Exhibit 10.7


 


1998 IMS
HEALTH INCORPORATED


 


EMPLOYEES’
STOCK INCENTIVE PLAN


 


(As amended
and restated effective October 20, 2008)


 


1.    Purpose
of the Plan


 


The purpose of the Plan is
to aid the Company and its Subsidiaries in securing and retaining employees of
outstanding ability and to motivate such employees to exert their best efforts
on behalf of the Company and its Subsidiaries by providing incentives through
the granting of Awards. The Company expects that it will benefit from the added
interest which such employees will have in the welfare of the Company as a
result of their proprietary interest in the Company’s success.


 


2.    Definitions


 


The following capitalized
terms used in the Plan have the respective meanings set forth in this Section:


 


(a) Act:    The Securities
Exchange Act of 1934, as amended, or any successor thereto.


 


(b) Annual Limit:    The
limitation on the amount of certain Awards intended to qualify as “performance-based
compensation” that may be granted to a given Participant each year.


 


(c) Award:    An Option,
Stock Appreciation Right, Other Stock-Based Award or cash award granted
pursuant to the Plan.


 


(d) Beneficial Owner:    As
such term is defined in Rule 13d-3 under the Act (or any successor rule thereto).


 


(e) Board:    The Board of
Directors of the Company.


 


(f) Change in
Control:    The occurrence of any of the following events
after Effective Date:


 


(i)           any Person (other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
becomes the Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company’s
then-outstanding securities;


 


(ii)          during any period of twenty-four months (not including any period prior
to the Effective Date), individuals who at the beginning of such period constitute
the Board, and any new director (other than (A) a director nominated by a
Person who has entered into an agreement with the Company to effect a
transaction described in Sections 2(f) (i), (iii) or (iv) of the
Plan, (B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a director nominated
by any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company’s securities) whose election by the Board or nomination for
election by the Company’s shareholders 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 shareholders 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 662/3% 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 shareholders 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 determines that a Change in Control shall be deemed to have
occurred for purposes of the Plan, provided that the Board may impose
limitations on the effects of a Change in Control on any Award or otherwise if
the Change in Control has occurred under this Section 2(f)(v) and not
under other subsections of this Section 2(f).


 


(g) Code:    The Internal
Revenue Code of 1986, as amended, or any successor thereto.


 


(h) Committee:    The
Compensation and Benefits Committee of the Board.


 


(i) Company:    IMS Health
Incorporated, a Delaware corporation.


 


(j) Disability:    Inability
of a Participant to perform the services for the Company and its Subsidiaries
required by his or her employment with the Company due to any medically
determinable physical and/or mental incapacity or disability which is
permanent. The determination whether a Participant has suffered a Disability
shall be made by the Committee based upon such evidence as it deems necessary
and appropriate. A Participant shall not be considered disabled unless he or
she furnishes such medical or other evidence of the existence of the Disability
as the Committee, in its sole discretion, may require.


 


(k) Effective Date:    The
date on which the Plan takes effect, as defined pursuant to Section 19 of
the Plan.


 


(l) Fair Market
Value:    With respect to Shares, unless otherwise
determined by the Committee, on a given date, the arithmetic mean of the high
and low prices of the Shares as reported on such date on the Composite Tape of
the principal national securities exchange on which such Shares are listed or
admitted to trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal national securities
exchange on which such Shares are listed or admitted to trading, or, if the
Shares are not listed or admitted on a national securities exchange, the
arithmetic mean of the per Share closing bid price and per Share closing asked
price on such date as quoted on the Nasdaq System (or such market in which such
prices are regularly quoted), or, if there is no market on which the Shares are
regularly quoted, the Fair Market Value shall be the value established by the
Committee in good faith. If no sale of Shares shall have been reported on such
Composite Tape or such national securities exchange on such date or quoted on
the Nasdaq System on such date, then the immediately preceding date on which
sales of the Shares have been so reported or quoted shall be used. Fair Market
Value relating to the exercise price of any Non-409A Option or Stock
Appreciation Right shall conform to requirements under Code Section 409A.


 

















 


(m) 409A Awards: Awards that constitute a
deferral of compensation subject to Code Section 409A and regulations
thereunder. “Non-409A Awards” means Awards other than 409A Awards (including
Awards exempt under Treasury Regulation § 1.409A-1(b)(4) and any successor
regulation, and Awards that vested before 2005 and which therefore are “grandfathered”
under Section 409A). Although the Committee retains authority under the
Plan to grant Options and Stock Appreciation Rights and Restricted Stock on
terms that will qualify those Awards as 409A Awards, Options and Stock
Appreciation Rights and Restricted Stock are intended to be Non-409A Awards
(with such Options and Stock Appreciation Rights referred to herein as “Non-409A
Options” and “Non-409A Stock Appreciation Rights”) unless otherwise expressly
specified by the Committee.


 


(n) LSAR:    A limited
stock appreciation right granted pursuant to Section 8(d) of the
Plan.


 


(o) Other Stock-Based Awards: Awards granted
pursuant to Section 9 of the Plan.


 


(p) Option:    A stock
option granted pursuant to Section 7 of the Plan.


 


(q) Option Price:    The
purchase price per Share of an Option, as determined pursuant to Section 7(a) of
the Plan.


 


(r) Participant:    An
individual who is selected by the Committee to participate in the Plan pursuant
to Section 5 of the Plan.


 


(s) Performance-Based
Awards:    Certain Other Stock-Based Awards granted
pursuant to Section 9(b) of the Plan.


 


(t) Person:    As such term
is used for purposes of Section 13(d) or 14(d) of the Act (or
any successor section thereto).


 


(u) Plan:    The 1998 IMS
Health Incorporated Employees’ Stock Incentive Plan.


 


(v) Retirement:    Termination
of employment with the Company or a Subsidiary after such Participant has
attained age 65 or age 55 and five years of service with the Company. The
foregoing notwithstanding, the term “Retirement” shall mean any termination of
employment with the prior written consent of the Committee that the termination
be treated as a Retirement.


 


(w) Shares:    Shares of
common stock, par value $0.01 per Share, of the Company.


 


(x) Stock Appreciation
Right:    A stock appreciation right granted pursuant to Section 8
of the Plan.


 


(y) Subsidiary:    A
subsidiary corporation, as defined in Section 424(f) of the Code (or
any successor section thereto).


