied consistently with respect to similarly situated claimants.”

31.Section 7.1 of the Plan is amended to read in its entirety as follows:

“7.1Amendment; Termination. The Board of Directors of the Company, may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part; provided, however, that no termination, suspension or amendment of the Plan may adversely affect (a) a Member’s or Vested Former Member’s benefit under the Plan to which he or she has become entitled hereunder, or, (b) a Vested Former Member’s right or the right of a Surviving Spouse to receive or to continue to receive a benefit in accordance with the Plan, such benefits or rights as in effect on the date immediately preceding the date of such termination, suspension or amendment. Notwithstanding the foregoing, the

9

Employee Benefits Committee of the Company may amend the Plan without the approval of the Board of Directors of the Company with respect to amendments that such Committee determines do not have a significant effect on the cost of the Plan.”

32.Section 7.3 of the Plan is amended to read in its entirety as follows:

“7.3Payout in Discretion of the Plan Administrator. Notwithstanding anything herein to the contrary, at any time following the termination of service of the Member or Vested Former Member, the Plan Administrator may authorize, under uniform rules applicable to all Members, Vested Former Members and Surviving Spouses under the Plan, a lump sum distribution of a Member’s or Vested Former Member’s Retirement Benefit or Deferred Vested Benefit or a lump sum distribution of a Surviving Spouse’s Benefit under the Plan, in full satisfaction of all present and future Plan liability with respect to such Member, Vested Former Member and/or Surviving Spouse, if the present value of such Retirement Benefit, Deferred Vested Benefit or Surviving Spouse’s Benefit, determined in accordance with the provisions of Section 3.4(a) with respect to Retirement Benefits and Deferred Vested Benefits, and Section 5.4 with respect to Surviving Spouse’s Benefits, on the assumption that the Member or Vested Former Member made an Election under Section 3.4, is less than $250,000.  Such lump sum distribution may be made without the consent of the Member, Vested Former Member or Surviving Spouse.”

33.Section 7.5 of the Plan is amended to read in its entirety as follows:

“7.5Arbitration. The provisions of this Section 7.5 shall be effective January 1, 2003. Any dispute or controversy arising under or in connection with the Plan shall be settled exclusively by arbitration in New York, New York in accordance with the rules of the American Arbitration Association in effect at the time of such arbitration. Upon submission of invoices, the Company shall promptly pay or reimburse all reasonable costs and expenses (including fees and disbursements of counsel and pension experts) incurred to assert rights under this Plan or in any proceeding in connection therewith, brought by a Member, Vested Former Member, Former Member or Surviving Spouse, whether or not such Member, Vested Former Member, Former Member or Surviving Spouse is ultimately successful in enforcing such rights or in such proceeding; provided, however, that no reimbursement shall be owed with respect to expenses relating to any unsuccessful assertion of rights or proceeding if and to the extent that such assertion or proceeding was initiated or maintained in bad faith or was frivolous as determined by the arbitrators or a court having jurisdiction over the matter, in which case any amounts previously paid by the Company shall be promptly repaid.”

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34.Section 7.6 of the Plan is amended to read in its entirety as follows:

“7.6No Alienation.  A Member’s or Vested Former Member’s right to benefit payments under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of such Member or Vested Former Member or his or her Surviving Spouse.”

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EX-10.2

Exhibit 10.2

First Amendment to the
IMS Health Incorporated
Supplemental Executive Retirement Plan

The IMS Health Incorporated Supplemental Executive Retirement Plan (the “Plan”) is amended effective April 17, 2001, except as otherwise provided herein, as follows:

1.Section 1.35 of the Plan is deleted.

2.Section 1.1 of the Plan is amended to read in its entirety as follows:

“1.1“Actuarial Equivalent Value” shall mean a benefit of equivalent value computed on the basis of the mortality table and interest rate used to calculate accrued benefits under the Basic Plan; provided, however, that for purposes of determining the Actuarial Equivalent Value of the amount described in Section 1.25(a) for Members or Vested Former Members who participated in the Predecessor to this Plan, the foregoing assumptions or the assumptions used in the Predecessor to this Plan shall be used, whichever produces the greater benefit for the Member or the Vested Former Member.”

3.The first paragraph of Section 1.9 of the Plan is amended to read in its entirety as follows:

“1.9“Cause”. A Member shall not be deemed to have been terminated for “Cause” under this Plan unless such Member shall have been terminated for “Cause” under the terms of such Member’s employment agreement or Change in Control Agreement with the Company, if any.  If no such employment agreement or Change in Control Agreement containing a definition of “Cause” shall be in effect, for purposes of this Plan “Cause” shall mean a Member’s:”

4.The following new Section 1.10 is added to the Plan and subsequent sections of the Plan are renumbered accordingly:

“1.10‘CEO’ shall mean the Chief Executive Officer of the Company.”

5.The first paragraph of Section 1.11 of the Plan is amended to read in its entirety as follows:

“1.11“Change in Control”  If a “Change in Control” shall have occurred or shall be deemed to have occurred under the terms of a Member’s or Vested Former Member’s Change in Control Agreement or employment agreement with the Company, if any, then a “Change in Control” shall be

deemed to have occurred under this Plan. Otherwise a “Change in Control” shall be deemed to have occurred if:”

6.The first sentence of Section 1.15 of the Plan is amended to read as follows:

“1.15“Compensation” shall mean base salary, annual bonuses, commissions, overtime and shift pay, in each case prior to reductions for elective contributions under Sections 401(k), 125 and 132(f)(4) of the Code and deferred compensation under any nonqualified deferred compensation plan.”

7.The first paragraph of Section 1.22 of the Plan is amended to read in its entirety as follows:

“1.22“Good Reason”  If a Member shall have terminated employment for “Good Reason” under the terms of such Member’s Change in Control Agreement or employment agreement with the Company, if any, then such Member shall be deemed to have terminated employment for “Good Reason” under this Plan.  Otherwise “Good Reason” shall mean, without the Member’s express written consent, the occurrence of any of the following circumstances unless such circumstances are fully corrected prior to the date of termination specified in the notice of termination given in respect thereof:”

8.Section 1.22(g) of the Plan is amended to read in its entirety as follows:

“(g)with respect to any Member who is a party to an employment agreement or a Change in Control Agreement, any purported termination of such Member’s employment that is not effected pursuant to the notice provisions, if any, in such Member’s employment agreement or Change in Control Agreement.”

9.Section 1.23 of the Plan is amended to read in its entirety as follows:

“1.23“Lump Sum Election” shall mean an election to receive all or a portion of the benefits payable hereunder in a lump sum pursuant to Section 3.4 hereof.”

10.The following new Section 1.28 is added to the Plan and subsequent sections are renumbered accordingly:

“1.28“Plan Administrator” shall mean the Company, except that any action authorized to be taken by the Plan Administrator hereunder may also be taken by any committee or person(s) duly authorized by the Board or the duly authorized delegees of such duly authorized committee or person(s).”

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11.Section 1.29(b) of the Plan is amended to read in its entirety as follows:

“(b)any Person (including the Company), as defined in Section 1.11(a) hereof, publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or”

12.Section 1.31 of the Plan is amended to read in its entirety as follows:

“1.31“Retirement” shall mean the termination of a Member’s or Vested Former Member’s employment with the Company or an Affiliated Employer other than by reason of death or Disability (a) after attaining age 55 and completing five years of Service, or (b) if Disability Benefits have been paid under the Plan to a Member or Vested Former Member, the later of the cessation of the payment of such Disability Benefits or the Member’s or Vested Former Member’s attainment of age 55.  In determining whether age 55 has been attained under clause (a) of this definition, there shall be included as years of age the number of additional years credited as “age” for purposes of the Plan to the Member or Vested Former Member under this Plan, a then-effective employment agreement between the Company and such person, a then-effective Change in Control Agreement between the Company and such person, or otherwise approved in writing by the CEO.”

13.Section 1.33 of the Plan is amended to read in its entirety as follows:

“1.33“Service” shall mean a Member’s service defined as Vesting Service in the Basic Plan, which is taken into account for vesting purposes thereunder (including any such service prior to the date such individual becomes a Member but not including any such service after participation hereunder terminates), except that (i) Service will also include that period of time during which the Member is receiving Disability Benefits under this Plan; (ii) if a Member was employed by a company acquired by the Company or an Affiliated Employer after the Effective Date, such Member’s service with that company prior to the date of acquisition will not constitute Service hereunder unless otherwise approved in writing by the CEO; (iii) upon commencement of participation hereunder in accordance with Section 2.1 hereof, the CEO may limit any service otherwise to constitute Service hereunder with respect to periods prior to the date of participation in the Plan; and (iv) no service of a Former Member or Vested Former Member during any period after removal from participation under Section 2.2 shall constitute Service for purposes of the Plan. The foregoing notwithstanding, there shall be included as Service for all purposes under the Plan the number of additional years (or other additional period) credited as “service” for purposes of the Plan to the Member or Former Member or Vested Former Member under this Plan, an employment agreement between the Company or an Affiliated Employer

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and such person or a Change in Control Agreement in effect at the time of such person’s termination of employment, or otherwise approved in writing by the CEO.”

14.Section 2.1 of the Plan is amended to read in its entirety as follows:

“2.1Commencement of Participation. Such key executives of the Corporation and its Affiliated Employers as are designated by the CEO in writing and, in the case of officers of the Company or its Affiliated Employers, approved by the Compensation and Benefits Committee of the Board, shall participate in the Plan as of a date determined by the CEO.”

15.Section 2.2 of the Plan is amended to read in its entirety as follows:

“2.2Termination of Participation.  A Member’s participation in the Plan shall terminate upon termination of his or her employment with the Company or any Affiliated Employer. Prior to termination of employment, a Member may be removed, upon written notice by the CEO, and, in the case of officers of the Company or its Affiliated Employers, as approved by the Compensation and Benefits Committee of the Board, from further participation in the Plan. As of the date of termination or removal, no further benefits shall accrue to such individual hereunder.”

16.Section 3.3(a) of the Plan is amended to read in its entirety as follows:

“(a)Except as provided under Section 3.3(b) or Section 3.3(c), the Retirement Benefit or Deferred Vested Benefit under this Plan, as the case may be, shall be payable in monthly installments in the form of a straight life annuity and without regard to any optional form of benefits elected under the Basic Plan.  Payments shall commence as of the first day of the calendar month coinciding with or next following (i) the earlier of the date the Member or Vested Former Member attains age 65 or the date of the Member’s or Vested Former Member’s Retirement, in the case of Retirement Benefits or (ii) the later of the date the Member or Vested Former Member attains age 55 or terminates employment, in the case of Deferred Vested Benefits, and shall commence to be paid on such date or as soon as administratively practicable thereafter, with interest as determined by the Plan Administrator for any delay in payment.”

17.Section 3.3(b) of the Plan is amended to read in its entirety as follows:

“(b)If a Member or Vested Former Member has made a Lump Sum Election pursuant to Section 3.4 and such Lump Sum Election becomes effective (i) prior to the date of such Member’s or Vested Former Member’s Retirement or termination of employment with the Company or an Affiliated Employer and (ii) while he or she was still a Member, the

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Retirement Benefit, or Deferred Vested Benefit under this Plan, as the case may be, shall be payable in the form or combination of forms of payment elected pursuant to such Lump Sum Election under Section 3.4 and without regard to any optional form of benefits elected under the Basic Plan.  Any portion of the benefits hereunder payable in a lump sum shall be paid within 60 days following (i) the earlier of the date the Member or Vested Former Member attains age 65 or the date of the Member’s or Vested Former Member’s Retirement, in the case of Retirement Benefits or (ii) the later of the date the Member or Vested Former Member attains age 55 or terminates employment, in the case of Deferred Vested Benefits.”

18.Section 3.4(a) of the Plan is amended to read in its entirety as follows:

“(a)A Member or Vested Former Member may elect to receive all, none, or a specified portion, as provided in Section 3.4(c), of his or her Retirement Benefit or Deferred Vested Benefit under the Plan as a lump sum and to receive any balance of such benefit in the form of an annuity; provided that any such Lump Sum Election shall be effective for purposes of this Plan only if the conditions of Section 3.4(b) are satisfied. Effective January 1, 2003, a Lump Sum Election made by a Member or Vested Former Member in accordance with the terms of any plan maintained by the Company described in Section 201(2) of ERISA shall be effective with respect to this Plan.  A Member or Vested Former Member may elect a payment form different than the payment form previously elected by him or her under this Section 3.4(a) by filing a revised election form; provided that any such new election shall be effective only if the conditions of Section 3.4(b) are satisfied with respect to such new election.  Any prior Lump Sum Election made by a Member that has satisfied the conditions of Section 3.4(b) shall remain effective for purposes of the Plan until such Member has made a new election satisfying the conditions of Section 3.4(b).  The amount of any portion of a Member’s or a Vested Former Member’s Retirement Benefit or Deferred Vested Benefit payable as a lump sum under this Section 3.4 shall equal the present value of such portion of the benefit, and such present value shall be determined:  (i) on the assumption that it is payable in the form of a joint and 50 percent survivor annuity if such Member or Vested Former Member is married; and (ii) on the basis of (1) a discount rate equal to 85% of the average of the 15-year non-callable U.S. Treasury bond yields (or, in the event that 15-year non-callable U.S. Treasury bond yields are unavailable, such proxy for the same as the Plan Administrator may reasonably select) as of the close of business on the last business day of each of the three months immediately preceding the date provided in Section 3.3(a) as of which monthly installments would otherwise commence, as modified by Section 3.8(a)(i) if applicable and (2) the 1983 Group Annuity Mortality Table.”

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19.Section 3.4(d) of the Plan is amended to read in its entirety as follows:

“(d)Effective January 1, 2003, in the event a Member who has made an Election pursuant to Section 3.4(a) dies or becomes Disabled while employed by the Company or an Affiliated Employer and such death or Disability occurs during the 12 calendar-month period immediately following the Election Date, the condition under Section 3.4(b)(i) shall be deemed satisfied with respect to such Member.”

20.Section 3.7(a) of the Plan is amended to read in its entirety as follows:

“(a)Subject to Section 3.8 hereof, a Member or Vested Former Member who receives in a lump sum any portion of his or her Retirement Benefit or Deferred Vested Benefit pursuant to a Lump Sum Election, shall receive such lump sum portion of such Retirement Benefit or Deferred Vested Benefit subject to the condition that if such Member or Vested Former Member engages in any of the acts described in Section 3.5, then such Member or Vested Former Member shall, within 60 days after written notice by the Company, repay to the Company the amount described in Section 3.7(b).”

21.Section 3.8(a)(i) of the Plan is amended to read in its entirety as follows:

“(i) Any Member, whose employment with the Company or an Affiliated Employer is involuntarily terminated by the Company or an Affiliated Employer at or within two years following a Change in Control for a reason other than Cause or whose employment is voluntarily terminated by the Member with Good Reason at or within two years following a Change in Control shall be deemed to have completed five years of Service for purposes of Section 3.2(a) hereof and shall be credited with three additional years of Service for purposes of calculating the benefits payable under Sections 3.1(b) or 3.2(b) hereof, as the case may be.  Notwithstanding the provisions of Section 3.3 of this Plan to the contrary, payment of the Actuarial Equivalent Value of such benefits shall be made in the form provided in Section 3.3 commencing as provided in Section 3.3(a) or (b), as the case may be, provided that with respect to Deferred Vested Benefits, the commencement of payment shall be determined without regard to whether the Member has attained age 55 and, provided further, that the Actuarial Equivalent Value of such benefits shall be determined by crediting such Member with three additional years of age and on the assumption that unreduced benefits are payable upon the Member’s attainment of age 55.  Moreover, for purposes of determining the Actuarial Equivalent Value of such benefits payable in the form of a lump sum, the interest and mortality factors specified in Section 3.4(a) shall apply.  In addition, in the event that a Member’s Service shall have been limited pursuant to Section 1.31(iii) to disregard Service prior to such

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Member’s participation in the Plan, such limitation shall be eliminated in the event of such Member’s termination of employment at or within two years following a Change in Control as provided above in this subsection (i).”

22.Section 3.8(a)(iii) of the Plan is amended to read in its entirety as follows:

“(iii)The provisions of Sections 3.5 through 3.7 shall be of no force or effect with respect to Members who Retire or terminate employment within a two-year period following a Change in Control.”

23.Section 4.1(b) of the Plan is amended to read in its entirety as follows:

“(b)Amount.  The Disability Benefit of a Member entitled thereto shall be an annual benefit payable in monthly installments under this Plan during the same period as disability benefits are actually paid by the Basic Disability Plan, in an amount equal to 60% of the Member’s Covered Earnings, offset by the Member’s (i) Basic Disability Plan Benefit, (ii) Basic Plan Benefit, if the Basic Disability Plan Benefit is offset by such Basic Plan Benefit, and (iii) Other Disability Income.”

