-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HvbXYdvJv9oBs4LiMxkmYPJBWJiARgOI5D1KPksix5e8oxOswgDQq7JVCrvpMd4r JYwwkpUaKCOgrz2AUD6Q8g== 0000927796-03-000643.txt : 20030814 0000927796-03-000643.hdr.sgml : 20030814 20030814165416 ACCESSION NUMBER: 0000927796-03-000643 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20030731 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DENDRITE INTERNATIONAL INC CENTRAL INDEX KEY: 0000880321 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 222786386 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16379 FILM NUMBER: 03848502 BUSINESS ADDRESS: STREET 1: 1200 MOUNT KEMBLE AVE CITY: MORRISTOWN STATE: NJ ZIP: 07960 BUSINESS PHONE: 2014251200 MAIL ADDRESS: STREET 1: 1200 MOUNT KEMBLE AVE CITY: MORRISTOWN STATE: NJ ZIP: 07960-6797 10-Q 1 august1303-10q.htm Form 10-Q for the quarterly period ended June 30, 2003

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended June 30, 2003

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _ to _

Commission File Number 0-26138

Dendrite International, Inc.

(Exact name of registrant as specified in its charter)

New Jersey

22-2786386

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

1200 Mount Kemble Avenue
Morristown, NJ 07960
————————————————————
(Address, including zip code, of
principal executive offices)

(973) 425-1200
————————————————————
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [ X ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act): [ X ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date: at August 11, 2003 there were 40,419,646 shares of common stock outstanding.

DENDRITE INTERNATIONAL, INC.
INDEX

PAGE NO

PART I.

FINANCIAL INFORMATION

ITEM 1.

Financial Statements

Consolidated Statements of Operations (unaudited)
Three months and six months ended June 30, 2003 and 2002

Consolidated Balance Sheets
June 30, 2003 (unaudited) and December 31, 2002

Consolidated Statements of Cash Flows (unaudited)
Six months ended June 30, 2003 and 2002

Notes to Unaudited Consolidated Financial Statements

ITEM 2.

Management’s Discussion and Analysis of Financial Condition
and Results of Operations

ITEM 4.

Controls and Procedures

PART II.

OTHER INFORMATION

ITEM 4.

Submission of Matters to a Vote of Security Holders

ITEM 6.

Exhibits and Reports on Form 8-K

Signatures

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

	Three Months Ended June 30,			Six Months Ended June 30,

	2003	2002		2003	2002

Revenues:
License fees	$ 2,752	$ 2,306		$ 5,315	$ 5,485
Services	66,776	55,306		123,923	109,570

	69,528	57,612		129,238	115,055

Cost of revenues:
Cost of license fees	1,204	1,007		2,283	2,251
Cost of services	33,578	27,748		62,318	56,656

	34,782	28,755		64,601	58,907

Gross margin:
License gross margin	1,548	1,299		3,032	3,234
Services gross margin	33,198	27,558		61,605	52,914

	34,746	28,857		64,637	56,148

Operating expenses:
Selling, general and administrative	20,983	19,488		41,222	38,987
Research and development	3,215	2,455		5,912	5,083

	24,198	21,943		47,134	44,070

Operating income	10,548	6,914		17,503	12,078
Interest income	312	288		554	592
Other income (expense)	25	(21	)	34	38

Income before income taxes	10,885	7,181		18,091	12,708
Income tax expense	4,962	2,585		7,844	4,575

Net income	$ 5,923	$ 4,596		$ 10,247	$ 8,133

Net income per share:
Basic	$ 0.15	$ 0.12		$ 0.26	$ 0.20

Diluted	$ 0.14	$ 0.11		$ 0.25	$ 0.20

Shares used in computing net income per
share:
Basic	40,220	39,921		40,115	39,818

Diluted	41,101	40,321		40,704	40,269

The accompanying notes are an integral part of these statements.

3

DENDRITE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

	June 30, 2003 (unaudited)		December 31, 2002

Assets
Current Assets:
Cash and cash equivalents	$ 23,189		$ 68,308
Short-term investments	--		1,295
Accounts receivable, net	69,740		39,853
Prepaid expenses and other current assets	7,628		4,962
Deferred taxes	12,808		3,380
Facility held for sale	6,900		6,900

Total current assets	120,265		124,698
Property and equipment, net	33,136		26,377
Other assets	2,914		1,713
Long-term receivable	3,157		6,314
Goodwill	68,504		12,353
Intangible assets, net	29,825		2,973
Purchased capitalized software, net	4,560		2,275
Capitalized software development costs, net	5,608		5,605
Deferred taxes	1,584		6,168

	$ 269,553		$ 188,476

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$ 14,116		$ 1,274
Income taxes payable	7,628		5,659
Capital lease obligations	1,166		615
Accrued compensation and benefits	15,039		5,055
Other accrued expenses	28,345		16,749
Purchase accounting restructuring accrual	15,107		1,188
Accrued restructuring charge	--		260
Deferred revenues	17,277		7,861

Total current liabilities	98,678		38,661

Capital lease obligations	789		275
Purchase accounting restructuring accrual	9,482		2,064
Other non-current liabilities	692		717
Stockholders' Equity
Preferred Stock, no par value, 15,000,000 shares
authorized, none issued	--		--
Common Stock, no par value, 150,000,000 shares authorized,
42,559,074 and 42,156,344 shares issued; 40,336,374 and
39,933,644 shares outstanding	95,819		93,037
Retained earnings	87,123		76,876
Deferred compensation	(39	)	(76	)
Accumulated other comprehensive loss	(2,115	)	(2,202	)
Less treasury stock, at cost	(20,876	)	(20,876	)

Total stockholders' equity	159,912		146,759

	$ 269,553		$ 188,476

The accompanying notes are an integral part of these statements.

4

DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

	Six Months Ended June 30,

	2003		2002

Operating activities:
Net income	$ 10,247		$ 8,133
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization	8,564		6,632
Amortization of deferred compensation, net of forfeitures	(54	)	17
Deferred taxes	608		--
Changes in assets and liabilities:
Decrease (increase) in accounts receivable	6,858		(2,929	)
Increase in prepaid expenses and other	(671	)	(290	)
Increase in other assets	(262	)	--
Decrease in prepaid income taxes	--		736
Decrease in accounts payable and accrued expenses	(16,100	)	(4,923	)
Increase in income taxes payable	58		--
Decrease in accrued restructuring charge	(260	)	(1,504	)
Decrease in deferred revenues	(1,130	)	(2,158	)
Increase in other non-current liabilities	68		95

Net cash provided by operating activities	7,926		3,809

Investing activities:
Purchases of short-term investments	--		(13,389	)
Sales of short-term investments	1,294		6,383
Acquisition, net of cash acquired	(51,682	)	--
Increase in other non-current assets	(50	)	(600	)
Purchases of property and equipment	(3,905	)	(7,224	)
Additions to capitalized software development costs	(1,382	)	(1,161	)

Net cash used in investing activities	(55,725	)	(15,991	)

Financing activities:
Borrowings from line of credit	5,000		--
Repayments of line of credit	(5,000	)	--
Payments on capital lease obligations	(251	)	--
Issuance of common stock	2,530		2,010

Net cash provided by financing activities	2,279		2,010

Effect of exchange rate changes on cash	401		199
Net decrease in cash and cash equivalents	(45,119	)	(9,973	)
Cash and cash equivalents, beginning of period	68,308		65,494

Cash and cash equivalents, end of period	$ 23,189		$ 55,521

The accompanying notes are an integral part of these statements.

5

DENDRITE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements of Dendrite International, Inc. and its subsidiaries (the “Company”) included in this Form 10-Q are unaudited and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the three and six month periods ended June 30, 2003 and 2002. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Forms 10-K and 10-K/A for the year ended December 31, 2002.

Our interim operating results may not be indicative of operating results for the full year.

2. Net Income Per Share

Basic net income per share was computed by dividing the net income for each period by the weighted average number of shares of common stock outstanding for each period. Diluted net income per share was computed by dividing net income for each period by the weighted average number of shares of common stock and common stock equivalents (stock options) outstanding during each period. For the three and six months ended June 30, 2003 common stock equivalents used in computing diluted net income per share were 880,000 and 589,000 shares, respectively. For the three and six months ended June 30, 2002 common stock equivalents used in computing diluted net income per share were 400,000 and 451,000 shares, respectively.

3. Comprehensive Income

Assets and liabilities of the Company’s wholly-owned international subsidiaries are translated at their respective period-end exchange rates and revenues and expenses are translated at average currency exchange rates for the period. The resulting foreign currency translation adjustments from assets and liabilities are included as “Accumulated other comprehensive loss” and are reflected as a separate component of stockholders’ equity. Total after-tax comprehensive income, which is calculated by adding the foreign currency translation adjustment to net income, for the three months ended June 30, 2003 was $6,139,000 compared to $4,874,000 for the three months ended June 30, 2002. Total after-tax comprehensive income for the six months ended June 30, 2003 was $10,334,000 compared to $8,207,000 for the six months ended June 30, 2002.

4. Reclassifications

Certain prior period balances have been reclassified to conform with current year presentation.

5. Stock Based Compensation

The Company has adopted the disclosure requirements of Statement of Financial Accounting Standards (“SFAS”) 123, “Accounting for Stock-Based Compensation”, as amended by SFAS 148 “Accounting for Stock-Based Compensation – Transition and Disclosure”. The Company applies Accounting Principles Board (“APB”) 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for stock options granted under the Company’s stock option plans (the “Plans”). Accordingly, compensation cost has been computed for the Plans based on the intrinsic value of the stock option at the date of grant, which represents the difference between the exercise price and the fair value of the Company’s stock. As the exercise price of all stock options granted equaled the fair value of the Company’s stock at the date of option issuance, no compensation cost related to stock options has been recorded in the accompanying statements of operations. Had compensation cost for the Plans and the employee stock purchase plan been determined consistent with SFAS 123, the Company’s net income and net income per share would have been adjusted to the following pro forma amounts:

	For the Three Months Ended				For the Six Months Ended

	2003		2002		2003		2002

Net income as reported	$ 5,923,000		$ 4,596,000		$ 10,247,000		$ 8,133,000

Add/(Deduct): Deferred compensation
amortization, net of forfeitures recognized
in accordance with APB 25, net of related	(2,000	)	3,000		(32,000	)	11,000
tax effects

Deduct: Total stock-based employee
compensation expense determined under the
fair value based method for all awards, net	(3,199,000	)	(4,092,000	)	(6,140,000	)	(7,909,000	)
of related tax effects

Pro forma net income	$ 2,722,000		$ 507,000		$ 4,075,000		$ 235,000


Earnings per share:
Basic - as reported	$ 0	.15	$ 0	.12	$ 0	.26	$ 0	.20
Basic - pro forma	$ 0	.07	$ 0	.01	$ 0	.10	$ 0	.01

Diluted - as reported	$ 0	.14	$ 0	.11	$ 0	.25	$ 0	.20
Diluted - pro forma	$ 0	.07	$ 0	.01	$ 0	.10	$ 0	.01

6. Restructuring Charge

The activity in accrued restructuring as of June 30, 2003 is summarized in the table below:

	Accrued Restructuring as of January 1, 2003	Cash Payments in 2003	Accrued Restructuring as of June 30, 2003

Termination payments to employees	$260,000	$260,000	-

	$260,000	$260,000	-

7. Acquisitions

On September 19, 2002, the Company acquired Software Associates International (“SAI”), a privately-held company based in New Jersey. SAI provided software products and solutions that enhanced corporate level sales and marketing analysis for pharmaceutical companies. These solutions are complementary to the Company’s core suite of business products. The results of SAI’s operations have been included in the Consolidated Financial Statements since the acquisition date.

The aggregate purchase price was approximately $16,739,000 which included: cash of approximately $15,092,000 (approximately $1,600,000 in escrow as of June 30, 2003); accrued professional service fees of approximately $410,000; and options to purchase Dendrite common stock valued at approximately $1,237,000. The fair value of the stock options was estimated using the Black-Scholes valuation model. The Company is in the process of finalizing a third-party valuation of certain intangible assets and its own evaluation of acquired facilities, and therefore, the purchase price allocation is preliminary and subject to adjustment.

On June 16, 2003, the Company completed its acquisition of Synavant Inc. (“Synavant”). Synavant provided a broad range of knowledge-based services to biopharmaceutical and healthcare companies around the world. Its comprehensive global solutions included pharmaceutical Customer Relationship Management (CRM) and e-Business applications, interactive marketing, server and database management, dedicated local helpline support, training, telemarketing, sample management, and product recall services. Synavant was headquartered in Atlanta, Georgia and had offices in 21 countries. The combining of the resources of Synavant with Dendrite created a comprehensive information, software, and services company dedicated to the global pharmaceutical industry, and further enhanced Dendrite’s ability to provide market leading solutions to the sales, marketing and clinical functions of pharmaceutical and other life science companies. The results of Synavant’s operations have been included in the accompanying Consolidated Financial Statements since the date of acquisition.

The Synavant acquisition was completed pursuant to an Agreement and Plan of Merger, dated as of May 9, 2003 and amended as of May 16, 2003 (as amended, the “Merger Agreement”) by and among Dendrite, Synavant, and Amgis Acquisition Co. (“Amgis”), a wholly-owned subsidiary of Dendrite. Amgis and Dendrite conducted an all cash tender offer followed by a second step merger, to acquire all of the outstanding shares of common stock of Synavant, at a price of $3.22 per share. The consideration paid in the acquisition was a result of a bidding process and arms-length negotiations between the executive officers and the boards of directors of Synavant and Dendrite.

A condensed balance sheet of Synavant, reflecting the amount assigned to each major asset and liability category as of June 16, 2003 is as follows (thousands):


Assets Acquired
Current assets
Cash		$ 1,042
Accounts receivable		30,138
Other current assets		2,861

Total current assets		34,041
Long-term assets
Property and equipment		8,876
Other assets		8,623
Intangibles		29,900
Goodwill		56,101

Total assets		137,541

Liabilities Assumed
Current liabilities
Restructuring reserve - current		$ 14,184
Deferred revenue		10,401
Other current liabilities		49,664

Total current liabilities		74,249
Long-term liabilities
Restructuring reserve - long-term		7,918
Other long-term liabilities		561

Total liabilities		82,728

Net assets acquired		$ 54,813

In connection with the Synavant acquisition, the Company recorded $56,101,000 of goodwill and $29,900,000 of acquired intangible assets of which approximately $6,000,000 was assigned to Trademarks, which are not subject to amortization. The remaining $23,900,000 (approximately 11 year weighted average amortization period) has been assigned to the following intangible assets: non-compete agreements — $2,100,000 (3 year amortization); backlog — $4,500,000 (3 year amortization); purchased capitalized software — $2,600,000 (10 year amortization); and customer relationships — $14,700,000 (15 year amortization). The goodwill and intangible assets recorded for financial statement purposes are not deductible for tax purposes. The Company is in the process of finalizing a third party valuation of certain intangible assets, as well as its evaluation of acquired facilities and personnel for redundancy and, therefore, the purchase price allocation is preliminary and subject to adjustment.

Pro-forma results of operations of the Company as if the Synavant and SAI acquisitions had occurred as of January 1, 2002 for the three and six month periods ended June 30, 2003 are as follows:

	For the Three Months Ended			For the Six Months Ended
	June 30, 2003 (A)		June 30, 2002	June 30, 2003 (B)		June 30, 2002

Revenue	$ 99,796,000		$ 106,089,000	$ 194,321,000		$ 213,378,000
Net income (loss)	$ (4,813,000	)	$ 2,965,000	$ (7,869,000	)	$ 4,227,000
Basic income (loss) per share	$ (0.12	)	$ 0.07	$ (0.20	)	$ 0.10
Diluted income (loss) per	$ (0.12	)	$ 0.07	$ (0.19	)	$ 0.10
share

(A) Net income (loss) includes approximately $500,000 of restructuring charges from Synavant as well as early termination fees related to Synavant’s lines of credit of approximately $800,000

(B) Net income (loss) includes approximately $1,300,000 of restructuring charges from Synavant as well as early termination fees related to Synavant’s lines of credit of approximately $1,850,000

8. Purchase Accounting Restructuring Accrual

In connection with the acquisition of SAI, discussed in Note 7, the Company developed an exit plan to close SAI’s facility in Mt. Arlington, New Jersey and to relocate the operations to other Company facilities in New Jersey. The Company accrued as part of the acquisition costs the costs to terminate certain leases amounting to $3,252,000. The Company exited the facility during the first quarter of 2003. The activity related to the SAI purchase accounting restructuring accrual as of June 30, 2003 is summarized in the table below:

	Purchase accounting restructuring accrual as of January 1, 2003	Cash Payments in 2003	Purchase accounting restructuring accrual as of June 30, 2003

Lease termination costs	$3,252,000	$ 489,000	$2,763,000

	$3,252,000	$ 489,000	$2,763,000

In connection with the acquisition of Synavant, discussed in Note 7, the Company plans to restructure the Synavant operations, to exit certain facilities of Synavant and to terminate the employment of certain Synavant employees in connection with the restructuring. The Company has accrued approximately $22,102,000 at June 16, 2003 for liabilities associated with the cost of completing the restructuring plan. The components of this accrued liability are as follows; severance costs for Synavant employees being involuntarily terminated as a result of the acquisition — approximately $13,042,000 and costs to exit facilities for Synavant facilities being vacated as a result of the acquisition — approximately $9,060,000.

The liability accrued for expenses incurred in exiting certain facilities of Synavant includes assumptions related to sublease income offsetting future lease obligations. The underlying subleases are not in place for all facilities and the future placement of subleases including timing of subleases and terms and conditions of subleases could be different than the assumptions.

The Company anticipates that the majority of the accrued restructuring balance relating to terminated employees will be utilized during 2004. The activity related to the Synavant purchase accounting restructuring accrual as of June 30, 2003 is summarized in the table below:

	Purchase accounting restructuring accrual as of June 16, 2003	Cash Payments in 2003	Purchase accounting restructuring accrual as of June 30, 2003

Termination payments to employees	$13,042,000	$ 266,000	$12,776,000
Facility exit costs	9,060,000	10,000	9,050,000

	$22,102,000	$ 276,000	$21,826,000

9. Goodwill and Intangible Assets

Effective January 1, 2002 the Company adopted SFAS 142, “Goodwill and other Intangible Assets.” SFAS 142 requires that goodwill and certain intangibles no longer be amortized, but instead be tested for impairment at least annually. SFAS 142 also requires that intangible assets with finite useful lives be amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS 121, which was superceded by SFAS 144. Based on the Company’s analysis, there was no impairment of goodwill upon adoption of SFAS 142 on January 1, 2002. The Company conducts its annual impairment testing of goodwill on October 1 of each year. For the year ended December 31, 2002 there was no impairment recorded.

The total gross carrying amount and accumulated amortization for goodwill and intangible assets are as follows:

	As of June 30, 2003			As of December 31, 2002

	Gross	Accumulated Amortization	Net	Gross	Accumulated Amortization	Net

INTANGIBLE ASSETS SUBJECT TO
AMORTIZATION
Purchased capitalized software	$ 5,041,000	$ 481,000	$ 4,560,000	$ 2,441,000	$ 166,000	$ 2,275,000
Capitalized software
development costs	18,928,000	13,320,000	5,608,000	17,546,000	11,941,000	5,605,000
Customer relationship assets	15,893,000	438,000	15,455,000	1,193,000	132,000	1,061,000
Backlog	4,500,000	62,000	4,438,000	--	--	--
Non-compete covenants	3,344,000	144,000	3,200,000	1,217,000	37,000	1,180,000

Total	47,706,000	14,445,000	33,261,000	22,397,000	12,276,000	10,121,000
INTANGIBLE ASSETS NOT SUBJECT
TO AMORTIZATION
Goodwill	68,504,000	--	68,504,000	12,353,000	--	12,353,000
Trademarks	6,732,000	--	6,732,000	732,000	--	732,000

Total	75,236,000	--	75,236,000	13,085,000	--	13,085,000

Total goodwill and intangible
assets	$122,942,000	$14,445,000	$108,497,000	$35,482,000	$12,276,000	$23,206,000

The activity in the carrying amount of goodwill for the six month period ended June 30, 2003 is as follows:

	Balance as of January 1, 2003	Additions	Balance as of June 30, 2003

Goodwill	$12,353,000	$56,151,000	$68,504,000

Aggregate annual amortization expense for intangible assets is estimated to be:

Year ending December 31,
2003		$ 6,575,000
2004		7,369,000
2005		5,626,000
2006		2,924,000
2007		1,240,000
Thereafter		11,669,000

10. Line of Credit

The Company entered into a credit agreement (the “Agreement”) as of June 16, 2003, in the amount of $30 million with JPMorgan Chase Bank as the agent. The Agreement replaces the $15 million credit facility, which was terminated. The Agreement is available to finance working capital needs and possible future acquisitions. The terms of this Agreement require the Company to maintain a minimum consolidated net worth, among other covenants, measured quarterly, which is equal to $130 million, plus 50% of net income earned after April 1, 2003 and 75% of net proceeds of any offering of new equity interests issued after June 30, 2003. This covenant effectively limits the amount of any cash dividends. The Agreement expires on July 1, 2005. During the second quarter of 2003, the Company borrowed $5,000,000 from the line of credit under the Agreement, which was repaid prior to June 30, 2003. At June 30, 2003, there were no borrowings outstanding under the Agreement and the Company was in compliance with all of covenant obligations.

11. Customer and Geographic Segment Data

For the three months ended June 30, 2003 and 2002, the Company derived approximately 44% of its revenues from its largest customer and approximately 46% of its revenues from its largest two customers, respectively. For the six months ended June 30, 2003 and 2002, the Company derived approximately 45% of its revenues from its largest customer, and approximately 55% of its revenues from its three largest customers, respectively.

The Company is organized by geographic locations and has one reportable segment. All transfers between geographic areas have been eliminated from consolidated revenues. Operating income consists of total revenues recorded in the location less operating expenses and does not include interest income, other expense or income taxes. This data is presented in accordance with SFAS 131, “Disclosure About Segments of an Enterprise and Related Information.”

	For the three months ended June 30,		For the six months ended June 30,

	2003	2002	2003	2002

Revenues:
United States	$52,249,000	$ 46,671,000	$ 99,845,000	$ 93,476,000
All Other	17,279,000	10,941,000	29,393,000	21,579,000

	$69,528,000	$ 57,612,000	$129,238,000	$115,055,000

Operating income:
United States	$ 7,949,000	$ 5,234,000	$ 12,555,000	$ 8,499,000
All Other	2,599,000	1,680,000	4,948,000	3,579,000

	$10,548,000	$ 6,914,000	$ 17,503,000	$ 12,078,000

	June 30, 2003	December 31, 2002

Identifiable assets:
United States	$195,451,000	$161,477,000
All Other	74,102,000	26,999,000

	$269,553,000	$188,476,000

For segment reporting purposes, license revenues have been allocated to the sales office of the respective country in which the sale is made, although the actual contract is with the U.S. entity for legal and tax purposes.

12. Income Taxes

In connection with the integration of the Synavant acquisition discussed in Note 7, the Company performed a reforecast of projected taxable income by jurisdiction and recognized a full valuation allowance on net operating loss carry forward for one of its foreign subsidiaries of approximately $608,000.

13. Recent Accounting Pronouncements

In November 2002, the FASB issued EITF Issues 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”). EITF 00-21 addresses the accounting for arrangements that involve the delivery or performance of multiple products, services or rights to use assets. This consensus is applicable to arrangements entered after June 15, 2003. The Company adopted EITF 00-21 on June 15, 2003, and it did not have a material impact on its consolidated financial statements.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

This Form 10-Q may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21-E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by such acts. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our strategy, future operations, future expectations or future estimates, future financial position and future plans and objectives of management. Those statements in this Form 10-Q containing the words “believes”, “anticipates”, “plans”, “expects” and similar expressions constitute forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our Company and the pharmaceutical and consumer packaged goods industries. All such forward-looking statements involve significant risks and uncertainties, including those risks identified in this Form 10-Q under “Factors That May Affect Future Operating Results”, many of which are beyond our control. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate and actual results may differ materially from those indicated by the forward-looking statements included in this Form 10-Q, as more fully described under “Factors That May Affect Future Operating Results”. In light of the significant uncertainties inherent in the forward-looking statements included in this Form 10-Q, you should not consider the inclusion of such information as a representation by us or anyone else that we will achieve such results. Moreover, we assume no obligation to update these forward-looking statements to reflect actual results. In addition, our financial and performance outlook concerning future revenues, margins, earnings and earnings per share and other operating or performance results does not include the impact of any future acquisitions or future acquisition-related expenses or any future restructuring or other charges that may occur from time to time due to management decisions and changing business circumstances and conditions.

OVERVIEW

Co-founded in 1986 by John E. Bailye, the Company’s Chairman and Chief Executive Officer, and incorporated in 1987, Dendrite was established to provide sales force automation solutions for the pharmaceutical industry. Since then, it has broadened its offerings to include multiple sales and marketing solutions and related services to life sciences clients. Dendrite’s solutions now comprise a broad array of knowledge-based, technology-driven solutions that increase the effectiveness of sales, marketing, and clinical processes for pharmaceutical and other life sciences clients, including: Customer Relationship Management (CRM) Solutions, Information Management, Business Intelligence and Analytics, and Commercial Operations Management.

Dendrite’s primary markets are the United States, the United Kingdom, France, Spain and Japan. We bill services provided by our foreign branches and subsidiaries in local currencies. Operating results generated in local currencies are translated into U.S. dollars at the average exchange rate in effect for the reporting period. We generated approximately 19% of our total revenues outside the United States during each of the six months ended June 30, 2003 and 2002. Our operating profits by geographic segment are shown in Note 11 of the Notes to Unaudited Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

Securities and Exchange Commission Financial Reporting Release 60 requires companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. A critical accounting policy is one that is both very important to the portrayal of a company’s financial position and results of operations, and requires management’s most difficult, subjective or complex judgments. The Company believes its critical accounting policies to be revenue recognition, accounting for restructuring, acquisitions, impairments and income taxes.

Revenue Recognition
The area of revenue recognition requires the Company’s management to make significant judgments and estimates. AICPA Statement of Position (SOP) 97-2, “Software Revenue Recognition”, governs revenue recognition for arrangements that include software which is more than incidental to the arrangement. Under SOP 97-2, if a sale of software includes services that are essential to the functionality of the software, then the entire arrangement is to be accounted for using contract accounting as described in Accounting Research Bulletin 45, “Long-Term Construction-Type Contracts”, and SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts.” The determination of whether or not services are essential to the functionality of the software can differ from arrangement to arrangement, and requires the use of significant judgment by management. Factors used in determining whether or not services are essential to the functionality may include: whether or not physical changes are being made to the software’s underlying source code; the complexity of software configuration services; the level of effort required to build interfaces; the overall relationship of the service fees to the license fees; the length of time expected to complete the services and whether or not the services can be obtained by a customer from their internal resources or another third-party vendor. If services are not considered to be essential to the software, SOP 97-2 generally allows companies to recognize revenue for software licenses upon delivery of the licenses, prior to configuration or implementation services, provided that the other requirements of the SOP are met. In management’s judgment, the Company’s configuration and implementation services generally are essential to the functionality of its software. Therefore, the Company typically recognizes revenues using the percentage-of-completion method as detailed in SOP 81-1.

The Company’s arrangements are segmented, in accordance with SOP 81-1, into two primary elements or profit centers, one being the license fee and implementation service element and the other being an ongoing sales force support services element. The Company believes that its arrangements meet all of the criteria under SOP 81-1 to allow for the segmentation of the two elements. If the segmentation criteria could not be met, it would result in recognition of the Company’s license and implementation service revenues over the term of its multi-year support service agreements.

The percentage-of-completion method of revenue recognition requires management to use significant estimates in measuring the progress-to-completion for each project. For its license fee and implementation service projects, the Company uses the input measure of labor incurred as compared with total expected labor for the entire project. The determination of total project labor requires the use of significant judgment and estimates. We review these estimates on a monthly basis. Actual results could differ from these estimates, which would have impacted the amount of revenue previously recognized, had better estimates been available at the time.

Accounting for Restructuring
During 2001, the Company recognized costs in connection with a restructuring plan, which involved a reduction in size of the Company’s work force, downsizing of certain facilities and relocation of certain activities. During 2002, in connection with the purchase accounting related to the acquisition of SAI, the Company established an accrual related to costs in connection with exiting SAI’s facility. During 2003, in connection with the purchase accounting related to the acquisition of Synavant, the Company established an accrual related to costs in connection with exiting multiple Synavant facilities as well as a reduction in the size of the work force.