 


3.    Shares
Subject to the Plan


 


(a)   Aggregate Share
Limitations.    Subject to adjustment as
provided in Section 10(a), the total number of Shares which may be issued
and/or delivered under the Plan is 29,783,765 plus an additional 6,700,000
(effective at May 5, 2006) plus the number of Shares reserved for awards
under the IMS Health Incorporated Replacement Plan for Certain Employees
Holding Cognizant Corporation Equity-Based Awards (the “Replacement Plan”) that
are not in fact issued or delivered in connection with such awards. The Shares
delivered under the Plan may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares. Shares subject to an Award under the Plan
that is canceled, expired, forfeited, settled in cash, or otherwise terminated
without a delivery of Shares to the Participant (or a Beneficiary), including
the number of Shares withheld 


 

















 


or
surrendered in payment of any exercise or purchase price of an Award or taxes
relating to an Award or the number of Shares subject to an Award but not
delivered upon exercise of the Award, will be available for Awards under the
Plan, and Shares shall be counted as issued or delivered under the Replacement
Plan in a manner consistent with the counting of Shares under this Section 3.
In addition, in the case of any Award granted in substitution for awards of a
company or business acquired by the Company or a Subsidiary, Shares issued or
issuable in connection with such substitute Award shall not be counted against
the number of Shares reserved under the Plan, but shall be deemed to be
available under the Plan by virtue of the Company’s assumption of the plan or
arrangement of the acquired company or business. These share counting rules apply
to all limitations specified in this Section 3(a). The Committee may
determine that Awards may be outstanding that relate to more Shares than the
aggregate remaining available under the Plan so long as such Awards will not in
fact result in delivery and vesting of Shares in excess of the number then
available under the Plan.


 


(b)   Annual
Per-Person Limitation on Equity-Based Awards.    In
each calendar year during any part of which the Plan is in effect, a
Participant may be granted Awards under each of Section 7, Section 8,
and Section 9(b) relating to up to the Participant’s Annual Limit
(such Annual Limit to apply separately to each Section). A Participant’s Annual
Limit, in any year during any part of which the Participant is then eligible
under the Plan, shall equal 1,000,000 shares plus the amount of the Participant’s
unused Annual Limit as of the close of the previous year, subject to adjustment
as provided in Section 10(a). This limitation is separate from the
limitation set forth in Section 9(b).


 


4.    Administration


 


(a)   Authority of
the Committee.    The Plan shall be administered
by the Committee, which may delegate its duties and powers in whole or in part
to any subcommittee thereof consisting solely of at least two individuals who
are each “non-employee directors” within the meaning of Rule 16b-3 under
the Act (or any successor rule thereto) and “outside directors” within the
meaning of Section 162(m) of the Code (or any successor section
thereto). The Committee is authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to
make any other determinations that it deems necessary or desirable for the administration
of the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent the
Committee deems necessary or desirable. Any decision of the Committee in the
interpretation and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to, Participants
and their beneficiaries or successors). The Committee shall require payment of
any amount it may determine to be necessary to withhold for minimum statutory
withholding requirements for federal, state, local or other taxes as a result
of the exercise or settlement of an Award. Unless the Committee specifies
otherwise, the Participant may elect to pay a portion or all of such
withholding taxes by (i) delivery in shares or (ii) having shares
withheld by the Company from any shares that would have otherwise been received
by the Participant. No authority to withhold shares is conferred under the Plan
to the extent that, solely due to such authority, an Award would be accounted
for as a “variable” award under APB 25. The Committee may, in its discretion,
grant Awards either alone or in addition to, in tandem with, or in substitution
or exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company
or a subsidiary, or any other right of a Participant to receive payment from
the Company or any subsidiary. The Committee may delegate to officers of the
Company, or committees thereof, the authority to grant awards to the fullest
extent permitted by Section 157 and other applicable provisions of the
Delaware General Corporation Law (“DGCL”), subject to such rules as the
Committee may specify. In furtherance of this delegation of authority, if the
chief executive officer of the Company is a member of the Board, the chief
executive officer shall have the authority to grant Awards of up to an
aggregate of 50,000 Shares (or such other amount as may be specified by the
Committee) in each calendar year to each Participant who is 


 

















 


not
subject to the rules promulgated under Section 16 of the Act (or any
successor section thereto); provided, however, that such chief executive
officer shall notify the Committee of any such grants made pursuant to
delegated authority under this Section 4(a).


 


(b)   Restriction on
Repricing.    Without the prior approval of the
Company’s shareholders, Options granted under the Plan will not be repriced,
replaced or regranted through cancellation, or by lowering the Option Price of
a previously granted Option. For this purpose, the term “repriced” shall mean: (i) amending
the terms of an Option after it is granted to lower its exercise price; (ii) any
other action that is treated as a repricing under generally accepted accounting
principles; and (iii) canceling an Option at a time when its exercise
price is equal to or greater than the fair market value of the underlying
Stock, in exchange for another Option, Restricted Stock, or other equity,
unless the cancellation and exchange occurs in connection with a merger,
acquisition, spin-off or other similar corporate transaction. A cancellation
and exchange described in clause (iii) of the preceding sentence will
be considered a repricing regardless of whether the Option, Restricted Stock or
other equity is delivered simultaneously with the cancellation, regardless of
whether it is treated as a repricing under generally accepted accounting
principles, and regardless of whether it is voluntary on the part of the
Participant.


 


5.    Eligibility


 


Employees (but not members
of the Committee or any person who serves only as a director) of the Company
and its Subsidiaries are eligible to be granted Awards. In addition, any person
who has been offered employment by the Company or a Subsidiary is eligible to
be granted Awards, provided that no such person may receive any payment or
exercise any right relating to an Award until such person has commenced such
employment. Participants shall be selected from time to time by the Committee,
in its sole discretion, from among those eligible, and the Committee shall
determine, in its sole discretion, the number of Shares to be covered by the
Awards granted to each Participant.


 


6.    Limitations


 


(a)   In addition to any per-Participant limitation on
the number of shares to be subject to awards that may be applicable under the
1998 IMS Health Employees Stock Incentive Plan or IMS Health Incorporated 2000
Stock Incentive Plan (the “Plans”) or may otherwise be specified by this
Committee, the maximum number of options or other awards that may be granted by
all officers to whom authority has been delegated shall be 1 million shares
in any one fiscal year under each such Plan plus the number of shares
specifically approved for awards to be granted under delegated authority in
that year, as specified in separate resolutions from time to time adopted by
this Committee.


 


(b)   Only employees of the Corporation or a subsidiary
of the Corporation may be granted awards pursuant to delegated authority, and
other limitations on the persons to whom awards may be granted shall apply as
specified by the Plan or the Committee. For this purpose, however, a person
who, at the time of commencement of employment will become a director or
executive officer of the Corporation and who will be granted awards at that
time shall not be deemed to be subject to Section 16 for purposes of the
delegation of authority under Section 4(a) of the Plan.