24.Section 5.1 of the Plan is amended to read in its entirety as follows:

“5.1Death Prior to Benefit Commencement.  Upon the death of a Member or Vested Former Member, prior to the commencement of his or her Retirement Benefit or Deferred Vested Benefit hereunder, any such Member shall be deemed to have completed five years of Service for purposes of Section 3.2(a) and his or her Surviving Spouse will be entitled to a Surviving Spouse’s Benefit under this Plan equal to 50% of the Retirement or Deferred Vested Benefit that would have been provided from the Plan had the Member or Vested Member retired from or terminated employment with the Company or an Affiliated Employer on the date of death and commenced benefits on the later of the date the Member would have attained age 55 or the date of the Member’s death.”

25.Section 5.3 of the Plan is amended to read in its entirety as follows:

“5.3Commencement of Surviving Spouse’s Benefit.  Except as provided in Section 5.4, the Surviving Spouse’s Benefit provided under Sections 5.1 or 5.2 will be payable monthly, at the same time as the Surviving Spouse’s benefits under the Basic Plan.  Such benefits shall continue until the first day of the month in which the Surviving Spouse dies.”

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26.Section 6.2 of the Plan is amended to read in its entirety as follows:

“6.2Presentation of Claims.  The claims procedures set forth in Sections 6.2 through 6.6 shall be effective January 1, 2003. Claims for benefits shall be filed in writing with the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be furnished to the claimant within 90 days after the claim is filed (or within 180 days if special circumstances require an extension of time for processing the claim and if notice of such extension and circumstances is provided to the claimant within the initial 90-day period.)”

27.The following new Section 6.3 is added to the Plan:

“6.3Claims Denial Notification.  If a claim is wholly or partially denied, the Plan Administrator shall furnish to the claimant a written notice setting forth in a manner calculated to be understood by the claimant:

(a)the specific reason(s) for denial;

(b)specific reference(s) to pertinent Plan provisions on which any denial is based;

(c)a description of any additional material or information necessary for the claimant to perfect the claim, and an explanation of why such material or information is necessary;

(d)an explanation of the Plan’s claims review procedures and the applicable time limits for such procedures; and

(e)a statement that the claimant has a right to bring a civil action under Section 502(a) of ERISA following an adverse determination on review.”

28.The following new Section 6.4 is added to the Plan:

“6.4Claims Review Procedure.  Upon a denial, the claimant is entitled (either in person or by his duly authorized representative) to:

(a)request a subsequent review of the claim by the Plan Administrator upon written application for review made to the Plan Administrator.  In the case of a denial as to which written notice of denial has been given to the claimant, any such request for review of the claim must be made within 60 days after receipt by the claimant of such notice.  A claimant must submit a written application for review before the claimant is permitted to bring a civil action for benefits;

(b)review pertinent documents relating to the denial; and

(c)submit written comments, documents, records and other information relating to the claim.”

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29.The following new Section 6.5 is added to the Plan:

“6.5Timing.  The Plan Administrator shall make its decision and notify the claimant with respect to a claim not later than 60 days after receipt of the request.  Such 60-day period may be extended for another period of 60 days if the Plan Administrator finds that special circumstances require an extension of time for processing and notice of the extension and special circumstances is provided to the claimant within the initial 60-day period.”

30.The following new Section 6.6 is added to the Plan:

“6.6Final Decision.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant with written or electronic notice of the decision in a manner calculated to be understood by the claimant.  The notice shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement that the claimant has a right to bring a civil action under Section 502(a) of ERISA, and a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the claim.  A document is relevant to the claim if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that Plan provisions have been applied consistently with respect to similarly situated claimants.”

31.Section 7.1 of the Plan is amended to read in its entirety as follows:

“7.1Amendment; Termination. The Board of Directors of the Company, may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part; provided, however, that no termination, suspension or amendment of the Plan may adversely affect (a) a Member’s or Vested Former Member’s benefit under the Plan to which he or she has become entitled hereunder, or, (b) a Vested Former Member’s right or the right of a Surviving Spouse to receive or to continue to receive a benefit in accordance with the Plan, such benefits or rights as in effect on the date immediately preceding the date of such termination, suspension or amendment.  Notwithstanding the foregoing, the Employee Benefits Committee of the Company may amend the Plan without the approval of the Board of Directors of the Company with

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respect to amendments that such Committee determines do not have a significant effect on the cost of the Plan.”

32.Section 7.3 of the Plan is amended to read in its entirety as follows:

“7.3Payout in Discretion of the Plan Administrator.  Notwithstanding anything herein to the contrary, at any time following the termination of service of the Member or Vested Former Member, the Plan Administrator may authorize, under uniform rules applicable to all Members, Vested Former Members and Surviving Spouses under the Plan, a lump sum distribution of a Member’s or Vested Former Member’s Retirement Benefit or Deferred Vested Benefit or a lump sum distribution of a  Surviving Spouse’s Benefit under the Plan, in full satisfaction of all present and future Plan liability with respect to such Member, Vested Former Member and/or Surviving Spouse, if the present value of such Retirement Benefit, Deferred Vested Benefit or Surviving Spouse’s Benefit, determined in accordance with the provisions of Section 3.4(a) with respect to Retirement Benefits and Deferred Vested Benefits, and Section 5.4 with respect to Surviving Spouse’s Benefits, on the assumption that the Member or Vested Former Member made an Election under Section 3.4, is less than $250,000.  Such lump sum distribution may be made without the consent of the Member, Vested Former Member or Surviving Spouse.”

33.Section 7.5 of the Plan is amended to read in its entirety as follows:

“7.5Arbitration.  The provisions of this Section 7.5 shall be effective January 1, 2003. Any dispute or controversy arising under or in connection with the Plan shall be settled exclusively by arbitration in New York, New York in accordance with the rules of the American Arbitration Association in effect at the time of such arbitration. Upon submission of invoices, the Company shall promptly pay or reimburse all reasonable costs and expenses (including fees and disbursements of counsel and pension experts) incurred to assert rights under this Plan or in any proceeding in connection therewith, brought by a Member, Vested Former Member, Former Member or Surviving Spouse, whether or not such Member, Vested Former Member, Former Member or Surviving Spouse is ultimately successful in enforcing such rights or in such proceeding; provided, however, that no reimbursement shall be owed with respect to expenses relating to any unsuccessful assertion of rights or proceeding if and to the extent that such assertion or proceeding was initiated or maintained in bad faith or was frivolous as determined by the arbitrators or a court having jurisdiction over the matter, in which case any amounts previously paid by the Company shall be promptly repaid.”

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34.Section 7.6 of the Plan is amended to read in its entirety as follows:

“7.6No Alienation.  A Member’s or Vested Former Member’s right to benefit payments under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of such Member or Vested Former Member or his or her Surviving Spouse.”

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EX-10.3

Exhibit 10.3

IMS HEALTH INCORPORATED

EXECUTIVE PENSION PLAN

Effective as of April 17, 2001

TABLE OF CONTENTS

INTRODUCTION
SECTION 1	- DEFINITIONS
1.1	“Actuarial Equivalent Value”
1.2	“Affiliated Employer”
1.3	“Average Final Compensation”
1.4	“Basic Disability Plan”
1.5	“Basic Disability Plan Benefit”
1.6	“Basic Plan”
1.7	“Basic Plan Benefit”
1.8	“Board”
1.9	“Cause”
1.10	“CEO”
1.11	“Change in Control”
1.12	“Change in Control Agreement”
1.13	“Code”
1.14	“Company”
1.15	“Compensation”
1.16	“Covered Earnings”
1.17	“Deferred Vested Benefit”
1.18	“Disability” or “Disabled”
1.19	“Disability Benefits”
1.20	“Effective Date”
1.21	“Former Member”
1.22	“Good Reason”.
1.23	“Lump Sum Election”
1.24	“Member”
1.25	“Other Disability Income”
1.26	“Other Retirement Income”
1.27	“Plan”

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1.28	“Plan Administrator”
1.29	“Potential Change in Control”
1.30	“Retirement”
1.31	“Retirement Benefits”
1.32	“Service”
1.33	“Surviving Spouse”
1.34	“Surviving Spouse’s Benefits”
1.35	“Vested Former Member”
SECTION 2	- PARTICIPATION
2.1	Commencement of Participation
2.2	Termination of Participation
SECTION 3	- AMOUNT AND FORM OF BENEFITS
3.1	Retirement Benefits
3.2	Deferred Vested Benefit
3.3	Form of Payment
3.4	Lump Sum Election
3.5	Cessation of Benefits
3.6	Notification of Cessation of Benefits
3.7	Repayment of Benefits Paid as Lump Sum
3.8	Change in Control
SECTION 4	- DISABILITY BENEFITS
4.1	Eligibility
4.2	Amount
SECTION 5	- SURVIVING SPOUSE’S BENEFITS
5.1	Death Prior to Benefit Commencement
5.2	Death On or After Benefit Commencement
5.3	Commencement of Surviving Spouse’s Benefit
5.4	Lump Sum Payment
5.5	Reduction

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SECTION 6	- PLAN ADMINISTRATOR
6.1	Duties and Authority
6.2	Presentation of Claims
6.3	Claims Denial Notification
6.4	Claims Review Procedure
6.5	Timing
6.6	Final Decision
SECTION 7	- MISCELLANEOUS
7.1	Amendment; Termination
7.2	No Employment Rights
7.3	Payout in Discretion of the Plan Administrator
7.4	Unfunded Status
7.5	Arbitration
7.6	No Alienation
7.7	Withholding
7.8	Governing Law
7.9	Successors
7.10	Integration

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IMS HEALTH INCORPORATED

EXECUTIVE PENSION PLAN

Effective as of April 17, 2001

INTRODUCTION

The IMS Health Incorporated Executive Pension Plan (the “Plan”) is hereby established to provide a means of ensuring the payment of a competitive level of retirement income and disability and survivor benefits, and thereby attract, retain and motivate a select group of executives of IMS Health Incorporated and its affiliated employers.

SECTION 1 - DEFINITIONS

1.1“Actuarial Equivalent Value” shall mean a benefit of equivalent value computed on the basis of the mortality table and interest rate used to calculate accrued benefits under the Basic Plan.

1.2“Affiliated Employer” shall mean an entity affiliated with the Company.

1.3“Average Final Compensation” shall mean a Member’s average annual Compensation during the five consecutive 12-month periods in the last ten consecutive 12-month periods of his or her Service (or during the total number of consecutive 12-month periods if fewer than five), immediately prior to the month following the Member’s termination of employment with the Company or an Affiliated Employer or, if earlier, removal from participation under this Plan, affording the highest such Average Final Compensation.  If actual monthly Compensation for any month during the 120-month computational period is

unavailable, Compensation for such month shall be determined by dividing the Member’s annual rate of base pay in the month preceding such unavailable month by 12.

1.4“Basic Disability Plan” shall mean as to any Member the long-term disability plan of the Company or an Affiliated Employer pursuant to which long-term disability benefits are payable to such Member.

1.5“Basic Disability Plan Benefit” shall mean the amount of benefits payable to a Member from the Basic Disability Plan.

1.6“Basic Plan” shall mean as to any Member or Vested Former Member the defined benefit pension plan of the Company or an Affiliated Employer intended to meet the requirements of Code Section 401(a) pursuant to which retirement benefits are payable to such Member or Vested Former Member or to the Surviving Spouse or designated beneficiary of a deceased Member or Vested Former Member.

1.7“Basic Plan Benefit” shall mean the amount of benefits payable from the Basic Plan to a Member or Vested Former Member.

1.8“Board” shall mean the Board of Directors of IMS Health Incorporated, except that any action authorized to be taken by the Board hereunder may also be taken by a duly authorized committee of the Board or its duly authorized delegees.

1.9“Cause”.  A Member shall not be deemed to have been terminated for “Cause” under this Plan unless such Member shall have been terminated for “Cause” under the terms of such Member’s employment agreement or Change in Control

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Agreement with the Company, if any.  If no such employment agreement or Change in Control Agreement containing a definition of “Cause” shall be in effect, for purposes of this Plan “Cause” shall mean a Member’s:

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

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

No act, or failure to act, on the part of the Member shall be deemed “willful” unless done, or omitted to be done, by the Member not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company.  Notwithstanding the foregoing, the Member shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Member a copy of the resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting

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of the Board (after reasonable notice to the Member and an opportunity for the Member, together with the Member’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Member was guilty of conduct set forth above in this definition and specifying the particulars thereof in detail.

1.10“CEO” shall mean the Chief Executive Officer of the Company.

1.11“Change in Control”.  If a “Change in Control” shall have occurred or shall be deemed to have occurred under the terms of a Member’s or Vested Former Member’s Change in Control Agreement or employment agreement with the Company, if any, then a “Change in Control” shall be deemed to have occurred under this Plan.   Otherwise a “Change in Control” shall be deemed to have occurred if:

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

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(b)during any period of 24 months (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 (i) a director nominated by a Person who has entered into an agreement with the Company to effect a transaction described in Sections 1.11(a), (c), or (d) hereof, (ii) 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 (iii) a director nominated by any Person who is the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company’s securities) whose election by the Board or nomination for election by the Company’s stockholders was approved in advance by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

(c)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 (i) 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

5

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 (ii) after which no “Person” holds 20% or more of the combined voting power of the then outstanding securities of the Company or such surviving entity;

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

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

1.12“Change in Control Agreement” shall mean any written agreement in effect between any Member or Former Member or Vested Former Member and the Company or an Affiliated Employer pursuant to which benefits may be payable to such Member or Former Member or Vested Former Member in connection with a Change in Control.

1.13“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.14“Company” shall mean IMS Health Incorporated.

1.15“Compensation” shall mean base salary, annual bonuses, commissions, overtime and shift pay, in each case prior to reductions for elective contributions under Sections 401(k), 125 and 132(f)(4) of the Code and deferred compensation under

6

any nonqualified deferred compensation plan.  Notwithstanding the foregoing, Compensation shall exclude severance pay (including, without limitation, severance pay under the Company’s Employee Protection Plan), stay-on bonuses, long-term bonuses, retirement income, change-in-control payments, contingent payments, amounts paid under this Plan (other than Disability Benefits) or any other retirement plan or deferred compensation plan, income derived from stock options, stock appreciation rights and other equity-based compensation and other forms of special remuneration.

1.16“Covered Earnings” shall mean a Member’s Compensation in the 12 months immediately preceding the onset of the Member’s Disability.

1.17“Deferred Vested Benefit” shall mean the benefits described in Section 3.2(b) hereof

1.18“Disability” or “Disabled” shall mean disability or disabled for purposes of the Basic Disability Plan.

1.19“Disability Benefits” shall mean the benefits provided as described in Section 4.2 hereof.

1.20“Effective Date” shall mean April 17, 2001.

1.21“Former Member” shall mean (a) a Member whose employment with the Company or an Affiliated Employer terminates before he or she has completed five or more years of Service, or (b) a Member who was removed from

7

participation in the Plan, in accordance with Section 2.2 hereof, before he or she has completed five or more years of Service.

1.22“Good Reason”.  If a Member shall have terminated employment for “Good Reason” under the terms of such Member’s Change in Control Agreement or employment agreement with the Company, if any, then such Member shall be deemed to have terminated employment for “Good Reason” under this Plan.  Otherwise “Good Reason” shall mean, without the Member’s express written consent, the occurrence of any of the following circumstances unless, such circumstances are fully corrected prior to the date of termination specified in the notice of termination given in respect thereof:

(a)the assignment to the Member of any duties inconsistent with the Member’s position in the Company, or an adverse alteration in the nature or status of the Member’s responsibilities or the conditions of the Member’s employment;

(b)a reduction by the Company in the Member’s annual base salary, target bonus or perquisites except for across-the-board perquisite reductions similarly affecting all senior executives of the Company and all senior executives of any Person, as such term is used for purposes of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, in control of the Company;

(c)the relocation of the principal place of the Member’s employment to a location more than 50 miles from the location of such place of

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employment; for this purpose, required travel on the Company’s business will not constitute a relocation so long as the extent of such travel is substantially consistent with the Member’s customary business travel obligations;

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

(e)the failure by the Company to continue in effect any material compensation or benefit plan in which the Member participated unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Member’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amounts of benefits provided and the level of the Member’s participation relative to other participants;

(f)the failure of the Company to obtain a satisfactory agreement from any successor to the Company to fully assume the Company’s obligations and to perform under this Plan, as contemplated in Section 7.9 hereof;

(g)with respect to any Member who is a party to an employment agreement or a Change in Control Agreement, any purported termination of such

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Member’s employment that is not effected pursuant to the notice provisions, if any, in such Member’s employment agreement or Change in Control Agreement.

