Exhibit 10.5


 


1998 IMS
HEALTH INCORPORATED

NON-EMPLOYEE DIRECTORS’ STOCK INCENTIVE PLAN


 


(As Amended and Restated as
of October 20, 2008)


 


1.  Purpose of the Plan


 


The purpose of the Plan is
to aid the Company in attracting, retaining and compensating non-employee
directors and to enable them to increase their proprietary interest in the
Company. The Plan is intended to benefit the Company and its shareholders by
enabling non-employee directors of the Board to have a greater personal
financial stake in the Company, and reinforcing such directors’ common interest
with shareholders in increasing the value of the Shares on a long-term basis. In
furtherance of this purpose, the Plan provides for periodic grants of Options,
Restricted Stock, and Restricted Stock Units, and the opportunity for
non-employee directors to elect deferred and alternative forms of compensation
in lieu of cash fees for service as a director, including Options, Shares, and
Deferred Share Units.


 


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) Award: 
An Option, a Share of Restricted Stock, or Restricted Stock Unit granted
under the Plan, or an Option, Share, or Deferred Share Unit granted in lieu of
cash directors fees under the Plan.


 


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


 


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


 


(e) Change in Control: The occurrence of any of
the following events:


 


(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(e)(i), (iii) or (iv) of
the Plan, (B) a director nominated by any Person (including the Company)
who publicly announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest) which if
consummated would constitute a Change in Control or (C) a director
nominated by any Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the Company’s securities) whose election by the Board or nomination for
election by the Company’s 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; or


 


(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.


 


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


 


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


 


(h)   Deferred Share Unit: An Award granted under Section 8 upon
deferral of cash compensation representing a contractual commitment of the
Company to deliver to the Participant, at a specified future date, one Share in
settlement of the deferral. Dividend equivalents equal to the value of
dividends on outstanding shares shall be paid or credited on Deferred Share
Units, if and subject to such terms as may be specified by the Committee,
including terms ensuring convenient administration of the Plan.


 


(i) Disability: Inability to continue to serve
as a non-employee director of the Board due to a medically determinable
physical or mental impairment which constitutes a permanent and total
disability, as determined by the Committee (excluding any member thereof whose
own Disability is at issue in a given case) 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.


 


(j) Effective Date: June 30, 1998.


 


(k) Fair Market Value: On a given date, the
arithmetic mean of the high and low prices of the Shares as reported for such
date, or if no trade was reported for such date then on the latest preceding
date for which a trade was reported, by a recognized reporting service
designated by the Committee.


 


(l) Option: A stock option granted under the
Plan.


 


(m) Participant: Any director of the Company
who has been granted an Award under the Plan, for so long as the Award is
outstanding.


 


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


 


(o) Plan: The 1998 IMS Health Incorporated
Non-Employee Directors’ Stock Incentive Plan, as amended and restated.


 

















 


(p) Restricted Stock: An Award of a Share
subject to a risk of forfeiture and non-transferability restrictions granted
under Section 7 of the Plan.


 


(q) Restricted Stock Unit or RSU: An Award,
granted under Section 7, representing a contractual commitment of the
Company to deliver to the Participant, at a specified future date, one Share,
if specified vesting conditions are met. Dividend equivalents equal to the
value of dividends on outstanding shares shall be paid or credited on RSUs, if
and subject to such terms as may be specified by the Committee, including terms
that may provide for forfeiture of such dividend equivalents if the
corresponding RSU is forfeited and terms ensuring convenient administration of
the Plan.


 


(r) Retirement: Termination of service with the
Company after such Participant has attained age 70, regardless of the length of
such Participant’s service; or, with the prior written consent of the Committee
(excluding any member thereof whose own Retirement is at issue in a given
case), termination of service at an earlier age after the Participant has
completed six or more years of service with the Company.


 


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


 


3.    Shares
Subject to the Plan


 


Subject to adjustment as
provided in Section 9(a), the total number of Shares reserved and
available for delivery under the Plan for Awards outstanding at May 2,
2003 or thereafter granted shall be 909,962. 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, including the number of Shares withheld or
surrendered in payment of any exercise or purchase price of an Award, will
become available for Awards under the Plan.