 


(c)   Subject to the limitations specified in the Plans
and any resolutions of the Committee, the officers to whom authority to grant
awards under the Plans is delegated may determine the persons to receive the awards,
the type of awards, the number of awards, and the date of grant of the awards.
Such officers shall exercise no discretion over other terms of the awards. The
Option Price of any Option granted pursuant to delegated authority shall be
100% of Fair Market Value of the underlying shares at the date of grant, unless
otherwise determined by this Committee. No cash consideration shall be payable
for the grant or exercise of any restricted 


 

















 


stock
units or similar awards, except to the extent required by law or as otherwise
determined by this Committee. Vesting terms, forfeiture terms, expiration
dates, and other terms and conditions of any option or award granted pursuant
to delegated authority shall be as specified in the applicable Plan and the
form of option or award agreement in current use under the applicable Plan for
an employee of the same employment or compensation level, unless otherwise
determined by the Committee.


 


(d)   No grant of restricted stock may be made pursuant
to delegated authority (restricted stock units may be granted, however).


 


(e)   No officer to whom authority has been delegated
may participate in the grant of an option or award to himself or herself.


 


(f)    All other applicable limitations on
delegated authority under Section 157(c) and other provisions of the
DGCL shall apply to officers acting pursuant to delegated authority under the
Plans.


 


(g)   No Award may be granted under the Plan after the
ninth anniversary of the amendment and restatement of the Plan effective May 5,
2006, but Awards theretofore granted may extend beyond that date.


 


7.     Terms
and Conditions of Options


 


Options granted under the
Plan shall be, as determined by the Committee, non-qualified, incentive or
other stock options for federal income tax purposes, as evidenced by the
related Award agreements, and shall be subject to the foregoing and the
following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:


 


(a)   Option Price.    The
Option Price per Share shall be determined by the Committee, but shall not be
less than 100% of the Fair Market Value of the Shares on the date an Option is
granted. The Committee may require the Participant to pay a portion of the
Option Price at the time of grant of the option, with the remainder of the
Option Price payable upon exercise of the Option. Such prepayment of the Option
Price shall be non-refundable except to the extent set forth in a Participant’s
original option agreement.


 


(b)   Exercisability.    Options
granted under the Plan shall be exercisable with the exception of certain
non-US jurisdictions at such time and upon such terms and conditions as may be
determined by the Committee, but in no event shall an Option be exercisable
more than ten years after the date it is granted.


 


(c)   Exercise Of
Options.    Except as otherwise provided in the
Plan or in an Award agreement, an Option may be exercised for all, or from time
to time any part, of the Shares for which it is then exercisable. For purposes
of Section 7 of the Plan, the exercise date of an Option shall be the
later of the date a notice of exercise is received by the Company and, if
applicable, (A) the date payment is received by the Company pursuant to
clauses (i), (ii) or (iii) in the following sentence, or (B) the
date of sale by a broker of all or a portion of the Shares being purchased
pursuant to clause (iv) in the following sentence. Unless otherwise
determined by the Committee, the Option Price for the Shares as to which an Option
is exercised shall be paid to the Company in full not later than the time of
exercise at the election of the Participant (i) in cash, (ii) in
Shares having a Fair Market Value equal to the aggregate unpaid Option Price
for the Shares being purchased and satisfying such other requirements as may be
imposed by the Committee, (iii) partly in cash and partly in such Shares,
or (iv) through the delivery of irrevocable instructions to a broker to
deliver promptly to the Company an amount equal to the aggregate Option Price
for the Shares being purchased, subject to applicable law. The Award agreement 


 

















 


shall,
unless otherwise provided by the Committee, permit the Participant to elect,
subject to such terms and conditions as the Committee shall determine, to have
the number of Shares deliverable to the Participant as a result of the exercise
reduced by a number sufficient to pay the amount the Company determines to be
necessary to withhold for federal, state, local or other taxes as a result of
the exercise of the Option and, if no additional accounting expense would
result to the Company, to pay the Option Price. No Participant shall have any
rights to dividends or other rights of a shareholder with respect to Shares
subject to an Option until the Participant has given written notice of exercise
of the Option and otherwise validly exercised the Option, including provision
for payment in full for such Shares, and, if applicable, has satisfied any
other conditions imposed by the Committee pursuant to the Plan.


 


(d)   Restrictions On
Shares Issued Upon Exercise; Other Conditions.    If
and to the extent so determined by the Committee, Shares issued upon exercise
of an Option may be subject to limitations on transferability, risks of
forfeiture, deferral of delivery (subject to Section 17), or such other
terms and conditions as the Committee may impose, subject to Section 14(b).
Such terms and conditions may include required forfeiture of Options or gains
realized upon exercise thereof, for a specified period after exercise, in the
event the Participant fails to comply with conditions relating to
non-competition, non-disclosure, non-solicitation or non-interference with
employees, suppliers, or customers, and non-disparagement and other conditions
specified by the Committee.


 


(e)   Exercisability
Upon Termination of Employment by Death or Disability.    If
a Participant’s employment with the Company and its Subsidiaries terminates by
reason of death or disability after the date of grant of an Option, (i) the
unexercised portion of such Option shall immediately vest in full (i.e., become
non-forfeitable) and (ii) such portion may thereafter be exercised during
the shorter of (A) the remaining stated term of the Option or (B) five
years after the date of death or Disability.


 


(f)    Exercisability
Upon Termination of Employment by Retirement.    If
a Participant’s employment with the Company and its Subsidiaries terminates by
reason of Retirement after the date of grant of an Option, the Participant’s
unexercised Option may thereafter be exercised only during the period ending at
the earlier of five years after such Retirement or the stated expiration date
of such Option (the “Post-Retirement Exercise Period”), provided that such
Option shall be exercisable during such Post-Retirement Exercise Period only to
the extent such Option was exercisable at the time of such Retirement. The
foregoing notwithstanding, (i) the Committee may, in its sole discretion,
accelerate the vesting of the unvested portion of such Option held by a
Participant upon such Participant’s Retirement, in which case such Option shall
not be forfeited as provided herein but thereafter shall become exercisable to
the extent and at such times as such portion of the Option would have become
both vested and exercisable during the Post-Retirement Exercise Period had the
Participant’s employment not been terminated, unless the Committee specifies
otherwise; and (ii), if a Participant dies within a period of five years after
such Retirement, the Participant’s unexercised Option (to the extent not
previously forfeited) may thereafter be exercised during the shorter of (i) the
remaining stated term of the Option or (ii) the period that is the longer
of (A) five years after the date of such termination of employment or (B) one
year after the date of death.