Accounting for Acquisitions
The purchase combinations carried out by us require management to estimate the fair value of the assets acquired and liabilities assumed in the combinations. These estimates of fair value are based on our business plan for the entities acquired including planned redundancies, restructuring, use of assets acquired and assumptions as to the ultimate resolution of obligations assumed for which no future benefit will be received. We also utilize appraisal reports issued by independent appraisers. Should actual use of assets or resolution of obligations differ from our estimates, revisions to the estimated fair values would be required.

Accounting for Impairments
We review long-lived assets other than goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. If indicators of impairment are present, we evaluate the recoverability of the long-lived assets by estimating future undiscounted cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the long-lived asset. If this estimate of future undiscounted cash flows demonstrates that recoverability is not probable, an impairment loss would be calculated and recognized. An impairment loss would be calculated based on the excess carrying amount of the long-lived asset over the long-lived asset’s fair value. The estimate of the fair value and the future undiscounted cash flows of the underlying long-lived assets are based on significant judgment and assumptions.

We review capitalized software development costs and purchased capitalized development software costs for impairment at each balance sheet date to determine if the unamortized capitalized costs of a computer software product is greater than the net realizable value of that product. In those instances where the unamortized capitalized costs are greater than the net realizable value, we will record an impairment.

We assess the impairment of goodwill and indefinite lived intangibles on an annual basis (October 1 of each year), and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Some factors we consider important which could trigger an impairment review include the following:

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Significant underperformance relative to expected historical or projected future operating results;

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Significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and

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Significant negative industry or economic trends.

On an annual basis, or when we determine that the carrying value of goodwill and indefinite lived intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment, we compare the fair value of the reporting unit to its carrying value, including goodwill (step one of the required test). If the carrying value exceeds fair value, we would perform step two of the required test. Under step two, we would calculate the implied fair value of the goodwill for the reporting unit and compare it to the carrying value of the goodwill for the reporting unit. If the implied fair value of the goodwill is less than the carrying value of the goodwill, we would recognize in our Statement of Operations an impairment loss equal to such difference, not to exceed the carrying value.

Accounting for Income Taxes
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing temporary differences, all of which require significant management judgments. Realization is dependent on generating sufficient taxable income of a correct character prior to the expiration of the loss carryforwards, capital loss and foreign tax credit carryforwards. Although realization is not assured, management currently believes it is more likely than not that the recorded net deferred tax asset will be realized; however, the asset could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

RECENT DEVELOPMENTS

On June 16, 2003, the Company completed its acquisition of Synavant. Synavant provided a broad range of knowledge-based services to biopharmaceutical and healthcare companies around the world. Its comprehensive global solutions included pharmaceutical Customer Relationship Management (CRM) and e-Business applications, interactive marketing, server and database management, dedicated local helpline support, training, telemarketing, sample management, and product recall services. Synavant was headquartered in Atlanta, Georgia, USA and had offices in 21 countries. The combining of the resources of Synavant with Dendrite created a comprehensive information, software, and services company dedicated to the global pharmaceutical industry, and further enhanced Dendrite’s ability to provide market leading solutions to the sales, marketing and clinical functions of pharmaceutical and other life science companies. The results of Synavant’s operations have been included in the accompanying Consolidated Financial Statements since the date of acquisition.

The acquisition was completed pursuant to an Agreement and Plan of Merger, dated as of May 9, 2003 and amended as of May 16, 2003 (as amended, the “Merger Agreement”) by and among Dendrite, Synavant, and Amgis Acquisition Co. (“Amgis”), a wholly-owned subsidiary of Dendrite. Amgis and Dendrite conducted an all cash tender offer followed by a second step merger to acquire all of the outstanding shares of common stock of Synavant, at a price of $3.22 per share. The consideration paid in the acquisition was a result of a bidding process and arms-length negotiations between the executive officers and the boards of directors of Synavant and Dendrite.

The aggregate purchase price was approximately $54,813,000 and included consideration paid for the common stock and approximately $3,128,000 of legal and professional fees incurred in connection with the transaction. The Company is in the process of finalizing a third party valuation of certain intangible assets, its evaluation of acquired facilities and personnel for redundancy and, therefore, the purchase price allocation is preliminary and subject to adjustment.

In connection with the acquisition of Synavant the Company plans to restructure the Synavant operations, to exit certain facilities of Synavant and to terminate the employment of certain Synavant employees in connection with the restructuring. The Company has accrued approximately $22,102,000 at June 16, 2003 for liabilities associated with the cost of completing the restructuring plan. The components of this accrued liability are as follows; severance costs for Synavant employees being involuntarily terminated as a result of the acquisition — approximately $13,042,000 and costs to exit facilities for Synavant facilities being vacated as a result of the acquisition — approximately $9,060,000.

RESULTS OF OPERATIONS

In the following discussion of the Company’s results of operations includes the results of Synavant for the period from the June 16, 2003 acquisition date. The following discussion of our results of operations also, where indicated, segregates the results of Synavant. The discussion also reconciles the segregated Synavant results to total Company results. The Company believes that segregating Synavant’s results from the date of acquisition provides investors with useful information, on a comparative basis, on the impact of Synavant on overall Company operations for the three and six months ended June 30, 2003.

THREE MONTHS ENDED JUNE 30, 2003 AND 2002

REVENUES. Total revenues increased to $69,528,000 in the three months ended June 30, 2003, up $11,916,000 or 21% from $57,612,000 in the three months ended June 30, 2002. Total revenues for the three months ended June 30, 2003 includes $7,426,000 of revenues recognized from Synavant subsequent to the Company’s acquisition. Due to the timing of several large deals within the quarter, Synavant performed a substantial amount of services during the last two weeks of the quarter which caused a higher than expected amount of revenue to be recognized. Excluding the revenue recognized from Synavant, revenues increased by $4,490,000, or 8%, in the three months ended June 30, 2003 over the prior year period.

License fee revenues increased to $2,752,000 in the three months ended June 30, 2003, up $446,000 or 19% from $2,306,000 in the three months ended June 30, 2002. License fee revenues as a percentage of total revenues were 4% in the three months ended June 30, 2003 and June 30, 2002. License fee revenues for the three months ended June 30, 2003 includes $86,000 of revenues recognized from Synavant subsequent to the Company’s acquisition. Excluding the results of Synavant, license fee revenues increased $360,000, or 16% in the three months ended June 30, 2003 over the prior year period. The increase in license revenues was driven by additional users in our Japanese market.

Service revenues increased to $66,776,000 in the three months ended June 30, 2003, up $11,470,000 or 21% from $55,306,000 in the three months ended June 30, 2002. Service revenues for the three months ended June 30, 2003 includes $7,340,000 of revenue recognized from Synavant subsequent to the Company’s acquisition. Excluding the results of Synavant, service revenues increased $4,130,000, or 7%, in the three months ended June 30, 2003 over the prior year period. This increase is a result of approximately 20% growth in our technical services revenue, approximately 19% increase in our international services, and growth in consulting and data businesses of more than 100%. This increase was offset by a decrease in our low gross margin or reimbursable revenue of approximately $2,464,000 to $1,025,000 for the three months ended June 30, 2003 from $3,489,000 in the three months ended June 30, 2002.

COST OF REVENUES. Total cost of revenues increased to $34,782,000 in the three months ended June 30, 2003, up $6,027,000 or 21% from $28,755,000 in the three months ended June 30, 2002. Total cost of revenues in the three months ended June 30, 2003 includes $4,858,000 of costs recognized from Synavant subsequent to the acquisition. Excluding the results of Synavant, cost of revenues increased $1,169,000, or 4% for three months ended June 30, 2003 over the prior year period.

Cost of license fees increased to $1,204,000 in the three months ended June 30, 2003, up $197,000 or 20% from $1,007,000 in the three months ended June 30, 2002. Cost of license fees for the three months ended June 30, 2003 is comprised of the amortization of capitalized and purchased software costs of $850,000 and third party-vendor license fees of $354,000. Cost of license fees for the same period in 2002 is comprised of the amortization of capitalized and purchased software costs of $648,000 and third party vendor license fees of $359,000. The increase in amortization of capitalized and purchased software costs relates primarily to amortization of the assets obtained from the acquisitions of SAI while third party vendor license fees remained relatively constant.

Cost of services increased to $33,578,000 in the three months ended June 30, 2003, up $5,830,000 or 21% from $27,748,000 in the three months ended June 30, 2002. This increase was due primarily to a $4,858,000 incremental increase in cost of services related to the Synavant acquisition. Excluding the results of Synavant, cost of services for the period increased $972,000 or 4% over the prior year period. This increase is due to the additional costs from the increase in headcount due to the acquisition of SAI in September 2002 as well as additional outside consultants related to the integration work for our largest customer. These increases were offset by a decrease in low-gross margin or reimbursable revenue.

GROSS MARGIN. Total gross margin for the three months ended June 30, 2003 and June 30, 2002 was 50%. Excluding the impact of Synavant, as discussed above, total gross margin for the three months ended June 30, 2003 was 52%.

Gross margin for license fees was 56% in the three months ended June 30, 2003 and June 30, 2002. Excluding the result of Synavant, discussed above, gross margin for license fees was 55% for the three months ended June 30, 2003. The gross margin decreased slightly due primarily to an increase in amortization of capitalized and purchased software costs offset by the increase in license fee revenues.

Gross margin for services was 50% in the three months ended June 30, 2003 and June 30, 2002. Excluding the results of Synavant discussed above, gross margin for the three months ended June 30, 2003 was 52%. The gross margin increased due to approximately 20% growth in our technical services revenue, approximately 19% growth in our international services and a decrease in the low gross margin or reimbursable revenue, offset by increase in employment costs related to the increase in headcount from the SAI acquisition as well as additional outside consultants related to the integration work for our largest customer.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A expenses increased to $20,983,000 in the three months ended June 30, 2003, up $1,495,000 or 8% from $19,488,000 in the three months ended June 30, 2002. This increase in expense primarily reflects a $1,246,000 increase in SG&A expenses related to the acquisition of Synavant. Excluding the results of Synavant, SG&A expenses decreased to $19,351,000 or 31% of revenues for the three months ended June 30, 2003, as compared to 34% of revenues for the three months ended June 30, 2002. Improvement in SG&A as a percentage of revenues primarily reflects the positive operating leverage attained through the Company’s acquisition of SAI, as well as the positive impact of the Company’s cost reduction actions in the third quarter of 2002 offset by an increase of amortization expense related to definite lived assets from acquisitions.

RESEARCH AND DEVELOPMENT (R&D) EXPENSES. R&D expenses increased to $3,215,000 in the three months ended June 30, 2003, up $760,000 or 31% from $2,455,000 in the three months ended June 30, 2002. As a percentage of revenues, R&D expenses slightly increased to 5% in the three month period ended June 30, 2003 compared to 4% for the three months ended June 30, 2002. R&D expenses for the three months ended June 30, 2003 includes $198,000 of costs recognized from Synavant subsequent to the acquisition. Excluding the results of Synavant, R&D expenses increased $562,000 or 23% for the three months ended June 30, 2003. This increase relates to higher employment costs due to an increase in headcount from the acquisition of SAI.

PROVISION FOR INCOME TAXES. The effective tax expense rate was 46% in the three months ended June 30, 2003 as compared to 36% for the three months ended June 30, 2002. In connection with the Synavant integration, the Company performed a reforecast of projected taxable income by jurisdiction and recognized a full valuation allowance on net operating loss carryforward for one of its foreign subsidiaries of approximately $608,000 which increased the effective tax expense rate by 6%. Prior to the acquisition of Synavant, the Company’s forecasted effective tax expense rate for the three months ended June 30, 2003 was 40%. In July 2002, the State of New Jersey enacted new tax legislation that adversely impacted the effective state tax rate of most companies operating in New Jersey. At June 30, 2002, the legislation had not yet been enacted and the effective tax rate originally reported for the three months ended June 30, 2002 was 36%.

SIX MONTHS ENDED JUNE 30, 2003 AND 2002

REVENUES. Total revenues increased to $129,238,000 in the six months ended June 30, 2003, up $14,183,000 or 12% from $115,055,000 in the six months ended June 30, 2002. Total revenues for the six months ended June 30, 2003 includes $7,426,000 of revenue recognized from Synavant subsequent to the Company’s acquisition. Due to the timing of several large deals within the quarter, Synavant performed a substantial amount of services during the last two weeks of the quarter which caused a higher than expected amount of revenue to be recognized. Excluding the revenue recognized from Synavant, revenues increase $6,757,000 or 6% for the six months ended June 30, 2003 over the prior year period.

License fee revenues decreased $170,000 or 3% to $5,315,000 in the six months ended June 30, 2003 from $5,485,000 in the six months ended June 30, 2002. License fee revenues as a percentage of total revenues were 4% in the six months ended June 30, 2003, as compared to 5% in the six months ended June 30, 2002. License fee revenues for the six months ended June 30, 2003 includes $86,000 of revenues recognized from Synavant subsequent to the Company’s acquisition. Excluding the results of Synavant, license fee revenues decreased $256,000 or 5% in the six months ended June 30, 2003 over the prior year period. License fees are, by nature, non-recurring items. The majority of license fees recognized during the six months ended June 30, 2003 related to licenses being recognized using the percentage-of-completion method as services were performed.

Service revenues increased to $123,923,000 in the six months ended June 30, 2003, up $14,353,000 or 13% from $109,570,000 in the six months ended June 30, 2002. Service revenues as a percentage of total revenues were 96% in the six months ended June 30, 2003, compared to 95% in the six months ended June 30, 2002. Service revenues for the six months ended June 30, 2003 includes $7,340,000 of revenue recognized from Synavant subsequent to the acquisition. Excluding the results of Synavant, service revenues increased $7,013,000 or 6% compared to the same period for the prior year. The relative increase in service revenues reflects growth of approximately 20% in implementation revenue related to the integration work for our largest customer, growth of approximately 5% in our technical services as well as growth of more than 100% in our data business partially offset by decreases in low gross margin or reimbursable revenue. In addition, favorable foreign currency movements accounted for 2% of the period-on-period growth.

COST OF REVENUES. Total cost of revenues increased to $64,601,000 in the six months ended June 30, 2003, an increase of $5,694,000 or 10% from $58,907,000 in the six months ended June 30, 2002. Total cost of revenues in the six months ended June 30, 2003 includes $4,858,000 of costs recognized from Synavant subsequent to the acquisition. Excluding the results of Synavant, cost of revenues increased $836,000 or 1% compared to the same period for the prior year.

Cost of license fees increased to $2,283,000 in the six months ended June 30, 2003, an increase of $32,000 or 1% from $2,251,000 in the six months ended June 30, 2002. Cost of license fees for the six months ended June 30, 2003 is comprised of the amortization of capitalized and purchased software costs of $1,688,000 and third party vendor license fees of $595,000. Cost of license fees for the same period in 2002 is comprised of the amortization of capitalized and purchased software costs of $1,297,000 and third party vendor license fees of $954,000. The increase in amortization of capitalized and purchased software costs relates primarily to amortization of the assets obtained from the acquisition of SAI, which occurred in September 2002.

Cost of services increased to $62,318,000 in the six months ended June 30, 2003, up $5,662,000 or 10% from $56,656,000 in the six months ended June 30, 2002. This increase was due primarily to the $4,858,000 incremental increase in cost of services related to Synavant’s operations. Excluding the results of Synavant, cost of services increased $804,000 or 1% in the six months ended June 30, 2003 compared to the prior year period. This increase is due to the additional costs from the increase in headcount due to the acquisition of SAI in September 2002 as well as additional outside consultants related to the integration work for our largest customer. These increases were offset by a decrease in low-gross margin or reimbursable revenue.

GROSS MARGIN. Total gross margin for the six months ended June 30, 2003 was 50%, up from 49% for the six months ended June 30, 2002. For the reasons described above, the Synavant acquisition negatively impacted gross margin for the six months ended June 30, 2003 by 1%. Excluding the results of Synavant, total gross margin was 51% for the six months ended June 30, 2003.

Gross margin for license fees was 57% in the six months ended June 30, 2003, down from 59% for the six months ended June 30, 2002. The decrease in gross margin was primarily impacted by decreasing license fee revenue as well as an increase in amortization of capitalized and purchased software costs which relates primarily to amortization of the assets obtained from the acquisition of SAI, which occurred in September 2002.

Gross margin for services was 50% in the six months ended June 30, 2003, up from 48%. The Synavant acquisition negatively impacted gross margin for services for the six months ended June 30, 2003 by 1%. Excluding the impact of Synavant, gross margin for services was 51% in the six months ended June 30, 2003. This increase is driven by a decrease in the amount of low gross margin or reimbursable revenue, increase in implementation revenues of approximately 20% related to the integration work for our largest customer, increase in technical service revenues of approximately 5% as well as growth of more than 100% in our data business partially offset by additional costs from the increase in headcount due to the acquisition of SAI in September 2002 as well as additional outside consultants related to the integration work for our largest customer. Also contributing to margin improvement were the efficiencies gained from the Company’s cost reduction actions in the third quarter of 2002.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A expenses increased to $41,222,000 in the six months ended June 30, 2003, up $2,235,000 or 6% from $38,987,000 in the six months ended June 30, 2002. As a percentage of revenues, SG&A expenses decreased to 32% of revenues in the six months ended June 30, 2003, as compared with 34% of revenues in the six months ended June 30, 2002. The increase in SG&A reflects a $1,246,000 increase related to the acquisition of Synavant. Excluding the results of Synavant, SG&A increased $989,000 or 3%. This increase reflects the additional operating costs from the acquisition of SAI, higher employment costs, higher professional fees and amortization expense related to definite lived assets from acquisitions, partially offset by the impact of the Company’s cost reduction actions in the third quarter of 2002.

RESEARCH AND DEVELOPMENT (R&D) EXPENSES. R&D expenses increased to $5,912,000 in the six months ended June 30, 2003, up $829,000 or 16% from $5,083,000 in the six months ended June 30, 2002. As a percentage of revenues, R&D expenses increased slightly to 5% in the six months ended June 30, 2003, up from 4% in the six months ended 2002. R&D expenses for the six months ended June 30, 2003 includes $198,000 of costs recognized from Synavant subsequent to the acquisition. Excluding the results of Synavant, R&D expenses increased $631,000 or 12% for the six months ended June 30, 2003. This increase relates to higher employment costs due to an increase in headcount from the acquisition of SAI.

PROVISION FOR INCOME TAXES. The effective tax expense recorded in six months ended June 30, 2003 was 43% as compared with 36% in the six months ended June 30, 2002. In connection with the Synavant integration, the Company performed a reforecast of projected taxable income by jurisdiction and recognized a full valuation allowance on net operating loss carryforward for one of its foreign subsidiaries of approximately $608,000, which increased the effective tax expense rate by 3%. Prior to the acquisition of Synavant, the Company’s forecasted effective tax expense rate for the six months ended June 30, 2003 was 40%. In July 2002, the State of New Jersey enacted new tax legislation that adversely impacted the effective state tax rate of most companies operating in New Jersey.

LIQUIDITY AND CAPITAL RESOURCES

We finance our operations primarily through cash generated by operations. Net cash provided by operating activities was $7,926,000 for the six months ended June 30, 2003, compared to $3,809,000 for the six months ended June 30, 2002. This increase in cash provided by operating activities was due primarily to increases in net income and cash collections from accounts receivable and a decrease in the amount of accrued restructuring payments offset by an increase in the amount of accrued expenses paid compared to the prior year period. The increase in accrued expenses paid related primarily to the payment of approximately $16 million of Synavant liabilities as of the acquisition date.

Cash used in investing activities was $55,725,000 in the six months ended June 30, 2003, compared to $15,991,000 in the six months ended June 30, 2002. The increase of $39,734,000 is attributable to the acquisition of Synavant offset by lower purchases of property and equipment as well as no purchases of short term investments during the six months ended June 30, 2003 compared to the prior year period.

Cash provided by financing activities was $2,279,000 in the six months ended June 30, 2003, compared to $2,010,000 in the six months ended June 30, 2002. The increase of $269,000 is attributable to an increase in stock option exercises during the six months ended June 30, 2003. Due to the timing of the disbursement of cash for the acquisition, the Company borrowed $5,000,000 from its line of credit, which was paid back from accounts receivable collections prior to June 30, 2003.

At June 30, 2003, working capital was approximately $21,587,000. Total cash and investments were 9% of total assets as of June 30, 2003, compared with 37% as of December 31, 2002. The Company’s days sales outstanding in accounts receivable was 94 days as of June 30, 2003 compared with 73 days as of December 31, 2002. Excluding the impact of Synavant, the Company’s days sales outstanding as of June 31, 2003 was 61 days. We believe that available funds, anticipated cash flows from operations and our line of credit will satisfy our currently projected working capital and capital expenditure requirements, exclusive of cash required for possible acquisitions of businesses, products and technologies, for the next twelve to eighteen months.

The Company regularly evaluates opportunities to acquire products or businesses complementary to our operations. Such acquisition opportunities, if they arise and are successfully completed, may involve the use of cash or equity instruments.

Contractual Obligations and Commitments

The Company entered into a credit agreement as of June 16, 2003, in the amount of $30 million with JPMorgan Chase Bank as the agent. The credit agreement replaces the $15 million credit facility, which has been terminated. The credit agreement is available to finance working capital needs and possible future acquisitions. The terms of this agreement require us to maintain a minimum consolidated net worth, among other covenants, measured quarterly, which is equal to $130 million, plus 50% of net income earned after April 1, 2003 and 75% of net proceeds of any offering of new equity interests issued after June 30, 2003. This covenant effectively limits the amount of any cash dividends. The credit facility expires on July 1, 2005. At June 30, 2003, there were no borrowings outstanding under the agreement and the Company was in compliance with all of its covenant obligations.

As of June 30, 2003, the Company did not have any material commitments for capital expenditures. Our principal commitments at June 30, 2003 consisted primarily of obligations under operating and capital leases as well as future minimum guarantees to certain vendors. Future minimum payments on these obligations are as follows:

	Payments due by period

Contractual Obligations	Total	2003	2004	2005	2006	2007	Thereafter

Capital Lease Obligations	$ 1,954,000	$ 809,000	$ 986,000	$ 159,000	--	--	--

Minimum Guarantees	1,066,000	625,000	441,000	--	--	--	--


Operating Leases	$84,668,000	$ 9,475,000	15,560,000	11,062,000	$9,604,000	$7,880,000	$31,087,000


Total	$87,688,000	$10,909,000	$16,987,000	$11,221,000	$ 9,604,00	$7,880,000	$31,087,000

As of June 30, 2003, letters of credit for approximately $996,000 were outstanding.

The Company has an agreement with a venture capital fund with a commitment to contribute $1,000,000 to the fund, callable at the discretion of the general partner in $100,000 increments. As of June 30, 2003, $400,000 has been paid, with $600,000 of commitment remaining. The agreement has a termination date of December 11, 2010, subject to extension with the consent of a majority in interest of the limited partners.

FACTORS THAT MAY AFFECT FUTURE RESULTS

OUR BUSINESS IS HEAVILY DEPENDENT ON THE PHARMACEUTICAL INDUSTRY

Most of our customer relationship management (CRM), sales force effectiveness (SFE) and data products and services are currently used in connection with the marketing and sale of prescription-only drugs. This market is undergoing a number of significant changes. These include:

•

the significant consolidation of the pharmaceutical industry as well as the timing and sequencing of sales to our customers may reduce the number of our existing and potential customers;

•

regulatory changes that permit the over-the-counter sale of formerly prescription-only drugs;

•

increasing Food and Drug Administration activism; and

•

competitive pressure on the pharmaceutical industry resulting from the continuing shift to delivery of healthcare through managed care organizations.

We cannot assure you that we can respond effectively to any or all of these and other changes in the marketplace. Our failure to do so could have a material adverse effect on our business, operating results or financial condition.

WE DEPEND ON A FEW MAJOR CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUES

Historically, a limited number of our customers have contributed a significant percentage of the Company’s revenues. The Company anticipates that its operating results in any given period will continue to depend significantly upon revenues from a small number of customers. The loss of any of these customers (which could include loss through mergers and acquisitions) could have a materially adverse effect on the Company’s business. We cannot make any assurances that we will retain our existing customers or attract new customers that would replace the revenue that could be lost if one or more of these customers failed to renew its agreement(s) with the Company.

BUSINESS AND ECONOMIC PRESSURES ON OUR MAJOR CUSTOMERS MAY CAUSE A DECREASE IN DEMAND FOR OUR NEW PRODUCTS AND SERVICES

Business and economic pressures on our major customers may result in budget constraints that directly impact their ability to purchase the Company’s new products and services offerings. We cannot assure you that any decrease in demand caused by these pressures will not have a material adverse effect on our business, operating results or financial condition.

OUR LENGTHY SALES AND IMPLEMENTATION CYCLES MAKE IT DIFFICULT TO PREDICT OUR QUARTERLY REVENUES

The selection of a CRM or SFE solution generally entails an extended decision-making process by our customers because of the strategic implications and substantial costs associated with a customer’s license or implementation of the solution. Given the importance of the decision, senior levels of management of our customers are often involved in the process and, in some instances, its board of directors may also be involved. As a result, the decision-making process typically takes nine to eighteen months, and in certain cases longer. Accordingly, we cannot fully control or predict the timing of our execution of contracts with customers.

In addition, an implementation process of three to six or more months before the software is rolled out to a customer’s sales force is customary. However, if a customer were to delay or extend its implementation process, our quarterly revenues may decline below expected levels and could adversely affect our results of operations.

OUR FIXED COSTS MAY LEAD TO FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS IF REVENUES FALL BELOW EXPECTATIONS

We establish our expenditure levels for product development, sales and marketing and some of our other operating expenses based in large part on our expected future revenues and anticipated competitive conditions. In particular, we frequently add staff in advance of new business to permit adequate time for training. If the new business is subsequently delayed, canceled or not awarded, we will have incurred expenses without the associated revenues. In addition, we may increase sales and marketing expenses if competitive pressures become greater than originally anticipated. Since only a small portion of our expenses varies directly with our actual revenues, our operating results and profitability are likely to be adversely and disproportionately affected if our revenues fall below our targeted goals or expectations.

WE MAY BE UNABLE TO SUCCESSFULLY INTRODUCE NEW PRODUCTS OR RESPOND TO TECHNOLOGICAL CHANGE

The market for CRM and SFE products changes rapidly because of frequent improvements in computer hardware and software technology. Our future success will depend, in part, on our ability to:

•

use available technologies and data sources to develop new products and services and to enhance our current products and services;

•

introduce new solutions that keep pace with developments in our target markets; and

•

address the changing and increasingly sophisticated needs of our customers.

We cannot assure you that we will successfully develop and market new products or product enhancements that respond to technological advances in the marketplace, or that we will do so in a timely fashion. We also cannot assure you that our products will adequately and competitively address the needs of the changing marketplace.

Competition for software products has been characterized by shortening product cycles. We may be materially and adversely affected by this trend if the product cycles for our products prove to be shorter than we anticipate. If that happens, our business, operating results or financial condition could be adversely affected.

To remain competitive, we also may have to spend more of our revenues on product research and development than we have in the past. As a result, our results of operations could be materially and adversely affected.

Further, our software products are technologically complex and may contain previously undetected errors or failures. We cannot assure you that, despite our testing, our new products will be free from significant errors. Software errors could cause delays in the commercial release of products until the errors have been corrected. Software errors may cause us to be in breach of our agreements with customers, which could result in termination of the agreements and monetary damages. Software errors may cause damage to our reputation and cause us to commit significant resources to their correction. Errors that result in termination of agreements, monetary damages, losses or delays could have a material adverse effect on our business, operating results or financial condition.

INCREASED COMPETITION MAY RESULT IN PRICE REDUCTIONS AND DECREASED DEMAND FOR OUR PRODUCTS AND SERVICES

There are a number of other companies that sell CRM and SFE products and related services that specifically target the pharmaceutical industry, including competitors that are actively selling CRM and SFE software products in more than one country and competitors that also offer CRM and SFE support services. Some of our competitors and potential competitors are part of large corporate groups and have significantly greater financial, sales, marketing, technology and other resources than we have.

While we believe that the CRM and SFE software products and/or services offered by most of our competitors do not address the variety of pharmaceutical customer needs that our solutions address, increased competition may require us to reduce the prices for our products and services. Increased competition may also result in decreased demand for our products and services.

We believe our ability to compete depends on many factors, some of which are beyond our control, including:

•

the number and success of new market entrants supplying competing CRM and SFE products or support services;

•

expansion of product lines by, or consolidation among, our existing competitors; and

•

development and/or operation of in-house CRM and SFE software products or services by our customers and potential customers.