 


4.    Administration


 


(a) Administrative
Authority.    The Plan shall be administered by
the Board or Committee, provided that any determination increasing the amount
or value of Awards that may granted in any year shall be subject to the
approval of the Board. The Committee may delegate its duties and powers in
whole or in part to any subcommittee thereof consisting solely of at least two “non-employee
directors” within the meaning of Rule 16b-3 under the Act (or any
successor rule thereto). In addition, the Committee may delegate
administrative responsibilities, including with respect to deferrals
implemented under the Plan, to an executive officer or committee of executive
officers and employees. The Board and the Committee are 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 either 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).


 


(b) Restriction
on Option Repricing.    Without the prior
approval of the Company’s stockholders, 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, “repriced”
means: (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 strike 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


 


A director who is not an
employee of the Company or any subsidiary of the Company as of the date that an
Award is granted shall be eligible to participate under this Plan.


 


6.    Terms and
Conditions of Options


 


Options granted under the
Plan shall be non-qualified stock options for federal income tax purposes, as
evidenced by the related Option 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 Board or the Committee shall
determine:


 


(a) Grants.    A
Participant may receive grants of Options, on such dates and authorizing the
purchase of such number of Shares as determined by the Board or Committee in
its sole discretion. In addition, the Board or Committee may authorize the
grant of Options in lieu of payment of fees to eligible directors, upon the election
of the director, in accordance with Section 8. The Board or Committee may
set such other terms of Options granted hereunder, subject to the explicit
provisions of the Plan.


 


(b) Option
Price.    The exercise price per Share of an
Option 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.


 


(c) Exercisability.    Options
granted under the Plan shall be exercisable 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.


 


(d) Exercise
of Options.    Except as otherwise provided in
the Plan or in a related Option 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 6 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. The exercise price
for the Shares as to which an Option is exercised shall be paid to the Company
in full at 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
Option exercise price for the Shares being purchased and satisfying such other
requirements as may be imposed by the Committee, including, if no additional
accounting expense to the Company will result, by directing the withholding of
Shares issuable upon exercise of the Option, (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 exercise price for the Shares being purchased not later
than the time of delivery of the Shares to the broker, subject to limitations
under applicable law. 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, paid in
full for such Shares and, if applicable, has satisfied any other conditions
imposed by the Committee pursuant to the Plan. The Committee may impose
restrictions on Option shares, subject to applicable law.


 

















 


(e) Termination
Provisions Relating to Certain Options.    An
Option granted under this Section 6 not in lieu of fees under Section 8
shall be subject to the following vesting and exercise terms in the event of
termination of a Participant’s service as a director:


 


(i)    Death.    If
a Participant’s service as a director of the Company terminates by reason of
death after the date of grant of an Option, the unexercised portion of such
Option shall immediately vest in full and the Option may thereafter be
exercised only during the shorter of (A) the remaining stated term of the
Option or (B) five years after the date of death.


 


(ii)   Disability or Retirement.    If
a Participant’s service as a director of the Company terminates by reason of
Disability or Retirement after the date of grant of an Option, the unexercised
portion of such Option shall immediately vest in full and such Option may
thereafter be exercised only during the shorter of (A) the remaining
stated term of the Option or (B) five years after the date of such
termination of service; provided, however, that if a Participant dies within a
period of five years after such termination of service, the unexercised portion
of the Option may thereafter be exercised, during the shorter of (A) the
remaining stated term of the Option or (B) the period that is the longer
of five years after the date of such termination of service or one year after
the date of death.


 


(iii)  Other Termination of Service.    Unless
otherwise specified by the Board not later than the time of grant of an Option,
if a Participant’s service as a director of the Company terminates for any
reason other than death, Disability or Retirement after the date of grant of an
Option as described above, the unexercised portion of an Option may thereafter
be exercised only during the period ending 90 days after the date of such
termination of service, but only to the extent to which such Option was
exercisable at the time of such termination of service.


 


7.    Terms and
Conditions of Restricted Stock and Restricted Stock Units


 


Restricted Stock or RSUs
granted under the Plan shall be subject to the foregoing and the following
terms and conditions and to such other terms and conditions, not inconsistent
therewith, as the Board or Committee shall determine:


 


(a)           Grants.    A
Participant may receive, on such dates as determined by the Committee in its
sole discretion, grants consisting of such amounts of Restricted Stock or RSUs
as determined by the Committee in its sole discretion.