 


(g)   Effect of Other
Termination of Employment.    If a Participant’s
employment with the Company and its Subsidiaries terminates for any reason
other than death, Disability or Retirement after the date of grant of an Option
as described above, the Participant’s unexercised Option may thereafter be
exercised during the period ending 90 days after the date of such
termination of employment, but only to the extent such Option was exercisable
at the time of such termination of employment, and in no event may such Option
be exercised after its stated expiration date. The foregoing notwithstanding
and subject to Section 17, the Committee may, in its sole discretion,
accelerate the vesting of unvested Options held by a Participant or specify
post-termination exercise periods longer than 90 days, but not extending
past the Option’s stated expiration date, 


 

















 


provided
that this authority shall not apply if such Participant is terminated from
employment for “cause” (as such term is defined by the Committee in its sole
discretion) by the Company.


 


8.     Terms
and Conditions of Stock Appreciation Rights


 


(a)   Grants.    The
Committee also may grant (i) a Stock Appreciation Right independent of an
Option or (ii) a Stock Appreciation Right in connection with an Option, or
a portion thereof. A Stock Appreciation Right granted pursuant to clause (ii) of
the preceding sentence (A) may be granted at the time the related Option
is granted or at any time prior to the exercise or cancellation of the related
Option, (B) shall cover the same Shares covered by an Option (or such
lesser number of Shares as the Committee may determine) and (C) shall be
subject to the same terms and conditions as such Option except for such
additional limitations as are contemplated by this Section 8 (or such
additional limitations as may be included in an Award agreement).


 


(b)   Terms.   The exercise price
per Share of a Stock Appreciation Right shall be an amount determined by the
Committee but in no event shall such amount be less than the greater of (i) the
Fair Market Value of a Share on the date the Stock Appreciation Right is
granted or, in the case of a Stock Appreciation Right granted in conjunction
with an Option, or a portion thereof, the Option Price of the related Option
and (ii) an amount permitted by applicable laws, rules, by-laws or
policies of regulatory authorities or stock exchanges. Each Stock Appreciation
Right granted independent of an Option shall entitle a Participant upon
exercise to an amount equal to (i) the excess of (A) the Fair Market
Value on the exercise date of one Share over (B) the exercise price per
Share, times (ii) the number of Shares covered by the Stock Appreciation
Right. Each Stock Appreciation Right granted in conjunction with an Option, or
a portion thereof, shall entitle a Participant to surrender to the Company the
unexercised Option, or any portion thereof, and to receive from the Company in
exchange therefore an amount equal to (i) the excess of (A) the Fair
Market Value on the exercise date of one Share over (B) the Option Price
per Share, times (ii) the number of Shares covered by the Option, or
portion thereof, which is surrendered. The date a notice of exercise is
received by the Company shall be the exercise date. Payment shall be made in
Shares or in cash, or partly in Shares and partly in cash, valued at such Fair
Market Value, all as shall be determined by the Committee. Stock Appreciation
Rights may be exercised from time to time upon actual receipt by the Company of
written notice of exercise stating the number of Shares subject to an
exercisable Option with respect to which the Stock Appreciation Right is being
exercised. No fractional Shares will be issued in payment for Stock
Appreciation Rights, but instead cash will be paid for a fraction or, if the
Committee should so determine, the number of Shares will be rounded downward to
the next whole Share. The Committee shall determine whether a Stock
Appreciation Right shall be a 409A Award or Non-409A Award, subject to Section 17.


 


(c)   Limitations.    The
Committee may impose, in its discretion, such conditions upon the
exercisability or transferability of Stock Appreciation Rights as it may deem
fit. In no event shall a Stock Appreciation Right be exercisable more than ten
years after the date it is granted.


 


(d)   Limited Stock
Appreciation Rights.    The Committee may grant
LSARs that are exercisable upon the occurrence of specified contingent events.
Subject to Section 17, such LSARs may provide for a different method of
determining appreciation, may specify that payment will be made only in cash
and may provide that any related Awards are not exercisable while such LSARs
are exercisable. Unless the context otherwise requires, whenever the term “Stock
Appreciation Right” is used in the Plan, such term shall include LSARs.


 


9.     Other
Stock-Based Awards; Cash Awards


 


(a)   Generally.    The
Committee, in its sole discretion, may grant Awards of Shares, Awards of
restricted Shares and Awards that are valued in whole or in part by reference
to, or are 


 

















 


otherwise
based on the Fair Market Value of, Shares (“Other Stock-Based Awards”). Such
Other Stock-Based Awards shall be in such form, and dependent on such
conditions, as the Committee shall determine, including, without limitation,
the right to receive one or more Shares (or the equivalent cash value of such
Shares) as an outright bonus or upon the completion of a specified period of
service, the occurrence of an event and/or the attainment of performance
objectives. Other Stock-Based Awards may be granted alone or in addition to any
other Awards granted under the Plan. Subject to the provisions of the Plan, the
Committee shall determine to whom and when Other Stock-Based Awards will be
made, the number of Shares to be awarded under (or otherwise related to) such
Other Stock- Based Awards; whether such Other Stock-Based Awards shall be
settled in cash, Shares or a combination of cash and Shares; and all other
terms and conditions of such Awards (including, without limitation, the vesting
provisions thereof). Cash awards may also be granted pursuant to this Section 9(a).
In addition, the Committee is authorized to grant dividend equivalents to a
Participant, entitling the Participant to receive cash, Shares, other Awards,
or other property equal in value to dividends paid with respect to a specified
number of Shares, or other periodic payments. Dividend equivalents may be
awarded on a free-standing basis or in connection with another Award. The
Committee may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Shares,
Awards, or other investment vehicles, subject to such restrictions on
transferability and risks of forfeiture as the Committee may specify.


 