1.23“Lump Sum Election” shall mean an election to receive all or a portion of the benefits payable hereunder in a lump sum pursuant to Section 3.4 hereof.

1.24“Member” shall mean an employee of the Company or an Affiliated Employer who becomes a participant in the Plan pursuant to Section 2, but excludes any Former Member or Vested Former Member.

1.25“Other Disability Income” shall mean (i) the disability insurance benefit that the Member is entitled to receive under the Federal Social Security Act while he or she is receiving the Basic Disability Plan Benefit and (ii) the disability income payable to a Member from any supplemental executive disability plan of the Company or any Affiliated Employer or from any other contract, agreement or other arrangement with the Company or an Affiliated Employer (excluding any Basic Disability Plan).

1.26“Other Retirement Income” shall mean the retirement income payable to a Member or Vested Former Member from any ‘excess benefit plan’ as that term is defined in Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (increased by the amount of benefits, if any, payable from the Pension Benefit Equalization Plan and/or the Supplemental Executive Benefit Plan of The Dun & Bradstreet Corporation), any plan described in Section 201(2) of ERISA, and any other contract, agreement or other

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arrangement providing a defined pension benefit or defined contribution retirement benefit, in any case, maintained or entered into with the Company or an Affiliated Employer (excluding this Plan, any Basic Plan, any defined contribution plan intended to meet the requirements of Code Section 401(a) and any elective plan of deferred compensation).

1.27“Plan” shall mean this IMS Health Incorporated Executive Pension Plan, as embodied herein, and any amendments thereto.

1.28“Plan Administrator” shall mean the Company, except that any action authorized to be taken by the Plan Administrator hereunder may also be taken by any committee or person(s) duly authorized by the Board or the duly authorized delegate of such duly authorized committee or person(s).

1.29“Potential Change in Control”.  If a “Potential Change in Control” shall have occurred or shall be deemed to have occurred under the terms of a Member’s Change in Control Agreement or employment agreement with the Company, if any, then a “Potential Change in Control” shall be deemed to have occurred under this Plan.  Otherwise a “Potential Change in Control” shall be deemed to have occurred if:

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

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(b)any Person (including the Company), as defined in Section 1.11(a) hereof, publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or

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

1.30“Retirement” shall mean the termination of a Member’s or Vested Former Member’s employment with the Company or an Affiliated Employer other than by reason of death or Disability (a) after attaining age 65 and completing five years of Service or (b) if Disability Benefits have been paid under the Plan to a Member or Vested Former Member, the later of the cessation of the payment of such Disability Benefits or the Member’s or Vested Former Member’s attainment of age 55.  In determining whether age 65 has been attained under clause (a) of this definition, there shall be included as years of age the number of additional years credited as “age” for purposes of the Plan to the Member or Vested Former Member under this Plan, a then-effective employment agreement between the Company and such person, a then-effective Change in Control Agreement between the Company and such Person, or otherwise approved in writing by the CEO.

1.31“Retirement Benefits” shall mean the benefits described in Section 3.1(b) hereof.

1.32“Service” shall mean a Member’s service defined as Vesting Service in the Basic Plan, which is taken into account for vesting purposes thereunder, except that (a) Service will also include that period of time during which the Member is

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receiving Disability Benefits under this Plan; (b) if a Member was employed by a company acquired by the Company or an Affiliated Employer after the Effective Date, such Member’s service with that company prior to the date of acquisition will not constitute Service hereunder unless otherwise approved in writing by the CEO; (c) upon commencement of participation hereunder in accordance with Section 2.1 hereof, the CEO may limit any service otherwise to constitute Service hereunder with respect to periods prior to the date of participation in the Plan; (d) no service of a Former Member or Vested Former Member during any period after removal from participation under Section 2.2 shall constitute Service for purposes of the Plan; and (e) service prior to the date an individual becomes a Member shall initially not be counted for purposes of determining the amount of the Member’s Retirement Benefit pursuant to Section 3.1(b)(i) or the Member’s Deferred Vested Benefit pursuant to Section 3.2(b)(i), but for such purposes shall be deemed to accrue at the rate of 20% of such prior service for each year of Service completed after such individual becomes a Member until 100% accrued.  The foregoing notwithstanding, there shall be included as Service for all purposes under the Plan the number of additional years (or other additional period) credited as “service” for purposes of the Plan to the Member or Former Member or Vested Former Member under this Plan, an employment agreement between the Company or an Affiliated Employer and such person or a Change in Control Agreement in effect at the time of such person’s termination of employment, or otherwise approved in writing by the CEO.

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1.33“Surviving Spouse” shall mean the spouse of a deceased Member or Vested Former Member to whom such Member or Vested Former Member is married under applicable state law immediately preceding such Member or Vested Former Member’s death.

1.34“Surviving Spouse’s Benefits” shall mean the benefits described in Section 5 hereof.

1.35“Vested Former Member” shall mean (a) a Member whose employment with the Company or an Affiliated Employer terminates on or after the date on which he or she has completed five or more years of Service, or (b) a Member who was removed from participation in the Plan, in accordance with Section 2.2 hereof, on or after the date on which he or she has completed five or more years of Service.

SECTION 2- PARTICIPATION

2.1Commencement of Participation.  Such key executives of the Company and its Affiliated Employers as are designated by the CEO in writing and, in the case of officers of the Company or its Affiliated Employers, approved by the Compensation and Benefits Committee of the Board, shall participate in the Plan as of a date determined by the CEO.

2.2Termination of Participation.  A Member’s participation in the Plan shall terminate upon termination of his or her employment with the Company or any Affiliated Employer. Prior to termination of employment, a Member may be removed, upon written notice by the CEO, and, in the case of officers of the

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Company or its Affiliated Employers, as approved by the Compensation and Benefits Committee of the Board, from further participation in the Plan.  As of the date of termination or removal, no further benefits shall accrue to such individual hereunder.

SECTION 3 - AMOUNT AND FORM OF BENEFITS

3.1Retirement Benefits

(a)Eligibility.  Upon the Retirement of a Member or Vested Former Member from the Company or an Affiliated Employer, he or she shall be entitled to the Retirement Benefit described in Section 3.1(b) hereof, payable in the form specified in Section 3.3.

(b)Amount.  The Retirement Benefit of a Member or Vested Former Member shall be an annual benefit equal to the difference between (i) and the sum of (ii) and (iii) where:

(i)is 2.5% of his or her Average Final Compensation multiplied by the number of his or her years of Service not in excess of fifteen years, plus 1.5% of such Average Final Compensation multiplied by the number of his or her years of Service over fifteen but not in excess of thirty years;

(ii)is the Basic Plan Benefit payable to the Member or Vested Former Member as of the date of his or her Retirement expressed in the form of an annual life annuity, or, if the Basic Plan Benefit

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becomes payable after the Member’s or Vested Former Member’s Retirement, the Actuarial Equivalent Value of the Basic Plan Benefit payable in the form of an annual life annuity as of such date, regardless of whether such date precedes the earliest possible payment date under the terms of the Basic Plan; and

(iii)is the Other Retirement Income payable to the Member or Vested Former Member as of the date of his or her Retirement expressed in the form of an annual life annuity, or, if the Other Retirement Income becomes payable after the Member’s or Vested Former Member’s Retirement, the Actuarial Equivalent Value of the Other Retirement Income payable in the form of an annual life annuity as of such date, regardless of whether such date precedes the earliest possible payment date under the terms of the appropriate retirement arrangement.

3.2Deferred Vested Benefit.

(a)Eligibility.  Each Member and Vested Former Member who has completed five or more years of Service and whose employment with the Company or an Affiliated Employer terminates prior to Retirement, for a reason other than Cause, death or Disability shall be entitled to the Deferred Vested Benefit described in Section 3.2(b) hereof, payable in the form specified in Section 3.3.

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(b)Amount.  The Deferred Vested Benefit of a Member or Vested Former Member who terminates and who meets the eligibility requirements of Section 3.2(a) shall be an annual benefit equal to the difference between (i) and the sum of (ii) and (iii), where:

(i)is 2.5% of his or her Average Final Compensation, multiplied by the number of his or her years of Service not in excess of fifteen, plus 1.5% of such Average Final Compensation multiplied by the number of his or her years of Service over fifteen, but not in excess of thirty years;

(ii)is the Basic Plan Benefit payable to the Member or Vested Former Member as of the date his or her Deferred Vested Benefit commences expressed in the form of an annual life annuity, or, if the Basic Plan Benefit becomes payable after the Member’s or Vested Former Member’s Deferred Vested Benefit commences, the Actuarial Equivalent Value of the Basic Plan Benefit payable in the form of an annual life annuity as of such date, regardless of whether such date precedes the earliest possible payment date under the terms of the Basic Plan; and

(iii)is the Other Retirement Income payable to the Member or Vested Former Member as of the date his or her Deferred Vested Benefit commences expressed in the form of an annual life annuity, or, if the Other Retirement Income becomes payable after the Member’s

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or Vested Former Member’s Deferred Vested Benefit commences, the Actuarial Equivalent Value of the Other Retirement Income payable in the form of an annual life annuity as of such date, regardless of whether such date precedes the earliest possible payment date under the terms of the appropriate retirement arrangement.

3.3Form of Payment.

(a)Except as provided under Section 3.3(b) or Section 3.3(c), the Retirement Benefit or Deferred Vested Benefit under this Plan, as the case may be, shall be payable in monthly installments in the form of a straight life annuity and without regard to any optional form of benefits elected under the Basic Plan.  Payments shall commence as of the first day of the calendar month coinciding with or next following (i) the earlier of the date the Member or Vested Former Member attains age 65 or the date of the Member’s or Vested Former Member’s Retirement, in the case of Retirement Benefits or (ii) the later of the date the Member or Vested Former Member attains age 55 or terminates employment, in the case of Deferred Vested Benefits, and shall commence to be paid on such date or as soon as administratively practicable thereafter, with interest as determined by the Plan Administrator for any delay in payment.

(1)Anything in this Plan to the contrary notwithstanding, the Deferred Vested Benefit payable to a Member or Vested Former Member

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who terminates employment prior to having attained age 55 shall be the Actuarial Equivalent Value of the Deferred Vested Benefit otherwise payable upon such Member’s or Vested Former Member’s attainment of age 65, reduced for commencement on the date of such  Member’s or Vested Former Member’s attainment of age 55.

(2)Anything in this Plan to the contrary notwithstanding, the Deferred Vested Benefit payable to a Member or Vested Former Member whose employment has been terminated by the Company without Cause before such Member or Vested Former Member has attained age 55 or the Deferred Vested Benefit payable to a Member or Vested Former Member who terminates employment for Good Reason before such Member or Vested Former Member has attained age 55 shall be reduced by 20% if such Member or Vested Former Member had not completed ten years of Service as of the date of termination; otherwise, by 10% if such Member or Vested Former Member had completed ten years of Service as of the date of termination.

(3)Anything in this Plan to the contrary notwithstanding, the Deferred Vested Benefit payable to a Member or Vested Former Member whose termination of employment occurs after such Member or Vested Former Member has attained age 55 but prior to such Member or Vested Former Member having completed 10 years of

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Service shall be reduced by 2% for each 12-month period that such Member’s or Vested Former Member’s termination of employment precedes such Member’s or Vested Former Member’s attainment of age 65.

(4)Anything in this Plan to the contrary notwithstanding,  the Deferred Vested Benefit payable to a Member or Vested Former Member whose  termination of employment occurs after such Member or Vested Former Member has attained age 55 and completed 10 years of Service shall be reduced by 2% for each 12-month period that such Member’s or Vested Former Member’s termination of employment precedes such Member’s or Vested Former Member’s attainment of age 60.  A Member or Vested Former Member whose termination of employment occurs after such Member or Vested Former Member has attained age 60 and completed 10 years of Service shall be paid 100% of such Member’s or Vested Former Member’s Deferred Vested Benefit.

(5)For purposes of calculating any Deferred Vested Benefit that is reduced in accordance with paragraphs (2), (3) or (4) of this Section 3.3(a), an interpolated percentage shall be used to calculate the percentage reduction in such Deferred Vested Benefit for any period of fewer than 12 months.

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(b)If a Member or Vested Former Member has made a Lump Sum Election pursuant to Section 3.4 and such Lump Sum Election becomes effective (i) prior to the date of such Member’s or Vested Former Member’s Retirement or termination of employment with the Company or an Affiliated Employer and (ii) while he or she was still a Member, the Retirement Benefit, or Deferred Vested Benefit under this Plan, as the case may be, shall be payable in the form or combination of forms of payment elected pursuant to such Lump Sum Election under Section 3.4 and without regard to any optional form of benefits elected under the Basic Plan.  Any portion of the benefits hereunder payable in a lump sum shall be paid within 60 days following (i) the earlier of the date the Member or Vested Former Member attains age 65 or the date of the Member’s or Vested Former Member’s Retirement, in the case of Retirement Benefits or (ii) the later of the date the Member or Vested Former Member attains age 55 or terminates employment, in the case of Deferred Vested Benefits.

(c)Notwithstanding any Lump Sum Election made (or not made) under Section 3.4, if the lump sum value, determined in the same manner as provided under Section 3.4(a), of a Member’s or Vested Former Member’s Retirement or Deferred Vested Benefit is $10,000 or less at the time such benefit is payable under this Plan, such benefit shall be payable as a lump sum.

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3.4Lump Sum Election.

(a)A Member or Vested Former Member may elect to receive all, none, or a specified portion, as provided in Section 3.4(c), of his or her Retirement Benefit or Deferred Vested Benefit under the Plan as a lump sum and to receive any balance of such benefit in the form of an annuity; provided that any such Lump Sum Election shall be effective for purposes of this Plan only if the conditions of Section 3.4(b) are satisfied.  A Lump Sum Election made by a Member or Vested Former Member in accordance with the terms of any plan maintained by the Company described in Section 201(2) of ERISA, including without limitation, the IMS Health Incorporated U.S. Executive Retirement Plan, shall be effective with respect to this Plan.  A Member or Vested Former Member may elect a payment form different than the payment form previously elected by him or her under this Section 3.4(a) by filing a revised election form; provided that any such new election shall be effective only if the conditions of Section 3.4(b) are satisfied with respect to such new election.  Any prior Lump Sum Election made by a Member that has satisfied the conditions of Section 3.4(b) shall remain effective for purposes of the Plan until such Member has made a new election satisfying the conditions of Section 3.4(b).  The amount of any portion of a Member’s or a Vested Former Member’s Retirement Benefit or Deferred Vested Benefit payable as a lump sum under this Section 3.4 shall be determined by first reducing such portion of the benefit in accordance with Section 3.3 (a)(1), (2), (3) or (4),

22

if applicable, and then calculating the present value of such portion of the benefit: (i) on the assumption that it is payable in the form of a joint and 50 percent survivor annuity if such Member or Vested Former Member is married; and (ii) on the basis of (1) a discount rate equal to 85% of the average of the 15-year non-callable U.S. Treasury bond yields (or, in the event that 15-year non-callable U.S. Treasury bond yields are unavailable, such proxy for the same as the Plan Administrator may reasonably select) as of the close of business on the last business day of each of the three months immediately preceding the date provided in Section 3.3(a) as of which monthly installments would otherwise commence, as modified by Section 3.8(a)(i) if applicable, and (2) the 1983 Group Annuity Mortality Table.

(b)A Member’s Election under Section 3.4(a) becomes effective only if all of the following conditions are satisfied: (i) such Member remains in the employment of the Company or an Affiliated Employer, as the case may be, for the full 12 calendar months immediately following the date of such election (the “Election Date”), except in the case of death or Disability of such Member (in which case Section 3.4(d) shall apply) and (ii) such Member complies with the administrative procedures set forth by the Plan Administrator with respect to the making of a Lump Sum Election.

(c)A Member making an election under Section 3.4(a) may specify the portion of his Retirement or Deferred Vested Benefit under the Plan to be received in a lump sum as follows:  0%, 25%, 50%, 75%, or 100%.

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(d)           In the event a Member who has made an Election pursuant to Section 3.4(a) dies or becomes Disabled while employed by the Company or an Affiliated Employer and such death or Disability occurs during the 12 calendar-month period immediately following the Election Date, the condition under Section 3.4(b)(i) shall be deemed satisfied with respect to such Member.