Any one of these factors can lead to price reductions and/or decreased demand and we cannot assure you that we will be able to continue to compete successfully or that competition will not have a material adverse effect on our business, operating results or financial condition.

WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY IN THE INTERNET-RELATED PRODUCTS AND SERVICES MARKET NOR CAN WE PROVIDE ASSURANCES THAT THE DEMAND FOR INTERNET-RELATED PRODUCTS AND SERVICES WILL INCREASE

The success of parts of our business will depend, in part, on our ability to continue developing Internet-related products and responding to technological advances and changing commercial uses of the Internet. We cannot assure you that our Internet-related products and services will adequately respond to such technological advances and changing uses. Nor can we assure you that the demand for Internet-related products and services will increase.

OUR INTERNATIONAL OPERATIONS HAVE RISKS THAT OUR DOMESTIC OPERATIONS DO NOT

The sale of our products and services in foreign countries accounts for, and is expected in the future to account for, a material part of our revenues. These sales are subject to risks inherent in international business activities, including:

•

any adverse change in the political or economic environments in these countries or regions;

•

any adverse change in tax, tariff and trade or other regulations;

•

the absence or significant lack of legal protection for intellectual property rights;

•

exposure to exchange rate risk for service revenues which are denominated in currencies other than U.S. dollars; and

•

difficulties in managing an organization spread over various jurisdictions.

WE MAY FACE RISKS ASSOCIATED WITH OUR ACQUISITIONS

Our business may be materially and adversely affected as a result of the risks associated with our acquisitions including our recent acquisitions of Synavant and SAI. As part of our business strategy, in the future we may also acquire businesses that offer complementary products, services or technologies. These acquisitions are accompanied by substantial risks, including:

•

the effect of the acquisitions on our financial and strategic position;

•

our inability to successfully integrate the acquired business as we had originally expected;

•

the failure of an acquired business to further our strategies;

•

our inability to achieve the expected cost and business synergies;

•

the difficulty of integrating the acquired business;

•

the diversion of our management's attention from other business concerns;

•

the impairment of relationships with customers of the acquired business;

•

unexpected problems, liabilities, risks or costs associated with the acquired business;

•

the potential loss of key employees of the acquired company; and

•

the maintenance of uniform, company-wide standards, procedures and policies.

These factors could have a material adverse effect on our revenues and earnings. We expect that the consideration paid for future acquisitions, if any, could be in the form of cash, stock, rights to purchase stock, or a combination of these. To the extent that we issue shares of stock or other rights to purchase stock in connection with any future acquisition, existing shareholders will experience dilution and potentially decreased earnings per share.

We are currently integrating the Synavant business with our other operations. While we have had success integrating acquired entities into our operations in the past, we cannot guarantee that we will successfully integrate this new business into our operations.

AN INABILITY TO MANAGE GROWTH COULD ADVERSELY AFFECT OUR BUSINESS

To manage our growth effectively we must continue to strengthen our operational, financial and management information systems and expand, train and manage our work force. However, we may not be able to do so effectively or on a timely basis. Failure to do so could have a material adverse effect upon our business, operating results or financial condition.

WE MAY FACE RISKS ASSOCIATED WITH EVENTS WHICH MAY AFFECT THE WORLD ECONOMY

The terrorist attacks of September 11, 2001 and subsequent world events weakened the world economy. While we did not experience any material impact to our business during the time period immediately following September 11, 2001, we cannot assure you that the resulting impact which the terrorist attacks, threat of future terrorist activity, current U.S. military action in the Middle East and elsewhere, or hostilities in the Middle East, Asia and other geographical areas, had or may have on the U.S. and world economies will not adversely affect our business or the businesses of our customers.

CATASTROPHIC EVENTS COULD NEGATIVELY AFFECT OUR INFORMATION TECHNOLOGY INFRASTRUCTURE

The efficient operation of our business, and ultimately our operating performance, depends on the uninterrupted use of our critical business and information technology systems. Many of these systems require the use of specialized hardware and other equipment that is not readily available. Although we maintain these systems at more than one location, a natural disaster, a fire or other catastrophic event at any of these locations could result in the destruction of these systems. In such an event, the replacement of these systems and restoration of archived data and normal operation of our business could take several days to several weeks, or more. During the intervening period when our critical business and information technology systems are fully or partially inoperable, our ability to conduct normal business operations could be significantly and adversely impacted and as a result our business, operating results and financial conditions could be adversely affected.

OUR SUCCESS DEPENDS ON RETAINING OUR KEY SENIOR MANAGEMENT TEAM AND ON ATTRACTING AND RETAINING QUALIFIED PERSONNEL

Our future success depends, to a significant extent, upon the contributions of our executive officers and key sales, technical and customer service personnel. Our future success also depends on our continuing ability to attract and retain highly qualified technical and managerial personnel. Due to competition for such personnel, we have at times experienced difficulties in recruiting qualified personnel and we may experience such difficulties in the future. Any such difficulties could adversely affect our business, operating results or financial condition.

OUR BUSINESS DEPENDS ON PROPRIETARY TECHNOLOGY THAT WE MAY NOT BE ABLE TO PROTECT COMPLETELY

We rely on a combination of trade secret, copyright and trademark laws, non-disclosure and other contractual agreements and technical measures to protect our proprietary technology. We cannot assure you that the steps we take will prevent misappropriation of this technology. Further, protective actions we have taken or will take in the future may not prevent competitors from developing products with features similar to our products. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. In response to a request by our customers, we have also on occasion entered into agreements which require us to place our source code in escrow to secure our service and maintenance obligations.

Further, while we believe that our products and trademarks do not infringe upon the proprietary rights of third parties, third parties may assert infringement claims against us in the future that may result in the imposition of damages or injunctive relief against us. In addition, any such claims may require us to enter into royalty arrangements. Any of these results could materially and adversely affect our business, operating results or financial condition.

IF OUR THIRD PARTY VENDORS ARE UNABLE TO SUCCESSFULLY RESPOND TO TECHNOLOGICAL CHANGE OR IF WE DO NOT MAINTAIN OUR RELATIONSHIPS WITH THIRD PARTY VENDORS, INTERRUPTIONS IN THE SUPPLY OF OUR PRODUCTS MAY RESULT

Some of our software is provided by third party vendors. If our third party vendors are unable to successfully respond to technological change or if our relationships with certain third party vendors are terminated, we may experience difficulty in replacing the functionality provided by the third party software currently offered with our products. Although we believe there are other sources for all of our third party software, any significant interruption in the supply of these products could adversely impact our sales unless and until we can secure another source. The absence of or any significant delay in the replacement of functionality provided by third party software in our products could materially and adversely affect our sales.

THE RESULTS DERIVED FROM CURRENT AND FUTURE STRATEGIC RELATIONSHIPS MAY PROVE TO BE LESS FAVORABLE THAN ANTICIPATED

We are involved in a number of strategic relationships with third parties and are frequently pursuing others. Should these relationships, or any of them, prove to be more costly than anticipated or fail to meet revenue expectations or other anticipated synergies, we cannot guarantee that such events will have no material impact upon our business, operating results or financial condition.

OUR DATA SOLUTIONS ARE DEPENDENT UPON STRATEGIC RELATIONSHIPS WHICH, IF NOT MAINTAINED, COULD UNDERMINE THE CONTINUED VIABILITY OF THESE SOLUTIONS

Our data and analytics solutions are sourced, in part, from data provided through strategic relationships. The termination of any of these relationships could diminish the breadth or depth of our data solutions and we cannot guarantee that this would not negatively impact our business, operating results or financial condition.

FEDERAL AND STATE LAWS AND REGULATIONS COULD DEPRESS THE DEMAND FOR SOME OF OUR SOLUTIONS

While we believe our data and analytics solutions are not violative of current federal or state laws and regulations pertaining to patient privacy or health information, including the Health Insurance Portability and Accountability Act of 1996 (HIPAA), we cannot guarantee that future laws or regulations or interpretations of existing laws and statutes will not impact negatively upon our ability to market these solutions or cause a decrease in demand for such solutions from customers that see an increased risk in any such new laws or regulations.

GOVERNMENTAL REGULATION MAY MATERIALLY AND ADVERSELY AFFECT THE COMPANY’S ABILITY TO DISTRIBUTE CONTROLLED SUBSTANCES THROUGH THE MAIL

Through the interactive marketing business we acquired in the Synavant acquisition, we currently distribute controlled substances to doctors’ offices through the mail as part of certain interactive marketing programs provided on behalf of pharmaceutical manufacturers. It is important to the business that this practice of distributing prescription-only drugs continues. Future legislation may restrict our ability to provide these types of services. If any such legislation is enacted, it could have a material and adverse effect on our business, operating results and financial condition.

DIFFICULTIES IN SUBLEASING, SELLING OR OTHERWISE DISPOSING OF CERTAIN OF OUR FACILITIES MAY NEGATIVELY IMPACT UPON OUR EARNINGS

We are currently marketing our Piscataway, New Jersey facility. We also expect to sublease all or a portion of certain other facilities, including facilities acquired as part of the Synavant acquisition. If the recent real estate downturn continues, it could negatively impact upon our ability to effectively market these facilities. An inability to successfully dispose or sublet, as applicable, any of these facilities or to obtain favorable pricing or sublease terms could negatively impact our earnings.

UNANTICIPATED CHANGES IN OUR ACCOUNTING POLICIES MAY BE REQUIRED BECAUSE OF MANDATES BY ACCOUNTING STANDARDS SETTING ORGANIZATIONS AND COULD HAVE A MATERIAL IMPACT ON OUR FINANCIAL STATEMENTS

In reporting our financial results we rely upon the accounting policies and standards then in effect at the time of our report. Future regulations, standards or interpretations may require us to adjust or restate financial results previously reported. A required restatement could have an unfavorable impact upon past financial results or current comparison to previous results.

PROVISIONS OF OUR CHARTER DOCUMENTS AND NEW JERSEY LAW MAY DISCOURAGE AN ACQUISITION OF DENDRITE

Provisions of our Restated Certificate of Incorporation, as amended, our By-laws, as amended, and New Jersey law may make it more difficult for a third party to acquire us. For example, the Board of Directors may, without the consent of the stockholders, issue preferred stock with rights senior to those of the common stock. In addition, the Company has a Shareholder Rights Plan which may limit the ability of a third party to attempt a hostile acquisition of the Company.

OUR COMMON STOCK MAY BE SUBJECT TO PRICE FLUCTUATIONS

The market price of our common stock may be significantly affected by the following factors:

•

the announcement or the introduction of new products by us or our competitors;

•

quarter-to-quarter variations in our operating results or changes in revenue or earnings estimates or failure to meet or exceed revenue or earnings estimates;

•

market conditions in the technology, healthcare and other growth sectors;

•

general consolidation in the healthcare information industry which may result in the market perceiving us or other comparable companies as potential acquisition targets; and

•

future acquisitions.

Further, the stock market has experienced on occasion extreme price and volume fluctuations. The market prices of the equity securities of many technology companies have been especially volatile and often have been unrelated to the operating performance of such companies. These broad market fluctuations may have a material adverse effect on the market price of our common stock.

ITEM 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.

The Company’s Chief Executive Officer and Chief Financial Officer have also concluded that there have not been any changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

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

The Company’s Annual Meeting of Shareholders was held on May 20, 2003. The following was considered and voted upon at the Annual Meeting:

Election of Directors. The following directors were nominated for election to the Board of Directors until the next Annual Meeting or until their successors are duly chosen and qualified: John E. Bailye, John A. Fazio, Bernard M. Goldsmith, Edward J. Kfoury, Paul A. Margolis, John H. Martinson, Terence H. Osborne and Patrick J. Zenner. The votes cast and withheld for such nominees were as follows:

Name	For	Withheld
John E. Bailye	36,747,708	1,156,069
John A. Fazio	37,510,475	393,302
Bernard M. Goldsmith	36,379,374	1,524,403
Edward J. Kfoury	36,580,137	1,323,640
Paul A. Margolis	37,510,550	393,227
John H. Martinson	37,510,250	393,527
Terence H. Osborne	34,704,128	3,199,649
Patrick J. Zenner	37,498,400	405,377

Based on these voting results, each of the directors nominated was elected.

ITEM 6. Exhibits and Reports on Form 8-K

(i) Exhibits

10.39

Distribution Agreement between IMS Health Incorporated and Synavant Inc. dated as of August 31, 2000.

10.40

Amendment to Distribution Agreement between IMS Health Incorporated and Synavant Inc. dated as of June 16, 2003.

10.41

Restated Xponent Data License Agreement between IMS Health Incorporated and Synavant Inc. dated as of April 26, 2001.

10.42

Amendment to Restated Xponent Data License Agreement between IMS Health Incorporated, Synavant Inc. and Dendrite International, Inc. dated as of June 16, 2003.

10.43

Synavant Inc. 2000 Savings Equalization Plan.

10.44

Cross License between IMS Health Incorporated and Synavant Inc. dated as of August 31, 2000.

31.1

Certification of John E. Bailye, Chairman of the Board and Chief Executive Officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a).

31.2

Certification of Kathleen E. Donovan, Senior Vice President and Chief Financial Officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a).

Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by John E. Bailye, Chairman of the Board and Chief Executive Officer of the Company, and Kathleen E. Donovan, Senior Vice President and Chief Financial Officer of the Company.

(ii) Reports on Form 8-K

(a)

The Company filed a Current Report on Form 8-K on July 1, 2003, pursuant to “Item 2. Acquisition or Disposition of Assets” and “Item 7. Financial Statements, Pro Forma Financial Information and Exhibits” relating to its acquisition of Synavant Inc.

(b)

The Company filed a Current Report on Form 8-K on June 20, 2003, pursuant to “Item 5. Other Events and Regulation FD Disclosure” and “Item 7. Financial Statements, Pro Forma Financial Information and Exhibits” relating to a credit agreement by and among the Company, certain lenders and JPMorgan Chase Bank.

(c)

The Company filed a Current Report on Form 8-K on May 20, 2003, pursuant to “Item 5. Other Events and Regulation FD Disclosure” and “Item 7. Financial Statements, Pro Forma Financial Information and Exhibits” relating to an amendment to the Agreement and Plan of Merger by and among the Company, Synavant Inc. and Amgis Acquisition Co. and a promissory note by and between the Company and Synavant Inc.

(d)

The Company filed a Current Report on Form 8-K on May 19, 2003, pursuant to “Item 5. Other Events and Regulation FD Disclosure” and “Item 7. Financial Statements, Pro Forma Financial Information and Exhibits” relating to an amendment to the Agreement and Plan of Merger by and among the Company, Synavant Inc. and Amgis Acquisition Co.

(e)

The Company filed a Current Report on Form 8-K on May 12, 2003, pursuant to “Item 5. Other Events and Regulation FD Disclosure” and “Item 7. Financial Statements, Pro Forma Financial Information and Exhibits” relating to the Agreement and Plan of Merger by and among the Company, Synavant Inc. and Amgis Acquisition Co.

(f)

The Company furnished a Current Report on Form 8-K on April 24, 2003, pursuant to “Item 7. Financial Statements, Pro Forma Financial Information and Exhibits,” “Item 9. Regulation FD Disclosure” and “Item 12. Results of Operations and Financial Condition” relating to its financial results for the first quarter of 2003.

Signatures

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

Date: August 13, 2003

By: JOHN E. BAILYE
——————————————
John E. Bailye, Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)

By: KATHLEEN E. DONOVAN
——————————————
Kathleen E. Donovan, Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)

EX-10.39 3 im_syndistragr.htm ims - synavant distribution agreement

EXECUTION COPY

DISTRIBUTION AGREEMENT

between

IMS HEALTH INCORPORATED

and

SYNAVANT INC.

Dated as of August 31, 2000

TABLE OF CONTENTS	Page
ARTICLE I DEFINITIONS	1


SECTION 1.1	GENERAL	1
SECTION 1.2	REFERENCES; INTERPRETATION	11


ARTICLE II DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS	11




SECTION 2.1	THE DISTRIBUTION AND OTHER TRANSACTIONS	11
SECTION 2.2	INTERCOMPANY ACCOUNTS AND THIRD PARTY ACCOUNTS	15
SECTION 2.3	CASH BALANCES	16
SECTION 2.4	ASSUMPTION AND SATISFACTION OF LIABILITIES	16
SECTION 2.5	RESIGNATIONS	17
SECTION 2.6	NON-SOLICITATION OF EMPLOYEES	17
SECTION 2.7	FURTHER ASSURANCES	17
SECTION 2.8	LIMITED REPRESENTATIONS OR WARRANTIES	17
SECTION 2.9	GUARANTEES	18
SECTION 2.10	WITNESS SERVICES	18
SECTION 2.11	CERTAIN POST-DISTRIBUTION TRANSACTIONS	18
SECTION 2.12	TRANSFERS NOT EFFECTED PRIOR TO THE DISTRIBUTION;
	TRANSFERS DEEMED EFFECTIVE AS OF THE DISTRIBUTION DATE	20
SECTION 2.13	CONVEYANCING AND ASSUMPTION INSTRUMENTS	20
SECTION 2.14	ANCILLARY AGREEMENTS	20
SECTION 2.15	CORPORATE NAMES	20
SECTION 2.16	JOINT BUSINESS OPPORTUNITIES; NON-COMPETITION;
	PROTECTION OF INFORMATION	21


ARTICLE III INDEMNIFICATION	24


SECTION 3.1	INDEMNIFICATION BY IMS	24
SECTION 3.2	INDEMNIFICATION BY ST	24
SECTION 3.3	PROCEDURES FOR INDEMNIFICATION	24
SECTION 3.4	INDEMNIFICATION PAYMENTS	25


ARTICLE IV ACCESS TO INFORMATION	26


SECTION 4.1	PROVISION OF CORPORATE RECORDS	26
SECTION 4.2	ACCESS TO INFORMATION	26
SECTION 4.3	REIMBURSEMENT; OTHER MATTERS	26
SECTION 4.4	CONFIDENTIALITY	26
SECTION 4.5	PRIVILEGED MATTERS	27
SECTION 4.6	OWNERSHIP OF INFORMATION	28
SECTION 4.7	LIMITATION OF LIABILITY	28
SECTION 4.8	OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF
	INFORMATION	28


ARTICLE V ADMINISTRATIVE SERVICES	29


SECTION 5.1	PERFORMANCE OF SERVICES	29
SECTION 5.2	INDEPENDENCE	29
SECTION 5.3	NON-EXCLUSIVITY	29


ARTICLE VI DISPUTE RESOLUTION	29


SECTION 6.1	NEGOTIATION	29
SECTION 6.2	ARBITRATION	30
SECTION 6.3	CONTINUITY OF SERVICE AND PERFORMANCE	30


ARTICLE VII INSURANCE	31


SECTION 7.1	POLICIES AND RIGHTS INCLUDED WITHIN ASSETS;
	ASSIGNMENT OF POLICIES	31
SECTION 7.2	POST-DISTRIBUTION DATE CLAIMS	31
SECTION 7.3	ADMINISTRATION; OTHER MATTERS	31
SECTION 7.4	AGREEMENT FOR WAIVER OF CONFLICT AND SHARED DEFENSE	32
SECTION 7.5	COOPERATION	32


ARTICLE VIII MISCELLANEOUS	33


SECTION 8.1	COMPLETE AGREEMENT; CONSTRUCTION	33
SECTION 8.2	ANCILLARY AGREEMENTS	33
SECTION 8.3	COUNTERPARTS	33
SECTION 8.4	SURVIVAL OF AGREEMENTS	33
SECTION 8.5	EXPENSES	33
SECTION 8.6	PAYMENTS	33
SECTION 8.7	NOTICES	33
SECTION 8.8	WAIVERS	34
SECTION 8.9	AMENDMENTS	34
SECTION 8.10	ASSIGNMENT	34
SECTION 8.11	SUCCESSORS AND ASSIGNS	34
SECTION 8.12	TERMINATION	34
SECTION 8.13	SUBSIDIARIES	34
SECTION 8.14	THIRD PARTY BENEFICIARIES	35
SECTION 8.15	TITLE AND HEADINGS	35
SECTION 8.16	EXHIBITS AND SCHEDULES	35
SECTION 8.17	GOVERNING LAW	35
SECTION 8.18	CONSENT TO JURISDICTION	35
SECTION 8.19	SEVERABILITY	35

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (this “Agreement”) is dated as of August 31, 2000, by and between IMS HEALTH INCORPORATED, a Delaware corporation (“IMS”), and SYNAVANT INC., a Delaware corporation, and, prior to the Distribution (as defined herein), a wholly-owned subsidiary of IMS (“ST”).

WHEREAS, IMS, acting through the ST Group (as defined herein), currently conducts a number of businesses, including, without limitation, (i) providing automated sales support technologies to the pharmaceutical industry, (ii) providing direct marketing services (the “Clark-O’Neill business”), and (iii) providing direct mail marketing services in Australia (the “Permail business”), and in the past has conducted a number of other businesses through the ST Group or its predecessors which have been discontinued, sold or transferred;

WHEREAS, the Board of Directors of IMS has determined that it is appropriate, desirable and in the best interests of IMS and its businesses, as well as of the holders of shares of common stock, par value $0.01 per share, of IMS (the “IMS Common Stock”), to reorganize IMS to separate from IMS all of the ST Business (as defined herein) and to cause such ST Business to be owned and conducted, directly or indirectly, by ST (the “Spin-Off”);

WHEREAS, in order to effect the Spin-Off, the Board of Directors of IMS has determined that it is appropriate, desirable and in the best interests of IMS and its businesses, as well as of the holders of IMS Common Stock, for IMS (i) to take certain steps to reorganize IMS’ Subsidiaries (as defined herein) and businesses, including, prior to the Distribution, the consummation of the restructuring steps more fully set forth on Exhibit A hereto and (ii) upon the completion of such reorganization to distribute to the holders of IMS Common Stock all the outstanding shares of common stock, par value $0.01 per share, of ST (the “ST Common Shares”), together with the associated Rights (as defined herein), as set forth herein;

WHEREAS, each of IMS and ST has determined that it is necessary and desirable, on or prior to the Distribution Date (as defined herein), to allocate and transfer those assets and to allocate and assign responsibility for those liabilities in respect of the activities of the businesses of such entities and those assets and liabilities in respect of other businesses and activities of IMS and its current and former Subsidiaries and other matters; and

WHEREAS, each of IMS and ST has determined that it is necessary and desirable to set forth the principal corporate transactions required to effect such Distribution and to set forth other agreements that will govern certain other matters following the Distribution.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE I
DEFINITIONS

SECTION 1.1 GENERAL. As used in this Agreement, the following terms shall have the following meanings:

(a) “Action” shall mean any action, suit, arbitration, inquiry, proceeding or investigation by or before any court, any governmental or other regulatory or administrative agency, body or commission or any arbitration tribunal.

(b) “Affiliate” shall mean, when used with respect to a specified person, another person that controls, is controlled by, or is under common control with the person specified. As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or other interests, by contract or otherwise.

(d) “Agreement” shall have the meaning set forth in the recitals hereto.

(e) “Agreement Disputes” shall have the meaning set forth in Section 6.1.

(f) “allocable portion of Insurance Proceeds” shall have the meaning set forth in Section 7.3(c).

(g) “allocable share of the deductible” shall have the meaning set forth in Section 7.3(d).

(h) “Ancillary Agreements” shall mean all of the written agreements, instruments, assignments or other arrangements (other than this Agreement) entered into in connection with the transactions contemplated hereby, including, without limitation, the Conveyancing and Assumption Instruments, the Employee Benefits Agreement, the Tax Allocation Agreement, the Corporate Services Agreement, the Data and Telecommunications Services Agreement, the Xponent and Pharbase data license agreements, the Shared Transaction Services Agreements and the IMS Bank Guaranty.

(i) “Assets” shall mean assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any person, including, without limitation, the following:

(i) all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form;

(ii) all apparatus, computers and other electronic data processing equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, aircraft and other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property;

(iii) all inventories of materials, parts, raw materials, supplies, work-in-process and finished goods and products;

(iv) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

(v) all interests in any capital stock or other equity interests of any Subsidiary or any other person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other person and all other investments in securities of any person;

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(vi) all license agreements, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products and other contracts, agreements or commitments;

(vii) all deposits, letters of credit and performance and surety bonds;

(viii) all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;

(ix) all domestic and foreign patents, copyrights, trade names, trademarks, service marks and registrations and applications for any of the foregoing, mask works, trade secrets, inventions, data bases, other proprietary information and licenses from third persons granting the right to use any of the foregoing;

(x) all computer applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation and instructions;

(xi) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product literature, artwork, design, development and manufacturing files, vendor and customer drawings, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

(xii) all prepaid expenses, trade accounts and other accounts and notes receivable;

(xiii) all rights under contracts or agreements, all claims or rights against any person arising from the ownership of any asset, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent;

(xiv) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

(xv) all licenses, permits, approvals and authorizations which have been issued by any Governmental Authority;

(xvi) cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and

(xvii) interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.

(j) “Assignee” shall have the meaning set forth in Section 2.1(f).

(k) “Business Entity” shall mean any corporation, partnership, limited liability company or other entity which may legally hold title to Assets.

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(l) “Claims Administration” shall mean the processing of claims made under the Shared Policies, including, without limitation, the reporting of claims to the insurance carriers and the management of the defense of claims.

(m) “Clark-O’Neill business” shall have the meaning set forth in the recitals hereto.

(n) “Code” shall mean the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder, including any successor legislation.

(o) “Commission” shall mean the U.S. Securities and Exchange Commission.

(p) “Conveyancing and Assumption Instruments” shall mean, collectively, the various agreements, instruments and other documents heretofore entered into and to be entered into to effect the transfer of Assets and the assumption of Liabilities in the manner contemplated by this Agreement, or otherwise arising out of or relating to the transactions contemplated by this Agreement, including, but not limited to, by contribution, assignment or sale, which shall be in substantially the forms attached hereto as Schedule 1.1(p) for transfers to be effected pursuant to New York law or the laws of one of the other states of the United States, or, if not appropriate for a given transfer, and for transfers to be effected pursuant to non-U.S. laws, shall be in such other form or forms as the parties agree and as may be required by the laws of such non-U.S. jurisdictions.

(q) “Corporate Services Agreement” shall mean the Corporate Services Agreement by and between IMS and ST, dated as of August 31, 2000.

(r) “CTS” shall mean Cognizant Technologies Solutions Corporation.

(s) “Data Integrator” shall have the meaning set forth in Section 2.16(c).

(t) “Distribution” shall mean the distribution on the Distribution Date to holders of record of shares of IMS Common Stock as of the Distribution Record Date of the ST Common Shares owned by IMS on the basis of one ST Common Share for every 20 outstanding shares of IMS Common Stock.

(u) “Distribution Date” shall mean August 31, 2000.

(v) “Distribution Record Date” shall mean the close of business on July 28, 2000.

(w) “E-Detailing” shall have the meaning set forth in Section 2.16(c).

(x) “Effective Time” shall mean immediately prior to the midnight, New York time, ending the 24-hour period comprising August 31, 2000.

(y) “Employee Benefits Agreement” shall mean the Employee Benefits Agreement by and between IMS and ST, dated as of August 31, 2000.

(z) “Form 10” shall have the meaning set forth in Section 2.1(c).

(aa) “Funded Liabilities” shall have the meaning set forth in Section 2.3(a).

(bb) “Gartner Distribution Agreement” shall mean the Distribution Agreement by and between IMS and the Gartner Group, Inc., dated as of June 17, 1999.

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(cc) “Governmental Authority” shall mean any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

(dd) “IMS” shall have the meaning set forth in the recitals hereto. (ee) “IMS Assets” shall mean, collectively, all the rights and Assets owned or held by IMS or any Subsidiary of IMS immediately prior to the Effective Time, except the ST Assets.

(ff) “IMS Bank Guaranty” shall mean the Guarantee Agreement by and between IMS and SunTrust Bank, dated as of August 11, 2000.

(gg) “IMS Business” shall mean each and every business conducted at any time by IMS or any Subsidiary of IMS prior to the Effective Time, except the ST Business.

(hh) “IMS Common Stock” shall have the meaning set forth in the recitals hereto.

(ii) “IMS Group” shall mean IMS and each person (other than any member of the ST Group) that is a Subsidiary of IMS immediately prior to the Effective Time.

(jj) “IMS Contracts” shall mean all the contracts and agreements to which IMS or any of its Affiliates is a party or by which it or any of its Affiliates is bound immediately prior to the Effective Time, except the ST Contracts.