(b)   Performance-Based
Awards.    Notwithstanding anything to the
contrary herein, certain Other Stock-Based Awards granted under this Section 9
and cash awards may be granted in a manner which is deductible by the Company
without limitation under Section 162(m) of the Code (or any successor
section thereto) (“Performance-Based Awards”). A Participant’s
Performance-Based Award shall be determined based on the attainment of written
performance goals approved by the Committee for a performance period
established by the Committee (i) while the outcome for that performance
period is substantially uncertain and (ii) no more than 90 days after
the commencement of the performance period to which the performance goal
relates or, if less, the number of days which is equal to 25 percent of
the relevant performance period. The performance goals, which must be
objective, shall be based upon one or more of the following criteria: (i) consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating
income; (iv) earnings per share; (v) book value per share; (vi) return
on shareholders’ equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability
of an identifiable business unit or product; (xi) maintenance or
improvement of profit margins; (xii) stock price; (xiii) market
share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital; (xviii) economic value added;
(xix) return on assets; (xx) total shareholder return (stock price
appreciation plus dividends and distributions); (xxi) operating management
goals; (xxii) and execution of pre-approved corporate strategy. The
foregoing criteria may relate to the Company, one or more of its Subsidiaries
or one or more of its divisions or units, or any combination of the foregoing,
and may be applied on an absolute basis and/or be relative to one or more peer
group companies or indices, or any combination thereof, all as the Committee
shall determine. In addition, to the degree consistent with Section 162(m) of
the Code (or any successor section thereto), the performance goals may be
calculated without regard to extraordinary items. In the case of a
Performance-Based Award which is not valued in a way in which the limitation
set forth in the final sentence of Section 3 would operate as an effective
limitation satisfying Treasury Regulation 1.162-27(e)(4), the maximum
amount of a Performance-Based Award to any Participant with respect to
performance in a single fiscal year of the Company shall be $5,000,000
(apportioned over all such Performance-Awards outstanding at the same time, but
with such amount earnable in each year of a performance period covering
multiple fiscal years or portions of a fiscal year). The Committee shall
determine whether, with respect to a performance period, the applicable
performance goals have been met with respect to a given Participant and, if
they have, to so certify and ascertain the amount of the applicable
Performance-Based Award. No Performance-Based Awards will be paid for such
performance period until such certification is made by the Committee. The
amount of the Performance-Based Award actually paid to a given Participant may
be less than the amount determined by the applicable performance goal formula, 


 

















 


at
the discretion of the Committee. The amount of the Performance-Based Award
determined by the Committee for a performance period shall be paid to the Participant
at such time as determined by the Committee in its sole discretion after the
end of such performance period; provided, however, that a Participant may, if
and to the extent permitted by the Committee and consistent with the provisions
of Section 162(m) of the Code and subject to Section 17, elect
to defer payment of a Performance-Based Award.


 


10.   Adjustments
Upon Certain Events


 


Notwithstanding any other
provisions in the Plan to the contrary, the following provisions shall apply to
all Awards granted under the Plan:


 


(a)   Generally.    In
the event of any change in the outstanding Shares after the Effective Date by
reason of any Share dividend or split, reorganization, recapitalization,
merger, consolidation, spin-off, combination or exchange of Shares of other
corporate exchange, or any large, special, and non-recurring distribution to
Shareholders, the Committee in its sole discretion and without liability to any
person may make such substitution or adjustment, if any, as it deems to be
equitable, as to (i) the number or kind of Shares or other securities
issued or reserved for issuance pursuant to the Plan or pursuant to outstanding
Awards, (ii) the Option Price, (iii) the number and kind of Shares by
which annual per-person Award limitations are measured under Section 3
hereof and/or (iv) any other affected terms of such Awards (including
making provision for the payment of cash, other Awards or other property in
respect of any outstanding Award). In the case of outstanding Awards, the
Committee shall adjust such Awards upon the occurrence of any equity
restructuring within the meaning of Statement of Financial Accounting Standards
No. 123(R) in order to preserve without enlarging the rights of
Participants with respect to such Awards. In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence, as
well as acquisitions and dispositions of businesses and assets) affecting the
Company, any subsidiary or any business unit, or the financial statements of
the Company or any subsidiary, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee’s assessment of the business strategy of
the Company, any subsidiary or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of a
Participant, and any other circumstances deemed relevant; provided that no such
adjustment shall be authorized to be made if and to the extent that such
authority or the making of such adjustment would cause Options, Stock Appreciation
Rights, or Performance Awards granted under Section 9(b) hereof
intended to qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder to otherwise fail to so qualify.


 


(b)   Change in
Control.    Except as otherwise provided in an
Award agreement and subject to Section 17, in the event of a Change in
Control, the Committee in its sole discretion and without liability to any
person may take such actions, if any, as it deems necessary or desirable with
respect to any Award (including, without limitation, (i) the acceleration
of an Award, (ii) the payment of a cash amount in exchange for the
cancellation of an Award and/or (iii) the requiring of the issuance of
substitute Awards that will substantially preserve the value, rights and
benefits of any affected Awards previously granted hereunder) as of the date of
the consummation of the Change in Control.


 


11.   No Right To
Employment


 


The granting of an Award
under the Plan shall impose no obligation on the Company or any Subsidiary to
continue the employment of a Participant and shall not lessen or affect the
Company’s or Subsidiary’s right to terminate the employment of such
Participant.


 
















 


12.   Successors and
Assigns


 


The Plan shall be binding on
all successors and assigns of the Company and a Participant, including without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the Participant’s creditors.


 


13.   Nontransferability
of Awards


 


An Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution. During the lifetime of a Participant, an
Award shall be exercisable only by such Participant. An Award exercisable after
the death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant. Notwithstanding anything to
the contrary herein, the Committee, in its sole discretion, shall have the
authority to waive this Section 13 (or any part thereof) to the extent
that this Section 13 (or any part thereof) is not required under the rules promulgated
under any law, rule or regulation applicable to the Company, in order to
permit a Participant or Participants to transfer Awards for estate-planning
purposes, but transfers of Awards before settlement to third parties unrelated
to the Participant for value will not be permitted.


 


14.   Amendments and
Termination


 


(a)   Changes To The
Plan.    The Board may amend, alter or
discontinue the Plan, except that (i) any amendment or alteration shall be
subject to the approval of the Company’s shareholders at or before the next annual
meeting of shareholders for which the record date is after the date of such
Board action if (x) such shareholder approval is required by any federal
or state law or regulation or the rules of any stock exchange or automated
quotation system on which the Shares may then be listed or quoted, and the
Board may otherwise, in its discretion, determine to submit amendments or
alterations to shareholders for approval or (y) such amendment or
alteration would materially increase the number of shares reserved for the
purposes of the Plan, materially broaden the employees or class of employees
eligible to receive Awards under the Plan or materially increase benefits
accruing to employees participating in the Plan; (ii) without the consent
of a Participant, no amendment or alteration shall materially impair any of the
Participant’s rights under an Award theretofore granted to such Participant;
and (iii) the Committee may amend or alter the Plan in such manner as it
deems necessary to permit the granting of Awards meeting requirements of the
Code or other applicable laws. Notwithstanding anything to the contrary herein,
the Board may not amend, alter or discontinue the provisions relating to Section 10(b) of
the Plan after the occurrence of a Change in Control.