3.5Cessation of Benefits.  Subject to Section 3.8 hereof, no benefits or no further benefits, as the case may be, shall be paid to a Member, Vested Former Member or Surviving Spouse if the Member or Vested Former Member has:

(a)become a stockholder (unless such stock is listed on a national securities exchange or traded on a daily basis in the over-the-counter market and the Member’s or Vested Former Member’s ownership interest is not in excess of 2% of the company whose shares are being purchased), employee, officer, director or consultant of or to a company, or a member or an employee of or a consultant to a partnership or any other business or firm, which competes with any of the businesses identified in the Company’s Employee Protection Plan, or such Member or Vested Former Member accepts any form of compensation from such competing entity;

(b)been discharged from employment with the Company or any Affiliated Employer for Cause;

(c)failed to retain in confidence any and all confidential information concerning the Company or any Affiliated Employer and its respective

24

business which was known or became known to the Member or Vested Former Member, except as otherwise required by law and except information (i) ascertainable or obtained from public information, (ii) received by the Member or Vested Former Member at any time after the Member’s or Vested Former Member’s employment by the Company or any Affiliated Employer terminated, from a third party not employed by or otherwise affiliated with the Company or any Affiliated Employer, or (iii) which was or became known to the public by any means other than a breach of this Section 3.5; or

(d)made disparaging comments about the Company or any Affiliated Employer in any communications, written or oral, with any individual, company, government body or agency or any other entity whatsoever.  For purposes hereof,  “disparage” shall mean any communication, including, but not limited to, any statements, actions or insinuations, made either directly or through a third party, that would tend to lessen the standing or stature of  the Company or any Affiliated Employer in the eyes of a customer, a prospective customer, a shareholder or a prospective shareholder.

3.6Notification of Cessation of Benefits.  Subject to Section 3.8 hereof, in any case described in Section 3.5, the Member, Vested Former Member or Surviving Spouse shall be given prior written notice that no benefits or no further benefits, as the case may be, will be paid to such Member, Vested Former Member or Surviving Spouse.  Such written notice shall specify the particular act(s), or

25

failures to act, and the basis on which the decision to cease paying his or her benefits has been made.

3.7Repayment of Benefits Paid as Lump Sum.

(a)Subject to Section 3.8 hereof, a Member or Vested Former Member who receives in a lump sum any portion of his or her Retirement Benefit or Deferred Vested Benefit pursuant to a Lump Sum Election, shall receive such lump sum portion of such Retirement Benefit or Deferred Vested Benefit subject to the condition that if such Member or Vested Former Member engages in any of the acts described in Section 3.5, then such Member or Vested Former Member shall, within 60 days after written notice by the Company, repay to the Company the amount described in Section 3.7(b).

(b)The amount described in this Section shall equal the amount of the Member’s or Vested Former Member’s lump sum benefit paid under this Plan to which such Member or Vested Former Member would not have been entitled, if such lump sum benefit had instead been payable in the form of an annuity under this Plan and such annuity payments were subject to the provisions of Section 3.5.

3.8Change in Control.

(a)Anything in this Plan to the contrary notwithstanding:

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(i)Any Member, whose employment with the Company or an Affiliated Employer is involuntarily terminated by the Company or an Affiliated Employer at or within two years following a Change in Control for a reason other than Cause or whose employment is voluntarily terminated by the Member with Good Reason at or within two years following a Change in Control shall be deemed to have completed five years of Service for purposes of Section 3.2(a) hereof and shall be credited with three additional years of Service for purposes of calculating the benefits payable under Sections 3.1(b) or 3.2(b) hereof and, notwithstanding the provisions of Section 3.3 of this Plan, any reductions in the benefits payable under Sections 3.1(b) or 3.2(b) otherwise applicable under Sections 3.3 (a) (1), (2), (3) or (4) shall not apply unless such Member shall have terminated employment prior to attainment of age 52, in which case the Actuarial Equivalent Value of such benefits shall be paid, calculated on the assumption that unreduced benefits are payable upon such Member’s attainment of age 52.  Payment of such benefits shall be made in the form provided in Section 3.3, commencing as provided in Section 3.3(a) or (b), as the case may be, provided that with respect to Deferred Vested Benefits, the commencement of payment shall be determined without regard to whether the Member has attained age 55.  In addition, in the event that a Member’s Service shall have been limited pursuant to

27

Section 1.32 to disregard all or any portion of service prior to such Member’s participation in the Plan, such limitation shall be eliminated in the event of such Member’s termination of employment at or within two years following a Change in Control as provided above in this subsection (i).

(ii)In the event of a Potential Change in Control or Change in Control, the Company shall, not later than 15 days thereafter, have established one or more so-called “rabbi” trusts and shall deposit therein cash in an amount sufficient to provide for full payment of all potential benefits payable under the Plan at or following a Change in Control.  Such rabbi trust(s) shall be irrevocable and shall provide that the Company may not, directly or indirectly, use or recover any assets of the trust(s) until such time as all obligations which potentially could arise hereunder have been settled and paid in full, subject only to the claims of creditors of the Company in the event of insolvency or bankruptcy of the Company; provided, however, that if no Change in Control has occurred within two years after such Potential Change in Control, such rabbi trust(s) shall at the end of such two-year period become revocable and may thereafter be revoked by the Company.

(iii)The provisions of Sections 3.5 through 3.7 shall be of no force or effect with respect to Members who Retire or terminate

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employment within a two-year period following a Change in Control.

SECTION 4 - DISABILITY BENEFITS

4.1Eligibility.  A Member who is enrolled for the maximum disability insurance coverage available under the Basic Disability Plan and who has become Disabled shall be entitled to the Disability Benefit described in Section 4.2.

4.2Amount.  The Disability Benefit of a Member entitled thereto shall be an annual benefit payable in monthly installments under this Plan during the same period as disability benefits are actually paid by the Basic Disability Plan, in an amount equal to 60% of the Member’s Covered Earnings, offset by the Member’s (i) Basic Disability Plan Benefit, (ii) Basic Plan Benefit, if the Basic Disability Plan Benefit is offset by such Basic Plan Benefit, and (iii) Other Disability Income.

SECTION 5- SURVIVING SPOUSE’S BENEFITS

5.1Death Prior to Benefit Commencement.  Upon the death of a Member or Vested Former Member, prior to the commencement of his or her Retirement Benefit or Deferred Vested Benefit hereunder, any such Member shall be deemed to have completed five years of Service for purposes of Section 3.2(a) and his or her Surviving Spouse will be entitled to a Surviving Spouse’s Benefit under this Plan equal to 50% of the Retirement or Deferred Vested Benefit that would have been provided from the Plan had the Member or Vested Member retired from or terminated employment with the Company or an Affiliated Employer on the date

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of death and commenced benefits on the later of the date the Member would have attained age 55 or the date of the Member’s death.

5.2Death On or After Benefit Commencement.  Upon the death of a Vested Former Member while he or she is receiving Retirement or Deferred Vested Benefits, his or her Surviving Spouse shall receive a Surviving Spouse’s Benefit equal to 50%of the Benefit he or she was receiving at the time of death.  Notwithstanding the foregoing, no benefit shall be payable under this Section 5.2to the extent a Retirement Benefit or Deferred Vested Benefit was previously paid to a Member or Vested Former Member in the form of a lump sum.

5.3Commencement of Surviving Spouse’s Benefit.  Except as provided in Section 5.4, the Surviving Spouse’s Benefit provided under Sections 5.1 or 5.2 will be payable monthly, at the same time as the Surviving Spouse’s benefits under the Basic Plan.  Such benefits shall continue until the first day of the month in which the Surviving Spouse dies.

5.4Lump Sum Payment.

(a)If a Member or a Vested Former Member made an Election under Section 3.4 but such Member or Vested Former Member died prior to such lump sum payment, the Surviving Spouse’s Benefit payable under Section 5.1 hereof will be payable in the form or combination of forms of payment so elected by such Member or Vested Former Member pursuant to such Lump Sum Election.  The amount of any lump sum payment under the

30

Plan shall be determined using the actuarial assumptions set forth in Section 3.4(a).

(b)If the lump sum value, determined in the same manner as provided under Section 3.4(a), of a Surviving Spouse’s Benefit is $10,000 or less at the time such Surviving Spouse’s Benefit is payable under this Plan, such benefit shall be payable as a lump sum.

(c)Any Surviving Spouse’s Benefit which is payable as a lump sum shall be paid within 60 days after the date when any portion of such benefit payable in annuity form commences or would commence if any portion of such Surviving Spouse’s Benefit were payable as an annuity as set forth in Section 5.3.

5.5Reduction.  Notwithstanding the foregoing provisions of Section 5, the amount of a Surviving Spouse’s Benefit shall be reduced by one percentage point for each year (where a half year or more is treated as a full year) in excess of ten years that the age of the Member or Vested Former Member exceeds the age of the Surviving Spouse.

SECTION 6 - PLAN ADMINISTRATOR

6.1Duties and Authority.  The Plan Administrator shall be responsible for the administration of the Plan and may delegate to any management committee, employee, director or agent its responsibility to perform any act hereunder, including, without limitation, those matters involving the exercise of discretion;

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provided, that such delegation shall be subject to revocation at any time at the Plan Administrator’s discretion.  The Plan Administrator shall have the sole discretion to determine all questions arising in connection with the Plan, to interpret the provisions of the Plan and to construe all of its terms, to adopt, amend, and rescind rules and regulations for the administration of the Plan, and generally to conduct and administer the Plan and to make all determinations in connection with the Plan as may be necessary or advisable.  All such actions of the Plan Administrator shall be conclusive and binding upon all Members, Former Members, Vested Former Members, Surviving Spouses and other persons.

6.2Presentation of Claims.  Claims for benefits shall be filed in writing with the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be furnished to the claimant within 90 days after the claim is filed (or within 180 days if special circumstances require an extension of time for processing the claim and if notice of such extension and circumstances is provided to the claimant within the initial 90-day period.)

6.3Claims Denial Notification.  If a claim is wholly or partially denied, the Plan Administrator shall furnish to the claimant a written notice setting forth in a manner calculated to be understood by the claimant:

(a)the specific reason(s) for denial;

(b)specific reference(s) to pertinent Plan provisions on which any denial is based;

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(c)a description of any additional material or information necessary for the claimant to perfect the claim, and an explanation of why such material or information is necessary;

(d)an explanation of the Plan’s claims review procedures and the applicable time limits for such procedures; and

(e)a statement that the claimant has a right to bring a civil action under Section 502(a) of ERISA following an adverse determination on review.

6.4Claims Review Procedure.  Upon a denial, the claimant is entitled (either in person or by his duly authorized representative) to:

(a)request a subsequent review of the claim by the Plan Administrator upon written application for review made to the Plan Administrator.  In the case of a denial as to which written notice of denial has been given to the claimant, any such request for review of the claim must be made within 60 days after receipt by the claimant of such notice.  A claimant must submit a written application for review before the claimant is permitted to bring a civil action for benefits;

(b)review pertinent documents relating to the denial; and

(c)submit written comments, documents, records and other information relating to the claim.

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6.5Timing.  The Plan Administrator shall make its decision and notify the claimant with respect to a claim not later than 60 days after receipt of the request.  Such 60-day period may be extended for another period of 60 days if the Plan Administrator finds that special circumstances require an extension of time for processing and notice of the extension and special circumstances is provided to the claimant within the initial 60-day period.

6.6Final Decision.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant with written or electronic notice of the decision in a manner calculated to be understood by the claimant.  The notice shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement that the claimant has a right to bring a civil action under Section 502(a) of ERISA, and a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the claim.  A document is relevant to the claim if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that Plan provisions have been applied consistently with respect to similarly situated claimants.

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SECTION 7- MISCELLANEOUS

7.1Amendment; Termination.  The Board of Directors of the Company, may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part; provided, however, that no termination, suspension or amendment of the Plan may adversely affect (a) a Member’s or Vested Former Member’s benefit under the Plan to which he or she has become entitled hereunder, or, (b) a Vested Former Member’s right or the right of a Surviving Spouse to receive or to continue to receive a benefit in accordance with the Plan, such benefits or rights as in effect on the date immediately preceding the date of such termination, suspension or amendment.  Notwithstanding the foregoing, the Employee Benefits Committee of the Company may amend the Plan without the approval of the Board of Directors of the Company with respect to amendments that such Committee determines do not have a significant effect on the cost of the Plan.

7.2No Employment Rights.  Nothing contained herein will confer upon any Member, Former Member or Vested Former Member the right to be retained in the service of the Company or any Affiliated Employee, nor will it interfere with the right of the Company or any Affiliated Employer to discharge or otherwise deal with Members, Former Members or Vested Former Members with respect to matters of employment.

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7.3Payout in Discretion of the Plan Administrator.  Notwithstanding anything herein to the contrary, at any time following the termination of service of the Member or Vested Former Member, the Plan Administrator may authorize, under uniform rules applicable to all Members, Vested Former Members and Surviving Spouses under the Plan, a lump sum distribution of a Member’s or Vested Former Member’s Retirement Benefit or Deferred Vested Benefit or a lump sum distribution of a Surviving Spouse’s Benefit in full satisfaction of all present and future Plan liability with respect to such Member, Vested Former Member and/or Surviving Spouse, if the present value of such Retirement Benefit, Deferred Vested Benefit or Surviving Spouse’s Benefit, determined in accordance with the provisions of Section 3.4(a) with respect to Retirement Benefits and Deferred Vested Benefits, and Section 5.4 with respect to Surviving Spouse’s Benefits, on the assumption that the Member or Vested Former Member made an Election under Section 3.4, is less than $250,000.  Such lump sum distribution may be made without the consent of the Member, Vested Former Member or Surviving Spouse.

7.4Unfunded Status.  Members and Vested Former Members shall have the status of general unsecured creditors of the Company, and this Plan constitutes a mere promise by the Company to make benefit payments at the time or times required hereunder. It is the intention of the Company that this Plan be unfunded for tax purposes and for purposes of Title I of ERISA and any trust created by the Company and any assets held by such trust to assist the Company in meeting its

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obligations under the Plan shall meet the requirements necessary to retain such unfunded status.

7.5Arbitration.  Any dispute or controversy arising under or in connection with the Plan shall be settled exclusively by arbitration in New York, New York in accordance with the rules of the American Arbitration Association in effect at the time of such arbitration.  Upon submission of invoices, the Company shall promptly pay or reimburse all reasonable costs and expenses (including fees and disbursements of counsel and pension experts) incurred to assert rights under this Plan or in any proceeding in connection therewith, brought by a Member, Vested Former Member, Former Member or Surviving Spouse, whether or not such Member, Vested Former Member, Former Member or Surviving Spouse is ultimately successful in enforcing such rights or in such proceeding; provided, however, that no reimbursement shall be owed with respect to expenses relating to any unsuccessful assertion of rights or proceeding if and to the extent that such assertion or proceeding was initiated or maintained in bad faith or was frivolous as determined by the arbitrators or a court having jurisdiction over the matter, in which case any amounts previously paid by the Company shall be promptly repaid.

7.6No Alienation.  A Member’s or Vested Former Member’s right to benefit payments under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of such Member or Vested Former Member or his or her Surviving Spouse.

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7.7Withholding.  The Company may withhold from any benefit under the Plan an amount sufficient to satisfy its tax withholding obligations.

7.8Governing Law.  The Plan 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 such state to the extent not preempted by federal law.

7.9Successors.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform the obligations of the Company under this Plan in the same manner and to the same extent that the Company would have been required to perform such obligations if no such succession had taken place and such assumption shall be an express condition to the consummation of any such purchase, merger, consolidation or other transaction.

7.10Integration.  In the event of any conflict or ambiguity between this Plan and the terms of any employment agreement between a Member and the Company or any Change in Control Agreement between a Member and the Company (this Plan and any such employment agreement or Change in Control Agreement being collectively referred to herein as the “arrangements”), such conflict or ambiguity shall be resolved in accordance with the terms of that arrangement which are most beneficial to the Member; provided, however, that no such resolution of any such conflict or ambiguity shall operate to cause the Member to receive duplicate payments or benefits under the arrangements.