 


(b)           Restrictions.    Restricted
Stock and RSUs granted under the Plan shall be subject to such vesting and
forfeiture terms as may be specified by the Board or Committee not later than
the time of grant of the Award. For so long as such Award is subject to a risk
of forfeiture, such Award may not be sold, transferred, pledged, assigned or
otherwise disposed of under any circumstances. Restricted Stock Units shall
remain subject to restrictions on transferability and deferral of settlement,
in accordance with Section 12, for such periods, after the risk of
forfeiture has lapsed, as may be specified by the Committee. Thus, deferral of
RSUs at the election of the Participant is specifically authorized, provided
that, in order to comply with Section 409A of the Internal Revenue Code
(the “Code”), any election to defer RSUs may be made in accordance with Section 13(a)(i) and
(ii).


 


(c)           Acceleration.
Notwithstanding anything in the Plan to the contrary except for applicable
provisions of Section 13, (i) the restrictions set forth in Section 7(b) of
the Plan (including any elected deferral period) shall automatically lapse in
the event that a Participant terminates service as a director of the Company as
a result of death or Disability, (ii) the risk of forfeiture of RSUs 


 

















 


shall automatically lapse upon a Change in Control,
and shares shall be distributed in settlement of such RSUs in accordance with Section 9(b),
and (iii) the Committee (excluding any member thereof whose own Award is
at issue in a given case) may, in its sole discretion, accelerate the lapsing
of the restrictions set forth in Section 7(b) of the Plan in the
event that a Participant terminates service as a director of the Company for
any other reason. In the case of RSUs which constitute a deferral of compensation
subject to Code Section 409A, no discretion may be exercised to change the
time of distribution of such RSUs except as may be permitted under Section 409A.
In the absence of acceleration under this Section 7(c), all Shares of
Restricted Stock and all RSUs as to which the risk of forfeiture has not
previously lapsed pursuant to Section 7(b) of the Plan shall be
forfeited upon the Participant’s separation from service as a director of the
Company.


 


(d)           Settlement
of RSUs. Unless a different
settlement date for RSUs is specified by the Board or Committee as a term of
the Award at grant or has been validly elected as a deferral by the Participant
or is required by this Plan (including Section 13), the settlement date
for RSUs will be the applicable vesting date. Shares will be delivered to the
Participant on or within 15 days following the applicable settlement date,
subject to Section 13.


 


8.    Issuance
of Shares, Deferred Share Units, and Options in Lieu of Cash Fees


 


The Board or Committee may
authorize the grant of Shares, Deferred Share Units, or Options in lieu of cash
fees otherwise payable to a non-employee director for service to the Company in
their capacity as a director, if and to the extent elected by the director.
Cash fees for these purposes includes annual retainer, meeting fees, such fees
for service as a member of a Board committee, and fees for service in a
leadership capacity with respect to the Board or a committee. Elections and
other terms of any deferral of cash fees will be subject to Section 13
hereof. Deferral will occur under this Section 8 as of the date the cash
fees would otherwise have been payable but for the valid election to defer,
even if the date at which the deferred amount is deemed invested in Shares or
Options are granted in lieu of cash fees is a later date. Awards granted under
this Section 8 shall be subject to the foregoing and the following terms
and conditions and to such other terms and conditions, not inconsistent
therewith, as the Board or Committee shall determine:


 


(a) Grant of
Shares or Deferred Share Units.    The number of
Shares or Deferred Share Units granted in lieu of cash fees shall be determined
by dividing the amount of cash fees being forgone or deferred by the director
by the Fair Market Value of a Share at the date such fees were otherwise
payable or another date designated by the Committee, not later than
90 days after the date such fees were otherwise payable, provided that the
Committee’s designation of a date other than the fee-payment date shall be made
prior to the affected fee-payment date.