(kk) “IMS Indemnitees” shall mean IMS, each member of the IMS Group, each of their respective present and former directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, as well as any present and former directors, officers, employees and agents of IMS prior to the Effective Time and each of their heirs, executors, successors and assigns, except the ST Indemnitees.

(ll) “IMS Liabilities” shall mean collectively, all obligations and Liabilities of IMS or any Subsidiary of IMS immediately prior to the Effective Time, except the ST Liabilities.

(mm) “IMS Policies” shall mean all Policies, current or past, which are owned or maintained by or on behalf of IMS or any Subsidiary of IMS immediately prior to the Effective Time which do not relate to the ST Business and which Policies are either maintained by IMS or a member of the IMS Group or are assignable to IMS or a member of the IMS Group.

(nn) “IMS Retained Businesses” shall have the meaning set forth in Section 2.16.

(oo) “Indemnifiable Losses” shall mean any and all losses, liabilities, claims, damages, demands, costs or expenses (including, without limitation, reasonable attorneys’ fees and any and all out-of-pocket expenses) reasonably incurred in investigating, preparing for or defending against any Actions or potential Actions or in settling any Action or potential Action or in satisfying any judgment, fine or penalty rendered in or resulting from any Action.

(pp) “Indemnifying Party” shall have the meaning set forth in Section 3.3.

(qq) “Indemnitee” shall have the meaning set forth in Section 3.3.

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(rr) “Indemnity and Joint Defense Agreement” shall mean the Indemnity and Joint Defense Agreement dated as of October 28, 1996 by and among Cognizant Corporation, The Dun & Bradstreet Corporation and ACNielsen Corporation.

(ss) “Information Statement” shall mean the Information Statement sent to the holders of shares of IMS Common Stock in connection with the Distribution, including any amendment or supplement thereto.

(tt) “Insurance Administration” shall mean, with respect to each Shared Policy, the accounting for premiums, retrospectively rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of each of the Shared Policies; and the reporting to excess insurance carriers of any losses or claims which may cause the per-occurrence, per-claim or aggregate limits of any Shared Policy to be exceeded, and the distribution of Insurance Proceeds as contemplated by this Agreement.

(uu) “Insurance Proceeds” shall mean those monies (i) received by an insured from an insurance carrier or (ii) paid by an insurance carrier on behalf of an insured, in either case net of any applicable premium adjustment, retrospectively rated premium, deductible, retention, or cost of reserve paid or held by or for the benefit of such insured.

(vv) “Insured Claims” shall mean those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Shared Policies, whether or not subject to deductibles, co-insurance, uncollectibility or retrospectively rated premium adjustments.

(ww) “Intercompany Accounts” shall mean all accounts between IMS and ST and their respective Subsidiaries (as defined herein), including receivables, payables and loans, or any other accounts that may arise, that are not designated as Third Party Accounts (as defined herein).

(xx) “IRI Action” shall mean the complaint filed in the United States District Court for the Southern District of New York on July 29, 1996 by Information Resources, Inc. naming as defendants The Dun & Bradstreet Corporation, A C Nielsen Company and IMS International, Inc.

(yy) “Liabilities” shall mean any and all losses, claims, charges, debts, demands, actions, causes of action, suits, damages, obligations, payments, costs and expenses, sums of money, accounts, reckonings, bonds, specialties, indemnities and similar obligations, exonerations, covenants, contracts, controversies, agreements, promises, doings, omissions, variances, guarantees, make whole agreements and similar obligations, and other liabilities, including all contractual obligations, whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and including those arising under any law, rule, regulation, Action, threatened or contemplated Action (including the costs and expenses of demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened or contemplated Actions), order or consent decree of any governmental or other regulatory or administrative agency, body or commission or any award of any arbitrator or mediator of any kind, and those arising under any contract, commitment or undertaking, including those arising under this Agreement or any Ancillary Agreement, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any person.

(zz) “1996 Distribution” shall mean the Distribution described in the 1996 Distribution Agreement.

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(aaa) “1998 Distribution” shall mean the Distribution described in the 1998 Distribution Agreement.

(bbb) “1996 Distribution Agreement” shall mean the Distribution Agreement among Cognizant Corporation, The Dun & Bradstreet Corporation and A C Nielsen Corporation, dated as of October 28, 1996.

(ccc) “1998 Distribution Agreement” shall mean the Distribution Agreement between Cognizant Corporation and IMS Health Incorporated, dated as of June 30, 1998.

(ddd) “Non-U.S. Cash Target” shall have the meaning set forth in Section 2.3(a).

(eee) “person” shall mean any natural person, Business Entity, corporation, business trust, joint venture, association, company, partnership, other entity or government, or any agency or political subdivision thereof.

(fff) “Permail business” shall have the meaning set forth in the recitals hereto.

(ggg) “Policies” shall mean insurance policies and insurance contracts of any kind (other than life and benefits policies or contracts), including, without limitation, primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, property and casualty, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder.

(hhh) “Records” shall have the meaning set forth in Section 4.1.

(iii) “Restricted Period” shall have the meaning set forth in Section 2.16.

(jjj) “Retained Businesses” shall have the meaning set forth in Section 2.16.

(kkk) “Rights” shall have the meaning set forth in Section 2.1(c).

(lll) “Rules” shall have the meaning set forth in Section 6.2.

(mmm) “Security Interest” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

(nnn) “Shared Policies” shall mean all Policies, current or past, which are owned or maintained by or on behalf of IMS or any Subsidiary of IMS immediately prior to the Effective Time which relate to the IMS Business and the ST Business.

(ooo) “Shared Transaction Services Agreements” shall mean the Shared Transaction Services Agreement, dated as of August 31, 2000, by and between IMS and ST and the Shared Transaction Services Agreement, dated as of August 31, 2000, or as soon as reasonably practicable thereafter, by and between IMS AG and various non-US subsidiaries of ST.

(ppp) “Spin-Off” shall have the meaning set forth in the recitals hereto.

(qqq) “ST” shall have the meaning set forth in the recitals hereto.

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(rrr) “ST Assets” shall mean:

(i) the ownership interests in those Business Entities listed on Schedule 1.1(rrr)(i);

(ii) any and all Assets that are expressly contemplated by this Agreement, including those on the list of pre-Distribution reorganization transactions attached as Schedule 1.1(rrr)(ii) hereto, or any Ancillary Agreement (or included on any Schedule hereto or thereto) as Assets which have been or are to be transferred to ST or any other member of the ST Group prior to the Effective Time or are to remain with ST or any member of the ST Group subsequent to the Effective Time;

(iii) any Assets reflected on the ST Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for ST or any member of the ST Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(iv) subject to Article VII, any rights of any member of the ST Group under any of the Policies, including any rights thereunder arising from and after the Effective Time in respect of any Policies that are occurrence policies; and

(v) any ST Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any ST Asset or the ST Business.

Notwithstanding the foregoing, the ST Assets shall not in any event include:

(y) any Assets primarily relating to or used in any terminated or divested Business Entity, business or operation formerly owned or managed by or associated with IMS, ST or any ST Business, except for those Assets primarily relating to or used in those Business Entities, businesses or operations listed on Schedule 1.1(rrr)(v)(y); or

(z) any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be transferred or conveyed to any member of the IMS Group, including those Assets listed on Schedule 1.1(rrr)(v) (z).

In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the foregoing provisions, for the purpose of determining what is and is not a ST Asset, any item explicitly included on a Schedule referred to in this Section 1.1(rrr)(v) shall take priority over any inconsistent provisions herein or Annex A or Schedule 1.1(sss) hereto, and clause (y) shall take priority over clause (z) hereof of this Section 1.1(rrr)(v).

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(sss) “ST Balance Sheet” shall mean the combined balance sheet of the ST Group, including the notes thereto, as of June 30, 2000, set forth as Schedule 1.1(sss) hereto.

(ttt) “ST Business” shall mean (i) the businesses conducted by the subsidiaries of ST set forth on Schedule 1.1(ttt)(i) hereto, (ii) the pharmaceutical industry automated sales and marketing support business of IMS Health Strategic Technologies, Inc., a Delaware corporation and wholly owned subsidiary of IMS, and the businesses of certain other foreign subsidiaries of IMS, as set forth on Schedule 1.1(ttt)(ii) hereto, and (iii) the interactive and direct marketing business of IMS, including the Clark-O’Neill business, as set forth on Schedule 1.1(ttt)(iii) hereto.

(uuu) “ST Common Shares” shall have the meaning set forth in the recitals hereto.

(vvv) “ST Contracts” shall mean the following contracts and agreements to which ST or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, whether or not in writing, except for any such contract or agreement that is not expressly contemplated to be transferred or assigned to ST, or any other member of the ST Group prior to the Effective Time, or to remain with ST, or any other member of the ST Group subsequent to the Effective Time, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i)

any contracts or agreements listed or described on Schedule 1.1(vvv)(i); (ii)any contract or agreement entered into in the name of, or expressly on behalf of, any division, business unit or member of the ST Group;

(iii)

any contract or agreement that relates primarily to the ST Business;

(iv)

federal, state and local government and other contracts and agreements that are listed or described on Schedule 1.1(vvv)(iv) and any other government contracts or agreements entered into after the date hereof and prior to the Effective Time that relate primarily to the ST Business;

(v)

any contract or agreement representing capital or operating equipment lease obligations reflected on the ST Balance Sheet, including obligations as lessee under those contracts or agreements listed on Schedule 1.1(vvv)(v);

(vi)

any contract or agreement that is otherwise expressly contemplated pursuant to this Agreement or any of the Ancillary Agreements to be transferred or assigned to ST or any member of the ST Group prior to the Effective Time or to remain with ST or any member of the ST Group subsequent to the Effective Time; and

(vii)

any guarantee, indemnity, representation or warranty of any member of the ST Group.

(www) “ST Group” shall mean (i) ST, (ii) Clark-O’Neill, Inc., a New Jersey corporation (“Clark-O’Neill”), and (iii) each Business Entity which is contemplated to become a Subsidiary of ST hereunder prior to the Effective Time, which shall include those identified as such on Schedules 1.1(rrr)(i) (which Schedule shall also indicate the amount of ST’s direct or indirect ownership interest therein) and 1.1(rrr)(ii) hereto.

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(xxx) “ST Indemnitees” shall mean ST, each member of the ST Group, each of their respective present and former directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(yyy) “ST Liabilities” shall mean:

(i)

any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by ST or any member of the ST Group prior to the Effective Time or to remain with any member of the ST Group subsequent to the Effective Time, and all agreements, obligations and Liabilities of ST or any member of the ST Group under this Agreement or any of the Ancillary Agreements, including those Liabilities set forth on Schedule 1.1(yyy)(i) hereto;

(ii)

all Liabilities (other than Taxes and any employee-related Liabilities subject to the provisions of the Tax Allocation Agreement and the Employee Benefits Agreement, respectively), primarily relating to, arising out of or resulting from:

(A)

the operation of the ST Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such person’s authority));

(B)

any ST Assets;

whether arising before, on or after the Effective Time; and

(iii)

all Liabilities reflected as liabilities or obligations on the ST Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities arising or assumed after the date of such balance sheet which, had they arisen or been assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet, subject to any discharge of such Liabilities subsequent to the date of the ST Balance Sheet.

Notwithstanding the foregoing, the ST Liabilities shall not include:

(x)

any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by IMS or any member of the IMS Group;

(y)

any Liabilities primarily relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation formerly owned or managed by or associated with IMS or any ST Business except for Liabilities primarily relating to, arising out of or resulting from those Business Entities, businesses or operations listed in Schedule 1.1(yyy)(y); or

(z)

all agreements and obligations of any member of the IMS Group under this Agreement or any of the Ancillary Agreements.

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(zzz) “ST Policies” shall mean all Policies, current or past, which are owned or maintained by or on behalf of ST or any Subsidiary of ST immediately prior to the Effective Time, which do not relate to the IMS Business.

(aaaa) “ST Retained Businesses” shall have the meaning set forth in Section 2.16.

(bbbb) “Subsidiary” shall mean any corporation, partnership or other entity of which another entity (i) owns, directly or indirectly, ownership interests sufficient to elect a majority of the Board of Directors (or persons performing similar functions) (irrespective of whether at the time any other class or classes of ownership interests of such corporation, partnership or other entity shall or might have such voting power upon the occurrence of any contingency) or (ii) is a general partner or an entity performing similar functions (e.g., a trustee).

(cccc) “Tax” shall have the meaning set forth in the Tax Allocation Agreement.

(dddd) “Tax Allocation Agreement” shall mean the Tax Allocation Agreement by and between IMS and ST, dated as of August 31, 2000.

(eeee) “Third Party Accounts” shall mean all accounts between IMS, ST or their respective Subsidiaries on the one hand, and third parties on the other hand, including receivables, payables and loans, or any other accounts that may arise, that are not designated as Intercompany Accounts.

(ffff) “Third Party Claim” shall have the meaning set forth in Section 3.3.

(gggg) “U.S. Cash Target” shall have the meaning set forth in Section 2.3(a).

SECTION 1.2 REFERENCES; INTERPRETATION. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. The words “include,” “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, such Agreement. Unless the context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

ARTICLE II
DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS

SECTION 2.1 THE DISTRIBUTION AND OTHER TRANSACTIONS.

(a) CERTAIN TRANSACTIONS. On or prior to the Distribution Date, IMS shall, on behalf of itself and its Subsidiaries, transfer or cause to be transferred to ST or another member of the ST Group, effective prior to or as of the Effective Time, all of IMS’ and its Subsidiaries’ right, title and interest in the ST Assets.

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(b) STOCK DIVIDEND TO IMS. On or prior to the Distribution Date, ST shall issue to IMS as a stock dividend (i) such number of ST Common Shares as will be required to effect the Distribution, as certified by IMS’ stock transfer agent (the “Agent”). In connection therewith IMS shall deliver to ST for cancellation the share certificate held by it representing ST Common Shares and shall receive a new certificate or certificates representing the total number of ST Common Shares to be owned by IMS after giving effect to such stock dividend. Each ST Common Share delivered by ST to IMS shall be validly issued, fully paid and nonassessable and free of any preemptive (or similar) rights.

(c) CHARTERS; BY-LAWS; RIGHTS PLANS. On or prior to the Distribution Date, all necessary actions shall have been taken to provide for the adoption of the form of Certificate of Incorporation and By-laws and the execution and delivery of the form of Rights Agreement, relating to the preferred share purchase rights relating to the ST Common Shares (the “Rights”), filed by ST with the Commission as exhibits to ST’s Registration Statement on Form 10 (the “Form 10”).

(d) DIRECTORS. On or prior to the Distribution Date, IMS, as the sole stockholder of ST, shall have taken all necessary actions on or prior to the Distribution Date to cause the Board of Directors of ST to consist of the individuals identified in the Information Statement as directors of ST.

(e) CERTAIN LICENSES AND PERMITS. Without limiting the generality of the obligations set forth in Section 2.1(a), on or prior to the Distribution Date or as soon as reasonably practicable thereafter:

(i) all transferable licenses, permits and authorizations issued by any Governmental Authority which do not relate primarily to the IMS Business but which are held in the name of IMS or any member of the IMS Group, or in the name of any employee, officer, director, stockholder or agent of IMS or any such member, or otherwise, on behalf of a member of the ST Group shall be duly and validly transferred or caused to be transferred by IMS to the appropriate member of the ST Group; and

(ii) all transferable licenses, permits and authorizations issued by Governmental Authorities which relate primarily to the IMS Business but which are held in the name of any member of the ST Group, or in the name of any employee, officer, director, stockholder, or agent of any such member, or otherwise, on behalf of a member of the IMS Group shall be duly and validly transferred or caused to be transferred by ST to IMS or the appropriate member of the IMS Group.

(f) TRANSFER OF AGREEMENTS. Without limiting the generality of 1the obligations set forth in Section 2.1(a):

(i) IMS hereby agrees that, on or prior to the Distribution Date or as soon as reasonably practicable thereafter, subject to the limitations set forth in this Section 2.1(f), it will, and it will cause each member of the IMS Group to, assign, transfer and convey to the appropriate member of the ST Group all of IMS’ or such member of the IMS Group’s respective right, title and interest in and to any and all ST Contracts;

(ii) ST hereby agrees that, on or prior to the Distribution Date or as soon as reasonably practicable thereafter, subject to the limitations set forth in this Section 2.1(f), it will, and it will cause each member of the ST Group to, assign, transfer and convey to IMS or the appropriate member of the IMS Group all of ST’s or such member of the ST Group’s respective right, title and interest in and to any and all IMS Contracts;

(iii) subject to the provisions of this Section 2.1(f), any agreement to which any of the parties hereto or any of their Subsidiaries is a party that inures to the benefit of both the IMS Business and the ST Business shall be assigned in part so that each party shall be entitled to the rights and benefits inuring to its business under such agreement;

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(iv) the assignee of any agreement assigned, in whole or in part, hereunder (an “Assignee”) shall assume and agree to pay, perform, and fully discharge all obligations of the assignor under such agreement or, in the case of a partial assignment under paragraph (f)(iii), such Assignee’s related portion of such obligations as determined in accordance with the terms of the relevant agreement, where determinable on the face thereof, and otherwise as determined in accordance with the practice of the parties prior to the Distribution; and

(v) notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any agreement, in whole or in part, or any rights thereunder if the agreement to assign or attempt to assign, without the consent of a third party, would constitute a breach thereof or in any way adversely affect the rights of the assignor or Assignee thereof. Until such consent is obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of any party hereto so that the intended Assignee would not, in fact, receive all such rights, the parties will cooperate with each other in any arrangement designed to provide for the intended Assignee the benefits of, and to permit the intended Assignee to assume liabilities under, any such agreement.

(g) CONSENTS. The parties hereto shall use their commercially reasonable efforts to obtain required consents to transfer and/or assignment of licenses, permits and authorizations of Governmental Authorities and of agreements hereunder.

(h) DELIVERY OF SHARES TO AGENT. IMS shall deliver to the Agent the share certificates representing the ST Common Shares issued to IMS by ST pursuant to Section 2.1(b) which are to be distributed to the holders of IMS Common Stock in the Distribution and shall instruct the Agent to distribute, on or as soon as practicable following the Distribution Date, certificates representing such ST Common Shares to holders of record of shares of IMS Common Stock on the Distribution Record Date as further contemplated by the Information Statement and herein. ST shall provide all share certificates that the Agent shall require in order to effect the Distribution.

(i) CERTAIN LIABILITIES. For purposes of this Agreement, including Article III hereof, ST agrees with IMS that:

(i) any and all Liabilities arising from or based upon misstatements in or omissions from the Form 10 filed by ST shall be deemed to be IMS Liabilities and not ST Liabilities.

(ii) except as otherwise provided in this Agreement or the Ancillary Agreements and subject to Section 2.1(k)(i) hereto, any and all Liabilities arising from or related to the spin-off of Cognizant Corporation and ACNielsen Corporation from The Dun & Bradstreet Corporation pursuant to the 1996 Distribution Agreement shall be deemed to be IMS Liabilities and not ST Liabilities.

(iii) except as otherwise provided in this Agreement or the Ancillary Agreements and subject to Section 2.1(k)(ii) hereto, any and all Liabilities arising from or related to the spin-off of IMS from Cognizant Corporation pursuant to the 1998 Distribution Agreement shall be deemed to be IMS Liabilities and not ST Liabilities.

(iv) except as otherwise provided in this Agreement or the Ancillary Agreements, all environmental liabilities, including, without limitation, environmental cleanup costs, fines or penalties, associated with the property located at 195 Danbury Road, Wilton, Connecticut shall be deemed to be IMS Liabilities and not ST Liabilities.

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(v) except as otherwise provided in this Agreement or the Ancillary Agreements, any and all costs associated with Pharbase data protection compliance shall be deemed to be IMS Liabilities and not ST Liabilities.

(vi) except as otherwise provided in this Agreement or the Ancillary Agreements, all liabilities incurred by any party in connection with the agreements between IMS HEALTH, or one of its subsidiaries, and Fabian Normand shall be deemed to be IMS Liabilities and not ST Liabilities.

(vii) except as otherwise provided in this Agreement or the Ancillary Agreements, any Liabilities not specifically allocated to ST pursuant to this Agreement or the Ancillary Agreements shall be deemed to be IMS Liabilities and not ST Liabilities.

(j) CERTAIN CONTINGENCIES. For purposes of this Agreement, including Article III hereof, each of ST and IMS agrees that:

(i) notwithstanding anything to the contrary herein or in the Tax Allocation Agreement, each of IMS and ST shall be liable for a portion of the liabilities related to certain prior business transactions to the extent and in the circumstances described in Schedule 2.1(j)(i), subject to a nine million dollar (US$ 9,000,000) cap on the amount of such liabilities, which amount shall include any liabilities set forth in Section 2.1(j)(ii); and

(ii) any and all Liabilities of IMS under the Indemnity and Joint Defense Agreement or otherwise related to the IRI Action, including legal fees and expenses related thereto, shall be allocated as to 50% to IMS and as to 50% to ST, subject to a nine million dollar (US$ 9,000,000) cap on the amount of such liabilities, which amount shall include any liabilities set forth in Section 2.1(j)(i); PROVIDED, HOWEVER, that ST’s obligation to reimburse IMS shall be triggered by any payments made by IMS and not a determination of liability under the terms of the Indemnity and Joint Defense Agreement.

(k) UNDERTAKINGS OF ST.

(i) On or prior to the Distribution Date, ST will undertake to each of R.H. Donnelly Corporation, formerly known as The Dun & Bradstreet Corporation, and ACNielsen Corporation to be jointly and severally liable for all “Cognizant Liabilities” (as defined in the 1996 Distribution Agreement) under the 1996 Distribution Agreement pursuant to an undertaking substantially in the form of Exhibit 2.1(k)(i) hereto; PROVIDED, HOWEVER, that except as otherwise provided for herein, IMS shall indemnify ST for “Cognizant Liabilities.”

(ii) On or prior to the Distribution Date, ST will undertake to Cognizant Corporation to be jointly and severally liable for all “IMS HEALTH Liabilities” (as defined in the 1998 Distribution Agreement) under the 1998 Distribution Agreement pursuant to an undertaking substantially in the form of Exhibit 2.1(k)(ii) hereto; PROVIDED, HOWEVER, that, except as otherwise provided for herein, IMS shall indemnify ST for “IMS HEALTH Liabilities.”

(l) GARTNER COMMON STOCK TRANSFER.

(i) In connection with the Distribution, IMS will transfer to ST all of its right, title and interest in shares of Class A Gartner Common Stock having a fair market value (based on the arithmetic mean of the high and low prices of such shares as reported on the New York Stock Exchange, Inc. on the last trading day immediately preceding the Distribution) equal to $4,000,000.

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(ii) IMS and ST jointly covenant and agree:

(a) to comply with all of the provisions of Section 2.4(a) of the Gartner Distribution Agreement and to refrain from taking any actions which would violate such provisions; and

(b) that neither party will take any action pursuant to clauses (x) and (y) of Section 2.4(a) of the Gartner Distribution Agreement without first notifying the Chief Financial Officer of the other party, or his respective designee, by or before 9:30 AM on the day a transfer is desired by such notifying party in order to (i) obtain the consent of the notified party to the transfer and (ii) designate the number of shares subject to such transfer. If, upon receipt of the notifying party’s notice, the notified party is also interested in transferring the shares pursuant to Section 2.4(a) of the Gartner Distribution Agreement, the shares subject to transfer will be allocated to each interested party based upon their relative ownership of Gartner Group Securities.

(m) IMS STOCK CONTRIBUTION. On the Distribution Date, IMS shall contribute to ST 22,000 shares of ST Common Stock which, pursuant to the Distribution, equals the conversion of 440,000 shares of IMS Common Stock purchased by IMS in its stock repurchase program into ST Common Stock.

(n) OTHER TRANSACTIONS. On or prior to the Distribution Date, each of IMS and ST shall consummate those other transactions in connection with the Distribution that are contemplated by the Form 10 and Exhibit A hereto, in order to implement the Distribution. After the Distribution Date, each of IMS and ST will exercise good faith commercially reasonable efforts to consummate as promptly as practicable all other transactions which must be consummated in order fully to complete the Distribution and any of the transactions contemplated hereby or by any of the Ancillary Agreements.

SECTION 2.2 INTERCOMPANY ACCOUNTS AND THIRD PARTY ACCOUNTS. (a) All Intercompany Accounts (other than receivables, payables and loans otherwise specifically provided for hereunder or under any Ancillary Agreement or set forth in Schedule 2.2), including, without limitation, in respect of any cash balances, any cash balances representing deposited checks or drafts for which only a provisional credit has been allowed or any cash held in any centralized cash management system between ST, or any member of the ST Group, on the one hand, and IMS or any member of the IMS Group (other than CTS), on the other hand, which exist and are reflected in the accounting records of the relevant parties as of July 31, 2000 and which have not been settled by the Distribution Date (the “Open Accounts”), shall be paid or settled concurrently with the payments set forth in Section 2.3(f).

(b) In connection with the Distribution, members of the IMS Group and members of the ST Group will effect certain business transfers as set forth on Schedules 2.2(b)(i)-(iii). In order to effect such business transfers certain cash payments will be made between members of the IMS Group and members of the ST Group to either fund payments for such business transfers or to effect such business transfers. The funding and transaction payments set forth on Schedules 2.2(b)(i)-(iii) shall be disregarded in computing the Cash Targets (as defined Section 2.3(a) herein) as there is no net impact. The amount of the transaction payments set forth on Schedules 2.2(b)(i)-(iii) shall be credited toward achieving the Cash Targets.

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SECTION 2.3 CASH BALANCES. (a) In addition to any other obligations hereunder or under any Ancillary Agreement or otherwise, on the close of business on July 31, 2000, ST shall have cash balances in the amount equal to (i) ten million seven hundred thousand United States dollars (US$ 10,700,000) in United States accounts (the “U.S. Cash Target”), (ii) the United States dollar equivalent (measured as of July 31, 2000) of one million five hundred thousand United States dollars (US$ 1,500,000) in accounts outside of the United States (the “Non-U.S. Cash Target,” and together with the U.S. Cash Target, the “Cash Targets”) and (iii) amounts required to fund the net liabilities set forth on Schedule 2.3(a) (the “Funded Liabilities”). Cash shall be determined in accordance with GAAP.

(b) To the extent that (i) cash balances as of July 31, 2000 in accounts outside the United States exceed the Non-U.S. Cash Target, ST shall transfer the excess funds in Euros to IMS Nederland Finance BV, or through some other manner as agreed upon by ST and IMS or (ii) cash balances as of July 31, 2000 in accounts outside the United States are less than the Non-U.S. Cash Target, IMS shall cause IMS Nederland Finance BV to transfer the shortfall in Euros to an entity outside of the U.S. designated by ST, or through some other manner as agreed upon by ST and IMS.

(c) To the extent that (i) cash balances as of July 31, 2000 in accounts in the United States exceed the U.S. Cash Target plus the amount of the Funded Liabilities, ST shall transfer the excess funds to IMS or (ii) cash balances as of July 31, 2000 in accounts in the United States are less than the U.S. Cash Target plus the amount of the Funded Liabilities, IMS shall transfer the shortfall to ST.

(d) Any cash transfers into or out of ST’s non-U.S. or U.S. accounts to or from parties other than members of the IMS Group (other than CTS) after the close of business on July 31, 2000 will be for ST’s account and shall have no effect upon the transactions contemplated by this Section 2.3. Any (i) cash transfers into or out of ST’s U.S. or non-U.S. accounts to or from members of the IMS Group (other than CTS) after the close of business on July 31, 2000 or (ii) payments made or received by any member of the IMS Group for the benefit of any member of the ST Group after the close of business on July 31, 2000 which have not otherwise been settled by the Distribution Date, including, for purposes of Sections 2.3(d)(i) and 2.3(d)(ii), the settlement of Open Accounts after the close of business on July 31, 2000, shall be taken into account so that, combined with the settlement of all accounts under this Section 2.3, the net result is achieving the Cash Targets set forth in Section 2.3(a).

(e) IMS shall, on the business day prior to the Distribution Date, transfer amounts that it reasonably believes will achieve the balances set forth in Section 2.3(a) as adjusted by the provisions in Section 2.3(d).

(f) Promptly after the Distribution Date, but no later than September 25, 2000, ST and IMS shall determine the cash balances in ST’s U.S. and non-U.S. accounts and the balances of Open Accounts which determination shall be subject to review by PricewaterhouseCoopers LLP. Based on such determination, any amounts payable under this Section 2.3 shall be paid by the appropriate party to the other party no later than September 30, 2000. No later than December 31, 2000, ST and IMS shall determine, on a final basis, such balances which determination shall be subject to review by PricewaterhouseCoopers LLP. To the extent the final determination differs from the initial determination, the appropriate party shall pay the applicable amount thereof to the other party no later than January 15, 2001.