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EX-10.4

Employment Agreement for Nancy E. Cooper

IMS HEALTH INCORPORATED

Employment Agreement for Nancy E. Cooper

1.	Employment.
2.	Term.
3.	Offices and Duties.
	(a)	Generally
	(b)	Place of Employment
4.	Salary and Annual Incentive Compensation.
	(a)	Base Salary
	(b)	Annual Incentive Compensation
5.	Long-Term Compensation, Including Stock Options, Benefits, Deferred Compensation, and Expense Reimbursement.
	(a)	Executive Compensation Plans
	(b)	Employee and Executive Benefit Plans
	(c)	Acceleration of Awards Upon a Change in Control
	(d)	Deferral of Compensation
	(e)	Company Registration Obligations
	(f)	Reimbursement of Expenses
6.	Termination Due to Retirement, Death, or Disability.
	(a)	Retirement
	(b)	Death
	(c)	Disability
	(d)	Other Terms of Payment Following Retirement, Death, or Disability

7.	Termination of Employment For Reasons Other Than Retirement, Death, or Disability.
	(a)	Termination by the Company for Cause
	(b)	Termination by Executive Other Than For Good Reason
	(c)	Termination by the Company Without Cause Prior to or More than Two Years After a Change in Control
	(d)	Termination by Executive for Good Reason Prior to or More than Two Years After a Change in Control
	(e)	Termination by the Company Without Cause Within Two Years After a Change in Control
	(f)	Termination by Executive for Good Reason Within Two Years After a Change in Control
	(g)	Other Terms Relating to Certain Terminations of Employment
8.	Definitions Relating to Termination Events.
	(a)	“Cause”
	(b)	“Change in Control”
	(c)	“Compensation Accrued at Termination”
	(d)	“Disability”.
	(e)	“Good Reason”
	(f)	“Potential Change in Control”
9.	Rabbi Trust Obligation Upon Potential Change in Control; Excise Tax-Related Provisions.
	(a)	Rabbi Trust Funded Upon Potential Change in Control
	(b)	Gross-up If Excise Tax Would Apply
10.	Non-Competition and Non-Disclosure; Executive Cooperation; Non-Disparagement; Certain Forfeitures.
	(a)	Non-Competition
	(b)	Non-Disclosure; Ownership of Work

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	(c)	Cooperation With Regard to Litigation
	(d)	Non-Disparagement
	(e)	Release of Employment Claims
	(f)	Forfeiture of Outstanding Options
	(g)	Forfeiture of Certain Bonuses and Profits
	(h)	Survival
11.	Governing Law; Disputes; Arbitration.
	(a)	Governing Law
	(b)	Reimbursement of Expenses in Enforcing Rights
	(c)	Arbitration
	(d)	Interest on Unpaid Amounts
12.	Miscellaneous.
	(a)	Integration
	(b)	Successors; Transferability
	(c)	Beneficiaries
	(d)	Notices
	(e)	Reformation
	(f)	Headings
	(g)	No General Waivers
	(h)	No Obligation To Mitigate
	(i)	Offsets; Withholding
	(j)	Successors and Assigns
	(k)	Counterparts
13.	Indemnification.
Attachment A

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IMS HEALTH INCORPORATED

Employment Agreement for Nancy E. Cooper

THIS EMPLOYMENT AGREEMENT made this 4th day of August, 2003 by and between IMS HEALTH INCORPORATED, a Delaware corporation (the “Company”), and Nancy E. Cooper (“Executive”) shall become effective as of February 11, 2003 (the “Effective Date”).

WITNESSETH:

WHEREAS, Executive has served the Company and its predecessors in executive capacities since November 1, 2001;

WHEREAS, the Company desires to continue to employ Executive as its Senior Vice President and Chief Financial Officer of the Company, and Executive desires to accept such employment on the terms and conditions herein set forth.

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

1.Employment.

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

2.Term.

The term of employment of Executive under this Agreement (the “Term”) shall be the period commencing on the Effective Date and ending on December 31, 2004 and any period of extension thereof in accordance with this Section 2, except that the Term will end at a date, prior to the end of such period or extension thereof, specified in Section 6 or 7 in the event of termination of Executive’s employment. The Term, if not previously ended, shall be extended automatically without further action by either party by one additional year (added to the end of the Term) first on December 31, 2004 (extending the Term to December 31, 2005) and on each succeeding December 31 thereafter, unless either party shall have served written notice in accordance with Section 12(d) upon the other party on or before the June 30 preceding a December 31 extension date electing not to extend the Term further as of that December 31 extension date, in which case employment shall terminate on that December 31 and the Term shall end at that date, subject to earlier termination of employment and earlier termination of the Term in accordance with Section 6 or 7. The foregoing notwithstanding, in the event there occurs a Potential Change in Control during the period of 180 days prior to the December 31 on which

the Term will terminate as a result of notice given by the Executive or the Company hereunder, the Term shall be extended automatically at that December 31 by an additional period such that the Term will extend until the 180^th day following such Potential Change in Control.

3.Offices and Duties.

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

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

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

4.Salary and Annual Incentive Compensation.

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

(a)Base Salary.  The Company will pay to Executive during the Term a base salary, the annual rate of which shall be $350,000 on April 1, 2003, payable in cash in substantially equal semi-monthly installments commencing at the beginning of the Term, and otherwise in accordance with the Company’s usual payroll practices with respect to senior executives (except to the extent deferred under Section 5(d)). Executive’s annual base salary shall be reviewed by the Compensation and Benefits Committee (the “Committee”) of the Board of Directors (the “Board”) at least once in each calendar year, and may be increased above, but may not be

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reduced below, the then-current rate of such base salary. For purposes of this Agreement, Base Salary means Executive’s then-current base salary.

(b)Annual Incentive Compensation.  The Company will pay to Executive during the Term annual incentive compensation which shall offer to Executive an opportunity to earn additional compensation based upon performance in amounts determined by the Committee in accordance with the applicable plan and consistent with past practices of the Company; provided, however, that as of April 1, 2003, the annual incentive opportunity with respect to each fiscal year of the applicable plan shall be not less than 51 % of Base Salary, with the nature of the performance and the levels of performance triggering payments of such annual target incentive compensation for each year to be established and communicated to Executive during the first quarter of such year by the Committee. In addition, the Committee (or the Board) may determine, in its discretion, to increase the Executive’s annual target incentive opportunity or provide an additional annual incentive opportunity, in excess of the annual target incentive opportunity, payable for performance in excess of or in addition to the performance required for payment of the annual target incentive amount. Any annual incentive compensation payable to Executive shall be paid in accordance with the Company’s usual practices with respect to payment of incentive compensation to senior executives (except to the extent deferred under Section 5(d)).

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

(a)Executive Compensation Plans.  Executive shall be entitled during the Term to participate, without discrimination or duplication, in executive compensation plans and programs intended for general participation by senior executives of the Company, as presently in effect or as they may be modified or added to by the Company from time to time, subject to the eligibility and other requirements of such plans and programs, including without limitation any stock option plans, plans under which restricted stock/restricted stock units, performance-based restricted stock/restricted stock units (“PERS”) or performance-accelerated restricted stock/restricted stock units (“PARS”) may be awarded, other annual and long-term cash and/or equity incentive plans, and deferred compensation plans; provided, however, that Executive’s participation in such plans and programs, in the aggregate, shall provide her with compensation and incentive award opportunities substantially no less favorable than those provided by the Company to Executive under such plans and programs as in effect on the Effective Date. The Company makes no commitment under this Section 5(a) to provide participation opportunities to Executive in all plans and programs or at levels equal to (or otherwise comparable to) the participation opportunity of any other executive.

(b)Employee and Executive Benefit Plans.  Executive shall be entitled during the Term to participate, without discrimination or duplication, in employee and executive benefit plans and programs of the Company, as presently in effect or as they may be modified or added to by the Company from time to time, subject to the eligibility and other requirements of such plans and programs, including without limitation plans providing pensions, supplemental pensions, supplemental and other retirement benefits, medical insurance, life insurance, disability insurance, and accidental death or dismemberment insurance, as well as savings, profit-sharing, and stock ownership plans; provided, however, that Executive’s participation in such benefit

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plans and programs, in the aggregate, shall provide Executive with benefits and compensation substantially no less favorable than those provided by the Company to Executive under such plans and programs as in effect on the Effective Date. The Company makes no commitment under this Section 5(b) to provide participation opportunities to Executive in all benefit plans and programs or at levels equal to (or otherwise comparable to) the participation opportunity of any other executive. The foregoing notwithstanding, Executive shall be eligible to participate or receive compensation and benefits under the Company’s Employee Protection Plan and her Change-in-Control Agreement, provided that any compensation and benefits to Executive under the Employee Protection Plan and the Change-in-Control Agreement shall be payable only if and to the extent that such benefits would exceed the corresponding benefits payable under this Agreement.

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

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

(ii)The Company will provide Executive with coverage as Senior Vice President and Chief Financial Officer with respect to long-term disability insurance and benefits substantially no less favorable (including any required contributions by Executive) than such insurance and benefits in effect on the Effective Date;

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

(iv)Executive will be entitled to benefits under the IMS Health Incorporated Executive Pension Plan (“EXPP”), with the effective date of Executive’s participation therein to be February 11, 2003. Anything to the contrary in the EXPP notwithstanding, including without limitation Section 1.32(e) thereof (providing phased-in credit for pre-participation service), Executive’s service prior to February 11, 2003 (the Prior Service) shall initially not be taken into account for purposes of determining the amount of Executive’s Retirement Benefit pursuant to Section 3.1(b)(i) of the EXPP or Executive’s Deferred Vested Benefit pursuant to Section 3.2(b)(i) of the EXPP, but for such purposes shall be credited at the rate of one month of Prior Service for each month of Service completed by Executive under the EXPP after February 11, 2003 until such Prior Service shall have been fully credited. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the EXPP.

(c)Acceleration of Awards Upon a Change in Control.  In the event of a Change in Control (as defined in Section 8(b)), all outstanding stock options, restricted stock, and other equity-based awards then held by Executive shall become vested and exercisable.

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

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

(f)Reimbursement of Expenses.  The Company will promptly reimburse Executive for all reasonable business expenses and disbursements incurred by Executive in the performance of Executive’s duties during the Term in accordance with the Company’s reimbursement policies as in effect from time to time.

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

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

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

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

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

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

(iv)All restricted stock and deferred stock awards, including outstanding PERS awards, all other long-term incentive awards, and all deferral arrangements under Section 5(d), shall be governed by the plans and programs under which the awards were granted or governing the deferral, and all rights under the EXPP and any other benefit plan shall be governed by such plan subject to, in the case of the EXPP, Section 5(b)(iv) of this Agreement, pursuant to which Prior Service that was credited under the EXPP as of Executive’s Retirement shall be fully reflected.

(v)If Executive shall not be eligible upon Retirement for retiree coverage under the Company’s Health Plan (the “Health Plan”) and Executive elects in accordance with the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”) continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. Prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the earliest of:  (1) Executive’s eligibility for medical coverage under the Company’s Health Plan, as a retiree or active employee, (2) Executive’s eligibility for medical coverage under a plan maintained by a subsequent employer or other entity to which Executive provides services, (3) Executive’s eligibility for Medicare, or (4) Executive’s attainment of age 65. In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in her sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set

6

forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid. Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. For purposes of this Section 6(a)(v), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

(i)Executive’s Compensation Accrued at Termination;

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

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

(iv)All restricted stock and deferred stock awards, including outstanding PERS awards, all other long-term incentive awards, and all deferral arrangements under Section 5(d), shall be governed by the plans and programs under which the awards were granted or governing the deferral, and all rights under the EXPP and any other benefit plan shall be governed by such plan subject to, in the case of the EXPP, Section 5(b)(iv) of this Agreement , pursuant to which Prior Service that was credited under the EXPP as of Executive’s death shall be fully reflected and

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provided additionally that the surviving spouse benefit under the EXPP shall be in an amount equal to 50% of the benefit that would have been payable under Section 3.1 or 3.2 of the EXPP upon Executive’s attainment of age 65 without actuarial reduction or any other discount except as provided in Section 5.5 of the EXPP with respect to reductions on account of a surviving spouse who is more than ten years younger than Executive, and payments to Executive’s surviving spouse shall commence on the later of the date of Executive’s death or the date on which Executive would have attained age 55; and

(v)If Executive’s surviving spouse (and eligible dependents, if any) elects continued coverage under the Company’s Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive’s surviving spouse on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. No further benefits shall be paid under this Section 6(b)(v) after the expiration of the maximum COBRA continuation period available to Executive’s surviving spouse and eligible dependents, if any.

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

(i)Executive’s Compensation Accrued at Termination;

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

(iii)Stock options held by Executive at termination shall be governed by the plans and programs and the agreements and other documents pursuant to which such options were granted;

(iv)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive

8

awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

(v)Disability benefits shall be payable in accordance with the Company’s plans, programs and policies, including the EXPP, and all deferral arrangements under Section 5(d) will be settled in accordance with the plans and programs governing the deferral; and

(vi)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. Prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the earliest of: (1) Executive’s eligibility for medical coverage under the Company’s Health Plan, as a retiree or active employee, (2) Executive’s eligibility for medical coverage under a plan maintained by a subsequent employer or other entity to which Executive provides services, (3) Executive’s eligibility for Medicare, or (4) Executive’s attainment of age 65. In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in her sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum

9

is paid. Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid for coverage under the Company’s group long-term disability policy from Executive’s termination of employment until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage from Executive’s termination of employment until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred. For purposes of this Section 6(c)(vi), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

(d)Other Terms of Payment Following Retirement, Death, or Disability.  Nothing in this Section 6 shall limit the benefits payable or provided in the event Executive’s employment terminates due to Retirement, death, or Disability under the terms of plans or programs of the Company more favorable to the Executive (or her beneficiaries) than the benefits payable or provided under this Section 6 (except in the case of annual incentives in lieu of which amounts are paid hereunder), including plans and programs adopted after the date of this Agreement. Amounts payable under this Section 6 following Executive’s termination of employment, other than those expressly payable following determination of performance for the year of termination for purposes of annual incentive compensation or otherwise expressly payable on a deferred basis, will be paid as promptly as practicable after such termination of employment.

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

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

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

(ii)All stock options, restricted stock and deferred stock awards, including outstanding PERS awards, and all other long-term incentive awards will be

10

governed by the terms of the plans and programs under which the awards were granted; and

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

(b)Termination by Executive Other Than For Good Reason.  Executive may terminate her employment hereunder voluntarily for reasons other than Good Reason (as defined in Section 8(e)) at any time upon 90 days’ written notice to the Company. An election by Executive not to extend the Term pursuant to Section 2 hereof shall be deemed to be a termination of employment by Executive for reasons other than Good Reason at the date of expiration of the Term, unless a Change in Control (as defined in Section 8(b)) occurs prior to, and there exists Good Reason at, such date of expiration. At the time Executive’s employment is terminated by Executive other than for Good Reason the Term will terminate, all obligations of the Company and Executive under Sections 1 through 5 of this Agreement will immediately cease, and the Company will pay Executive, and Executive will be entitled to receive, the following:

(i)Executive’s Compensation Accrued at Termination;

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

(iii)All deferral arrangements under Section 5(d) will be settled in accordance with the plans and programs governing the deferral, and all rights under the EXPP and any other benefit plan shall be governed by such plan subject to, in the case of the EXPP, Section 5(b)(iv) of this Agreement pursuant to which Prior Service that was credited under the EXPP as of Executive’s termination shall be fully reflected.