 


(b) Grant of
Options.    The number of Options granted in
lieu of cash fees shall be determined by dividing the amount of cash fees being
forgone by the director by the Option value at the date such fees were
otherwise payable or another date designated by the Committee. Such designated
date may be at any time within a reasonable period, not exceeding approximately
one year, over which the director’s fees being forgone otherwise would have
been payable; provided, however, that the Committee’s designation of a date or
dates other than the fee-payment date shall be made prior to the affected
fee-payment date. The Committee may specify vesting and forfeiture terms to
provide that the Option will not be retained if the service for which the
director would have received the cash fees is not in fact performed. Option
value shall be determined from time to time by the Committee, based on a
reasonable stock option valuation methodology consistently applied, provided
that the Committee may specify a uniform Option value or a formula for
determining such value that may remain in effect for a period of approximately
one year, for administrative convenience and to provide predictable terms to
Participants committing to forgo fees.


 


(c) Other
Terms of Deferred Share Units and Options In Lieu of Fees.    Subject
to Section 6 and other provisions of the Plan, the Board or Committee may
specify the duration of Deferred Share 


 

















 


Units and Options, settlement dates of Deferred
Share Units, any post-termination exercise periods of Options, and all other
terms of Awards to be granted in lieu of fees, including terms relating to the
deferral of such fees.


 


9.    Adjustments
Upon Certain Events


 


Notwithstanding any other
provision 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 exercise price and/or (iii) any other affected terms of such Awards, and the Committee make such adjustments to outstanding Awards as it deems necessary or appropriate to preserve without enlarging the rights of each Participant with respect to his or her Award. The forgoing notwithstanding, 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 each Participant with respect to such Awards.
 


(b) Change
in Control.    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 (in the case of an Option, not to exceed intrinsic
value at the date of Committee action or a single specified date thereafter)
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. In furtherance of this authority, upon a Change in Control, any
outstanding RSUs or Deferred Share Units shall become immediately vested. RSUs
and Deferred Share Units that do not constitute deferrals of compensation under
Code Section 409A will be settled within five business days after such
Change in Control (subject to earlier settlement as provided below). RSUs and
Deferred Share Units, and deferred cash under the NEDDCP (as defined below)
that constitute deferrals of compensation under Section 409A (“409A Awards”)
will be settled within five business days after (i) the occurrence of a
409A Change in Control (as defined below) occurring at the time of or following
the Change in Control or (ii) upon occurrence of the Change in Control
occurring within 90 days after the 409A Change in Control, but only if the
occurrence of the Change in Control is non-discretionary and objectively
determinable at the time of the 409A Change in Control (in this case, the Participant
shall have no influence on when during such 90-day period the settlement shall
occur). If a Change in Control occurs but settlement of a 409A Award does not
occur under the preceding sentence, such 409A Award shall be settled at the
earliest of (i) the earliest permitted time of settlement that would have
applied in the absence of a Change in Control, (ii) the occurrence of a
409A Change in Control, or (iii) the Participant’s separation from
service, subject to the six-month delay rule set forth in Section 13(a)(iii)(B).
In the event that any such 409A Award cannot be settled upon a Change in
Control or immediately upon the Participant’s separation from service after a
Change in Control, the Participant will have the right to elect to denominate such
409A Award in cash (based on the then Fair Market Value of Shares) both at the
time of the Change in Control and again upon separation from service following
the Change in Control. If the Participant elects to denominate such a 409A
Award in cash, the Company will adjust the cash payment to reflect the deferred
settlement date by multiplying the cash amount by the product of the six-month
CMT Treasury Bill annualized yield rate as published by the U.S. Treasury for
the date on which the award was denominated in cash (or the most appropriate 


 

















 


surrogate for such rate if such rate is not
available) multiplied by a fraction, the numerator of which is the number of
days from and including the date on which the 409A Award was denominated in
cash until and including the date of payment of such award to the Participant
and the denominator of which is 365, and pay such adjusted amount at settlement.
In the case of RSUs and Deferred Share Units, settlement that otherwise could
occur in the five business days after a Change in Control under the foregoing
provisions shall, if possible, occur early enough to permit the Participant to
participate in a transaction that is related to the Change in Control, such as
a tender offer or a cash election merger)


 


10.  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, or any designated beneficiary.