SECTION 2.4 ASSUMPTION AND SATISFACTION OF LIABILITIES. Except as otherwise specifically set forth in any Ancillary Agreement, from and after the Effective Time, (i) IMS shall, and shall cause each member of the IMS Group to, assume, pay, perform and discharge all IMS Liabilities and (ii) ST shall, and shall cause each member of the ST Group to, assume, pay, perform and discharge all ST Liabilities. To the extent reasonably requested to do so by another party hereto, each party hereto agrees to sign such documents, in a form reasonably satisfactory to such party, as may be reasonably necessary to evidence the assumption of any Liabilities hereunder.

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SECTION 2.5 RESIGNATIONS. (a) Subject to Section 2.5(b), IMS shall cause all their employees to resign, effective as of the Distribution Date, from all positions as officers or directors of any member of the ST Group in which they serve, and ST shall cause all its employees to resign, effective as of the Effective Time, from all positions as officers or directors of IMS or any members of the IMS Group in which they serve.

(b) No person shall be required by any party hereto to resign from any position or office with another party hereto if such person is disclosed in the Information Statement as the person who is to hold such position or office following the Distribution.

SECTION 2.6 NON-SOLICITATION OF EMPLOYEES. From the date of this Agreement, and for a period of two years after the Effective Time, each party hereby covenants and agrees that neither it nor any of its Affiliates shall actively solicit, or cause or authorize, directly or indirectly, to be solicited for employment or employ or cause or authorize, directly or indirectly, to be employed or engaged as an employee, for or on behalf of itself or any other person, any person who is currently, or was, less than 90 days prior to the date of this Agreement, an executive officer, senior manager (or the equivalent thereof), executive vice president or employee of any other party or any of such party’s Subsidiaries, without such party’s prior written approval.

SECTION 2.7 FURTHER ASSURANCES. In case at any time after the Effective Time any further action is reasonably necessary or desirable to carry out the purposes of this Agreement, the Ancillary Agreements, the transactions contemplated by Annex A hereto and the agreements set forth in Schedule 2.7 hereto, the proper officers of each party to this Agreement shall take all such necessary action. Without limiting the foregoing, IMS and ST shall use their commercially reasonable efforts promptly to obtain all consents and approvals, to enter into and execute all initial or amendatory agreements and to make all filings and applications that may be required for the consummation of the transactions contemplated by this Agreement, the Ancillary Agreements, Annex A hereto and the agreements set forth in Schedule 2.7 hereto, including, without limitation, all applicable governmental and regulatory filings. IMS and ST shall cause the appropriate parties thereto to execute the agreements set forth on Schedule 2.7 hereto as soon as reasonably practicable following the Distribution Date. Each of IMS and ST agree that irreparable damage would occur in the event that any of the transactions contemplated by this Agreement, the Ancillary Agreements, Annex A hereto and the agreements set forth in Schedule 2.7 hereto were not entered into, performed or consummated in accordance with their specific terms. It is accordingly agreed that each of IMS and ST shall be entitled to specific performance of the terms hereof and thereof, as the case may be, this being in addition to any other remedy to which they are entitled at law or in equity. Except as otherwise set forth in Section 8.5 hereto, ST agrees that it shall bear all costs incurred with the execution and consummation of the actions required by this Section 2.7.

SECTION 2.8 LIMITED REPRESENTATIONS OR WARRANTIES. Each of the parties hereto agrees that no party hereto is, in this Agreement or in any other agreement or document contemplated by this Agreement or otherwise, making any representation or warranty whatsoever, as to title or value of Assets being transferred. It is also agreed that, notwithstanding anything to the contrary otherwise expressly provided in the relevant Conveyancing and Assumption Instrument, all Assets either transferred to or retained by the parties, as the case may be, shall be “as is, where is” and that (subject to Section 2.7) the party to which such Assets are to be transferred hereunder shall bear the economic and legal risk that such party’s or any of the Subsidiaries’ title to any such Assets shall be other than good and marketable and free from encumbrances. Similarly, each party hereto agrees that, except as otherwise expressly provided in the relevant Conveyancing and Assumption Instrument, no party hereto is representing or warranting in any way that the obtaining of any consents or approvals, the execution and delivery of any amendatory agreements and the making of any filings or applications contemplated by this Agreement will satisfy the provisions of any or all applicable agreements or the requirements of any or all applicable laws or judgments, it being agreed that the party to which any Assets are transferred shall bear the economic and legal risk that any necessary consents or approvals are not obtained or that any requirements of laws or judgments are not complied with.

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SECTION 2.9 GUARANTEES. (a) Except as otherwise specified herein or in any Ancillary Agreement and in Section 2.9(b) below, ST shall use its commercially reasonable best efforts to have, on or prior to the Distribution Date, or as soon as practicable thereafter, IMS and any member of the IMS Group removed as guarantor of or obligor for any ST Liability, including, without limitation, in respect of those guarantees set forth on Schedule 2.9(a) to the extent that they relate to ST Liabilities.

(b) Except as otherwise specified herein or in any Ancillary Agreement, ST shall use its commercially reasonable best efforts to have, no later than six months after the Distribution Date, IMS and any member of the IMS Group removed as guarantor of or obligor in respect of those guarantees set forth on Schedule 2.9(b).

(c) If ST is unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (a) or (b) of this Section 2.9, the applicable guarantor or obligor shall continue to be bound as such and, unless not permitted by law or the terms thereof, the relevant beneficiary shall or shall cause one of its Subsidiaries, as agent or subcontractor for such guarantor or obligor, to pay, perform and discharge fully all the obligations or other liabilities of such guarantor or obligor thereunder from and after the date hereof. Either party shall indemnify and hold harmless the other party for any and all Liabilities incurred in connection with this Section 2.9. In addition, IMS shall be paid the fees set forth on Schedule 2.9(c) hereto in connection with its services as guarantor for the guarantees contemplated by this Section 2.9, including, without limitation, the IMS Bank Guaranty.

SECTION 2.10 WITNESS SERVICES. At all times from and after the Distribution Date, each of IMS and ST shall use its commercially reasonable best efforts to make available to the other, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees and agents as witnesses to the extent that (i) such persons may reasonably be required in connection with the prosecution or defense of any Action in which the requesting party may from time to time be involved and (ii) there is no conflict in the Action between the requesting party and IMS or ST as applicable. A party providing witness services to the other party under this Section shall be entitled to receive from the recipient of such services, upon the presentation of invoices therefor, payments for such amounts, relating to disbursements and other out-of-pocket expenses (which shall be deemed to exclude the costs of salaries and benefits of employees who are witnesses), as may be reasonably incurred in providing such witness services.

SECTION 2.11 CERTAIN POST-DISTRIBUTION TRANSACTIONS.

(a) (i) IMS shall comply and shall cause its Subsidiaries to comply with and otherwise not take action inconsistent with each representation and statement made to McDermott, Will & Emery in connection with the request by IMS for a legal opinion in respect of the Distribution as to certain tax aspects of the Distribution, and (ii) until two years after the Distribution Date, IMS will maintain its status as a company engaged in the active conduct of a trade or business, as defined in Section 355(b) of the Code.

(b) (i) ST shall comply and shall cause its Subsidiaries to comply with and otherwise not take action inconsistent with each representation and statement made to McDermott, Will & Emery in connection with the request by IMS for a legal opinion in respect of the Distribution as to certain tax aspects of the Distribution, and (ii) until two years after the Distribution Date, ST will maintain its status as a company engaged in the active conduct of a trade or business, as defined in Section 355(b) of the Code.

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(c) ST agrees that, until two years after the Distribution Date, it will not (i) merge or consolidate with or into any other corporation, (ii) liquidate or partially liquidate, (iii) sell or transfer all or substantially all of its assets (within the meaning of Rev. Proc. 77-37, 1977 — 2 C.B. 568) in a single transaction or series of related transactions, (iv) redeem or otherwise repurchase any ST Common Shares (other than as described in Section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B. 696), or (v) take any other action or actions which in the aggregate would have the effect of causing or permitting one or more persons to acquire directly or indirectly stock representing a 50 percent or greater interest (within the meaning of Section 355(e) of the Code) in ST, unless prior to taking such action ST has obtained (and provided to IMS) a written opinion of a law firm reasonably acceptable to IMS, or a ruling from the Internal Revenue Service, that such action or actions will not result in (y) the Distribution failing to qualify under Section 355(a) of the Code or (z) the ST Common Shares failing to qualify as qualified property for purposes of Section 355(c)(2) of the Code by reason of Section 355(e) of the Code.

(d) ST agrees and covenants:

(i) that it will use its commercially reasonable best efforts to ensure that IMS will incur no liability under the IMS Bank Guaranty or other credit support provided by IMS;

(ii) that it will use its commercially reasonable best efforts to secure an independent line of credit within the three month period subsequent to the Distribution Date that satisfies all of ST’s then projected working capital requirements as a going concern without IMS credit support of any kind;

(iii) that it will perform and be bound by all covenants set forth in the IMS Bank Guaranty; and

(iv) that, notwithstanding anything to the contrary herein or in any Ancillary Agreement, any and all fees and costs incurred by either party in connection with the IMS Bank Guaranty, or other credit support provided by IMS, and the pursuit of an independent line of credit by ST will be borne by ST.

(e) Notwithstanding anything to the contrary herein or in the Tax Allocation Agreement, if IMS or ST (or any of their respective Subsidiaries) fails to comply with any of its obligations under Sections 2.11(a), 2.11(b), 2.11(c) and 2.11(d) above (PROVIDED, HOWEVER, that the obligation of ST to indemnify IMS under this Section 2.11(e) shall not be affected if, despite ST’s commercially reasonable best efforts, (y) IMS incurs liability under the IMS Bank Guaranty or other credit support provided by IMS or (z) ST fails to secure an independent line of credit within the three month period subsequent to the Distribution Date) or takes or fails to take any action on or after the Distribution Date, and such failure to comply, action or omission contributes to a determination that (i) the Distribution fails to qualify under Section 355(a) of the Code or (ii) the ST Common Shares fail to qualify as qualified property for purposes of Section 355(c)(2) of the Code by reason of Section 355(e) of the Code, then such party shall indemnify and hold harmless the other party, each member of the consolidated group of which the other party is a member and the stockholders of either party from and against any and all federal, state and local taxes, including any interest, penalties or additions to tax, imposed upon or incurred by such other party, any member of its group or any stockholder of either party as a result of the failure of the Distribution to qualify under Section 355(a) of the Code or the application of Section 355(e). The obligation of ST to indemnify IMS pursuant to the preceding sentence shall not be affected by the delivery of any legal opinion or supplemental ruling under Sections 2.11(c).

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SECTION 2.12 TRANSFERS NOT EFFECTED PRIOR TO THE DISTRIBUTION; TRANSFERS DEEMED EFFECTIVE AS OF THE DISTRIBUTION DATE. To the extent that any transfers contemplated by this Article II shall not have been consummated on or prior to the Distribution Date, the parties shall cooperate to effect such transfers as promptly following the Distribution Date as shall be practicable. Nothing herein shall be deemed to require the transfer of any Assets or the assumption of any Liabilities which by their terms or operation of law cannot be transferred; PROVIDED, HOWEVER, that the parties hereto and their respective Subsidiaries shall cooperate to seek to obtain any necessary consents or approvals for the transfer of all Assets and Liabilities contemplated to be transferred pursuant to this Article II. In the event that any such transfer of Assets or Liabilities has not been consummated, from and after the Distribution Date, the party retaining such Asset or Liability shall hold such Asset in trust for the use and benefit of the party entitled thereto (at the expense of the party entitled thereto) or retain such Liability for the account of the party by whom such Liability is to be assumed pursuant hereto, as the case may be, and take such other action as may be reasonably requested by the party to whom such Asset is to be transferred, or by whom such Liability is to be assumed, as the case may be, in order to place such party, insofar as is reasonably possible, in the same position as would have existed had such Asset or Liability been transferred as contemplated hereby. As and when any such Asset or Liability becomes transferable, such transfer shall be effected forthwith. The parties agree that, as of the Distribution Date, each party hereto shall be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such party is entitled to acquire or required to assume pursuant to the terms of this Agreement.

SECTION 2.13 CONVEYANCING AND ASSUMPTION INSTRUMENTS. In connection with the transfers of Assets and the assumptions of Liabilities contemplated by this Agreement, the parties shall execute, or cause to be executed by the appropriate entities, the Conveyancing and Assumption Instruments in substantially the form contemplated hereby for transfers to be effected pursuant to New York law or the laws of one of the other states of the United States or, if not appropriate for a given transfer, and for transfers to be effected pursuant to non-U.S. laws, in such other form as the parties shall reasonably agree, including the transfer of real property with deeds as may be appropriate. The transfer of capital stock shall be effected by means of delivery of stock certificates and executed stock powers and notation on the stock record books of IMS or other legal entities involved, or by such other means as may be required in any non-U.S. jurisdiction to transfer title to stock and, to the extent required by applicable law, by notation on public registries.

SECTION 2.14 ANCILLARY AGREEMENTS. Prior to the Distribution Date, each of IMS and ST shall enter into, and/or (where applicable) shall cause members of the IMS Group or the ST Group, as applicable, to enter into, the Ancillary Agreements and any other agreements in respect of the Distribution reasonably necessary or appropriate in connection with the transactions contemplated hereby and thereby.

SECTION 2.15 CORPORATE NAMES. (a) Except as otherwise specifically provided in any Ancillary Agreement:

(i) as soon as reasonably practicable after the Distribution Date but in any event within six months thereafter, IMS will, at its own expense, remove (or, if necessary, on an interim basis, cover up) any and all exterior signs and other identifiers located on any of its property or premises or on the property or premises used by it or its Subsidiaries (except property or premises to be shared with ST or its Subsidiaries after the Distribution) which refer or pertain to SYNAVANT or which include the SYNAVANT, Strategic Technologies or Clark-O’Neill name, logo or other trademark or other intellectual property utilizing ST;

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(ii) as soon as reasonably practicable after the Distribution Date but in any event within six months thereafter, IMS will, and will cause its Subsidiaries to, remove from all letterhead, envelopes, invoices and other communications media of any kind all references to SYNAVANT, including the SYNAVANT name, logo and any other trademark or other intellectual property utilizing SYNAVANT (except that IMS shall not be required to take any such action with respect to materials in the possession of customers), and neither IMS nor its Subsidiaries shall use or display the “ST” name, logo or other trademarks or intellectual property utilizing ST without the prior written consent of ST;

(b) Except as otherwise specifically provided in any Ancillary Agreement:

(i) as soon as reasonably practicable after the Distribution Date but in any event within six months thereafter, ST will, at its own expense, remove (or, if necessary, on an interim basis, cover up) any and all exterior signs and other identifiers located on any of their respective property or premises owned or used by them or their respective Subsidiaries (except property or premises to be shared with IMS or its Subsidiaries after the Distribution) which refer or pertain to IMS or which include the “IMS Health Incorporated,” “IMS Health” or “IMS” name, logo or other trademark or other IMS intellectual property;

(ii) as soon as reasonably practicable after the Distribution Date but in any event within six months thereafter, ST will, and will cause its respective Subsidiaries to, remove from all letterhead, envelopes, invoices and other communications media of any kind all references to IMS, including the “IMS Health Incorporated” or “IMS” name, logo and any other trademark or other IMS intellectual property (except that ST shall not be required to take any such action with respect to materials in the possession of customers), and neither ST nor any of its Subsidiaries shall use or display the “IMS Health Incorporated” or “IMS” name, logo or other trademarks or IMS intellectual property without the prior written consent of IMS; and

(iii) as soon as reasonably practicable after the Distribution Date but in any event within six months thereafter, ST will, and will cause its Subsidiaries to, change their corporate names to the extent necessary to remove and eliminate any reference to IMS, including the “IMS” Health Incorporated or “IMS” name; PROVIDED, HOWEVER, that, notwithstanding the foregoing requirements of this Section 2.15(b), if ST has exercised good faith efforts to comply with this clause (iii) but is unable, due to regulatory or other circumstance beyond its control, to effect a corporate name change in compliance with applicable law, then ST or its Subsidiary will not be deemed to be in breach hereof if it continues to exercise good faith efforts to effectuate such name change and does effectuate such name change within nine months after the Distribution Date, and, in such circumstances, such party may continue to include in exterior signs and other identifiers and in letterhead, envelopes, invoices and other communications references to the name which include references to IMS but only to the extent necessary to identify such party and only until such party’s corporate name can be changed to remove and eliminate such references.

SECTION 2.16 JOINT BUSINESS OPPORTUNITIES; NON-COMPETITION; PROTECTION OF INFORMATION.

(a) IMS and ST are committed to pursuing joint business opportunities to enhance customer value, on terms and conditions as may be agreed by the parties after the date hereof. The parties acknowledge and agree that nothing in this Section 2.16(a) shall create a binding obligation on IMS or ST to enter into or pursue any such business opportunity.

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(b) IMS hereby covenants and agrees that neither it nor any of its respective Subsidiaries will, between the Effective Time and the [fifth] anniversary of the Effective Time (the “Restricted Period”):

(i) engage in or carry on any business in the United States or elsewhere in whatever form which would be in competition with any of ST’s Retained Businesses (as defined herein) as such businesses are conducted by ST at the Effective Time; and

(ii) engage in or carry on any business in the United States or elsewhere in whatever form, directly or indirectly, with ST named competitors;

(c) ST hereby covenants and agrees that neither it nor any of its respective Subsidiaries will, during the Restricted Period:

(i) engage in or carry on any business in the United States or elsewhere in whatever form which would be in competition with any of IMS’s Retained Businesses (as defined herein) as such businesses are conducted by IMS at the Effective Time;

(ii) engage in or carry on any business in the United States or elsewhere, directly or indirectly, with (a) NDC Automation, Inc., NDC Health Information Services, Inc., Quintiles Transnational Corp., Healtheon/WebMD Corporation, Cejedim or any of their respective subsidiaries and (b) any companies controlled by or managed by Rene Derecque or Roland Lederer; PROVIDED, however, that, notwithstanding anything to the contrary in this Section 2.16(c), in the event that ST wishes to engage in a business partnership with one of the above-named companies, it may do so with the prior written consent of IMS, which consent IMS will only be required to grant if IMS shall reasonably determine in good faith that engaging in such activity by ST would not be adverse to IMS; and

(iii) engage in or carry on any commercial data business; PROVIDED, HOWEVER, that, notwithstanding anything to the contrary in this Section 2.16(c), (A) in the event that a customer explicitly so requests, ST may serve as a Data Integrator (as defined herein) for such customer to the extent so requested, (B) in the event that a customer explicitly so requests, ST may engage in E-Detailing (as defined herein) for such customer to the extent so requested, (C) in the event that a customer explicitly so requests, ST may engage in data analytics and decision support tools used on ST’s proprietary SFA and CRM systems, (D) in the event that a customer explicitly so requests, ST may engage in Pharbase, including updates from multiple sources, used on ST’s proprietary SFA and CRM systems and (E) in the event that ST wishes to engage in or carry on commercial data business, it may do so with the prior written consent of IMS, which consent IMS will only be required to grant if IMS shall reasonably determine in good faith that engaging in or carrying on such business by ST would not be adverse to IMS. As used herein: (A) “Data Integrator” means an integrator of information solely through the sales force automation or customer relationship management systems proprietary to ST; and (B) “E-Detailing” means an Internet-based software product related to doctor detailing provided through the sales force automation or customer relationship management systems proprietary to ST.

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(d) In the event that ST (i) sells, transfers or leases all or substantially all of its assets, (ii) is not the surviving corporation in any merger, consolidation or other business combination in which it may enter with any person or (iii) enters into any joint venture, joint marketing, or partnership agreements into which it may enter with any person, in any case prior to the termination of the Restricted Period, ST will cause such purchaser or surviving corporation, as the case may be, to assume ST’s obligations under this Section 2.16 upon the consummation of any such transaction, and, in the case of a joint venture, joint marketing or partnership agreement, ST will cause the party to such agreement, and such party will be deemed, to be bound by the provisions of this Section 2.16.

(e) Notwithstanding anything to the contrary in Sections 2.16(b), (c) or (d) above, nothing in this Section 2.16 shall in any way restrict or preclude either party or any of its respective Subsidiaries from acquiring and operating any company (or substantially all of the assets thereof) whose primary business is not in competition with either of the parties’ Retained Businesses. Each of the parties further covenant that neither party nor any of its Subsidiaries or any its officers, directors, employees or agent thereof will disclose any confidential information with respect to either parties’ Retained Businesses without the prior written consent of the other party, and will enforce to the fullest extent possible, on behalf of the other party, the other party’s rights under or pursuant to its policies and agreements with third parties, restricting or prohibiting disclosure by such persons of such confidential information.

(f) As used herein:

(i) the term “IMS Retained Businesses” shall mean the following businesses of IMS: (i) sales management information services (including sales compensation applications, targeting and scrubbing services) which are based on commercial data, (ii) market research services also based on the commercialization of data, (iii) data analytics, and (iv) consulting services, decision support tools and services and information technology relating to the foregoing (but excluding sales force automation and customer relationship management systems), all of which relates to the pharmaceutical, biotechnology, diagnostics, medical/surgical supply and health care industries;

(ii) the term “ST Retained Businesses” shall mean the following businesses of ST: (i) sales force automation and customer relationship management systems, which is based on the sale of proprietary software, (ii) implementation, integration and consulting services relating to the foregoing, (iii) data analytics and decision support tools used on ST’s proprietary SFA and CRM systems, (iv) MTO’s to facilitate doctor targeting used on ST’s proprietary SFA and CRM systems, (v) Pharbase, including updates from multiple sources, used on ST’s proprietary SFA and CRM systems and (vi) direct mail services, and drug sample accountability and distribution, all of which relates to the pharmaceutical, biotechnology, diagnostics, medical/surgical supply and health care industries; and

(iii) the term “Retained Businesses” shall refer to both the IMS Retained Businesses and the ST Retained Businesses, including all business units currently in each company.

(g) Each of IMS and ST acknowledge and agree that the covenants and agreements contained in this Section 2.16 have been negotiated in good faith by each of them, and are reasonable and not more restrictive or broader than necessary to protect the interests of each of IMS and ST in the IMS Retained Businesses and the ST Retained Businesses, respectively, and would not achieve their intended purpose if they were on different terms or for periods of time shorter than the periods of time provided herein or applied in more restrictive geographical and business line areas than are provided herein.

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ARTICLE III
INDEMNIFICATION

SECTION 3.1 INDEMNIFICATION BY IMS. Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, IMS shall indemnify, defend and hold harmless the ST Indemnitees from and against any and all Indemnifiable Losses of the ST Indemnitees arising out of, by reason of or otherwise in connection with the IMS Liabilities or alleged IMS Liabilities, including any breach by IMS of any provision of this Agreement or any Ancillary Agreement.

SECTION 3.2 INDEMNIFICATION BY ST. Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, ST shall indemnify, defend and hold harmless the IMS Indemnitees from and against any and all Indemnifiable Losses of the IMS Indemnitees arising out of, by reason of or otherwise in connection with the ST Liabilities or alleged ST Liabilities, including any breach by ST of any provision of this Agreement or any Ancillary Agreement.

SECTION 3.3 PROCEDURES FOR INDEMNIFICATION.

(a) THIRD PARTY CLAIMS. If a claim or demand is made against an IMS Indemnitee or a ST Indemnitee (each, an “Indemnitee”) by any person who is not a party to this Agreement (a “Third Party Claim”) as to which such Indemnitee is entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the party which is or may be required pursuant to Section 3.1 or Section 3.2 hereof to make such indemnification (the “Indemnifying Party”) in writing, and in reasonable detail, of the Third Party Claim promptly (and in any event within fifteen (15) business days) after receipt by such Indemnitee of written notice of the Third Party Claim; PROVIDED, HOWEVER, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnitee failed to give such notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly (and in any event within five (5) business days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.

If a Third Party Claim is made against an Indemnitee, the Indemnifying Party shall be entitled to participate in the defense thereof and, if it so chooses and acknowledges in writing its obligation to indemnify the Indemnitee therefor, to assume the defense thereof with counsel selected by the Indemnifying Party; PROVIDED that such counsel is not reasonably objected to by the Indemnitee. Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party shall, within thirty 30 days (or sooner if the nature of the Third Party Claim so requires), notify the Indemnitee of its intent to do so, and the Indemnifying Party shall thereafter not be liable to the Indemnitee for legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof; PROVIDED that such Indemnitee shall have the right to employ counsel to represent such Indemnitee if, in such Indemnitee’s reasonable judgment, a conflict of interest between such Indemnitee and such Indemnifying Party exists in respect of such claim which would make representation of both such parties by one counsel inappropriate, and in such event the fees and expenses of such separate counsel shall be paid by such Indemnifying Party. If the Indemnifying Party assumes such defense, the Indemnitee shall have the right to participate in the defense thereof and to employ counsel, subject to the proviso of the preceding sentence, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party shall control such defense. The Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has failed to assume the defense thereof (other than during the period prior to the time the Indemnitee shall have given notice of the Third Party Claim as provided above). If the Indemnifying Party so elects to assume the defense of any Third Party Claim, all of the Indemnitees shall cooperate with the Indemnifying Party in the defense or prosecution thereof, including by providing or causing to be provided Records and witnesses as soon as reasonably practicable after receiving any request therefor from or on behalf of the Indemnifying Party.

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If the Indemnifying Party acknowledges in writing responsibility for a Third Party Claim, then in no event will the Indemnitee admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without the Indemnifying Party’s prior written consent; PROVIDED, HOWEVER, that the Indemnitee shall have the right to settle, compromise or discharge such Third Party Claim without the consent of the Indemnifying Party if the Indemnitee releases the Indemnifying Party from its indemnification obligation hereunder with respect to such Third Party Claim and such settlement, compromise or discharge would not otherwise adversely affect the Indemnifying Party. If the Indemnifying Party acknowledges in writing liability for a Third Party Claim, the Indemnitee will agree to any settlement, compromise or discharge of a Third Party Claim that the Indemnifying Party may recommend and that by its terms obligates the Indemnifying Party to pay the full amount of the liability in connection with such Third Party Claim and releases the Indemnitee completely in connection with such Third Party Claim and that would not otherwise adversely affect the Indemnitee; PROVIDED, HOWEVER, that the Indemnitee may refuse to agree to any such settlement, compromise or discharge if the Indemnitee agrees that the Indemnifying Party’s indemnification obligation with respect to such Third Party Claim shall not exceed the amount that would be required to be paid by or on behalf of the Indemnifying Party in connection with such settlement, compromise or discharge. If an Indemnifying Party elects not to assume the defense of a Third Party Claim, or fails to notify an Indemnitee of its election to do so as provided herein, such Indemnitee may compromise, settle or defend such Third Party Claim.

Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to assume the defense of any Third Party Claim (and shall be liable for the fees and expenses of counsel incurred by the Indemnitee in defending such Third Party Claim) if the Third Party Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the Indemnitee which the Indemnitee reasonably determines, after conferring with its counsel, cannot be separated from any related claim for money damages. If such equitable relief or other relief portion of the Third Party Claim can be so separated from that for money damages, the Indemnifying Party shall be entitled to assume the defense of the portion relating to money damages.

(b) In the event of payment by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.

(c) The remedies provided in this Article III shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

SECTION 3.4 INDEMNIFICATION PAYMENTS. Indemnification required by this Article III shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or loss, liability, claim, damage or expense is incurred.

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ARTICLE IV
ACCESS TO INFORMATION

SECTION 4.1 PROVISION OF CORPORATE RECORDS.

(a) Other than in circumstances in which indemnification is sought pursuant to Article III (in which event the provisions of such Article will govern), after the Distribution Date, upon the prior written request by ST for specific and identified agreements, documents, books, records or files (collectively, “Records”) which relate to (x) ST or the conduct of the ST Business up to the Effective Time, or (y) any Ancillary Agreement to which IMS and ST are parties, as applicable, IMS shall arrange, as soon as reasonably practicable following the receipt of such request, for the provision of appropriate copies of such Records (or the originals thereof if the party making the request has a reasonable need for such originals) in the possession or control of IMS or any of its Subsidiaries, but only to the extent such items are not already in the possession or control of the requesting party.