(c)Termination by the Company Without Cause Prior to or More than Two Years After a Change in Control.  The Company may terminate the employment of Executive hereunder without Cause, if at the date of termination no Change in Control has occurred or such date of termination is at least two years after the most recent Change in Control, upon at least 90 days’ written notice to Executive. The foregoing notwithstanding, the Company may elect, by written notice to Executive, to terminate Executive’s positions specified in Sections 1 and 3 and all other obligations of Executive and the Company under Section 3 at a date earlier than the expiration of such 90-day period, if so specified by the Company in the written notice, provided that Executive shall be treated as an employee of the Company (without any assigned duties) for all other purposes of this Agreement, including for purposes of Sections 4 and 5, from such specified date until the expiration of such 90-day period. An election by the Company not to extend the Term pursuant to Section 2 hereof shall be deemed to be a termination of Executive’s employment by the Company without Cause at the date of expiration of the Term and shall be subject to this Section 7(c) if at the date of such termination no Change in Control has occurred

11

or such date of termination is at least two years after the most recent Change in Control; provided, however, that, if Executive has attained age 65 at such date of termination, such termination shall be deemed a Retirement of Executive. At the time Executive’s employment is terminated by the Company (i.e., at the expiration of such notice period), the Term will terminate, all remaining obligations of the Company and Executive under Sections 1 through 5 of this Agreement will immediately cease (except for obligations which continue after termination of employment as expressly provided herein), and the Company will pay Executive, and Executive will be entitled to receive, the following:

(i)Executive’s Compensation Accrued at Termination;

(ii)Cash in an aggregate amount equal to one times the sum of (A) Executive’s Base Salary under Section 4(a) immediately prior to termination plus (B) an amount equal to the greater of (x) the portion of Executive’s annual target incentive compensation potentially payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the year of termination or (y) the portion of Executive’s annual incentive compensation that became payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the latest year preceding the year of termination based on performance actually achieved in that latest year. The amount determined to be payable under this Section 7(c)(ii) shall be payable in monthly installments over the 24 months following termination, without interest, except the Company may elect to accelerate payment of the remaining balance of such amount and to pay it as a lump sum, without discount;

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

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

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based

12

awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

(vii)All rights under the EXPP and any other benefit plan shall be governed by such plan, subject to, in the case of the EXPP, Section 5(b)(iv) of this Agreement pursuant to which Prior Service that was credited under the EXPP as of Executive’s termination shall be fully reflected; and

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than two years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the second anniversary of Executive’s termination of employment. In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in her sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid. Such

13

lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had she remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had she remained employed, from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred. For purposes of this Section 7(c)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

(i)Executive’s Compensation Accrued at Termination;

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

14

payable under this Section 7(d)(ii) shall be payable in monthly installments over the 24 months following termination, without interest, except the Company may elect to accelerate payment of the remaining balance of such amount and to pay it as a lump sum, without discount;

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

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

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

(vii)All rights under the EXPP and any other benefit plan shall be governed by such plan, subject to, in the case of the EXPP, Section 5(b)(iv) of this Agreement pursuant to which Prior Service that was credited under the EXPP as of Executive’s termination shall be fully reflected; and

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than two years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore

15

shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the second anniversary of Executive’s termination of employment. In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in her sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid. Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had she remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had she remained employed, from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in

16

effect for the year in which Executive’s termination occurred. For purposes of this Section 7(d)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

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

(i)Executive’s Compensation Accrued at Termination;

(ii)Cash in an aggregate amount equal to three times the sum of (A) Executive’s Base Salary under Section 4(a) immediately prior to termination plus (B) an amount equal to the greater of (x) the portion of Executive’s annual target incentive compensation potentially payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the year of termination or (y) the portion of Executive’s annual incentive compensation that became payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the latest year preceding the year of termination based on performance actually achieved in that latest year. The amount determined to be payable under this Section 7(e)(ii) shall be paid by the Company not later than 15 days after Executive’s termination;

(iii)In lieu of any annual incentive compensation under Section 4(b) for the year in which Executive’s employment terminated, an amount equal to the portion of

17

Executive’s annual target incentive compensation potentially payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the year of termination, multiplied by a fraction the numerator of which is the number of days Executive was employed in the year of termination and the denominator of which is the total number of days in the year of termination;

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

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

(vii)All rights under the EXPP and any other benefit plan shall be governed by such plan; provided, however, in the case of the EXPP, all Prior Service shall be fully reflected for purposes of determining the amount of Executive’s Retirement Benefit under Section 3.1(b)(i) of the EXPP or Executive’s Deferred Vested Benefit under Section 3.2(b)(i) of the EXPP, regardless of whether such Prior Service shall have been fully credited pursuant to Section 5(b)(iv) of this Agreement as of Executive’s termination; and, provided additionally, that payments under the EXPP shall commence as provided in Section 3.8 of the EXPP in an amount equal to 100% of the benefit under Section 3.1 or 3.2 of the EXPP without actuarial reduction or any other discount; and

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than three years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore

18

shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the third anniversary of Executive’s termination of employment. In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in her sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid. Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had she remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had she remained employed, from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s

19

termination occurred. For purposes of this Section 7(e)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

(i)Executive’s Compensation Accrued at Termination;

(ii)Cash in an aggregate amount equal to three times the sum of (A) Executive’s Base Salary under Section 4(a) immediately prior to termination plus (B) an amount equal to the greater of (x) the portion of Executive’s annual target incentive compensation potentially payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the year of termination or (y) the portion of Executive’s annual incentive compensation that became payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the latest year preceding the year of termination based on performance actually achieved in that latest year. The amount determined to be payable under this Section 7(f)(ii) shall be paid by the Company not later than 15 days after Executive’s termination;

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

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

20

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

(vii)All rights under the EXPP and any other benefit plan shall be governed by such plan; provided, however, in the case of the EXPP, all Prior Service shall be fully reflected for purposes of determining the amount of Executive’s Retirement Benefit under Section 3.1(b)(i) of the EXPP or Executive’s Deferred Vested Benefit under Section 3.2(b)(i) of the EXPP, regardless of whether such Prior Service shall have been fully credited pursuant to Section 5(b)(iv) of this Agreement as of Executive’s termination; and, provided additionally, that payments under the EXPP shall commence as provided in Section 3.8 of the EXPP in an amount equal to 100% of the benefit under Section 3.1 or 3.2 of the EXPP without actuarial reduction or any other discount; and

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than three years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the third anniversary of Executive’s termination of employment. In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in her sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by

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a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and her spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid. Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had she remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had she remained employed, from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred. For purposes of this Section 7(f)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

If any payment or benefit under this Section 7(f) is based on Base Salary or other level of compensation or benefits at the time of Executive’s termination and if a reduction in such Base Salary or other level of compensation or benefit was the basis for Executive’s termination for Good Reason, then the Base Salary or other level of compensation in effect before such reduction shall be used to calculate payments or benefits under this Section 7(t).

(g)Other Terms Relating to Certain Terminations of Employment.  Whether a termination is deemed to be at or within two years after a Change in Control for purposes of Sections 7(c), (d), (e), or (f) is determined at the date of termination, regardless of whether the Change in Control had occurred at the time a notice of termination was given. In the event Executive’s employment terminates for any reason set forth in Section 7(b) through (f), Executive will be entitled to the benefit of any terms of plans or agreements applicable to

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Executive which are more favorable than those specified in this Section 7 (except in the case of annual incentives in lieu of which amounts are paid hereunder). Amounts payable under this Section 7 following Executive’s termination of employment, other than those expressly payable on a deferred basis, will be paid as promptly as practicable after such a termination of employment, and such amounts payable under Section 7(e) or 7(f) will be paid in no event later than 15 days after Executive’s termination of employment unless not determinable within such period.

8.Definitions Relating to Termination Events.

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

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

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

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

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

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

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Company representing 20% or more of the combined voting power of the Company’s then-outstanding securities;

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

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

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

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

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

(i)The unpaid portion of annual base salary at the rate payable, in accordance with Section 4(a) hereof, at the date of Executive’s termination of employment, pro rated through such date of termination, payable in accordance with the Company’s regular pay schedule;

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

(iii)Reasonable business expenses and disbursements incurred by Executive prior to Executive’s termination of employment, to be reimbursed to Executive, as authorized under Section 5(f), in accordance with the Company’s reimbursement policies as in effect at the date of such termination.

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

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

(i)the assignment to Executive of duties inconsistent with Executive’s position and status as Senior Vice President and Chief Financial Officer, or an alteration, adverse to Executive, in Executive’s position and status as Senior Vice President and Chief Financial Officer or in the nature of Executive’s duties, responsibilities, and authorities or conditions of Executive’s employment from those relating to Executive position and status as Senior Vice President and Chief Financial Officer (excluding changes in assignments permitted under Section 3 and excluding inadvertent actions which are promptly remedied); except the foregoing shall not constitute Good Reason if occurring in connection with the termination of Executive’s employment for Cause, Disability, Retirement, as a result of Executive’s death, or as a result of action by or with the consent of Executive; for purposes of this Section 8(e)(i), references to the Company (and the Board and stockholders of the Company) refer to the ultimate parent company (and its board and stockholders) succeeding the Company following an acquisition in which the corporate existence of the Company continues, in accordance with Section 12(b);

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

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senior executives of the Company and all senior executives of any Person in control of the Company;

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

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

(v)the failure by the Company to continue in effect any material compensation or benefit plan in which Executive participated immediately prior to a Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amounts of compensation or benefits provided and the level of Executive’s participation relative to other participants, as existed at the time of the Change in Control;

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

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

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

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

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

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

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

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

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

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

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

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

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

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Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;

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

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

(ii)For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Executive’s employment, Executive shall repay to the Company within ten days after the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by Executive if such repayment results in a reduction in Excise Tax and/or federal and state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of Executive’s employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional gross-up payment in respect of such excess within ten days after the time that the amount of such excess is finally determined.

(iii)The payments provided for in this Section 9(b) shall be made not later than the fifteenth day following the date of Executive’s termination of employment; provided, however, that if the amount of such payments cannot be finally determined on or before such day, the Company shall pay to Executive on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth day after the date of Executive’s termination of employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to

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Executive, payable on the fifteenth day after the demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

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

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

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

(b)Non-Disclosure; Ownership of Work.  Executive shall not, at any time during the Term and thereafter (including following Executive’s termination of employment for any reason), disclose, use, transfer, or sell, except in the course of employment with or other service to the Company, any proprietary information, secrets, organizational or employee information, or other confidential information belonging or relating to the Company and its affiliates and customers so long as such information has not otherwise been disclosed or is not otherwise in the public domain, except as required by law or pursuant to legal process. In addition, upon termination of employment for any reason, Executive will return to the Company or its affiliates all documents and other media containing information belonging or relating to the Company or

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its affiliates. Executive will promptly disclose in writing to the Company all inventions, discoveries, developments, improvements and innovations (collectively referred to as “Inventions”) that Executive has conceived or made during the Term; provided, however, that in this context “Inventions” are limited to those which (i) relate in any manner to the existing or contemplated business or research activities of the Company and its affiliates; (ii) are suggested by or result from Executive’s work at the Company; or (iii) result from the use of the time, materials or facilities of the Company and its affiliates. All Inventions will be the Company’s property rather than Executive’s. Should the Company request it, Executive agrees to sign any document that the Company may reasonably require to establish ownership in any Invention.

(c)Cooperation With Regard to Litigation.  Executive agrees to cooperate with the Company, during the Term and thereafter (including following Executive’s termination of employment for any reason), by making herself available to testify on behalf of the Company or any subsidiary or affiliate of the Company, in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any subsidiary or affiliate of the Company, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company, or any subsidiary or affiliate of the Company, as requested. The Company agrees to reimburse the Executive, on an after-tax basis, for all expenses actually incurred in connection with her provision of testimony or assistance and will pay the Executive a mutually agreed upon per diem allowance.

(d)Non-Disparagement.  Neither the Company nor the Executive shall, at any time during the Term and thereafter, make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Executive or the Company or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall preclude the Company or the Executive from making truthful statements that are required by applicable law, regulation or legal process.

(e)Release of Employment Claims.  Executive agrees, as a condition to receipt of any termination payments and benefits provided for in Sections 6 and 7 herein (other than Compensation Accrued at Termination), that she will execute a general release agreement, in substantially the form set forth in Attachment A to this Agreement, releasing any and all claims arising out of Executive’s employment other than enforcement of this Agreement and rights to indemnification under any agreement, law, Company organizational document or policy, or otherwise.

(f)Forfeiture of Outstanding Options.  The provisions of Sections 6 and 7 notwithstanding, if Executive willfully and materially fails to substantially comply with any restrictive covenant under this Section 10 or willfully and materially fails to substantially comply with any material obligation under this Agreement, all options to purchase Common Stock granted by the Company and then held by Executive or a transferee of Executive shall be immediately forfeited and thereupon such options shall be cancelled. Notwithstanding the foregoing, Executive shall not forfeit any option unless and until there shall have been delivered to him, within six months after the Board (i) had knowledge of conduct or an event allegedly constituting grounds for such forfeiture and (ii) had reason to believe that such conduct or event

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could be grounds for such forfeiture, a copy of a resolution duly adopted by a majority affirmative vote of the membership of the Board (excluding Executive) at a meeting of the Board called and held for such purpose (after giving Executive reasonable notice specifying the nature of the grounds for such forfeiture and not less than 30 days to correct the acts or omissions complained of, if correctable, and affording Executive the opportunity, together with her counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, Executive has engaged and continues to engage in conduct set forth in this Section 10(f) which constitutes grounds for forfeiture of Executive’s options; provided, however, that if any option is exercised after delivery of such notice and the Board subsequently makes the determination described in this sentence, Executive shall be required to pay to the Company an amount equal to the difference between the aggregate value of the shares acquired upon such exercise at the date of the Board determination and the aggregate exercise price paid by Executive. Any such forfeiture shall apply to such options notwithstanding any term or provision of any option agreement. In addition, all options granted to Executive and gains resulting from the exercise of such options, shall be subject to forfeiture in accordance with the Company’s standard policies relating to such forfeitures and clawbacks, as such policies are in effect at the time of grant of such options.

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

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

11.Governing Law; Disputes; Arbitration.

(a)Governing Law.  Anything in the EXPP to the contrary notwithstanding, this Agreement and the rights and obligations of the Company and Executive under the EXPP are governed by and are to be construed, administered, and enforced in accordance with the laws of the State of Connecticut, without regard to conflicts of law principles, except insofar as federal laws and regulations and the Delaware General Corporation Law may be applicable. If under the governing law, any portion of this Agreement or the EXPP is at any time deemed to be in conflict with any applicable statute, rule, regulation, ordinance, or other principle of law, such portion shall be deemed to be modified or altered to the extent necessary to conform thereto or, if that is not possible, to be omitted therefrom. The invalidity of any such portion shall not affect the force, effect, and validity of the remaining portion thereof. If any court determines that any provision of Section 10 of this Agreement is unenforceable because of the duration or geographic scope of such provision, it is the parties’ intent that such court shall have the power to modify the duration or geographic scope of such provision, as the case may be, to the extent necessary to render the provision enforceable and, in its modified form, such provision shall be enforced.

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(b)Reimbursement of Expenses in Enforcing Rights.  Upon submission of invoices, the Company shall promptly pay or reimburse all reasonable costs and expenses (including fees and disbursements of counsel and pension experts) incurred by Executive or Executive’s surviving spouse in seeking to interpret this Agreement or enforce rights pursuant to this Agreement or in any proceeding in connection therewith brought by Executive or Executive’s surviving spouse, whether or not Executive or Executive’s surviving spouse is ultimately successful in enforcing such rights or in such proceeding; provided, however, that no reimbursement shall be owed with respect to expenses relating to any unsuccessful assertion of rights or proceeding if and to the extent that such assertion or proceeding was initiated or maintained in bad faith or was frivolous, as determined by the arbitrators in accordance with Section 11 (c) or a court having jurisdiction over the matter, in which case any amounts previously paid by the Company shall be promptly repaid.

(c)Arbitration.  Anything in the EXPP to the contrary notwithstanding, any dispute or controversy arising under or in connection with this Agreement or the EXPP shall be settled exclusively by arbitration in Fairfield, CT, by three arbitrators in accordance with the rules of the American Arbitration Association in effect at the time of submission to arbitration. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. For purposes of entering any judgment upon an award rendered by the arbitrators, the Company and Executive hereby consent to the jurisdiction of any or all of the following courts: (i) the United States District Court for the District of Connecticut, (ii) any of the courts of the State of Connecticut, or (iii) any other court having jurisdiction. The Company and Executive further agree that any service of process or notice requirements in any such proceeding shall be satisfied if the rules of such court relating thereto have been substantially satisfied. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to such jurisdiction and any defense of inconvenient forum. The Company and Executive hereby agree that a judgment upon an award rendered by the arbitrators may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Subject to Section 11(b) of this Agreement, the Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 11. Notwithstanding any provision in this Section 11, Executive shall be entitled to seek specific performance of Executive’s right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement.

(d)Interest on Unpaid Amounts.  Any amount which has become payable pursuant to the terms of this Agreement or any decision by arbitrators or judgment by a court of law pursuant to this Section 11 but which has not been timely paid shall bear interest at the prime rate in effect at the time such amount first becomes payable, as quoted by the Company’s principal bank.

12.Miscellaneous.

(a)Integration.  This Agreement cancels and supersedes any and all prior employment agreements and understandings between the parties hereto with respect to the employment of Executive by the Company, any parent or predecessor company, and the Company’s subsidiaries during the Term, except for contracts relating to compensation under executive compensation and employee benefit plans of the Company and its subsidiaries. The foregoing notwithstanding, in the event of any conflict or ambiguity between this Agreement and

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the Employee Protection Plan as applicable to Executive or the Change-in-Control Agreement executed by Executive and the Company or the EXPP, the provisions of this Agreement shall govern except that Executive shall remain entitled to any right or benefit under the Employee Protection Plan or the Change-in-Control Agreement or the EXPP for so long as such Plan or Agreement remains in effect, if and to the extent that such right or benefit is more favorable to Executive than a corresponding provision of this Agreement; but no payment or benefit under the Employee Protection Plan or Change-in-Control Agreement or the EXPP shall be made or extended which duplicates any payment or benefit hereunder. If and to the extent that this Agreement may provide enhanced benefits to Executive under the EXPP which benefits are not explicitly provided for under the EXPP, the EXPP shall be deemed amended by this Agreement (but only insofar as it pertains to Executive). This Agreement constitutes the entire agreement among the parties with respect to the matters herein provided, and no modification or waiver of any provision hereof shall be effective unless in writing and signed by the parties hereto. Executive shall not be entitled to any payment or benefit under this Agreement which duplicates a payment or benefit received or receivable by Executive under any prior agreements and understandings or under any benefit or compensation plan of the Company which are in effect.