 


11.  Amendments and
Termination


 


The Board may amend, alter,
discontinue or terminate the Plan, except that 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 (a) 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, or
(b) such amendment or alteration would materially increase the number of
shares reserved for the purposes of the Plan, materially broaden the class of persons
eligible to participate in the Plan or materially increase benefits accruing to
Participants. The Board may, in its discretion, determine to submit other
amendments or alterations to the Plan to shareholders for approval. The
Committee may act to amend or alter the Plan, but only if the amendment would
not require shareholder approval and otherwise does not materially increase the
cost of the Plan to the Company. The Board or Committee can act to amend
outstanding Awards. The foregoing notwithstanding, no amendment or other change
to the Plan or to the terms of an outstanding Award shall be made which would
materially and adversely affect the rights of a Participant under any Award
theretofore granted without such Participant’s consent.


 


12.  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, and the additional restrictions on
transferability will apply to certain awards under Section 13(a)(viii). During
the lifetime of a Participant, an Award, if exercisable, 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 or a beneficiary designated in accordance with procedures
specified by the Company. Notwithstanding
anything to the contrary herein, the Committee, in its sole discretion, shall
have the authority to waive this Section 12 (or any part thereof) with
respect to Awards that do not constitute a deferral of compensation under Code Section 409A
(certain RSUs and Deferred Share Units will constitute such Section 409A
deferrals of compensation) to the extent that this Section 12 (or any part
thereof) is not required under the rules promulgated under any law, rule or
regulation applicable to the Company.


 


13.   Compliance
With Code Section 409A


 


(a)     409A Deferrals. Other provisions of the Plan notwithstanding,
the terms of any Award that constitutes a deferral of compensation under Code Section 409A,
and any other such deferral of compensation under the 1998 IMS Health
Incorporated Non-Employee Directors Deferred Compensation Plan (the “NEDDCP”)
implemented under this Plan (together, “409A Deferrals,” which includes cash
deferrals under the NEDDCP), including any authority of the Company and 


 

















 


rights
of the Participant with respect to the 409A Deferrals, 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 Deferrals:


 


(i)            Elections. If a Participant is permitted to elect to defer compensation
and in lieu thereof receive a 409A Deferral, or is permitted to elect to defer
any payment under an Award resulting in a 409A Deferral, 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 to the 1998 Employees’ Stock Incentive Plan;


 


(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 Deferrals (and Awards that are not 409A Deferrals if they
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 13(a)(iv) hereof, no right relating to a 409A Deferral
shall be exercisable (if the exercise would result in a distribution) or a
deferred amount 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 Deferral 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 13(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
Deferral, a reference in any agreement or other governing document to a
termination of service as a director (or a termination of employment
interpreted to refer to a director’s service) 


 

















 


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 Deferral 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 Deferral may not be accelerated prior to the time specified in
accordance with Section 13(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 Deferral
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 Deferral 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 Deferral 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
Deferral in any other circumstance permitted under Treasury Regulation
§ 1.409A-3(j)(4).


 


(v)           Definitions. For purposes of this Section 13,
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 Deferral 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 Deferral, 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 Deferral 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 Treasury Regulation §  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 Treasury Regulation Section § 
1.409A-1(i)(6)..


 


 (viii)       Non-Transferability. The provisions of Section 13 notwithstanding,
no 409A Award409A Deferral 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 Award409A Deferral, such right may
only be exercised at the time the 409A Award 409A Deferral 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 Deferrals under this Section 13(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 Deferral 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. 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)           Limitation
on Adjustments. Any
adjustment under Section 9 shall be implemented in a way that complies
with applicable requirements under Section 409A so that Option and SARs
that are not 409A Deferrals do not, due to the adjustment, become 409A
Deferrals, and otherwise so that no adverse consequences under Section 409A
result to Participants.


 


(e)           Limit
on Authority to Amend. The
authority to adopt amendments under Section 11 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.


 


(f)            Scope and Application of this Provision. For purposes of this Section 13,
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 Deferral 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.


 


(g)           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.


 


14.  Nonexclusivity of
the Plan


 


Neither the adoption of the
Plan by the Board nor any submission of the Plan or amendments thereto to a
vote of shareholders of the Company shall be construed as creating any
limitations on the 


 

















 


power of the Board or Committee 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.


 


15.  Choice of 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 the State of New York.


 


16.  Effectiveness of the
Plan and Plan Termination


 


The Plan became effective as
of the Effective Date. The Plan will terminate at such time as no Shares remain
available for issuance and the Company has no further obligations with respect
to outstanding Awards.