(b) Other than in circumstances in which indemnification is sought pursuant to Article III (in which event the provisions of such Article will govern), after the Distribution Date, upon the prior written request by IMS for specific and identified Records which relate to (x) IMS or the conduct of the IMS Business up to the Effective Time, or (y) any Ancillary Agreement to which ST and IMS are parties, as applicable, ST shall arrange, as soon as reasonably practicable following the receipt of such request, for the provision of appropriate copies of such Records (or the originals thereof if the party making the request has a reasonable need for such originals) in the possession or control of ST or any of its Subsidiaries, but only to the extent such items are not already in the possession or control of the requesting party.

SECTION 4.2 ACCESS TO INFORMATION. Other than in circumstances in which indemnification is sought pursuant to Article III (in which event the provisions of such Article will govern), from and after the Distribution Date, each of IMS and ST shall afford to the other and its authorized accountants, counsel and other designated representatives reasonable access during normal business hours, subject to appropriate restrictions for classified, privileged or confidential information, to the personnel, properties, books and records of such party and its Subsidiaries insofar as such access is reasonably required by the other party and relates to (x) such other party or the conduct of its business prior to the Effective Time or (y) any Ancillary Agreement to which each of the party requesting such access and the party requested to grant such access are parties.

SECTION 4.3 REIMBURSEMENT; OTHER MATTERS. Except to the extent otherwise contemplated by any Ancillary Agreement, a party providing Records or access to information to the other party under this Article IV shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses, as may be reasonably incurred in providing such Records or access to information.

SECTION 4.4 CONFIDENTIALITY. Each of (i) IMS and its Subsidiaries and (ii) ST and its Subsidiaries shall not use or permit the use of (without the prior written consent of the other) and shall keep, and shall cause its consultants and advisors to keep, confidential all information concerning the other parties in its possession, its custody or under its control (except to the extent that (A) such information has been in the public domain through no fault of such party or (B) such information has been later lawfully acquired from other sources by such party or (C) this Agreement or any other Ancillary Agreement or any other agreement entered into pursuant hereto permits the use or disclosure of such information) to the extent such information (w) relates to or was acquired during the period up to the Effective Time, (x) relates to any Ancillary Agreement, (y) is obtained in the course of performing services for the other party pursuant to any Ancillary Agreement, or (z) is based upon or is derived from information described in the preceding clauses (w), (x) or (y), and each party shall not (without the prior written consent of the other) otherwise release or disclose such information to any other person, except such party’s auditors and attorneys, unless compelled to disclose such information by judicial or administrative process or unless such disclosure is required by law and such party has used commercially reasonable efforts to consult with the other affected party or parties prior to such disclosure.

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SECTION 4.5 PRIVILEGED MATTERS. The parties hereto recognize that legal and other professional services that have been and will be provided prior to the Distribution Date have been and will be rendered for the benefit of each of IMS, the members of the IMS Group and the members of the ST Group, and that each of IMS, the members of the IMS Group and the members of the ST Group should be deemed to be the client for the purposes of asserting all privileges which may be asserted under applicable law. To allocate the interests of each party in the information as to which any party is entitled to assert a privilege, the parties agree as follows:

(a) IMS shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the IMS Business, whether or not the privileged information is in the possession of or under the control of IMS or ST. IMS shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting IMS Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by IMS, whether or not the privileged information is in the possession of or under the control of IMS or ST.

(b) ST shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the ST Business, whether or not the privileged information is in the possession of or under the control of IMS or ST. ST shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the subject matter of any claims constituting ST Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by ST, whether or not the privileged information is in the possession of or under the control of IMS or ST.

(c) The parties hereto agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 4.5, with respect to all privileges not allocated pursuant to the terms of Sections 4.5(a) and (b). All privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve both IMS and ST in respect of which both parties retain any responsibility or liability under this Agreement shall be subject to a shared privilege among them.

(d) No party hereto may waive any privilege which could be asserted under any applicable law, and in which any other party hereto has a shared privilege, without the consent of the other party, except to the extent reasonably required in connection with any litigation with third parties or as provided in subsection (e) below. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon the other party requesting such consent.

(e) In the event of any litigation or dispute between or among any of the parties hereto, any party and a Subsidiary of another party hereto, or a Subsidiary of one party hereto and a Subsidiary of another party hereto, either such party may waive a privilege in which the other party has a shared privilege, without obtaining the consent of the other party, provided that such waiver of a shared privilege shall be effective only as to the use of information with respect to the litigation or dispute between the parties and/or their Subsidiaries, and shall not operate as a waiver of the shared privilege with respect to third parties.

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(f) If a dispute arises between or among the parties hereto or their respective Subsidiaries regarding whether a privilege should be waived to protect or advance the interest of any party, each party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other parties, and shall not unreasonably withhold consent to any request for waiver by another party. Each party hereto specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

(g) Upon receipt by any party hereto or by any Subsidiary thereof of any subpoena, discovery or other request which arguably calls for the production or disclosure of information subject to a shared privilege or as to which another party has the sole right hereunder to assert a privilege, or if any party obtains knowledge that any of its or any of its Subsidiaries’ current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged information, such party shall promptly notify the other party or parties of the existence of the request and shall provide the other party or parties a reasonable opportunity to review the information and to assert any rights it or they may have under this Section 4.5 or otherwise to prevent the production or disclosure of such privileged information.

(h) The transfer of all Records and other information pursuant to this Agreement is made in reliance on the agreement of IMS and ST, as set forth in Sections 4.4 and 4.5, to maintain the confidentiality of privileged information and to assert and maintain all applicable privileges. The access to information being granted pursuant to Sections 4.1 and 4.2 hereof, the agreement to provide witnesses and individuals pursuant to Sections 2.10 and 3.3 hereof, the furnishing of notices and documents and other cooperative efforts contemplated by Section 3.3 hereof, and the transfer of privileged information between and among the parties and their respective Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

SECTION 4.6 OWNERSHIP OF INFORMATION. Any information owned by one party or any of its Subsidiaries that is provided to a requesting party pursuant to Article III or this Article IV shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such information.

SECTION 4.7 LIMITATION OF LIABILITY. (a) No party shall have any liability to any other party in the event that any information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate.

(b) Other than in connection with Section 2.2, no party or any Subsidiary thereof shall have any liability or claim against any other party or any Subsidiary of any other party based upon, arising out of or resulting from any agreement, arrangement, course of dealing or understanding existing on or prior to the Distribution Date (other than this Agreement or any Ancillary Agreement or any agreement entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby), unless such agreement, arrangement, course of dealing or understanding is listed on Schedule 4.7(b) hereto, and any such liability or claim, whether or not in writing, which is not reflected on such Schedule, is hereby irrevocably cancelled, released and waived.

SECTION 4.8 OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The rights and obligations granted under this Article IV are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of information set forth in any Ancillary Agreement.

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ARTICLE V
ADMINISTRATIVE SERVICES

SECTION 5.1 PERFORMANCE OF SERVICES. Beginning on the Distribution Date, IMS will provide, or cause one or more of its Subsidiaries to provide, to ST and its Subsidiaries such services on such terms as may be set forth in the Corporate Services Agreement and the Shared Transaction Services Agreements. Except as otherwise set forth in the Corporate Services Agreement, the Shared Transaction Services Agreements or any Schedules thereto, IMS will use (and will cause its Subsidiaries to use) commercially reasonable efforts to provide such services to ST and its Subsidiaries in a satisfactory and timely manner and as further specified in such Corporate Services Agreement or the Shared Transaction Services Agreements.

SECTION 5.2 INDEPENDENCE. Unless otherwise agreed in writing, all employees and representatives of IMS and its Subsidiaries providing services to ST and its Subsidiaries will be deemed for purposes of all compensation and employee benefits matters to be employees or representatives of IMS and its Subsidiaries and not employees or representatives of ST and its Subsidiaries. In performing such services, such employees and representatives will be under the direction, control and supervision of IMS and its Subsidiaries (and not ST and its Subsidiaries) and IMS and its Subsidiaries will have the sole right to exercise all authority with respect to the employment (including, without limitation, termination of employment), assignment and compensation of such employees and representatives.

SECTION 5.3 NON-EXCLUSIVITY. Nothing in this Agreement precludes ST from obtaining, in whole or in part, services of any nature that may be obtainable from its own employees or from providers other than IMS and its Subsidiaries.

ARTICLE VI
DISPUTE RESOLUTION

SECTION 6.1 NEGOTIATION. In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including, without limitation, any claim based on contract, tort, statute or constitution (but excluding any controversy, dispute or claim arising out of any agreement relating to the use or lease of real property if any third party is a party to such controversy, dispute or claim) (collectively, “Agreement Disputes”), the Agreement Dispute shall be negotiated in good faith for a reasonable period of time by the local managers concerned (or the equivalent thereof) of the parties, PROVIDED that such reasonable period of time shall not exceed 15 days from the time the parties began such negotiations. Should there be no resolution of an Agreement Dispute within a reasonable period of time by such local managers (or the equivalent thereof) of the parties, the Agreement Dispute shall be negotiated in good faith for a reasonable period of time by the general counsels of the parties, PROVIDED that such reasonable period of time shall not, unless otherwise agreed by the parties in writing, exceed 15 days from the time the general counsels began such negotiations. Should there be no resolution of an Agreement Dispute within a reasonable period of time by the general counsels of the parties, the Agreement Dispute shall be negotiated in good faith for a reasonable period of time by the chief executive officers of the parties, or their respective designees, PROVIDED that such reasonable period of time shall not, unless otherwise agreed by the parties in writing, exceed 30 days from the time the chief executive officers of the parties, or their respective designees, began such negotiations; PROVIDED FURTHER that, in the event of any arbitration in accordance with Section 6.2 hereof, the parties shall not assert the defenses of statute of limitations and laches arising for the period beginning after the date the parties began negotiations hereunder, and any contractual time period or deadline under this Agreement or any Ancillary Agreement to which such Agreement Dispute relates shall not be deemed to have passed until such Agreement Dispute has been resolved.

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SECTION 6.2 ARBITRATION. If after such reasonable period such local managers concerned (or the equivalent thereof), general counsels or chief executive officers, or their respective designees are unable to settle such Agreement Dispute (and in any event, unless otherwise agreed in writing by the parties, after 60 days have elapsed from the time the parties began such negotiations), such Agreement Dispute shall be determined, at the request of any party, by arbitration conducted in New York City, before and in accordance with the then-existing International Arbitration Rules of the American Arbitration Association (the “Rules”). In any dispute between the parties hereto, the number of arbitrators shall be one. Any judgment or award rendered by the arbitrator shall be final, binding and nonappealable (except upon grounds specified in 9 U.S.C. ss.10(a) as in effect on the date hereof). If the parties are unable to agree on the arbitrator, the arbitrator shall be selected in accordance with the Rules; PROVIDED that the arbitrator shall be a U.S. national. Any controversy concerning whether an Agreement Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this Article VI shall be determined by the arbitrator. In resolving any dispute, the parties intend that the arbitrator apply the substantive laws of the State of New York, without regard to the choice of law principles thereof. The parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable. The parties agree to comply with any award made in any such arbitration proceeding that has become final in accordance with the Rules and agree to enforcement of or entry of judgment upon such award, by any court of competent jurisdiction, including (a) the Supreme Court of the State of New York, New York County, or (b) the United States District Court for the Southern District of New York, in accordance with Section 8.17 hereof. The arbitrator shall be entitled, if appropriate, to award any remedy in such proceedings, including, without limitation, monetary damages, specific performance and all other forms of legal and equitable relief; PROVIDED, however, the arbitrator shall not be entitled to award punitive damages. Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the parties or permitted by this Agreement, the parties shall keep confidential all matters relating to the arbitration or the award, PROVIDED such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by law. Notwithstanding Article 32 of the Rules, the party other than the prevailing party in the arbitration shall be responsible for all of the costs of the arbitration, including legal fees and other costs specified by such Article 32. Nothing contained herein is intended to or shall be construed to prevent any party, in accordance with Article 22(3) of the Rules or otherwise, from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes.

SECTION 6.3 CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise agreed in writing, the parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article VI with respect to all matters not subject to such dispute, controversy or claim.

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ARTICLE VII
INSURANCE

SECTION 7.1 POLICIES AND RIGHTS INCLUDED WITHIN ASSETS; ASSIGNMENT OF POLICIES. (a) POLICY RIGHTS. The ST Assets shall include (i) any and all rights of an insured party under each of the Shared Policies, subject to the terms of such Shared Policies and any limitations or obligations of ST contemplated by this Article VII, specifically including rights of indemnity and the right to be defended by or at the expense of the insurer, with respect to all claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses incurred or claimed to have been incurred prior to the Distribution Date by any party in or in connection with the conduct of the ST Business or, to the extent any claim is made against ST or any of its Subsidiaries, the conduct of the IMS Business, and which claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses may arise out of an insured or insurable occurrence under one or more of such Shared Policies.

(b) ASSIGNMENT OF SHARED POLICIES. Subject to the terms and conditions hereof, ST hereby assigns, transfers and conveys to IMS all of ST’s right, title and interest in and to any and all of the Shared Policies, including, without limitation, the right of indemnity, the right to be defended by or at the expense of the insurer and the right to any applicable Insurance Proceeds thereunder; and IMS and ST shall use their commercially reasonable efforts to obtain any required consents of insurers to the assignment contemplated by this paragraph.

SECTION 7.2 POST-DISTRIBUTION DATE CLAIMS. If, subsequent to the Distribution Date, any person shall assert a claim against ST or any of its Subsidiaries (including, without limitation, where ST or its Subsidiaries are joint defendants with other persons) with respect to any claim, suit, action, proceeding, injury, loss, liability, damage or expense incurred or claimed to have been incurred prior to the Distribution Date in or in connection with the conduct of the ST Business or, to the extent any claim is made against ST or any of its Subsidiaries (including, without limitation, where ST or its Subsidiaries are joint defendants with other persons), in connection with the conduct of the IMS Business, and which claim, suit, action, proceeding, injury, loss, liability, damage or expense may arise out of an insured or insurable occurrence under one or more of the Shared Policies, IMS shall, at the time such claim is asserted, to the extent any such Policy may require that Insurance Proceeds thereunder be collected directly by the named insured or anyone other than the party against whom the Insured Claim is asserted, be deemed to designate, without need of further documentation, ST as the agent and attorney-in-fact to assert and to collect any related Insurance Proceeds under such Shared Policy.

SECTION 7.3 ADMINISTRATION; OTHER MATTERS. (a) ADMINISTRATION. From and after the Distribution Date, IMS shall be responsible for (i) Insurance Administration of the Shared Policies and (ii) Claims Administration under such Shared Policies with respect to IMS Liabilities and ST Liabilities; PROVIDED that the assumption of such responsibilities by IMS is in no way intended to limit, inhibit or preclude any right to insurance coverage for any Insured Claim of a named insured under such Policies as contemplated by the terms of this Agreement; PROVIDED FURTHER that IMS’ assumption of the administrative responsibilities for the Shared Policies shall not relieve the party submitting any Insured Claim of the primary responsibility for reporting such Insured Claim accurately, completely and in a timely manner or of such party’s authority to settle any such Insured Claim within any period permitted or required by the relevant Policy; and PROVIDED FURTHER that all direct or indirect communication with insurers relating to the Shared Policies shall be conducted by IMS. IMS may discharge its administrative responsibilities under this Section 7.3 by contracting for the provision of services by independent parties. Each of the parties hereto shall administer and pay any costs relating to defending its respective Insured Claims under Shared Policies to the extent such defense costs are not covered under such Policies and shall be responsible for obtaining or reviewing the appropriateness of releases upon settlement of its respective Insured Claims under Shared Policies. The disbursements, out-of-pocket expenses and direct and indirect costs of employees or agents of IMS relating to Claims Administration and Insurance Administration contemplated by this Section 7.3(a) shall be for ST’s account if they relate to ST Liabilities and for IMS’ account if they relate to IMS Liabilities.

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(b) EXCEEDING POLICY LIMITS. Except as set forth in this Section 7.3(b), IMS and ST shall not be liable to one another for claims not reimbursed by insurers for any reason not within the control of IMS or ST, as the case may be, including, without limitation, coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of an insurance carrier, Shared Policy limitations or restrictions, any coverage disputes, any failure to timely claim by IMS or ST or any defect in such claim or its processing, PROVIDED that ST shall be responsible for the amount of the difference, if any, between the deductible set forth in any Shared Policy and the deductible allocable to IMS as set forth in Schedule 7.3(b) hereto.

(c) ALLOCATION OF INSURANCE PROCEEDS. Insurance Proceeds received with respect to claims, costs and expenses under the Shared Policies shall be paid to IMS, which shall thereafter administer the Shared Policies by paying the Insurance Proceeds, as appropriate, to ST with respect to ST Liabilities and to IMS with respect to IMS Liabilities. Payment of the allocable portions of indemnity costs of Insurance Proceeds resulting from such Policies will be made by IMS to the appropriate party upon receipt from the insurance carrier. In the event that the aggregate limits on any Shared Policies are exceeded by the aggregate of outstanding Insured Claims by both of the parties hereto, the parties agree to allocate the Insurance Proceeds received thereunder based upon their respective percentage of the total of their bona fide claims which were covered under such Shared Policy (their “allocable portion of Insurance Proceeds”), and any party who has received Insurance Proceeds in excess of such party’s allocable portion of Insurance Proceeds shall pay to the other party the appropriate amount so that each party will have received its allocable portion of Insurance Proceeds pursuant hereto. Each of the parties agrees to use commercially reasonable efforts to maximize available coverage under those Shared Policies applicable to it, and to take all commercially reasonable steps to recover from all other responsible parties in respect of an Insured Claim to the extent coverage limits under a Shared Policy have been exceeded or would be exceeded as a result of such Insured Claim.

(d) ALLOCATION OF DEDUCTIBLES. In the event that both parties have bona fide claims under any Shared Policy for which a deductible is payable, the parties agree that the aggregate amount of the deductible paid shall be borne by the parties in the same proportion which the Insurance Proceeds received by each such party bears to the total Insurance Proceeds received under the applicable Shared Policy (their “allocable share of the deductible”), and any party who has paid more than such share of the deductible shall be entitled to receive from the other party an appropriate amount so that each party has borne its allocable share of the deductible pursuant hereto. For purposes of this Section 7.3(d), the amount of the relevant deductible under any Shared Policy shall be that set forth in Schedule 7.3(b) hereto.

(e) Effective as of the Distribution Date, each of ST and IMS shall be responsible for its applicable deductible for workers’ compensation, general liability and automobile liability claims as set forth in Schedule 7.3(e).

SECTION 7.4 AGREEMENT FOR WAIVER OF CONFLICT AND SHARED DEFENSE. In the event that Insured Claims of both of the parties hereto exist relating to the same occurrence, the parties shall jointly defend and waive any conflict of interest necessary to the conduct of the joint defense. Nothing in this Article VII shall be construed to limit or otherwise alter in any way the obligations of the parties to this Agreement, including those created by this Agreement, by operation of law or otherwise.

SECTION 7.5 COOPERATION. The parties agree to use their commercially reasonable efforts to cooperate with respect to the various insurance matters contemplated by this Agreement.

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ARTICLE VIII
MISCELLANEOUS

SECTION 8.1 COMPLETE AGREEMENT; CONSTRUCTION. This Agreement, including the Exhibits and Schedules, and the Ancillary Agreements shall constitute the entire agreement between the parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. In the event of any inconsistency between this Agreement and any Schedule hereto, the Schedule shall prevail. Other than Section 2.1(j), Section 2.8, Section 4.5 and Article VI, which shall prevail over any inconsistent or conflicting provisions in any Ancillary Agreement, notwithstanding any other provisions in this Agreement to the contrary, in the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of any Ancillary Agreement, such Ancillary Agreement shall control.

SECTION 8.2 ANCILLARY AGREEMENTS. Subject to the last sentence of Section 8.1, this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Ancillary Agreements.

SECTION 8.3 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties.

SECTION 8.4 SURVIVAL OF AGREEMENTS. Except as otherwise contemplated by this Agreement, all covenants and agreements of the parties contained in this Agreement shall survive the Distribution Date.

SECTION 8.5 EXPENSES. Except as otherwise contemplated in this Agreement or any Ancillary Agreement, all costs and expenses incurred with the Distribution, which includes the preparation, execution and delivery of the Information Statement (including any registration statement on Form 10 of which such Information Statement may be a part), shall be charged to and paid by IMS; PROVIDED, HOWEVER, that the costs and expenses associated with the implementation and consummation of the transactions contemplated hereby or by any Ancillary Agreement, including, without limitation, name changes, trademark registrations, establishment of benefit plans and compensation to benefits consultants, will be charged to and paid by ST.

SECTION 8.6 PAYMENTS. Except as otherwise contemplated in this Agreement or any Ancillary Agreement, all payments to be made by IMS or ST under this Agreement shall be made in United States dollars within the United States.

SECTION 8.7 NOTICES. All notices and other communications hereunder shall be in writing and hand delivered or mailed by registered or certified mail (return receipt requested) or sent by any means of electronic message transmission with delivery confirmed (by voice or otherwise) to the parties at the following addresses (or at such other addresses for a party as shall be specified by like notice) and will be deemed given on the date on which such notice is received:

    (i)            if to IMS, to:

                    IMS Health Incorporated
                    200 Nyala Farms
                    Westport, CT 06880
                    Telecopy: (203)222-4313
                    Attn: General Counsel; and

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    (ii)            if to IMS, to:

                    Synavant Inc.
                    3445 Peachtree Rd., NE, Suite 1400
                    Atlanta, GA 30326
                    Telecopy: (404)841-4115
                    Attn: Chief Financial Officer

SECTION 8.8 WAIVERS. The failure of any party to require strict performance by any other party of any provision in this Agreement will not waive or diminish that party’s right to demand strict performance thereafter of that or any other provision hereof.

SECTION 8.9 AMENDMENTS. Subject to the terms of Section 8.12 hereof, this Agreement may not be modified or amended except by an agreement in writing signed by each of the parties hereto.

SECTION 8.10 ASSIGNMENT. (a) This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any party hereto without the prior written consent of the other parties hereto, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void.

(b) IMS will not distribute to its stockholders any interest in any IMS Business Entity, by way of a spin-off distribution, split-off or exchange of interests in a IMS Business Entity for any interest in IMS held by IMS stockholders, or any similar transaction or transactions, unless the distributed IMS Business Entity undertakes to ST to be jointly and severally liable for all IMS Liabilities hereunder.

(c) ST will not distribute to its stockholders any interest in any ST Business Entity, by way of a spin-off distribution, split-off or exchange of interests in a ST Business Entity for any interest in ST held by ST stockholders, or any similar transaction or transactions, unless the distributed ST Business Entity undertakes to IMS to be jointly and severally liable for all ST Liabilities hereunder.

SECTION 8.11 SUCCESSORS AND ASSIGNS. The provisions to this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

SECTION 8.12 TERMINATION. This Agreement (including, without limitation, Article III hereof) may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Distribution by and in the sole discretion of IMS without the approval of ST or the shareholders of IMS. In the event of such termination, no party shall have any liability of any kind to any other party or any other person. After the Distribution, this Agreement may not be terminated except by an agreement in writing signed by the parties; PROVIDED, HOWEVER, that Article III shall not be terminated or amended after the Distribution in respect of the third party beneficiaries thereto without the consent of such persons.

SECTION 8.13 SUBSIDIARIES. Each of the parties hereto shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such party or by any entity that is contemplated to be a Subsidiary of such party on and after the Distribution Date.

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SECTION 8.14 THIRD PARTY BENEFICIARIES. Except as provided in Article III relating to Indemnitees, this Agreement is solely for the benefit of the parties hereto and their respective Subsidiaries and Affiliates and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

SECTION 8.15 TITLE AND HEADINGS. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

SECTION 8.16 EXHIBITS AND SCHEDULES. The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

SECTION 8.17 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.

SECTION 8.18 CONSENT TO JURISDICTION. Without limiting the provisions of Article VI hereof, each of the parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each of the parties agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, New York County. Each of the parties further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 8.18. Each of the parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the Supreme Court of the State of New York, New York County, or (ii) the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 8.19 SEVERABILITY. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.

IMS HEALTH INCORPORATED

By: /s/ MATTHEW L. FRIEDMAN
——————————————
Name: Matthew L. Friedman
Title: Vice President

SYNAVANT INC.

By: /s/ JAMES C. MALONE
——————————————
Name: James C. Malone
Title: Vice President

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EX-10.40 4 amendtodistragr_10q.htm amendment to distribution agreement

AMENDMENT

ThisAMENDMENT TO DISTRIBUTION AGREEMENT (this “Amendment”), dated as of June 16, 2003, between IMS Health Incorporated (“IMS”) and Synavant Inc. (“Synavant”).

WHEREAS, IMS and Synavant are parties to that certain Distribution Agreement, dated as of August 31, 2000 (as the same may have been amended, modified, or supplemented prior to the date hereof, the “Distribution Agreement”)

WHEREAS, IMS, Synavant, and Dendrite International, Inc. (“Dendrite”) entered into a Letter Agreement, dated May 8, 2003 (the “Letter Agreement”), in contemplation of the acquisition of Synavant by Dendrite and/or certain of its affiliates (the “Transaction”);

WHEREAS, simultaneous with the execution and delivery of this Amendment, the Transaction will be closed and in accordance with the Letter Agreement the parties desire to amend the terms of the Distribution Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth in this Amendment, the parties hereby agree as follows (capitalized terms contained herein and not defined in this Amendment have the meanings set forth in the Distribution Agreement):

1. The Distribution Agreement is hereby amended by deleting Section 2.16 in its entirety, and replacing it with the following: “Section 2.16 [Intentionally omitted].”

2. Except as expressly amended and modified under paragraph 1 above, the Distribution Agreement shall remain in full force and effect.

3. This Amendment 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.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized representative as of the date first above written.

IMS HEALTH INCORPORATED.

BY:  ROBERT H. STEINFELD
——————————————
Name:  Robert H. Steinfeld
Title:    SVP - General Counsel

SYNAVANT INC.

BY:  CHRISTINE PELLIZZARI
——————————————
Name:  Christine Pellizzari
Title:    Secretary

EX-10.41 5 restatedxplicagr_10q.htm restated xponent data license agreement

IMS HEALTH INCORPORATED

Restated Xponent Data License Agreement

AGREEMENT, dated as of this 26^th day of April, 2001, with an effective date of September 1, 2000 (“Effective Date”) by and between IMS Health Incorporated (hereinafter “IMS”), a Delaware corporation with an address at 200 Nyala Farms, Westport, Connecticut 06880, and the Interactive Marketing Division of Synavant Inc., (formerly known as Clark O’Neill) (hereinafter “Licensee”), a Delaware corporation, with an address at One Broad Avenue, Fairview, New Jersey 07022. This Agreement supercedes the Xponent Data License Agreement signed on August 31, 2000.

RECITALS

WHEREAS, IMS is principally engaged in providing information services to the pharmaceutical industry and, in connection therewith, collects data from pharmacies through various third parties relating to prescription transactions and prescribers;

WHEREAS, Licensee on behalf of its customers, is principally engaged in providing direct marketing of pharmaceutical promotion to prescribers in the United States and circulation management of healthcare professional publications in the United States; and

WHEREAS, IMS desires to license certain data to Licensee in accordance with and subject to the terms set forth in this Agreement:

NOW THEREFORE, in consideration of the foregoing and of the mutual promises herein contained, the parties agreement as follows:

DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings specified:

“affiliate” of Licensee means any Person which now or in the future controls, is controlled by or is under common control with Licensee.

“Agency” means an agency engaged by a Manufacturer to develop and/or implement a marketing campaign for one or more of such Manufacturer’s Legended Drugs.

“Association” means a professional association, comprised of members in a health care-related profession, which is, pursuant to the terms of Paragraph 8(a), identified by IMS as licensing data to IMS that is incorporated into certain elements of the Data

“Contract Year” means each 12-month period commencing on September 1 and ending on August 31 during the term of this Agreement.

“Data” means certain data provided by IMS from its Xponent® Plantrak™ and Xponent® Profiler™ information services and other services as further described on Exhibit 1 hereto.

“Desktop Media” means prescription pads, medical forms and other similar promotional materials which are provided to Prescribers at a nominal charge or without charge, and which contain advertising relating to one of more Legended Drugs.