 


(b)   Changes To
Outstanding Awards.    The Committee may waive
any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan and except that the Committee
may not amend or alter an Award theretofore granted if such action would result
in an Award having terms that would not have been authorized or permitted for a
new grant or Award under the Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such Award


 


15.   International
Participants


 


With respect to Participants
who reside or work outside the United States of America and either who are not
(and who are not expected to be) “covered employees” within the meaning of Section 162(m) of
the Code or who are granted Awards not intended to qualify as “performance-based
compensation” under Section 162(m), the Committee may, in its sole
discretion, amend the terms of the Plan or Awards with respect to such
Participants in order to conform such terms with local laws, regulations, or
customs or 


 

















 


otherwise to meet the objectives of the Plan, and
may, where appropriate, establish one or more sub-plans to reflect such amended
provisions.


 


16.   Nonexclusivity
of the Plan


 


Neither the adoption of the
Plan by the Board nor any submission of the Plan, specific Plan terms, or
amendments thereto to a vote of shareholders of the Company shall be construed
as creating any limitations on the power of the Board to adopt such other
compensatory arrangements as it may deem desirable, including, without
limitation, the granting of awards otherwise than under the Plan, and such
other arrangements may be either applicable generally or only in specific
cases.


 


17.   Compliance
With Code Section 409A


 


 (a)          409A Awards and Deferrals.
Other provisions of the Plan notwithstanding, the terms of any 409A
Award (which for this purpose excludes any award that was both granted and
vested before 2005 and therefore is deemed to be “grandfathered” under
applicable IRS regulations and guidance unless such award is materially
modified to become a 409A Award), including any authority of the Company and
rights of the Participant with respect to the 409A Award, shall be limited to
those terms permitted under Section 409A, and any terms not permitted
under Section 409A shall be automatically modified and limited to the
extent necessary to conform with Section 409A but only to the extent that
such modification or limitation is permitted under Code Section 409A and
the regulations and guidance issued thereunder. The following rules will
apply to 409A Awards:


 


(i)                                   Elections. If a Participant is permitted to
elect to defer compensation and in lieu thereof receive an Award, or is
permitted to elect to defer any payment under an Award, such election will be
permitted only at times in compliance with Section 409A (including
transition rules thereunder). Such election shall be made in accordance
with Exhibit A hereto;


 


(ii)                                  Changes in Distribution Terms. The Committee
may, in its discretion, require or permit on an elective basis a change in the
distribution terms applicable to 409A Awards (and Non-409A Awards that qualify
for the short-term deferral exemption under Section 409A) in accordance
with, and to the fullest extent permitted by, applicable guidance of the
Internal Revenue Service (including Proposed Treasury Regulation § 1.409A,
Preamble § XI.C and IRS Notice 2005-1), and otherwise in accordance with Section 409A
and regulations thereunder. The Senior Vice President — Human Resources and
General Counsel of the Company are authorized to modify any such outstanding
Awards to permit election of different deferral periods provided that any such
modifications may not otherwise increase the benefits to Participants or the
costs of such Awards to the Company. Other provisions of this Plan
notwithstanding, changes to distribution timing resulting from amendments to
this Plan or changes in Participant elections in 2008 shall not have the affect
of accelerating distributions into 2008 or causing distributions that otherwise
would have occurred in 2008 to be deferred until a year after 2008;


 


(iii)                               Exercise and Distribution. Except as provided
in Section 17(a)(iv) hereof, no 409A Award shall be exercisable (if
the exercise would result in a distribution) or otherwise distributable to a
Participant (or his or her beneficiary) except upon the occurrence of one of
the following (or a date related to the occurrence of one of the following),
which must be specified in a written document governing such 409A Award and
otherwise meet the requirements of Treasury Regulation § 1.409A-3:


 

















 


(A)                              Specified Time. A specified time or a fixed schedule;


 


(B)                                Separation from Service. The Participant’s
separation from service (within the meaning of Treasury Regulation
§ 1.409A-1(h) and other applicable rules under Code Section 409A);
provided, however, that if the Participant is a “Specified Employee” under
Treasury Regulation § 1.409A-1(i), settlement under this Section 17(a)(iii)(B) shall
instead occur at the expiration of the six-month period following separation
from service under Section 409A(a)(2)(B)(i). During such six-month delay
period, no acceleration of settlement may occur, except (1) acceleration
shall occur in the event of death of the Participant, (2), if the distribution
date was specified as the earlier of separation from service or a fixed date
and the fixed date falls within the delay period, the distribution shall be
triggered by the fixed date, and (3) acceleration may be permitted
otherwise if and to the extent permitted under Section 409A. In the case
of installments, this delay shall not affect the timing of any installment otherwise
payable after the six-month delay period. With respect to any 409A Award, a
reference in any agreement or other governing document to a “termination of
employment” which triggers a distribution shall be deemed to mean a “separation
from service” within the meaning of Treasury Regulation § 1.409A-1(h);


 


(C)                                Death. The death of the Participant. Unless a
specific time otherwise is stated for payment of a 409A Award upon death, such
payment shall occur in the calendar year in which falls the 30th day
after death;


 


(D)                               Disability. The date the Participant has
experienced a 409A Disability (as defined below); and


 


(E)                                 409A Change in Control. The occurrence of a
409A Change in Control (as defined below).


 


(iv)                              No Acceleration. The exercise or distribution
of a 409A Award may not be accelerated prior to the time specified in
accordance with Section 17(a)(iii) hereof, except in the case of one
of the following events:


 


(A)                              Unforeseeable Emergency. The occurrence of an
Unforeseeable Emergency, as defined below, but only if the net amount payable
upon such settlement does not exceed the amounts necessary to relieve such
emergency plus amounts necessary to pay taxes reasonably anticipated as a
result of the settlement, after taking into account the extent to which the
emergency is or may be relieved through reimbursement or compensation from
insurance or otherwise or by liquidation of the Participant’s other assets (to
the extent such liquidation would not itself cause severe financial hardship),
or by cessation of deferrals under the Plan. Upon a finding that an
Unforeseeable Emergency has occurred with respect to a Participant, any
election of the Participant to defer compensation that will be earned in whole
or part by services in the year in which the emergency occurred or is found to
continue will be immediately cancelled.


 


(B)                                Domestic Relations Order. The 409A Award may
permit the acceleration of the exercise or distribution time or schedule to an
individual other than the Participant as may be necessary to comply 


 

















 


with
the terms of a domestic relations order (as defined in Section 414(p)(1)(B) of
the Code).


 


(C)                                Conflicts of Interest. Such 409A Award may
permit the acceleration of the settlement time or schedule as may be necessary
to comply with an ethics agreement with the Federal government or to comply
with a Federal, state, local or foreign ethics law or conflict of interest law
in compliance with Treasury Regulation § 1.409A-3(j)(4)(iii).