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

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

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

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

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If to the Company:

IMS HEALTH INCORPORATED
1499 Post Road
Fairfield, CT 06824
Attention: Chief Executive Officer

If to Executive:

Nancy E. Cooper
Senior Vice President and Chief Financial Officer
IMS Health Incorporated
1499 Post Road
Fairfield, CT 06824

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

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

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

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

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

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

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

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

13.Indemnification.

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

IN WITNESS WHEREOF, Executive has hereunto set her hand and the Company has caused this instrument to be duly executed as of the date of this Agreement set forth in Section 1 hereof.

IMS HEALTH INCORPORATED
By:	/s/ David M. Thomas
	Name: David M. Thomas
	Title: Chairman of the Board and
	Chief Executive Officer
/s/ Nancy E. Cooper
Nancy E. Cooper

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EX-10.5

Exhibit 10.5

Employment Agreement for Robert H. Steinfeld

As Amended and Restated as of February 11, 2003

IMS HEALTH INCORPORATED

Employment Agreement for Robert H. Steinfeld

As Amended and Restated as of February 11, 2003

1.	Employment
2.	Term
3.	Offices and Duties
	(a)	Generally.
	(b)	Place of Employment
4.	Salary and Annual Incentive Compensation
	(a)	Base Salary
	(b)	Annual Incentive Compensation
5.	Long Term Compensation, Including Stock Options, Benefits, Deferred Compensation, and Expense Reimbursement
	(a)	Executive Compensation Plans
	(b)	Employee and Executive Benefit Plans
	(c)	Acceleration of Awards Upon a Change in Control
	(d)	Deferral of Compensation
	(e)	Company Registration Obligations
	(f)	Reimbursement of Expenses
6.	Termination Due to Retirement, Death or Disability
	(a)	Retirement
	(b)	Death
	(c)	Disability
	(d)	Other Terms of Payment Following Retirement, Death or Disability
7.	Termination of Employment For Reasons Other Than Retirement, Death, or Disability
	(a)	Termination by the Company for Cause
	(b)	Termination by Executive Other Than For Good Reason
	(c)	Termination by the Company Without Cause Prior to or More than Two Years After a Change in Control
	(d)	Termination by Executive for Good Reason Prior to or More than Two Years After a Change in Control
	(e)	Termination by the Company Without Cause Within Two Years After a Change in Control

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	(f)	Termination by Executive for Good Reason Within Two Years After a Change in Control
	(g)	Other Terms Relating to Certain Terminations of Employment
8.	Definitions Relating to Termination Events
	(a)	“Cause”
	(b)	“Change in Control”
	(c)	“Compensation Accrued at Termination”
	(d)	“Disability”
	(e)	“Good Reason
	(f)	“Potential Change in Control”
9.	Rabbi Trust Obligation Upon Potential Change in Control; Excise Tax Related Provisions
	(a)	Rabbi Trust Funded Upon Potential Change in Control
	(b)	Gross-up If Excise Tax Would Apply
10.	Non-Competition and Non-Disclosure; Executive Cooperation; Non-Disparagement; Certain Forfeitures
	(a)	Non-Competition
	(b)	Non-Disclosure; Ownership of Work
	(c)	Cooperation With Regard to Litigation
	(d)	Non-Disparagement
	(e)	Release of Employment Claims
	(f)	Forfeiture of Outstanding Options
	(g)	Forfeiture of Certain Bonuses and Profits
	(h)	Survival
11.	Governing Law; Disputes; Arbitration
	(a)	Governing Law
	(b)	Reimbursement of Expenses in Enforcing Rights
	(c)	Arbitration
	(d)	Interest on Unpaid Amounts
12.	Miscellaneous
	(a)	Integration
	(b)	Successors; Transferability
	(c)	Beneficiaries
	(d)	Notices
	(e)	Reformation

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	(f)	Headings
	(g)	No General Waivers
	(h)	No Obligation To Mitigate
	(i)	Offsets; Withholding
	(j)	Successors and Assigns
	(k)	Counterparts
13.	Indemnification
Attachment A

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IMS HEALTH INCORPORATED

Employment Agreement for Robert H. Steinfeld

As Amended and Restated as of February 11, 2003

THIS EMPLOYMENT AGREEMENT by and between IMS HEALTH INCORPORATED, a Delaware corporation (the “Company”), and Robert H. Steinfeld (“Executive”) shall become effective as of November 14, 2000 (the “Effective Date”), and the amendment and restatement hereof made this 22nd day of May, 2003 shall become effective as of February 11, 2003 (the “Amendment Date”).

WITNESSETH

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

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

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

1.Employment.

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

2.Term.

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

3.Offices and Duties.

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

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

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

4.Salary and Annual Incentive Compensation.

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

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

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

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

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

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

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

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

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

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

(iv)Executive will be entitled to benefits under the IMS Health Incorporated Executive Pension Plan (“EXPP”), with the effective date of Executive’s participation therein to be February 11, 2003.  Notwithstanding anything to the contrary in this Agreement or the EXPP, Executive’s years of service with the Company (and its predecessor Cognizant Corporation) prior to the date that his participation in the EXPP commenced shall be included as Service for purposes of participation, vesting and accrual of benefits under the EXPP subject to the special rules contained in this Section 5(b)(iv).  For the period from February 11, 2003 through January 31, 2006, Executive

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shall be deemed a participant in both the EXPP and the IMS Health Incorporated U.S. Executive Retirement Plan (the “USERP”), with Service  apportioned between the two Plans; for this purpose, Executive shall be credited with additional Service for purposes of the EXPP (the “Additional Service Credits”), including without limitation, Sections 3.1(b)(i) and 3.2(b)(i) of the EXPP, with a corresponding reduction in Service for purposes of Sections 3.1(b)(i) and 3.2(b)(i) of the USERP, as follows:

Date	Years of Service Under USERP	Years of Service Under EXPP	Total Years of Service
Feb. 11, 2003	6.0833	0	6.0833
Jan. 31, 2004	4	3	7
Jan. 31, 2005	2	6	8
Jan. 31, 2006	0	9	9

From and after January 31, 2006, such Additional Service Credits shall remain credited under the EXPP, and Executive’s  benefits shall be determined solely under the EXPP, with Executive’s further Service accruing in accordance with the terms of the EXPP.  The provisions governing the accrual of  Service under the EXPP set forth herein shall take precedence over any  inconsistent provision of the EXPP, including without limitation Section 1.32(e) of the EXPP (providing phased-in credit for pre-participation Service).  Years of Service credited in accordance with the above table shall be determined in accordance with the rules generally applicable to crediting Service under the EXPP, including  the rules which provide that Service shall be computed in 1/12ths of a year, with a full month being granted for each completed or partial calendar month.  The foregoing notwithstanding, in the event that Executive shall become eligible for Retirement Benefits or Deferred Vested Benefits under the USERP and/or the EXPP, the aggregate benefit payable to Executive under the USERP and/or the EXPP shall not be less than the Retirement Benefit or Deferred Vested Benefit, as the case may be, that would have been payable to Executive under the USERP had Executive continued to participate in the USERP from February 11, 2003 until the date of his retirement or termination of employment.  Moreover, in the event that Executive’s Surviving Spouse shall become eligible for death benefits under the USERP and/or the EXPP prior to the commencement of benefit payments to Executive, the Surviving Spouse’s Benefit shall not be less than the Surviving Spouse’s Benefit that would have been payable under the USERP had Executive continued to participate in the USERP from February 11, 2003 until the date of Executive’s death.  Furthermore, for purposes of calculating Retirement Benefits, Deferred Vested Benefits or Surviving Spouse’s Benefits payable under the USERP and/or the EXPP, Executive’s Average Final Compensation shall not be less than $465,000.  Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the EXPP (or if applicable, the USERP).

(c)Acceleration of Awards Upon a Change in Control.In the event of a Change in Control (as defined in Section 8(b)), all outstanding stock options, restricted stock, and other equity-based awards then held by Executive shall become vested and exercisable.

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

(e)Company Registration Obligations.  The Company will use its best efforts to file with the Securities and Exchange Commission and thereafter maintain the effectiveness of one or more registration

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statements registering under the Securities Act of 1933, as amended (the “1933 Act”), the offer and sale of shares by the Company to Executive pursuant to stock options or other equity-based awards granted to Executive under Company plans or otherwise or, if shares are acquired by Executive in a transaction not involving an offer or sale to Executive but resulting in the acquired shares being “restricted securities” for purposes of the 1933 Act, registering the reoffer and resale of such shares by Executive.

(f)Reimbursement of Expenses.  The Company will promptly reimburse Executive for all reasonable business expenses and disbursements incurred by Executive in the performance of Executive’s duties during the Term in accordance with the Company’s reimbursement policies as in effect from time to time.

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

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

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

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

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

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

(v)If Executive shall not be eligible upon Retirement for retiree coverage under the Company’s Health Plan (the “Health Plan”) and Executive elects in accordance with the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”) continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. Prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the earliest of:  (1) Executive’s eligibility for medical coverage under the Company’s Health Plan, as a retiree or active employee, (2) Executive’s eligibility for medical coverage under a plan maintained by a subsequent employer or other entity to which Executive

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provides services, (3) Executive’s eligibility for Medicare, or (4) Executive’s attainment of age 65. In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in his sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of  the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. For purposes of this Section 6(a)(v), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

(i)Executive’s Compensation Accrued at Termination;

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

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

(iv)All restricted stock and deferred stock awards, including outstanding PERS awards, all other long-term incentive awards, and all deferral arrangements under Section 5(d), shall be governed by the plans and programs under which the awards were granted or governing the deferral, and all rights under the EXPP, USERP and any other benefit plan shall be governed by such plan subject to, in the case of the EXPP and USERP, Section 5(b) hereof including without limitation that Additional Service Credits as provided in Section 5(b)(iv) of this Agreement that were credited as of Executive’s death shall be fully reflected and provided additionally that the surviving spouse benefit under the USERP and/or the EXPP shall be  in an amount equal to 50% of the benefit that would have been payable under Section 3.1 or 3.2 of the EXPP upon Executive’s attainment of age 65 or Section 3.1 or 3.2 of the USERP upon Executive’s attainment of age 55 (whichever is applicable or in the appropriate combination thereof) without actuarial reduction or any other

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discount except as provided in Section 5.5 of the EXPP and the USERP with respect to a reduction on account of a surviving spouse who is more than ten years younger than Executive, and payments to Executive’s surviving spouse shall commence on the later of the date of Executive’s death or the date on which Executive would have attained age 55; and

(v)If Executive’s surviving spouse (and eligible dependents, if any) elects continued coverage under the Company’s Health Plan in accordance with the applicable provisions of  COBRA, the Company shall pay to Executive’s surviving spouse on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage.  No further benefits shall be paid under this Section 6(b)(v) after the expiration of the maximum COBRA continuation period available to Executive’s surviving spouse and eligible dependents, if any.

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

(i)Executive’s Compensation Accrued at Termination;

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

(iii)Stock options held by Executive at termination shall be governed by the plans and programs and the agreements and other documents pursuant to which such options were granted;

(iv)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

(v)Disability benefits shall be payable in accordance with the Company’s plans, programs and policies, including the EXPP and USERP, provided; however, that there shall be no duplication of disability benefits provided under the EXPP and USERP and provided further that in the event that disability benefits payable under the EXPP or USERP shall cease, Executive’s retirement benefits under the USERP and/or EXPP shall fully reflect the Additional Service Credits that were credited as of Executive’s retirement as  provided in Section 5(b)(iv) of this Agreement  and  the payment of such retirement benefits under the USERP and/or EXPP  shall commence at the later of the cessation of Executive’s disability benefits or Executive’s attainment of age 55 in an amount equal to 100% of the benefit under Sections 3.1 or 3.2 of  the EXPP or Sections 3.1 or 3.2 of the USERP (whichever is applicable or in the appropriate combination thereof) without actuarial reduction or any other discount.), and all deferral arrangements under Section 5(d) will be settled in accordance with the plans and programs governing the deferral; and

(vi)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a

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monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. Prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the earliest of:  (1) Executive’s eligibility for medical coverage under the Company’s Health Plan, as a retiree or active employee, (2) Executive’s eligibility for medical coverage under a plan maintained by a subsequent employer or other entity to which Executive provides services, (3) Executive’s eligibility for Medicare, or (4) Executive’s attainment of age 65.  In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in his sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of  the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise.  In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid for coverage under the Company’s group long-term disability policy from Executive’s termination of employment until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2)  the amount that the Company would have paid to continue Executive’s group life insurance coverage from Executive’s termination of employment until Executive’s attainment of age 65, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred.  For purposes of this Section 6(c)(vi), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

(d)Other Terms of Payment Following Retirement, Death, or Disability.  Nothing in this Section 6 shall limit the benefits payable or provided In the event Executive’s employment terminates due to Retirement, death, or Disability under the terms of plans or programs of the Company more favorable to the Executive (or his beneficiaries) than the benefits payable or provided under this Section 6 (except in the case of annual incentives in lieu of which amounts are paid hereunder), including plans and programs adopted after the date of this Agreement.  Amounts payable under this Section 6 following Executive’s termination of employment, other than those expressly payable following determination of performance for the year of termination for purposes of annual incentive compensation or otherwise expressly payable on a deferred basis, will be paid as promptly as practicable after such termination of employment.

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

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

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

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

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

(b)Termination by Executive Other Than For Good Reason.  Executive may terminate his employment hereunder voluntarily for reasons other than Good Reason (as defined in Section 8(e)) at any time upon 90 days’ written notice to the Company.  An election by Executive not to extend the Term pursuant to Section 2 hereof shall be deemed to be a termination of employment by Executive for reasons other than Good Reason at the date of expiration of the Term, unless a Change in Control (as defined in Section 8(b)) occurs prior to, and there exists Good Reason at, such date of expiration.  At the time Executive’s employment is terminated by Executive other than for Good Reason the Term will terminate, all obligations of the Company and Executive under Sections 1 through 5 of this Agreement will immediately cease, and the Company will pay Executive, and Executive will be entitled to receive, the following:

(i)Executive’s Compensation Accrued at Termination;

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

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

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

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obligations which continue after termination of employment as expressly provided herein), and the Company will pay Executive, and Executive will be entitled to receive, the following:

(i)Executive’s Compensation Accrued at Termination;

(ii)Cash in an aggregate amount equal to one times the sum of (A) Executive’s Base Salary under Section 4(a) immediately prior to termination plus (B) an amount equal to the greater of (x) the portion of Executive’s annual target incentive compensation potentially payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the year of termination or (y) the portion of Executive’s annual incentive compensation that became payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the latest year preceding the year of termination based on performance actually achieved in that latest year.  The amount determined to be payable under this Section 7(c)(ii) shall be payable in monthly installments over the 24 months following termination, without interest, except the Company may elect to accelerate payment of  the remaining balance of such amount and to pay it as a lump sum, without discount;

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

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

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

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

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than two years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the

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date of expiration of Executive’s COBRA continuation period and continue until the second anniversary of Executive’s termination of employment.  In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in his sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of  the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had he remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated  on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had he remained employed, from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred.  For purposes of this Section 7(c)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

(i)Executive’s Compensation Accrued at Termination;

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

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in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the latest year preceding the year of termination based on performance actually achieved in that latest year.  The amount determined to be payable under this Section 7(d)(ii) shall be payable in monthly installments over the 24 months following termination, without interest, except the Company may elect to accelerate payment of  the remaining balance of such amount and to pay it as a lump sum, without discount;

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

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

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

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

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than two years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the second anniversary of Executive’s termination of employment.  In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in his sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive

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theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of  the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had he remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated  on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had he remained employed, from the date of Executive’s termination of employment until the second anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred.  For purposes of this Section 7(d)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

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

(i)Executive’s Compensation Accrued at Termination;

(ii)Cash in an aggregate amount equal to three times the sum of (A) Executive’s Base Salary under Section 4(a) immediately prior to termination plus (B) an amount equal to the greater of (x) the portion of Executive’s annual target incentive compensation potentially payable in cash to

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Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the year of termination or (y) the portion of Executive’s annual incentive compensation that became payable in cash to Executive (i.e., excluding the portion payable in PERS or in other non-cash awards) for the latest year preceding the year of termination based on performance actually achieved in that latest year.  The amount determined to be payable under this Section 7(e)(ii) shall be paid by the Company not later than 15 days after Executive’s termination;