“Healthcare Company” means (i) a manufacturer of Legended Drugs or over the counter (“OTC”) products or any Person licensed by such a manufacturer to market and sell Legended Drugs or OTC products (“Manufacturer”) or an Agency; provided, however, that neither a wholesaler of Legended Drugs, a pharmacy, nor a Person providing mail service prescription drug programs shall be deemed a “Manufacturer”; (ii) a manufacturer of medical supplies and/or diagnostic equipment, or any person licensed by such a manufacturer to market and sell medical supplies and/or diagnostic equipment; (iii) a publisher of single or multi-sponsored journals which are devoted to medicine, health care or veterinary subjects (“Journals”); (iv) a publisher of Desktop Media, (v) a sponsor of continuing medical education (“CME”) seminars, conferences or courses or a publisher of CME materials or (vi) a pharmacy benefits management company or “PBM”.

“Legended Drugs” means drugs, which under Federal or state law require the written prescription of a doctor, osteopath or other individual who has the authority to prescribe Legended Drugs.

“Materials” means (i) information, including promotional materials and solicitation materials sent to a Prescriber, all of which related to one or more Legended Drugs or over-the-counter drugs of a Manufacturer or relate to medical supplies and/or diagnostic equipment marketed by a Healthcare Company, (ii) surveys or questionnaires sent to a Prescriber which either seek information related to the prescribing or practice profile of such Prescriber or the use by such Precriber of medical supplies or diagnostic equipment; provided, however, that the use of such surveys or questionnaire shall be subject to the terms of Paragraph 6(c) hereof, (iii) Journals, (iv) Desktop Media, or (v) information, including promotional materials, solicitation materials or course materials, relating to CME.

“Person” means any natural person, corporation, business trust, joint venture, association, company, firm, partnership, government entity or other entity.

“Prescriber” means a doctor, osteopath, dentist or other individual with an address in the United States who has the authority to prescribe Legended Drugs.

LICENSE GRANT
IMS hereby grants to Licensee a non-transferable and non-exclusive license, without the right to grant sublicenses, to Data for use solely in accordance with the terms of Paragraph 4 and 5 hereof and subject to the other terms and conditions of this Agreement and only for the uses as specified in Exhibit 3. The licenses granted herein are not exclusive, subject to Exhibit 5, and nothing contained herein shall prohibit or restrict IMS from licensing, selling or otherwise transferring Data or any other information to any other Person or from using Data or any other information for its own purposes.

DATA
IMS shall provide the Data to Licensee in accordance with the operational procedures set forth on Exhibit 2 hereto. IMS will use its reasonable efforts to process Data in an accurate and complete manner. IMS will promptly notify Licensee of any material inaccuracies in such Data, which become known to IMS in accordance with IMS’s then applicable internal procedures for data quality assurance.

USE OF DATA
Subject to the other terms and conditions of this Agreement, the Data licensed hereunder, shall be used by Licensee solely for the uses and purposes listed on Exhibit 3.

CONDITIONS APPLICABLE TO USE OF DATA

The delivery of any Materials, Legended Drug samples or over-the-counter drug samples in connection with Paragraph 4 may be made by U.S. Postal Service, other common carrier, telegram, telephone, facsimile transmission, internet, modem or other means; provided, however, that under no circumstances (except as noted below) shall delivery of any of such Materials or Legended Drug samples be accomplished by (i) any employee of a Manufacturer, including but not limited to any pharmaceutical sales representative of such Manufacturer, or (ii) any Person engaged by a Manufacturer to call on Prescribers on behalf of such Manufacturer in connection with the marketing of one or more Legended Drugs, except that in the event that the Manufacturer is a licensee of Xponent® prescriber level data for the same products, and therapeutic classes during the applicable time periods, the prohibition set forth above in this paragraph 5a does not apply, provided that Licensee has secured advance written approval of IMS (e.g. execution of a Third Party Access Agreement). Notwithstanding the above, in the event that a Prescriber has requested that Licensee deliver a Legended Drug sample, or Materials, as a result of Licensee’s First Rx or sample fulfillment programs, and the Manufacturer of the Legended Drugs or the Manufacturer of the Legended Drug that is described in the Materials is not a Licensee of Xponent® prescriber level data for the same products and therapeutic classes, Licensee, for three (3) programs only for any twelve (12) month period, will be allowed to permit a person described in (i) or (ii) above, to deliver the Materials and/or Legended Drug samples to the Prescriber; provided however that (a) Licensee provides IMS with three (3) days prior written notice, and (b) each such program does not exceed supplying five thousand (5,000) Prescribers with Legended Drug samples and/or Materials.

The use of any list of Prescribers selected by Licensee from the Data pursuant to the terms of Paragraph 4 shall be limited to a specific one-time use or a single marketing program conducted by Licensee for a Healthcare Company or any renewal or repeat of such program by Licensee; provided, however, that with the exception of Limited Data, and the retention of Historical Data as provided under Paragraph 11(c), and Data, or any information derived from such Data, contained in or identified with such list may only be used in a manner permitted hereunder for a period not to exceed ninety (90) days, after which such Data must be destroyed. In the event any Data or any information derived therefrom is copied or incorporated into any database, data bank or any file or listing containing any data not provided pursuant to the terms of this Agreement, such database, data bank, file or listing, as the case may be, shall be and remain subject to all of the terms and conditions of this Agreement.

Except as provided under Paragraphs 5(d), 5(e) and 18 hereof, Licensee shall retain the Data and any information derived therefrom only within the internal confines of Licensee’s own organization. The parties hereto acknowledge and agree that the preceding sentence is fundamental to this Agreement and Licensee shall not design programs or provide multiple copies of list to a Healthcare Company which taken together would result in either directly or indirectly avoiding the restriction contained in the preceding sentence. Licensee shall not provide any data to any third party, including but not limited to a Healthcare Company or any affiliate of Licensee, except as specifically set forth below:

(1)

If a Healthcare Company engages a third party to provide lettershop or similar services in connection with sending Materials to Prescribers (a “Lettershop”), Limited Data may be provided by Licensee to the Lettershop; provided, however, Licensee enters into a written agreement with such Lettershop in accordance with Paragraph 5(f)(1) of this Agreement. The Lettershop shall be required to return Limited Data to Licensee or the Healthcare Company, as the case may be, within ten (10) calendar days of the earlier of completion or termination of the respective order for services.

(2)

In the event Licensee selects a list of Prescribers from the Data for use in connection with providing Materials or Legended Drug samples to certain of such Prescribers on behalf of a Manufacturer, Licensee may provide Limited Data to such Manufacturer for the sole purpose of permitting such Manufacturer to notify its sales representatives of Prescribers within each sales representative’s territory who were sent such Materials or Legended Drug samples; provided, however, Licensee send a purchase order to such Manufacturer or enters into a written agreement with such Manufacturer in accordance with Paragraph 5(f)(2) of this Agreement and provided further that Limited Data derived in whole or in part from Data is not provided to a Manufacturer any more frequently than once in any thirty (30) day period.

(3)

In connection with the delivery to a Prescriber of any sample of a Manufacturer’s Legended Drugs in response to a solicitation made pursuant to Paragraph 4, Licensee may provide Limited Data to such Manufacturer, and such Manufacturer shall be permitted to retain Limited Data relating to the recipients of such Legended Drug samples solely for purposes of compliance with any applicable state and Federal laws, including but not limited to laws relating to the distribution of Legended Drug samples, such period of retention in each instances to be limited to the longest period of time necessary to comply with any such laws or as otherwise reasonably provided by agreement between Licensee and its customer.

Licensee may provide the following types of information derived from the Data to a Healthcare Company that is a prospective customer for a specific service of Licensee that involves the selecting of lists of Prescribers, derived from the Data for the uses permitted by the terms of Paragraph 4 of this Agreement, solely for purposes of promoting such service provided such information does not identify individual Prescribers and is not summarized by and/or identified with any geographic area or unit including but not limited to zip codes, counties, state or sales territories, (except that Licensee may aggregate the Data and provide a prospective customer such aggregated information for one state or one region (e.g. New England), only) but aggregates Prescribers only in the following manner:

(1)	by Prescriber specialty, the total number of Prescribers per specialty contained in the Data, and/or

(2)	by prescribing level, in quintiles or deciles.

Licensee may provide to a Healthcare Company for whom Licensee has provided a product or service which uses Data as permitted under Paragraph 4 in connection with a single marketing program, the total number of Prescribers that were sent Materials or responded to Materials from Licensee, as the case may be, with respect to such program.

If at any time Licensee provides any Limited Data or any information derived from such Data to:

(1)

A Lettershop, Licensee shall enter into a written agreement with such Lettershop, which agreement shall, among other things, contain such terms and conditions as are necessary or desirable to prohibit such Lettershop from making any use of such Limited Data and/or information in a manner which is inconsistent with the terms and conditions of this Agreement. Such terms and conditions at a minimum, shall include:

(a)

a provision stating that the Limited Data is being provided to the Lettershop solely for the limited purpose set forth in Paragraph 5(c)(1);

(b)

terms and conditions which reflect the obligations and restrictions contained in Paragraphs 5(a), 5(b), 5(c)(1), 5(g), 5(h), 6, 7 and 8;

(c)

a provision stating that the use of Limited Data is limited to a specific one-time use or use in connection with a single marketing program, as the case may be; and

(d)

a provision stating that IMS Health Incorporated is an intended third party beneficiary to the agreement between Licensee and such Lettershop. In the event a Lettershop fails to comply with such an agreement, Licensee shall promptly notify an appropriate representative of such Lettershop in writing of such failure, with a copy to IMS, within five business days after Licensee knows or reasonably suspects such failure. Licensee shall promptly provide IMS with a copy of any correspondence between Licensee and such Lettershop relating to such failure. IMS shall have a right to bring an action as an intended third party beneficiary to enforce the terms and conditions of the agreement between Licensee and such Lettershop to the extent such terms and conditions are required by the terms of this Paragraph 5(f). In the event IMS does not have rights as an intended third party beneficiary to bring an action as contemplated in this Paragraph 5(f), Licensee agrees to be liable for any breach by such Lettershop of such agreement.

(2)

A Manufacturer, Licensee shall either send an order form to such Manufacturer or enter into a written agreement with such Manufacturer which order form or agreement, as the case may be, shall, among other things, contain such terms and conditions as are necessary or desirable to prohibit such Manufacturer from making any use of such Limited Data and/or information in a manner which is inconsistent with the terms and conditions of this Agreement. Such terms and conditions, at a minimum, shall include:

(a)

a provision stating that the Limited Data is being provided to the Manufacturer solely for one or both of the limited purposes set forth in Paragraph 5(c)(2) and (3);

(b)

terms and conditions which reflect the obligations and restrictions contained in Paragraphs 5(a), 5(b), 5(c)(2) and/or 5(c)(3), as the case may be 5(g), 5(h), 6, 7 and 8;

(c)

a provision stating that the use of Limited Data is limited to a specific one-time use and/or use in connection with a single marketing program;

(d)

a provision stating that such Manufacturer is not permitted to store the Limited Data in any database or otherwise use the Limited Data to target the calling activity of its sales representatives on Prescribers; and

(e)

a provision stating that IMS Health Incorporated is an intended third party beneficiary to the agreement between Licensee and such Manufacturer.

In the event a Manufacturer fails to comply with such an agreement, Licensee shall promptly notify an appropriate representative of such Manufacturer in writing of such failure, with a copy to IMS within five business days after Licensee knows or suspects such failure. License shall promptly provide IMS with a copy of any correspondence between Licensee and such Manufacturer relating to such failure. IMS shall have a right to bring an action as an intended third party beneficiary to enforce the terms and conditions of the agreement between Licensee and such Manufacturer to the extent such terms and conditions are required by the terms of this Paragraph 5(f). In the event IMS does not have rights as an intended third party beneficiary to bring an action as contemplated in this Paragraph 5(f), Licensee agrees to be liable for any breach by such Manufacturer of such agreement.

Such agreements shall specify the intended uses of such Limited Data in sufficient detail so that it may be determined whether such use is in compliance with the terms and conditions of this Agreement. Such agreements shall be available to IMS in connection with any inspection, which IMS may perform pursuant to Paragraph 17 of this Agreement.

In connection with any use of Data under no circumstances shall any of such Data or any information derived therefrom be disclosed to a Prescriber or to any other Person except as expressly provided herein.

Notwithstanding anything to the contrary contained herein, under no circumstances shall any Data or Limited Data be provided by Licensee to any Person which has one or more lines of business engaged in the licensing, selling or providing of access to data, information or databases in competition with IMS or any Subsidiary (“Competing Company”), or any Person controlling, controlled by or under common control with a Competing Company, including but not limited to the Competing Companies listed on Exhibit 4; provided, however, that nothing herein shall preclude Licensee, a Manufacturer or an Agency from engaging a Lettershop of the delivery of Materials in accordance with the terms of Paragraph 5(a) and in connection therewith, providing Limited Data to such Lettershop in accordance with Paragraph 5(c)(1), provided Licensee complies with the terms of Paragraph 5(f)(1).

As used in this Paragraph, “Limited Data” shall mean Data limited to the following fields of information: Prescriber name and Prescriber address to which the Material or Legended Drug sample was sent or to be sent. Limited Data shall also include Association Data, provided Licensee has an appropriate license with respect to such Data and further provided the use of such Association Data and if applicable, the disclosure of such Association Data, is permitted under the terms of such license.

PROHIBITED USES OF DATA
IMS does not grant, and Licensee does not receive any title or other interest in the Data or any information derived therefrom, including but not limited to the Limited Data, except for those rights granted explicitly in this Agreement; all rights not expressly granted to Licensee are reserved to IMS. Without limiting the generality of the foregoing, under no circumstances shall Licensee use, or permit any other Person to use, Data received by Licensee in connection with this Agreement or any information derived therefrom, including but not limited to the Limited Data, in any manner which:

is contrary to the terms of this Agreement or is otherwise not expressly permitted by the terms of this Agreement;

will violate any law or regulation by such use;

will violate the contractual restrictions of any Association identified by IMS pursuant to Paragraph 7(a) governing the use of such Association’s data incorporated within the Data in effect at the time of the use of such Data, unless an authorized representative of IMS provides Licensee with written notice that such Data is no longer subject to the restrictions of such Association’s agreement;

results in any analysis of the Data, or any information derived therefrom, which analysis (i) results in the disclosure to one or more Persons of any information regarding the mathematical algorithms formulas, processes, or projection or statistical methods used by IMS to produce any of the Data, (ii) is used or made available for use to promote or aid in the promoting of any data or information which is not derived from the Data, or (iii) seeks to demonstrate that the Data, or any information derived therefrom, is inferior to any other data, attempts to show any deficiency in such Data or information, or otherwise makes statements detrimental to IMS concerning such Data or information;

results in the selection of Prescribers from which a Manufacturer, an Agency, Licensee or any other Person solicits information on practice profiles and/or prescribing activity for the purpose of developing a database of practice and prescribing profiles on individual Prescribers, except for the solicitation of such information for the benefit of (i) a single Manufacturer or (ii) a single Healthcare Company that is a manufacturer of medical supplies and/or diagnostic equipment or (iii) a publisher of desktop media. Notwithstanding the above, with respect to the developing of practice profile databases of Prescribers by Licensee, Licensee may develop a database of practice profile information derived from the use of the Data if such practice profile information is (i) not information that IMS regularly collects, creates or possesses in the ordinary course of its businesses, (ii) the practice profile information is only indirectly derived from the Data (i.e. Data is used to solicit practice profile information for Prescribers and does not contain anything from the Data itself other than Limited Data) and (iii) the practice profile information does not reflect attitudes and self-reporting behavior relating to the prescribing of Legended Drugs.

applies one or more mathematical algorithms, formulas or processes to any of the Data for the purpose of estimating or projecting any new data or information;

results in the reverse engineering or disassembling of any of the Data;

enhances, benchmarks, validates, compares with, authenticates, verifies, supplements, or modifies any data, products or services of Licensee or any other party except as expressly provided in this Agreement;

facilitates, authorizes or otherwise expressly or tacitly permits the incorporation of the Data, or any information derived therefrom, in any sales force automation systems, electronic territory management system, customer relationship management system, or any other similar system used by sales representatives for call reporting and management of sales information for their respective territories, except as expressly provided in Paragraph 5(c)(2);

facilitates, authorizes or otherwise expressly or tacitly permits the use of any Data, or any information derived therefrom, by a Manufacturer for use in connection with the compensation or management of such Manufacturer’s sales force(s); or

facilitates, authorizes or otherwise expressly or tacitly permits the use of any Data, or any information derived therefrom, by a Manufacturer for targeting of Prescribers by the sales representatives of such Manufacturer.

ASSOCIATION DATA

IMS may identify to Licensee in writing certain elements of some or all of the Data, which incorporates information licensed to IMS by an Association (“Association Data”). In addition to the terms and conditions of this Agreement, Licensee agrees to treat each element of Association Data in accordance with the terms of the respective Association agreement then in effect between IMS and such Association. To the extent that any term of such an Association agreement then in effect is more restrictive concerning the use or disclosure of Association Data than the terms contained in this Agreement concerning the use or disclosure of Data, then the terms of such Association Agreement shall control, but only with respect to the use or disclosure, as the case may be by Licensee of Association Data.

In the event IMS identifies Association Data pursuant to Paragraph 7(a) above and Licensee fails to maintain the requisite license with the Association licensing such data to IMS which would permit Licensee, at a minimum, a right to use the Association Data provided hereunder in the manner contemplated herein, IMS shall have no further requirement to provide such Association Data under the terms of this Agreement until such time as Licensee obtains such a license.

By way of example, and not by way of limitation, any element of Data identifying:

(1)	the Medical Education number of the Prescriber is derived from the American Medical Association’s (“AMA”) Physician Professional Data and shall remain subject to the terms and conditions of the applicable AMA agreement then in effect between IMS and the AMA.

(2)	the American Osteopathic Association (“AOA”) number of the Prescriber is derived from the AOA’s data files and shall remain subject to the terms and conditions of the applicable AOA agreement then in effect between IMS and the AOA.

CONFIDENTIALITY
Licensee hereby acknowledges that the Data are proprietary to IMS (collectively “Confidential Information”), agree to protect the proprietary and confidential nature of such Confidential Information and in connection therewith, will prohibit any access to or copying or disclosure of any of the Confidential Information during the terms of this Agreement and after termination of this Agreement, except (a) that access to and disclosure of Confidential Information may be provided to those employees of Licensee, in connection with the uses permitted Licensee as described in Exhibit 3 who require same to carry out such uses, and (b) as expressly permitted under Paragraphs 5(c), (d) and (e) of this Agreement. Licensee and any such other persons who receive access to or disclosure of Confidential Information pursuant to the preceding sentence shall maintain the strict confidentiality of such Confidential Information in the same manner as Licensee maintains the confidentiality of its own confidential information, and Licensee will not disclose such Confidential Information except as expressly provided herein. In the event any of such other persons fail to comply with the confidentiality obligations contained in this Paragraph 8, Licensee shall promptly notify an appropriate representative of such person in writing of such failure, with a copy to IMS within five business days after Licensee knows or suspects such failure. Licensee shall promptly provide IMS with a copy of any responses from such person to Licensee’s notification. IMS shall have a right to bring an action as an intended third party beneficiary to enforce the terms and conditions of the agreement between Licensee and such person with respect to obligations of confidentiality. In the event IMS does not have rights as an intended third party beneficiary to bring an action as contemplated in this Paragraph 8, Licensee agrees to be liable for any breach by such person of such agreement. Licensee agrees that it will not ever, either during the term of this Agreement or after its termination, assert that Data are not, were not or will not be proprietary to IMS and subject to copyright held by IMS with the exception of elements of Association Data which is proprietary to the respective Association and subject to copyright held by such Association.

REPRESENTATIONS AND WARRANTIES
IMS represents and warrants that it has the right and authority to license the Data to Licensee under this Agreement. EXCEPT AS EXPRESSLY STATED IN THE PRECEDING SENTENCE OR PARAGRAPH 3, IMS MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE DATA (INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OF SUCH DATA OR ITS FITNESS FOR LICENSEE’S PARTICULAR PURPOSE) AND FURTHER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED AS TO THE ACCURACY OR COMPLETENESS OF THE DATA.

10.

LIMITATION OF LIABILITY
IMS’s entire liability and Licensee’s exclusive remedy for IMS’s failure to abide by the accuracy and completeness requirements of Paragraph 3 shall be for IMS to endeavor to correct, in accordance with IMS’s then applicable operating procedures for data quality assurance, any such non-conformance which has been reported by Licensee to IMS in writing in a timely manner in accordance with Exhibit 2. Notwithstanding any injunctive relief which Licensee may be entitled to, IMS shall not be liable for any indirect, consequential, punitive, incidental or special damages to person, property or business which may be caused by any use, failure to provide or unavailability of Data or any breach by IMS of its obligations hereunder (even if IMS has been advised of the possibility of such damages).

11.

TERM/TERMINATION

The term of this Agreement shall be for a three (3) year period commencing on the date first written above. Licensee shall have the right to terminate this Agreement at the end of each contract year of this Agreement provided that Licensee give IMS one hundred, eighty (180) days written notice prior to the end of the then existing contract year, of its intention to terminate. Notwithstanding the foregoing, IMS shall have the right to terminate this Agreement on thirty (30) days advance written notice to Licensee:

(1)

if Licensee becomes insolvent, voluntarily files a petition under any federal or state bankruptcy law for itself, has an involuntary petition filed under any federal or state bankruptcy law against it which is not removed within thirty (30) days of filing, ceases operations for at least thirty (30) days with the intent of winding up Licensee’s business, or otherwise publicly announces the termination of its operations and/or substantially all the products relating to the licenses granted herein;

(2)	upon the sale of Licensee, whether by merger, consolidation, the sale of its stock or by the sale of all or substantially all of its assets to a Competing Company or any Person controlling, controlled by or under common control with a Competing Company; or

(3)	if Licensee or any affiliate of Licensee develops or comes into possession of data, which is substantially similar to the Data or Licensee, or any affiliate of Licensee acquires the right, by license, purchase or otherwise, to data which is substantially similar to the Data.

As used in Paragraph 11(a)(3), data which is “substantially similar to the Data” shall include but not be limited to any data or information (a) consisting of or derived from a number of prescription transactions in any calendar month which number is greater than or equal to one-twentieth (1/20^th) of the number of prescription transactions as estimated by IMS’s National Prescription Audit for such calendar month, or (b) which Licensee or any affiliate of Licensee claims is the functional or statistical equivalent of data that consists of or is derived from a number of prescription transactions in any calendar month which number is greater than or equal to one-twentieth of the number of prescription transactions as estimated by IMS’s National Prescription Audit for such calendar month. However, data shall not be considered “substantially similar to the Data” for any data received from a pharmaceutical Manufacturer for use by Licensee solely to provide services to such Manufacturer.

In the event of the termination of this Agreement:

(1)

Licensee shall deliver all Data, and any information derived therefrom, (except for Licensee’s client’s proprietary information that has been supplied to Licensee by client) in its possession or control to IMS within ten (10) days of such termination except as otherwise expressly provided in Paragraph 11(c).

(2)

for any period during which Data, or any information derived therefrom, remains in the possession or control of Licensee after termination of this Agreement, such Data and information shall remain subject to the restrictions contained in this Agreement, including but not limited to those restrictions contained in Paragraphs 4, 5, 6, 7, and 8.

This provision shall not be construed to limit survival of any other provision, which also survives the termination of this Agreement by the express or implied terms of such provision.

In connection with the selection of a list of Prescribers for a use permitted pursuant to Paragraph 4, Licensee is authorized to maintain for a period of three years (or longer to the extent required by law) from the date following the termination of this Agreement historical files containing the following data elements from Data: physician name, physician address used in connection with a delivery made in accordance with the terms of this Agreement, Prescriber identification number and Prescriber specialty (collectively “Historical Data”). Such Historical Data may be maintained for such three year period only for the following purposes: (i) servicing a possible Legended Drug product recall pursuant to applicable regulations promulgated by a government agency whereby notices are delivered to Prescribers chosen from a list produced by Licensee under the terms of this Agreement to whom samples of such Legended Drugs were sent, (ii) recreating a delivery made on behalf of a Healthcare Company pursuant to the terms of this Agreement in which an error was made either by Licensee and/or the Healthcare Company, as the case may be, which error is the sole reason for recreating such delivery, or (iii) responding to an audit or written request of a governmental agency for information on the recipients of a Legended Drug sample delivered in the fulfillment of a request by a Prescriber in response to a solicitation made pursuant to Paragraphs 4(a), 4(b) or 4(d). Within thirty (30) days following the end of such period, the Historical Data for such deliveries will be deleted from Licensee’s possession and control.

12.

DEFAULT

A “Default” shall exist hereunder by Licensee if Licensee fails in any material respect to be in compliance with the terms of Paragraphs 2, 4, 5, 6, 7 or 8 (an “Event of Default”) and such failure, if curable, is not cured within ten (10) calendar days following notice of such failure from IMS.

If IMS alleges an Event of Default by Licensee, and Licensee in good faith disputes the occurrence of such Event of Default, IMS agrees to continue to provide Data hereunder until such dispute is resolved by the parties or by a determination through arbitration as provided in Paragraph 16, without prejudice to any remedies available to IMS.

13.

CERTAIN REMEDIES

If the sale of any product or the rendering of any service or the license of any Data gives rise to an Event of Default pursuant to Paragraph 2 or 4 of this Agreement, then IMS shall receive from Licensee an amount equal to the aggregate of the gross revenues recognized from the same of such product or the fees charged in connection with the rendering of such service or the licensing of such Data.

Two or more Events of Defaults hereunder, whether or not cured, shall entitle IMS, in its sole discretion, to immediately terminate this Agreement upon written notice to Licensee; provide however, that each such Event of Default is acknowledged in writing by Licensee and/or is finally determined by arbitration pursuant to Paragraph 16 of this Agreement.

Noting herein shall be construed as limiting IMS’s rights and remedies, in the event of a breach of this Agreement by Licensee, whether or not such breach is cured. The rights and remedies set forth in Paragraphs 11 and 13 of this Agreement are in addition to any other rights or remedies which otherwise may be available, in law or in equity.

14.

FORCE MAJEURE
Licensee agrees that IMS shall not be deemed to have breached this Agreement or to be liable for any damages caused by failure to perform or by delay in rendering performance hereunder arising out of any occurrence or contingency beyond its reasonable control, including but not limited to (a) flood, earthquake, fire, war, strikes, labor unrest, riot, civil commotion, power or communication line failure, computer equipment failure or operational failure, (b) failure of independent contractors under agreement with IMS to perform or a delay in such performance, failures, delays or restrictions of sources from which information or data is obtained, or failure of performance by Licensee, or (c) prohibition(s) or restrictions(s) imposed by applicable regulatory authority, the judgment, ruling or order of a court or agency of competent jurisdiction, or the enactment of or change in any law or regulation.

15.

ADDITIONAL AGREEMENTS

IMS and Licensee each agree to keep the terms of this Agreement in confidence and not disclose them to any other Person, except for those terms of the Agreement required to be disclosed (i) pursuant to federal or state laws or regulations including securities laws and their related disclosure requirements, (ii) pursuant to judicial or arbitration orders and proceedings, (iii) as may be required to perform their obligations under this Agreement, or (iv) to each of IMS’s and Licensee’s legal and financial representatives who need to know such terms solely for the purpose of providing legal and financial advice to each such party, respectively. This provision shall not prohibit either party from disclosing the existence of this Agreement or that IMS is a data source.

Upon the request of IMS, the President of Licensee (or in the event the President of Licensee is not responsible for the day-to-day business of Licensee, then the General Manager of Licensee or such other person who has overall responsibility for the day-to-day business of Licensee) shall provide IMS with a written statement certifying that, after due inquiry, Licensee has complied in all materials respects with Licensee’s obligations under the provisions of Paragraphs 2, 4, 5, 6, 7 and 8 of this Agreement for the past Contract Year, except as noted therein.

Under no circumstances shall this Agreement be construed as placing any affirmative obligation on IMS, express or implied, to collect or continue to collect any data or information from any third party, including but not limited to pharmacy data from which the Data is derived (“Source Data”). In the event IMS determines, in its sole judgment and discretion, to cease collecting any Source Data which will result in a substantial reduction in the amount of, or the cessation in, the Data delivered hereunder, IMS will provide written notice of such at least ninety (90) days prior to the date on which such Source Data collection will cease, specifying the date or dates at which IMS will cease collecting such Source Data and the approximate number of prescriptions that will not be included in the Data in the ensuing twelve (12) months as a result (the “IMS Notice”). In such event, IMS shall incur no liability to Licensee in connection therewith and, in the event IMS ceases to collect all of such Source Data then this Agreement shall automatically terminate and be of no further force and effect immediately upon the last delivery of Data to Licensee. A “substantial reduction” means a reduction in the aggregate amount of prescriptions comprising the Source Data for use in connection with the delivery of Data hereunder in excess of twenty-five percent (25%) when compared with the aggregate amount of prescriptions comprising the Source Data available to IMS for use in connection with the delivery of Data for the same calendar quarter period in the immediately prior year.