 


(D)                               Change. The Committee may exercise the
discretionary right to accelerate the lapse of the substantial risk of
forfeiture of any unvested compensation deemed to be a 409A Award upon a 409A
Change in Control or to terminate the Plan upon or within 12 months after a
409A Change in Control, or otherwise to the extent permitted under Treasury
Regulation § 1.409A-3(j)(4)(ix), or accelerate settlement of such 409A
Award in any other circumstance permitted under Treasury Regulation
§ 1.409A-3(j)(4).


 


(v)                                 Definitions. For purposes of this Section 17,
the following terms shall be defined as set forth below:


 


(A)                              “409A Change in Control” shall be deemed to
have occurred if, in connection with a Change in Control (or any other event
defined as a change in control relating to a 409A Award under any applicable
Company document), there occurs a change in the ownership of the Company, a
change in effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company, as defined in Treasury
Regulation § 1.409A-3(i)(5).


 


(B)                                “409A Disability” means an event which
results in the Participant being (i) unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii), by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Company or its subsidiaries.


 


(C)                                “Unforeseeable Emergency” means a severe
financial hardship to the Participant resulting from an illness or accident of
the Participant, the Participant’s spouse, or a dependent (as defined in Code Section 152,
without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)) of the
Participant, loss of the Participant’s property due to casualty, or similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, and otherwise meeting the definition set
forth in Treasury Regulation § 1.409A-3(i)(3).


 


(vi)                              Time of Distribution. In the case of any
distribution of a 409A Award, if the timing of such distribution is not
otherwise specified in the Plan or an Award agreement or other governing
document, the distribution shall be made within 60 days after the date at which
the settlement of the Award is specified to occur. In the case of any
distribution of a 409A Award during a specified period 


 

















 


following
a settlement date, the maximum period shall be 90 days, and the Participant
shall have no influence (other than permitted deferral elections) on any
determination as to the tax year in which the distribution will be made during
any period in which a distribution may be made;


 


 (vii)                        “Specified Employee.”  “Specified Employee” means an
employee of the Company, at a time that any stock of the Company is publicly
traded, who satisfies the requirements for being designated a “key employee”
under Code Section 416(i)(1)(A)(i), (ii) or (iii) without regard
to Section 416(i)(5) of the Code at any time during a calendar year,
in which case such employee shall be considered a Specified Employee for the
twelve-month period beginning on the first day of the fourth month immediately
following the end of such calendar year. Notwithstanding the foregoing, all
employees who are nonresident aliens during an entire calendar year are
excluded for purposes of determining which employees meet the requirements of Section 416(i)(1)(A)(i),
(ii) or (iii) of the Code without regard to Section 416(i)(5) of
the Code for such calendar year. The term “nonresident alien” as used herein
shall have the meaning set forth in Regulations Section 1.409A-1(j). In
the event of any corporate spinoff or merger, the determination of which
employees meet the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of
the Code without regard to Section 416(i)(5) of the Code for any
calendar year shall be determined in accordance with Regulations Section 1.409A-1(i)(6).


 


(viii)                        Non-Transferability. The provisions of Section 13
notwithstanding, no 409A Award or right relating thereto shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant or the Participant’s
Beneficiary.


 


(ix)                                Limitation on Setoffs. If the Company has a
right of setoff that could apply to a 409A Award, such right may only be
exercised at the time the 409A Award would have been distributed to the
Participant or his or her Beneficiary.


 


(x)                                   409A Rules Do Not Constitute Waiver of
Other Restrictions. The rules applicable to 409A Awards under this Section 17(a) constitute
further restrictions on terms of Awards set forth elsewhere in this Plan.


 


(b)           Separate
Payments. Unless otherwise specified in the applicable Award
agreement, each vesting tranche of an Award shall be deemed to be a separate
payment for purposes of Code Section 409A, and any portion of a vesting
tranche that would vest on a pro rata basis in the event of a separation from
service on December 31 of a given year, and the portion of such vesting
tranche that would not so vest, each shall be deemed to be a separate payment
for purposes of Code Section 409A.


 


(c)           Distributions
Upon Vesting. In the case of any Non-409A Award providing for a
distribution upon the lapse of a substantial risk of forfeiture, if the timing
of such distribution is not otherwise specified in the Plan or an Award
agreement or other governing document, the distribution shall be made not later
than March 15 of the year following the year in which the substantial risk
of forfeiture lapsed, and if a determination is to be made promptly following
the end of a performance year (as in the case of performance shares) then the
determination of the level of achievement of performance and the distribution
shall be made between January 1 and March 15 of the year following
such performance year. In all cases, the Participant shall have no influence
(aside from any permitted deferral election) on any determination as to the tax
year in which the distribution will be made.


 


(d)           Grandfathered Awards. Any
award that was both granted and vested before 2005 and which otherwise might
constitute a deferral of compensation under Section 409A is 


 

















 


intended to be “grandfathered” under Section 409A,
unless it has been materially modified since October 3, 2004. No amendment
or change to the Plan or other change (including an exercise of discretion)
with respect to such a grandfathered award after October 3, 2004, shall be
effective if such change would constitute a “material modification” within the
meaning of applicable guidance or regulations under Section 409A, except
in the case of an award that is, following such modification, compliant as a
409A Award or compliant with an exemption under Section 409A.


 


(e)           Limitation on Adjustments.
Any adjustment under Section 13 shall be implemented in a way that
complies with applicable requirements under Section 409A so that Non- 409A
Option/SARs do not, due to the adjustment, become 409A Awards, and otherwise so
that no adverse consequences under Section 409A result to Participants.


 


(f)            Release or Other
Termination Agreement. If the Company requires a Participant to
execute a release, non-competition, or other agreement as a condition to
receipt of a payment upon or following a termination of employment, the Company
will supply to the Participant a form of such release or other document not
later than the date of the Participant’s termination of employment, which must
be returned within the minimum time period required by law and must not be
revoked by the Participant within the applicable time period for revocation in
order for the Participant to satisfy any such condition. If any amount payable
during a fixed period following termination of employment is subject to such a
requirement and the fixed period would begin in one year and end in the next,
the Company, in determining the time of payment of any such amount, will not be
influenced by the timing of any action of the Participant including execution
of such a release or other document and expiration of any revocation period. In
particular, the Company will be entitled in its discretion to deposit any such
payment in escrow during either year comprising such fixed period, so that such
deposited amount is constructively received and taxable income to the
Participant upon deposit but with distribution from such escrow remaining
subject to the Participant’s execution and non-revocation of such release or
other document.


 


(g)           Limit on Authority to
Amend. The authority to adopt amendments under Section 14 does
not include authority to take action by amendment that would have the effect of
causing Awards to fail to meet applicable requirements of Section 409A.


