Exhibit 10.1

 

Closing Agreement On Final Determination

Covering Specific Matters

 

Under section 7121 of the Internal Revenue Code, IMS Health Incorporated ; EIN:
06-1506026 of 1499 Post Road, Fairfield, CT 06824, on behalf of itself and as
agent for its Subsidiaries, and the Commissioner of Internal Revenue make the
following closing agreement:

 

This Closing Agreement contains the complete agreement of the parties.

 

A.            WHEREAS, for taxable years ending December 31, 1998, 1999, 2000,
2001, 2002, & 2003 IMS Health Incorporated, the entity referred to in the
caption above (“Taxpayer”), was the common parent of an affiliated group of
domestic corporations within the meaning of I.R.C. section 1504(a) that joined
in the filing of consolidated federal income tax returns (“Consolidated
Returns”),

 

B.            WHEREAS, Taxpayer leased certain intangible software and database
assets from IMS Health Licensing Associates, L.L.C., f/k/a IMS Health Licensing
Associates, L.P., f/k/a Cognizant Licensing Associates, L.P. (the
“Partnership”),

 

C.            WHEREAS, Taxpayer deducted royalty payments to the Partnership on
its U.S. Consolidated Form 1120 as follows:

 

Year

 

Amount

 

December 31, 1998

 

$

38,640,000

 

December 31, 1999

 

$

77,280,000

 

December 31, 2000

 

$

90,804,000

 

December 31, 2001

 

$

104,328,000

 

December 31, 2002

 

$

104,328,000

 

December 31, 2003

 

$

111,026,000

 

 

D.            WHEREAS, a dispute has arisen between the Taxpayer and the
Commissioner of Internal Revenue regarding the allowable amounts of royalty
expense in taxable years ending December 31, 1998 through December 31, 2003,

 

E.             WHEREAS, Taxpayer and the Commissioner of Internal Revenue desire
to resolve this dispute with finality under the terms set forth in this
agreement (the “Closing Agreement”) for the taxable years ending December 31,
1998 through December 31, 2003 and December 31, 2004 through December 31, 2013.

 

NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX PURPOSES THAT:

 

1.               The amount of royalty expense allowable on the Taxpayer’s U.S.
Consolidated Form 1120 for taxable years ending December 31, 1998 through
December 31, 2003 is:

 

Year

 

Amount

 

December 31, 1998

 

$

35,228,088

 

December 31, 1999

 

$

70,456,176

 

December 31, 2000

 

$

82,786,007

 

December 31, 2001

 

$

95,115,838

 

December 31, 2002

 

$

95,115,838

 

December 31, 2003

 

$

101,222,404

 

 

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2.               For each taxable year ending December 31, 2004 through December
31, 2013, the Taxpayer will be entitled to a deduction in an amount equal to the
total amount of royalties paid to the Partnership in that taxable year, reduced
by $10,395,029. Notwithstanding the preceding sentence, the Commissioner of
Internal Revenue can audit the amount of royalties paid during such period
solely under the last sentence of section 482 of the Internal Revenue Code and
can make correlative adjustments.

 

3.               No ordinary or capital loss will be recognized by the Taxpayer
on the sale, transfer, distribution, liquidation, or disposition of its
interest, in whole or in part, in the Partnership.

 

4.               Taxpayer will not claim any net loss realized by the
Partnership on the sale, transfer, distribution, liquidation, or disposition by
the Partnership of assets contributed to it. Taxpayer will not redistribute its
allocable share of royalty income outside the affiliated group.

 

5.               Taxpayer is not subject to any penalty, including penalties
under section 6662 of the Internal Revenue Code, in connection with the matters
covered by this Closing Agreement.

 

6.               The resolution of the Taxpayer’s participation in the
Partnership for the taxable years ending December 31, 2004 through December 31,
2013, as reflected in this Closing Agreement, does not constitute an examination
of the Taxpayer’s books and records for purposes of I.R.C. § 7605.

 

7.               This agreement is final and conclusive except:

 

(1)       the matter it relates to may be reopened in the event of fraud,
malfeasance, or misrepresentation of material fact;

 

(2)       it is subject to the Internal Revenue Code sections that expressly
provide that effect be given to their provisions (including any stated exception
for Code section 7121) notwithstanding any other law or rule of law; and

 

(3)       if it relates to a tax period ending after the date of this agreement,
it is subject to any law enacted after the agreement date that applies to that
tax period.

 

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By signing, the above parties certify that they have read and agreed to the
terms of this document.

 

 

Taxpayer (other than individual)

 IMS Health Incorporated

 

 

 

 

By

/s/ Robert H. Steinfeld

 

Date Signed

March 14, 2006

 

 

 

 Robert H. Steinfeld

 

 

 

 

 

Title

 Senior Vice President and General Counsel

 

 

 

 

 

Commissioner of Internal Revenue

 

 

 

 

By

/s/ Christine C. Haveles

 

Date Signed

March 15, 2006

 

 

 

 Christine C. Haveles

 

 

 

 

 

Title

 Appeals Team Case Leader

 

 

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