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

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

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

(vii)All rights under the EXPP and USERP shall be governed by such plan, subject to Section 5(b) hereof including without limitation that Additional Service Credits that were credited as of Executive’s termination as provided in Section 5(b)(iv) of this Agreement shall be fully reflected; provided additionally that (a) payments under the EXPP and USERP shall commence as provided in Section 3.8 of the EXPP and the USERP in an amount equal to 100% of the benefit under Section 3.1 or 3.2 of the EXPP or Section 3.1 or 3.2 of the USERP (whichever is applicable or in the appropriate combination thereof) without actuarial reduction or any other discount and (b) if such termination occurs prior to January 31, 2006, any additional years of Service credited as a result of Section 3.8 of the EXPP (governing Change in Control) shall be credited in accordance with Section 5(b)(iv) of this Agreement so that the Additional Service Credits are fully reflected in the additional years of Service credited pursuant to Section 3.8 of the EXPP; and

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than three years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the third anniversary of Executive’s termination of employment.  In the event that the Company

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determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in his sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of  the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had he remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated  on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had he remained employed, from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred.  For purposes of this Section 7(e)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

(i)Executive’s Compensation Accrued at Termination;

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

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latest year.  The amount determined to be payable under this Section 7(f)(ii) shall be paid by the Company not later than 15 days after Executive’s termination;

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

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

(v)Any performance objectives upon which the earning of performance-based restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards is conditioned shall be deemed to have been met at target level at the date of termination, and restricted stock and deferred stock awards, including outstanding PERS awards, and other long-term incentive awards (to the extent then or previously earned, in the case of performance-based awards) shall become fully vested and non-forfeitable at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;

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

(vii)All rights under the EXPP and USERP shall be governed by such plan, subject to Section 5(b) hereof including without limitation that Additional Service Credits that were credited as of Executive’s termination as provided in Section 5(b)(iv) of this Agreement shall be fully reflected; provided additionally that (a) payments under the EXPP and USERP shall commence as provided in Section 3.8 of the EXPP and the USERP in an amount equal to 100% of the benefit under Section 3.1 or 3.2 of the EXPP or Section 3.1 or 3.2 of the USERP (whichever is applicable or in the appropriate combination thereof) without actuarial reduction or any other discount and (b) if such termination occurs prior to January 31, 2006 any additional years of Service credited as a result of Section 3.8 of the EXPP (governing Change in Control) shall be credited in accordance with Section 5(b)(iv) of this Agreement so that the Additional Service Credits are fully reflected in the additional years of Service credited pursuant to Section 3.8 of the EXPP; and

(viii)If Executive elects after termination of employment continued coverage under the Health Plan in accordance with the applicable provisions of COBRA, the Company shall pay to Executive on a monthly basis during such COBRA continuation period an amount equal on an after-tax basis to the total cost of such coverage. If the maximum COBRA continuation period available to Executive shall be less than three years, prior to the expiration of the maximum COBRA continuation period available to Executive, provided that Executive theretofore shall have complied with the conditions set forth in Section 10, the Company shall make a good faith effort to obtain insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) that is substantially comparable to such COBRA continuation coverage, which insured coverage shall begin on the date of expiration of Executive’s COBRA continuation period and continue until the third anniversary of Executive’s termination of employment.  In the event that the Company determines, in its sole discretion, that it is unable to obtain such insured coverage for Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) or in the event that Executive determines, in his sole discretion, that any such insured coverage offered by the Company is not substantially comparable to such

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COBRA continuation coverage, the Company shall pay to Executive, provided that Executive shall not have become eligible for medical coverage under (1) the Company’s Health Plan, as a retiree or active employee, (2) a plan maintained by a subsequent employer or other entity to which Executive provides services, or (3) Medicare and, provided further, that Executive theretofore shall have complied with the conditions set forth in Section 10, a lump sum amount equal on an after-tax basis to the present value of  the total cost of retiree medical coverage under the Health Plan that would have been incurred by both Executive and the Company on behalf of Executive (and his spouse and eligible dependents, if any, for whom coverage had been provided during the COBRA continuation period) if Executive (and such spouse and dependents, if any) had been eligible for such retiree medical coverage from the end of Executive’s COBRA continuation period until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which such lump sum is paid.  Such lump sum amount shall be calculated by the actuary for the Health Plan and paid in cash as soon as administratively practicable following the expiration of Executive’s COBRA continuation period and shall not be subject to reduction or forfeiture by reason of any coverage for which Executive may thereafter become eligible by reason of subsequent employment or otherwise. In addition, as soon as administratively practicable following Executive’s termination of employment, provided that Executive shall have complied with the conditions set forth in Section 10, the Company shall pay to Executive a lump sum amount equal on an after-tax basis to the present value of the sum of (1) the amount that Executive would have paid, had he remained employed, for coverage under the Company’s group long-term disability policy from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated  on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred; and (2) the amount that the Company would have paid to continue Executive’s group life insurance coverage, had he remained employed, from the date of Executive’s termination of employment until the third anniversary of Executive’s termination of employment, calculated on the assumption that the cost of such coverage would remain unchanged from that in effect for the year in which Executive’s termination occurred.  For purposes of this Section 7(f)(viii), present value shall be calculated on the basis of the discount rate set forth in the EXPP for the determination of lump sum payments.

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

(g)Other Terms Relating to Certain Terminations of Employment.  Whether a termination is deemed to be at or within two years after a Change in Control for purposes of Sections 7(c), (d), (e), or (f) is determined at the date of termination, regardless of whether the Change in Control had occurred at the time a notice of termination was given.  In the event Executive’s employment terminates for any reason set forth in Section 7(b) through (f), Executive will be entitled to the benefit of any terms of plans or agreements applicable to Executive which are more favorable than those specified in this Section 7 (except in the case of annual incentives in lieu of which amounts are paid hereunder).  Amounts payable under this Section 7 following Executive’s termination of employment, other than those expressly payable on a deferred basis, will be paid as promptly as practicable after such a termination of employment, and such amounts payable under Section 7(e) or 7(f) will be paid in no event later than 15 days after Executive’s termination of employment unless not determinable within such period.

8.Definitions Relating to Termination Events.

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

(i)willful and continued failure to substantially perform his duties hereunder (other than any such failure resulting from incapacity due to physical or mental illness or Disability or any failure after the issuance of a notice of termination by Executive for Good Reason) which failure is demonstrably and materially damaging to the financial condition or reputation of the Company and/or its subsidiaries, and which failure continues more than 48 hours after a written demand for

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substantial performance is delivered to Executive by the Board, which demand specifically identifies the manner in which the Board believes that Executive has not substantially performed his duties hereunder and the demonstrable and material damage caused thereby; or

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

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

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

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

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

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

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

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

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

(i)The unpaid portion of annual base salary at the rate payable, in accordance with Section 4(a) hereof, at the date of Executive’s termination of employment, pro rated through such date of termination, payable in accordance with the Company’s regular pay schedule;

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

(iii)Reasonable business expenses and disbursements incurred by Executive prior to Executive’s termination of employment, to be reimbursed to Executive, as authorized under Section 5(f), in accordance the Company’s reimbursement policies as in effect at the date of such termination.

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

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

(i)the assignment to Executive of duties  inconsistent with Executive’s position and status as Senior Vice President and General Counsel, or an alteration,  adverse to Executive, in Executive’s position and status as Senior Vice President and General Counsel or in the nature of Executive’s duties, responsibilities, and authorities or conditions of Executive’s employment from those relating to Executive position and status as Senior Vice President and General Counsel (excluding changes in assignments permitted under Section 3 and excluding inadvertent actions which are promptly remedied); except the foregoing shall not constitute Good Reason if occurring in connection with the termination of Executive’s employment for Cause, Disability, Retirement, as a result of Executive’s death, or as a result of action by or with the consent of Executive; for purposes of this Section 8(e)(i), references to the Company (and the Board and stockholders of the Company) refer to the ultimate parent company (and its board and stockholders) succeeding the Company following an acquisition in which the corporate existence of the Company continues, in accordance with Section 12(b);

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

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

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

(v)the failure by the Company to continue in effect any material compensation or benefit plan in which Executive participated immediately prior to a Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amounts of compensation or benefits provided and the level of Executive’s participation relative to other participants, as existed at the time of the Change in Control;

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

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

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

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

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

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

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

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

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

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

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

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and local income tax and Excise Tax upon the payment provided for by Section 9(b)(i), shall be equal to the Total Payments.

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

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

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

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

(ii)For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Executive’s employment, Executive shall repay to the Company within ten days after the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross-Up Payment being repaid by Executive if such repayment results in a reduction in Excise Tax and/or federal and state and local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.  In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of Executive’s employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional gross-up payment in respect of such excess within ten days after the time that the amount of such excess is finally determined.

(iii)The payments provided for in this Section 9(b) shall be made not later than the fifteenth day following the date of Executive’s termination of employment; provided, however, that if the amount of such payments cannot be finally determined on or before such day, the Company shall pay to Executive on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth day after the date of Executive’s termination of employment. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the

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Company to Executive, payable on the fifteenth day after the demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

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

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

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

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

(c)Cooperation With Regard to Litigation. Executive agrees to cooperate with the Company, during the Term and thereafter (including following Executive’s termination of employment for any reason), by making herself available to testify on behalf of the Company or any subsidiary or affiliate of the Company, in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any subsidiary or affiliate of the Company, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company, or any subsidiary or affiliate of the Company, as requested.  The Company agrees to reimburse the Executive, on an after-tax basis, for all expenses actually incurred in connection with her provision of testimony or assistance.

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

(e)Release of Employment Claims.  Executive agrees, as a condition to receipt of any termination payments and benefits provided for in Sections 6 and 7 herein (other than Compensation Accrued at Termination), that he will execute a general release agreement, in substantially the form set forth in Attachment A to this Agreement, releasing any and all claims arising out of Executive’s employment other than enforcement of this Agreement and rights to indemnification under any agreement, law, Company organizational document or policy, or otherwise.

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

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

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

11.Governing Law; Disputes; Arbitration.

(a)Governing Law.  Anything in the USERP or the EXPP to the contrary notwithstanding, this Agreement and the rights and obligations of the Company and Executive under the USERP and the EXPP are governed by and are to be construed, administered, and enforced in accordance with the laws of the State of Connecticut, without regard to conflicts of law principles, except insofar as federal laws and regulations and the Delaware General Corporation Law may be applicable. If under the governing law, any portion of this Agreement or the USERP or the EXPP is at any time deemed to be in conflict with any applicable statute, rule, regulation, ordinance, or other principle of law, such portion shall be deemed to be modified or altered to the extent necessary to conform thereto or, if that is not possible, to be omitted therefrom . The invalidity of any such portion shall not

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affect the force, effect, and validity of the remaining portion thereof. If any court determines that any provision of Section 10 of this Agreement is unenforceable because of the duration or geographic scope of such provision, it is the parties’ intent that such court shall have the power to modify the duration or geographic scope of such provision, as the case may be, to the extent necessary to render the provision enforceable and, in its modified form, such provision shall be enforced.

(b)Reimbursement of Expenses in Enforcing Rights.  Upon submission of invoices, the Company shall promptly pay or reimburse all reasonable costs and expenses (including fees and disbursements of counsel and pension experts) incurred by Executive or Executive’s surviving spouse in seeking to interpret this Agreement or enforce rights pursuant to this Agreement or in any proceeding in connection therewith brought by Executive or Executive’s surviving spouse, whether or not Executive or Executive’s surviving spouse is ultimately successful in enforcing such rights or in such proceeding; provided, however, that no reimbursement shall be owed with respect to expenses relating to any unsuccessful assertion of rights or proceeding if and to the extent that such assertion or proceeding  was initiated or maintained in bad faith or was frivolous, as determined by the arbitrators in accordance with Section 11(c) or a court having jurisdiction over the matter, in which case any amounts previously paid by the Company shall be promptly repaid.

(c)Arbitration.  Anything in the USERP or the EXPP to the contrary notwithstanding, any dispute or controversy arising under or in connection with this Agreement or the USERP or the EXPP shall be settled exclusively by arbitration in  Fairfield, CT, by three arbitrators in accordance with the rules of the American Arbitration Association in effect at the time of submission to arbitration. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. For purposes of entering any judgment upon an award rendered by the arbitrators, the Company and Executive hereby consent to the jurisdiction of any or all of the following courts: (i) the United States District Court for the District of Connecticut, (ii) any of the courts of the State of Connecticut, or (iii) any other court having jurisdiction. The Company and Executive further agree that any service of process or notice requirements in any such proceeding shall be satisfied if the rules of such court relating thereto have been substantially satisfied. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to such jurisdiction and any defense of inconvenient forum. The Company and Executive hereby agree that a judgment upon an award rendered by the arbitrators may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Subject to Section 11(b) of this Agreement, the Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 11. Notwithstanding any provision in this Section 11, Executive shall be entitled to seek specific performance of Executive’s right to be paid during the pendency of any dispute or controversy arising under or in connection with this Agreement.

(d)Interest on Unpaid Amounts.  Any amount which has become payable pursuant to the terms of this Agreement or any decision by arbitrators or judgment by a court of law pursuant to this Section 11 but which has not been timely paid shall bear interest at the prime rate in effect at the time such amount first becomes payable, as quoted by the Company’s principal bank.

12.Miscellaneous.

(a)Integration.  This Agreement cancels and supersedes any and all prior employment agreements and understandings between the parties hereto with respect to the employment of Executive by the Company, any parent or predecessor company, and the Company’s subsidiaries during the Term, except for contracts relating to compensation under executive compensation and employee benefit plans of the Company and its subsidiaries.  The foregoing notwithstanding, in the event of any conflict or ambiguity between this Agreement and the Employee Protection Plan as applicable to Executive or the Change-in-Control Agreement executed by Executive and the Company or the EXPP or USERP, the provisions of this Agreement shall govern except that Executive shall remain entitled to any right or benefit under the Employee Protection Plan or the Change-in-Control Agreement or the EXPP or USERP for so long as such Plan or Agreement remains in effect, if and to the extent that such right or benefit is more favorable to Executive than a corresponding provision of this Agreement; but no payment or benefit under the Employee Protection Plan or Change-in-Control Agreement or the EXPP or USERP shall be made or extended which duplicates any payment or benefit hereunder.  If and to the extent that this Agreement may provide enhanced benefits to Executive under the EXPP or USERP which benefits are not explicitly provided for under the EXPP or USERP, the EXPP or USERP shall be deemed amended by this Agreement (but only insofar as it pertains to Executive).  This Agreement constitutes the entire agreement among the parties with respect to the matters herein provided, and no modification or waiver of any provision hereof shall be effective unless in writing and signed by

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the parties hereto. Executive shall not be entitled to any payment or benefit under this Agreement which duplicates a payment or benefit received or receivable by Executive under any prior agreements and understandings or under any benefit or compensation plan of the Company which are in effect.

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

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

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

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

If to the Company:

IMS HEALTH INCORPORATED
1499 Post Road
Fairfield, CT  06824
Attention: Chief Executive Officer

If to Executive:

Mr. Robert H. Steinfeld

Senior Vice President and General Counsel
IMS Health Incorporated
1499 Post Road
Fairfield, CT  06824

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

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

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

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

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of such provisions. No such waiver shall be effective unless in writing and signed by the party against whom such waiver is sought to be enforced.

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

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

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

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

13.Indemnification.

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

IN WITNESS WHEREOF, Executive has hereunto set his hand and the Company has caused this instrument to be duly executed as of the date of this Agreement set forth in Section 1 hereof.

IMS HEALTH INCORPORATED
By:	/s/ David M. Thomas
	Name: David M. Thomas
	Title: Chairman of the Board and Chief Executive Officer
/s/ Robert H. Steinfeld
Robert H. Steinfeld

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EX-31.1

Exhibit 31.1

CEO CERTIFICATION

I, David M. Thomas, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of IMS Health Incorporated (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 5, 2003
By:	/s/David M. Thomas
	David M. Thomas
	Chairman and Chief Executive Officer

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EX-31.2

Exhibit 31.2

CFO CERTIFICATION

I, Nancy E. Cooper, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of IMS Health Incorporated (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 5, 2003
By:	/s/ Nancy E. Cooper
	Nancy E. Cooper Senior Vice President and Chief Financial Officer

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EX-32.1

Exhibit 32.1

Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned does hereby certify that:

The Form 10-Q for the quarter ended June 30, 2003 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ David M. Thomas
Date: August 5, 2003	David M. Thomas
	Chairman and Chief Executive Officer

	/s/ Nancy E. Cooper
Date: August 5, 2003	Nancy E. Cooper
	Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to IMS Health Incorporated and will be retained by IMS Health Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

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