 


(h)           Scope and
Application of this Provision. For purposes of this Section 17,
references to a term or event (including any authority or right of the Company
or a Participant) being “permitted” under Section 409A mean that the term
or event will not cause the Participant to be deemed to be in constructive
receipt of compensation relating to the 409A Award prior to the distribution of
cash, Shares or other property or to be liable for payment of interest or a tax
penalty under Section 409A.


 


(i)            Unanticipated Early Taxation of Awards In the case of any
vested Award other than Award as to which the Participant has elected to be
subject to taxation at grant under Code Section 83(b), if the Participant
is deemed to receive taxable income for any taxable year that is prior to the
taxable year in which such Award is to be settled as a result of the failure of
the Award terms hereunder to comply with the requirements of Code Section 409A,
the vested Award shall be settled immediately and cash or Shares delivered to
the Participant to the extent such Award (or the value thereof) is required to
be included in the Participant’s income. If the Participant becomes subject to
any tax penalty or interest under Code Section 409A by reason of such
Award, the Company will reimburse the Participant on a fully grossed-up and
after-tax basis for any such tax penalty or interest (so that the Participant
is held economically harmless) ten business days prior to the date such tax
penalty or interest is due and payable by the Participant to the government.


 

















 


18.   Choice of Law


 


The Plan shall be governed
by and construed in accordance with the laws of the State of New York.


 


19.   Effectiveness
and Termination of the Plan


 


The Plan shall be effective
as of June 30, 1998. Unless the Board discontinues the Plan under Section 14
at an earlier date, the authority to grant further Awards will terminate on May 5,
2015, and the Plan will remain in effect thereafter until such time as the
Company has no further rights or obligations under the Plan with respect to
outstanding Awards under the Plan.


 

















 


Exhibit A


 


Deferral Election Rules


 


If a participant in a plan, program or other
compensatory arrangement (a “plan”) of IMS Health Incorporated (the “Company”)
is permitted to elect to defer awards or other compensation, any such election
relating to compensation deferred under the applicable plan must be received by
the Company prior to the date specified by or at the direction of the
administrator of such plan (the “Administrator,” which in most instances will
be the Human Resources Department). For purposes of compliance with Section 409A
of the Internal Revenue Code (the “Code”), any such election to defer shall be
subject to the rules set forth below, subject to any additional
restrictions as may be specified by the Administrator. Under no circumstances
may a participant elect to defer compensation to which he or she has attained,
at the time of deferral, a legally enforceable right to current receipt of such
compensation.


 


(1)                                  Initial Deferral Elections. Any initial election to defer compensation
(including the election as to the type and amount of compensation to be
deferred and the time and manner of settlement of the deferral) must be made
(and shall be irrevocable) no later than December 31 of the year before
the participant’s services are performed which will result in the earning of
the compensation, except as follows:


 


·                  Initial deferral elections with respect to
compensation that, absent the election, constitutes a short-term deferral may
be made in accordance with Treasury Regulation § 1.409A-2(a)(4) and
(b);


·                  Initial deferral elections with respect to
compensation that remains subject to a requirement that the participant provide
services for at least 12 months (a “forfeitable right” under Treasury
Regulation § 1.409A-2(a)(5)) may be made on or before the 30th
day after the participant obtains the legally binding right to the
compensation, provided that the election is made at least 12 months before the
earliest date at which the forfeiture condition could lapse and otherwise in
compliance with Treasury Regulation § 1.409A-2(a)(5);


·                  Initial deferral elections by a participant
in his or her first year of eligibility may be made within 30 days after the
date the participant becomes eligible to participate in the applicable plan,
with respect to compensation paid for services to be performed after the
election and in compliance with Treasury Regulation § 1.409A-2(a)((7);


·                  Initial deferral elections by a participant
with respect to performance-based compensation (as defined under Treasury
Regulation § 1.409A-1(e)) may be made on or before the date that is six
months before the end of the performance period, provided that (i) the
participant was employed continuously from either the beginning of the
performance period or the later date on which the performance goal was
established, (ii) the election to defer is made before such compensation
has become readily ascertainable (i.e., substantially certain to be paid), (iii) the
performance period is at least 12 months in length and the performance goal was
established no later than 90 days after the commencement of the service period
to which the performance goal relates, (iv) the performance-based
compensation is not payable in the absence of performance except due to death,
disability, a 409A Change in Control (as defined in Section 17(a)(v)(A) of
the Plan) or as otherwise permitted under Treasury Regulation
§ 1.409A-1(e), and (v) this initial deferral election must in any
event comply with Treasury Regulation § 1.409A-2(a)(8);


·                  Initial deferral elections resulting in
Company matching contributions may be made in compliance with Treasury
Regulation § 1.409A-2(a)(9);


·                  Initial deferral elections may be made to the
fullest permitted under other applicable provisions of Treasury Regulation
§ 1.409A-2(a); and


 

















 


(2)                                  Further Deferral Elections. The foregoing
notwithstanding, for any election to further defer an amount that is deemed to
be a deferral of compensation subject to Code Section 409A (to the extent
permitted under Company plans, programs and arrangements), any further deferral
election made under the Plan shall be subject to the following, provided that
deferral elections in 2005 - 2008 may be made under applicable transition rules under
Section 409A:


 


·                  The further deferral election will not take
effect until at least 12 months after the date on which the election is made;


·                  If the election relates to a distribution
event other than a Disability (as defined in Treasury Regulation
§ 1.409A-3(i)(4)), death, or Unforeseeable Emergency (as defined in
Treasury Regulation § 1.409A-3(i)(3)), the payment with respect to which
such election is made must be deferred for a period of not less than five years
from the date such payment would otherwise have been paid (or in the case of a
life annuity or installment payments treated as a single payment, five years
from the date the first amount was scheduled to be paid), to the extent
required under Treasury Regulation § 1.409A-2(b);


·                  The requirement that the further deferral
election be made at least 12 months before the original deferral amount would
be first payable may not be waived by the Administrator, and shall apply to a
payment at a specified time or pursuant to a fixed schedule (and in the case of
a life annuity or installment payments treated as a single payment, 12 months
before the date that the first amount was scheduled to be paid);


·                  The further deferral election shall be
irrevocable when filed with the Company; and


·                  The further deferral election otherwise shall
comply with the applicable requirements of Treasury Regulation
§ 1.409A-2(b).


 


(3)                                  Transition Rules. Initial deferral elections
and elections to change any existing deferred date for distribution of
compensation in any transition period designated under Department of the
Treasury and IRS regulations may be permitted by the Company to the fullest
extent authorized under transition rules and other applicable guidance
under Code Section 409A (including transition rules in effect in the
period 2005 – 2008).