IMS and Licensee acknowledge that a data supplier to IMS may request that some or all of its data be restricted in such a manner as to prevent IMS from providing such data, or information derived therefrom to Licensee (“Data Supplier Request”). In the event of a Data Supplier Request, IMS may, at its sole option enter into an agreement or arrangement or continue an agreement or arrangement, as the case may be, which accommodates such Request; provided, however, IMS prior to the acceptance of such an agreement or arrangement, uses reasonable efforts to persuade such data supplier to provide its data without such restriction. For purposes of this Paragraph 15(d), IMS shall be deemed to have used “reasonable efforts” if IMS, in connection with its negotiations with such data supplier, makes a bona fide attempt to persuade such data supplier to provide its data to IMS without such restriction; provided, however, under no circumstances shall IMS have any obligation to increase the amounts paid, or to be paid, to such data supplier in exchange for the elimination of such restriction.

IMS agrees that, upon the request of Licensee, IMS shall negotiate in good faith with Licensee for a period of not more than 30 days with respect to the acquisition by Licensee of IMS’s Xponent® information services in certain European countries. In the event that the parties have not entered into a definitive agreement with respect to such acquisition at the end of such 30-day period, IMS shall have no further obligations pursuant to this Section 15(c). The parties acknowledge and agree that nothing in this Section 15(c) shall create a binding obligation on IMS or Licensee to consummate such an acquisition or shall constitute any expression of the parties’ intent or agreement with respect to the terms of any such acquisition; any such obligation and such terms will be created and expressed only by a definitive agreement or agreements, if any, negotiated and entered into by the parties.

16.

ARBITRATION

Each party shall designate a project manager to coordinate such party’s activities under this Agreement. Such project managers shall also, when necessary, confer in order to resolve problems or disputes that may arise in connection with each party’s performance hereunder. If the project managers cannot resolve such problems or disputes, such problems or disputes shall be referred to each party’s respective senior management including, if necessary, its President for discussion and resolution.

Subject to Paragraph 16(d) any controversy or claim arising out of or relating to this Agreement, and which cannot be resolved in accordance with the procedure set forth in the preceding paragraph, shall be submitted to arbitration before a panel of three (3) arbitrators. The arbitrators shall be selected and the arbitration conducted in accordance with the Commercial Rules of the American Arbitration Association. An award shall be conclusive and binding if concurred in by two (2) of the arbitrators, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitrators shall be required to deliver a written decision setting forth their findings of fact and basis for their award. The arbitrator’s award shall provide for the payment of the arbitrators’ expenses and fees, together with other expenses incurred in the conduct of the arbitration proceeding other than legal fees and expenses. However, the arbitrators shall award the prevailing party reasonable attorneys’ fees and other expenses incurred in the arbitration proceeding in the event that the arbitrators determine that either party acted in bad faith in connection with either asserting a claim or a defense in the arbitration proceeding itself.

The parties hereby agree to submit to the exclusive personal jurisdiction and venue of the United States District Court for the Eastern District of Pennsylvania for purposes of enforcing the agreement to arbitrate, providing provisional relief pending the award, and entering judgment on the award. If for any reason the aforesaid court does not have subject matter jurisdiction the parties alternatively agree to submit to the exclusive personal jurisdiction and venue of the applicable court of the Commonwealth of Pennsylvania, County of Montgomery, for the foregoing purposes. Nothing contained in this paragraph shall preclude the arbitrators from granting, where appropriate, injunctive or other provisional relief pending a final award.

Notwithstanding, the provisions of Paragraphs 16(b) and (c), any party hereto may pursue any provisional remedy (including but not limited to preliminary injunctive relief) to enforce its rights hereunder in the courts designated in Paragraph 16(c). The parties shall have the right to obtain such provisional injunctive relief from a court of law designated in Paragraph 16(c) pending the determination and award in the arbitration proceeding. The parties may seek injunctive relief either restraining certain conduct or mandating certain conduct. This Paragraph 16(d) shall not be deemed to limit the power of the arbitrators to grant any remedy or relief the arbitrators deem just or reasonable within the scope of this Agreement.

The parties agree that, immediately upon the designation of the arbitrators they will request the arbitrators that they set an expedited schedule for the conduct of the arbitration proceeding such that the proceeding is concluded within six months of the date of the filing of a demand for arbitration and that an award shall be rendered within thirty (30) days of the conclusion of the proceeding.

17.

INSPECTION RIGHTS/COOPERATION

IMS shall have the right to make an inspection of the business, books and records of Licensee upon five (5) days notice to Licensee for the purpose of verifying Licensee’s compliance with its obligations pursuant to Paragraphs 2, 4, 5, 6, 7 and 8 of this Agreement. Licensee shall maintain business records, books, account information, computer logs and related materials sufficient to permit IMS to verify that Licensee is in compliance with its obligations under the above-referenced Paragraphs.

Any such inspection of Licensee’s books and records, shall be performed by IMS’s representatives and/or its outside auditors. The costs of such an inspection shall normally be at IMS’s expense. However, Licensee shall bear the cost of an inspection if such inspection reveals an Event of Default or any other material breach of the terms of this Agreement.

18.

MISCELLANEOUS

The parties hereto are independent contractors engaged in the operation of their own respective businesses. Neither party is, or is to be considered as, the agent or employee of the other for any purpose whatsoever. Neither party has the authority to enter into contracts or assume any obligations for the other party or make any warranties or representations on behalf of the other party. Nothing in this Agreement shall be construed to establish a relationship of co-partners or joint ventures between the parties.

This Agreement constitutes the entire understanding between the parties and supersedes all proposals, commitments, writings, negotiations and understandings, oral and written and all other communications between the parties relating to the subject matter of this Agreement. This Agreement supercedes the Xponent Data License Agreement signed August 31, 2000 in its entirety. In the event there is a conflict between the terms of this Agreement and the terms of the Distribution Agreement dated August 31, 2000, the terms of the Distribution Agreement shall prevail.

IMS may assign all or any portion of this Agreement to an entity which is then an affiliated company and any such affiliated company may assign all or any portion of this Agreement to an entity which is then an affiliated company; provided, however, that any such assignment shall not relieve IMS of its obligations under this Agreement if the assignee fails to perform. This Agreement may not be assigned from Licensee to any other Person, whether by assignment by Licensee, by operation of law or otherwise without the prior written consent of IMS, which consent shall not be unreasonably withheld. The sale or transfer of a majority of the outstanding shares of Licensee, or the merger or consolidation of Licensee with any other Person, shall be deemed an attempt by Licensee to assign its interests in this Agreement which shall first require the prior written consent of IMS. Any assignment not expressly permitted under this Paragraph 18(c) or which has not received the written consent of the other party if required herein shall be void.

Should any part, term or condition hereof be declared illegal or unenforceable or in conflict with any other law, the validity of the remaining portion or provisions of this Agreement shall not be affected thereby, and the illegal or offensive portions of this Agreement shall be and hereby are redrafted to conform with applicable law in a manner which is consistent with the original spirit and intent embodied in the original executed copy of this Agreement, while leaving the remaining portions of this Agreement intact.

The waiver by either party of a breach or violation hereof or remedy provided herein shall not operate as or be construed to be a waiver of any subsequent breach or violation hereof.

This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to principles of conflicts of law.

Nothing in this Agreement is intended to benefit and shall not be deemed to benefit any person who is not a party hereto or to create any third party beneficiary rights.

All notices pertaining to this Agreement or the performance of either party hereunder shall be sufficient if in writing and sent by Federal Express or other similar overnight courier service with receipted delivery addressed to the other party at the address shown below or to such other address as a party hereto shall supply to the other in writing:

If to IMS:

IMS Health Incorporated
660 W. Germantown Pike
Plymouth Meeting, PA 19462
Attention: President

With a copy to:

IMS Health Incorporated
660 W. Germantown Pike
Plymouth Meeting, PA 19462
Attention: President

If to Licensee:

Synavant, Inc.
Interactive Marketing Division
One Broad Avenue
Fairview, NJ 07022
Attention: President

With a copy to:

Synavant, Inc.
3445 Peachtree Road, N.E.
Suite 1400
Atlanta, GA 30326
Attention: President

Such notice shall be effective upon receipt by the other party.

Neither party may under any circumstances utilize the name, trademarks, or tradenames of the other, or any names, trademarks, or tradenames so similar as likely to cause confusion, without the prior written notice to, and express written approval of, the other. Notwithstanding the preceding sentence:

(1)	Licensee’s advertising and other promotional materials for products or services which use any of the Data shall identify IMS as originator of such Data, a copy of which material will be promptly provided to IMS on or before the first release of any such material;

(2)

Licensee is hereby granted a non-transferable and non-exclusive license, without the right to grant sublicenses, to use the trademark Xponent in connection with the advertising and promotion of the Data, as such term is defined in Exhibit 1, and Licensee agrees to use such trademark in connection with its advertising and promotion of any products or services which use Data in accordance with the following:

(a)

whenever Licensee uses the Xponent trademark in advertising or in any other manner in connection with the Projected Data or any product or services of Licensee, which use the Projected Data. Licensee shall clearly indicate IMS’s ownership of the trademark;

(b)

samples of all literature, stationery, packages, labels and advertising prepared by or for Licensee and intended to be used by Licensee in connection with the use of the Xponent trademark shall be promptly provided to IMS by Licensee on or before the release of such materials;

(c)

when using the Xponent trademark, Licensee agrees to comply with all laws pertaining to trademarks in force at any time in the United States, including but not limited to, compliance with marking requirements.

(d)

Licensee agrees to comply with any written usage guidelines provided by IMS for use of the Xponent trademark;

(e)

Licensee acknowledges (i) IMS’s exclusive right, title and interest in and to the Xponent trademark and will not at any time do or cause to be done any act or thing contesting or in any way impairing or tending to impair any part of such right, title and interest, and (ii) use by Licensee of the Xponent trademark shall not create in Licensee’s favor any right, title or interest in or to the Xponent™ trademark, but that all uses of the Xponent trademark by the Licensee shall inure to the benefit of IMS

(3)	IMS shall have a right to identify to any Persons (i) that Licensee is a licensee of Data from IMS and (ii) those products and services which Licensee may use the Data under the terms of this Agreement.

Paragraph headings herein are for convenience only and do not control or affect the meaning or interpretation of any terms or provisions of this Agreement

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above


IMS Health Incorporated:	Synavant Inc.
By: BARRY BROUGHTON	By: CRAIG KUSSMAN
Name: Barry Broughton	Name: Craig Kussman
Title: Vice President	Title: Executive Vice President
Date: 4/26/01	Date: April 26, 2001

EXHIBIT 1

FEES & DATA DESCRIPTION

FEES. The annual fee for the services described in this Agreement for each Contract Year shall be one million, two hundred thousand dollars ($1,200,000). IMS shall invoice one quarter of the annual fee on a quarterly basis in advance (i.e. IMS shall invoice three hundred thousand dollars ($300,000) on or about September 1^st, December 1^st, March 1^st, and June 1^st of each Contract Year). Licensee shall pay the amount of each invoice from IMS within thirty (30) days from receipt of invoice by Licensee. In no event shall Licensee deduct or set-off any amount(s) against any amount(s) owed to IMS under this Agreement without IMS’ prior written consent. If Licensee fails to timely pay any amount in accordance with the terms of this Agreement Licensee shall pay in addition to the invoice amount, interest at the rate of eighteen percent (18%) per annum on the unpaid balance beginning thirty-five (35) days from the date of the invoice until such amounts are paid. In addition to any fees which Licensee agrees to pay Licensee shall have the exclusive responsibility for and agrees to pay all applicable governmental sales, use, added value, ad valorem or other similar taxes, duties, fees, levies or other governmental charges now in force or enacted in the future, except for taxes based on IMS’s income.

DATA– Data shall consist of the following:

Xponent Profiler (decided Xponent Data)

Data Elements:

Prescriber ID

ME number and IMS ID number

Prescriber Name

Prescriber Address

Prescriber Specialty

Product Code (or aggregate product codes)

Therapeutic class code

Decile range by therapeutic class

Decile range by product

Ancillary

Data:

DRM

45 for every report

A file identifying all the product changes from the previous deliverable.
A spreadsheet containing the record count for each tape.

Frequency of Delivery: Quarterly

Data to be Reported in Each Deliverable: Ninety (90) therapeutic classes (same as received as of June, 2000) with the right to substitute up to ten (10) classes per calendar quarter with a minimum of thirty (30) days prior written notice given to IMS (but subject to production schedules). Rolling twelve(12)months on calendar quarters within current production.

Format: FTP or Magnetic Tape

Xponent Plantrak

Data Elements:

IMS Plan Number

Product Code

TRX Prescription Volume and NRX Prescription Volume (an estimate of total count by Product Code for each Plan, of the number of prescriptions written from which products have been dispensed from Pharmacies).

TRX Unit Volume (an estimate of total units (e.g. number of tablets) by product code for each Plan, from which Products have been dispensed from pharmacies).

Ancillary Plan Affiliation (Prescriber to Plan linkages)

IMS Plan Roster File

Plan Name Key

Plan name and address

Frequency of Delivery: Once per contract year, upon request

Data to be Reported in Each Deliverable: Thirty-seven (37) therapeutic classes (same as received as of June, 2000 with the right to substitute up to five (5) classes per year with a minimum of thirty (30) days prior written notice to IMS (but subject to production schedules)

Format: FTP or Magnetic Tape

Unprojected Data File (to the extent IMS continues to offer this file to customers)for use solely in connection with Licensee’s First Rx Product as such product exists on June 1, 2000

Data Elements:

IMS Prescriber ID Number

ME number

Product NDC

Week End Date

Date Dispensed

TRX

NRX

Frequency of Delivery: Weekly

Data to be Reported in Each Deliverable: For each product requested, but for no more than twenty-four (24) First Rx Product projects per contact year. Specifications to be mutually agreed upon for each project.

Format: FTP or Magnetic Tape

CMF number for those products involved in the First Rx product. These requests will be fulfilled by the Analyst on an ad hoc basis but not more than twelve (12) times per calendar year.

IMS Bridge File

Data Elements:

IMS ID Number

*ME Number (or other Source ID and Source #3)

Frequency Delivery: Quarterly, upon request

Data to be Reported in Each Deliverable: To be mutually agreed upon.

Format: FTP or Magnetic Tape or CD Rom

Analyst – In order to facilitate Licensee’s receipt of Data and other Xponent data, IMS shall make available, for a maximum of twenty (20) hours per week, data analyst(s) to: (a) process Licensee’s requests for Data, and (b) process Licensee’s requests for other Xponent data for one or more of the uses described in Exhibit 3 (other than for use with First Rx) as more fully described in an IMS HEALTH Third Party Access Agreement between IMS and Licensee.

PRODUCT
For purposes of calculating the number of Products hereunder, a Product shall be counted for each Product Code reported with one or more Data Value fields, whether the reporting of such information is by:

(1)

prescription volume for a Legended Drug, regardless of form or strength,

(2)

prescription volume for a Legended Drug by form, regardless of strength, or

(3)

prescription volume for a Legended Drug by form and by strength.

For example, and not intended as a limitation, the separate reporting of Drug X in liquid form at 500mg and 1,000mg strengths and in tablet form at 500mg and 1,000mg strengths shall constitute four Products.

NOTE: IMS may, in its sole discretion, provide Prescriber Name, Prescriber Address, Professional Association Number (AMA or AOA only) and Prescriber Specialty linked to the Prescriber ID on a quarterly basis in a separate file from the Data (“Prescriber File”).

For purposes of this Agreement, the elements of Data identified with an asterisk (*) for (i) any Data having an ME Number in the Prescriber ID field or otherwise bridged to an ME Number in the Prescriber File shall be deemed derived from AMA-PPD, and (ii) any Data having an AOA Number in the Prescriber ID field or otherwise bridged to an AOA Number in the Prescriber File shall be deemed derived from AOA data.

EXHIBIT 2

OPERATIONAL PROCEDURES FOR DATA

INITIAL OBLIGATIONS. Within sixty (60) days of the Effective Date of this Agreement each party shall designate a Project Manager. The Project Manager of both parties shall meet to discuss the implementation of the Data delivery and any related issues.

DATA DELIVERY. Data Delivery shall be in accordance with frequency level and format as indicated in Exhibit 1 any amendments thereto. Licensee shall pay all shipping and other costs incurred with the delivery of IMS Data.

CHANGES TO DATA

Changes to Products. In the event that Licensee seeks to change or add products. Licensee shall notify IMS and Licensee shall be charged the price then in effect for such change.

Changes to Data Elements.

(a)

Licensee Initiated Changes. In the event that Licensee seeks to change any of the data elements, Licensee shall notify IMS in writing through its Project Manager of the requested change and the parties shall mutually agree to a fee increase. IMS in its sole discretion may decline to agree to the change.

(b)

IMS Initiated Changes. IMS reserves the right to discontinue any product or service

Changes to Reporting Frequency. In the event that Licensee seeks to change the reporting frequency, Licensee shall notify IMS in writing through its Project Manager of the requested change and the parties shall mutually agree to a fee increase. IMS in its sole discretion may decline to agree to the change

NOTICE OF CHANGES TO DELIVERABLES. Licensee shall send notice to the Project Manager of any changes to Data as set forth in section C above.

PLACE AND METHOD OF DELIVERY. The place of delivery shall be: Synavant, One Broad Ave, Fairview, New Jersey 07022. The method shall be via Federal Express other overnight mail courier, hand-delivery or other method reasonable calculated to reach Licensee promptly.

LOST OR DAMAGED DATA. Licensee must notify IMS if any Data is lost or damaged within ten (10) days from date of delivery. IMS will endeavor to conform the Data to the applicable IMS published specifications prevailing at the time of shipment, and will provide the replacement Data to Licensee within thirty (30) days of notice.

INSPECTION OF DATA. Licensee shall inspect the Data within ten (10) days of receipt. IMS Data shall be deemed to be proper and correct, unless proper notice is given to IMS within ten (10) days of receipt of the Data.

EXHIBIT 3

DATA USES

THE FOLLOWING USES ARE THE ONLY PERMITTED USES OF THE DATA:

The Licensee may use the Data to select, on behalf of a Healthcare Company, a list of Prescribers for the purpose of sending Materials, developed by or on behalf of such Healthcare Company, to certain of such Prescribers; B. The Licensee may use the Data in connection with Licensee’s Single Source Sampling product (as that product is defined as of August 31, 2000), to select, on behalf of one or more Manufacturers or Healthcare Company, a list of Prescribers, which list Licensee may use solely for the purpose of sending its order form to certain of such Prescribers soliciting a request from each of such Prescribers for one or more Legended Drugs of each of such Manufacturers (a “Form”), which form is substantially similar to the form attached hereto as Attachment 1;

The Licensee may use the Data to select on behalf of a publisher of Journals or a publisher of Desktop Media, a list of Prescribers for the purpose of determining advertisements to appear in a Journal or in a Desktop Media or who should receive such Journals;

The Licensee may use the Data to select on behalf of a Manufacturer or Healthcare Company, a list of Prescribers for the purpose of sending Legended Drug or OTC products samples of such Manufacturer to certain of such Prescribers.

Licensee may use the Data to report the overall impact and effectiveness of Licensee’s products and services provided to its third party customers, provided that only topline aggregated Data is provided to the third party.

Licensee may use the Unprojected Data File for its First RX product (as that product is defined as of August 1, 2000) for program targeting for Licensee intervention only.

The Licensee may use information derived from the Data in its proposals to customers, provided that only small amounts of topline aggregated information be used in such proposals.

EXHIBIT 4

LIST OF COMPETING COMPANIES

Name	Name
Abbott Associates, Inc.	Medstart
AC Neilsen Corporation	McKesson Corporation
Amaxis	Merck-Medco Managed Care Inc.
American Healthcare Systems	Migliara/Kaplan Associates (M/K)
Andersen Consulting (*)	N.A.D.C.
Archi-Tech Systems, Inc.	National Data Corporation (NDC)
Beghou Consulting	NFO
Bergen Brunswig Drug Company	Nomadic Systems, Inc.
Cardinal Health, Inc.	PCS Health Systems, Inc.
Common Health Direct	PharmFlex, Inc.
Communi-Form	Pharmaceutical Consulting Group
Comvestrix Corp.	Pharmaceutical Software Laboratories, Inc.
Comet	Pharmetrics
Computer Sciences Corporation (*)	Phoenix Marketing Group, Inc.
Data Analysis Systems, Inc.	Powell and Associates
Decision Resources, Inc.	Prescription Card Services, Inc. (PCS)
Della Marketing Concepts	Print Data Corporation
Dendrite	Professional Detailing Inc.
Diversified Pharmaceutical Services, Inc.	ProMetrics Consulting, Inc.
EDS	Photocare Sciences
Epsilon	Putnam & Associates
First Image	Quintiles Transnational
Forms Distribution Center	Rx Analyst
Futurion Forecasting Associates, Inc.	SCC
Hann & DePalmer	Scott-Levin Associates, Inc.
HCIA, Inc.	Siebel Systems
Health Products Research, Inc.	Synygy Inc.
Health Research Associates	Skila, Inc.
Horizon Systems, Inc.	SMG Marketing Group, Inc.
Infinite Data Structures, Inc. (IDS)	Software Associates International
Information Builders	Source Informatics, Inc.
Information Resources, Inc. (IRI)	Strategic Information Associates
Ingenix	Strategic Mapping, Inc. (Claritas)
ISIS	Strategic Marketing Corp. (SMC)
Interdata S.A	Strategic Marketing Group (SMG)
Integrated Systems Solutions Corp. (ISSC)	Strategic Network Designs, Inc.
Intersearch/Sofres	Tactician Corporation
Karl Analytical	Taylor-Nelson/AGB
Kelly/Waldron & Co.	Technovations, Inc.
KWS & P, Inc.	The Alexander Group
Ketron	The Vandeveer Group
Laser Print and Image, Inc.	Total Research
Market Measures	Windsoft, Inc.
McKinsey & Company (*)	Ziment
Medi-Promotions, Inc.	ZS Associates

Note: For the companies identified above with an (“*”), the restriction applies with respect to the divisions and groups within those companies which provide information, technology or consulting services to organizations in the pharmaceutical and health care industries.

EXHIBIT 5

RESTRICTION
For the term of this Agreement, IMS will not grant a license to the same or substantially the same Xponent® Profiler Data being licensed by Licensee hereunder, which includes the products, therapeutic classes and total volume being purchased by Licensee, for uses A, C and D defined on Exhibit 3 and for use in sample fulfillment programs that are in direct competition with Single Source Sampling (as that program is defined as of August 1, 2000), to the following companies:

Epsilon

NDC Health Information Services

PPS Medical Marketing Services, Inc.

Medical Marketing Service Inc.

Phoenix Marketing Group

Notwithstanding the above, IMS shall be allowed to grant such a license if it can be demonstrated that IMS or any of its predecessors had previously done so prior to August 1, 2000.

Notwithstanding the above, IMS shall not be precluded or limited or restricted in any way from entering into a Third Party Access Agreement whereby a company or companies listed above is the third party or parties entitling it to use the Data for uses A, C and D as noted on Exhibit 3. For purposes of the paragraph, “Third Party Access Agreement” shall mean an agreement entered into with IMS, IMS’s client and a third party contractor or agent of IMS’s client, whereby the third party is permitted access to IMS data.

Notwithstanding the above, the limitation upon IMS’s ability to grant a license to Xponent Profiler Data to a particular company listed above shall not apply in the event that (a) such company becomes an affiliate of IMS, (b) IMS or its affiliates acquires an ownership interest or makes an investment in such company or its affiliates, whether in the form of equity, debt or otherwise (but excluding ownership of less than one percent (1%) of the issued and outstanding shares of capital stock of any company listed on additional securities exchange or quoted by the National Association of Securities Dealers Automated Quotation System), or (c) IMS or its affiliates enters into a partnership or joint venture with such Company or its affiliates. As used in the preceding sentence, an “affiliate” shall refer to any Person, which now or in the future controls, is controlled by or is under common control with IMS.

IMS’s ability to license a subset of the Xponent Profiler Data shall not be in anyway restricted.

ADDENDUM and AMENDMENT TO

Restated Xponent Data License Agreement
Dated April 26, 200
Between IMS Health Incorporated ("IMS")
and
Interactive Marketing Division of Synavant, Inc. ("Licensee")

This Addendum and Amendment (“Addendum”) is effective as of September 1, 2002 and supplements, modifies, and is hereby made part of the Restated Xponent Data License Agreement dated April 26, 2001, with an effective date of September 1, 2000, between IMS Health Incorporated and Synavant (the “Agreement”).

1.	The following additional deliverables and associated fees will be deemed included in the Schedule of Fees & Services of the Agreement:


Deliverable	Total Additional Fees September 2002 - August 2003

Selected Services                                                                                            $750,000
      Xponent(R)Profiler(TM)
      Up to three (3)Consulting Promotional Evaluations
      (see attached example)
Early View(TM)                                                      See Early View Rider, Paragraph 5, Fees for pricing schedule

Total additional Fees:                                                                                      $750,000
                                                                                                                   Plus Early View Fees,
                                                                                                         as determined at time of purchase

The above deliverables are hereby included in the Data, Software and Services under the Agreement, as further described in the attached Schedule of Services.

2.	Exhibit 5, entitled “Restriction”, is deemed deleted in its entirety. In the second sentence of Paragraph 2, the phrase “subject to Exhibit 5,” is deleted.

Except as modified above, all other terms and conditions remain the same and in effect.


IMS Health Incorporated:	Synavant Inc.
By: TOM STAZZONE	By: KERRY COLLINS
Name: Tom Stazzone	Name: Kerry Collins
Title: Corp. Director	Title: V. P. Operations
Date: 4/15/2003	Date: 4/1/2003

EX-10.42 6 amendtoxponentlicagr_10q.htm amendmet to restated xponent data license agreement

Amendment To
Restated Xponent Data License Agreement
Dated April 26, 2001
Between IMS Health Incorporated And
Interactive Marketing Division of Synavant, Inc.

This amendment (“Amendment”), effective as of June 16, 2003 (the “Effective Date”), is entered into by and among IMS Health Incorporated (“IMS”), Synavant, Inc. (“Licensee”), and Dendrite International, Inc. (“Dendrite”) and supplements, modifies and is hereby made part of the Restated Xponent Data License Agreement dated April 26, 2001, with an effective date of September 1, 2000, as amended by an Addendum and Amendment to such agreement dated September 1, 2002, (the “Agreement”) between IMS and Licensee.

1. Background

Licensee has agreed to be acquired by Dendrite and/or certain of its affiliates (such acquisition hereinafter referred to as the “Transaction”). In connection with the Transaction, the parties, by a letter agreement dated May 8, 2003 (the “Extension Agreement”) agreed to enter into an extension of the Agreement on the terms stated in this Amendment.

2. Term Extension

The term of the Agreement is hereby extended to August 31, 2005.

3. Fees

Commencing as of the Effective Date, the annual fees payable by Licensee to IMS for the services provided under the Agreement are hereby restated to one million five hundred thousand dollars ($1,500,000). IMS shall invoice one quarter of the annual fee on a quarterly basis in advance (i.e., IMS shall invoice three hundred and seventy-five thousand dollars ($375,000) on or about September 1^st, December 1^st, March 1^st, and June 1^st of each Contract Year commencing on September 1, 2003) and on or about September 1^st, 2003 shall invoice any difference between the pro-rata portion of such annual fee applicable to the period from the Effective Date to September 1, 2003 and the fee due under the Agreement (prior to the modification to such fee under this Amendment) applicable to such period which was previously billed to Licensee.

4. Termination Rights

In addition to the other termination rights under the Agreement, Dendrite and/or Licensee may terminate the Agreement upon thirty (30) days advance written notice to IMS in the event that IMS terminates, pursuant to section 4.c of the Extension Agreement, the Cross License Agreement, dated as of August 31, 2000, as extended, between IMS and Licensee (the “Pharbase Cross License”), such termination of the Agreement to be effective as of the effective termination date of the Pharbase Cross License, unless agreed otherwise by the parties. In the event of such termination, IMS shall provide to Licensee an appropriate credit or refund, as applicable, of the un-earned portion of the fees under the Agreement in a pro-rata amount applicable to the period following the effective termination of the Agreement.

Except as herein modified and supplemented, all other terms and conditions of the Agreement remain in full force and effect.


IMS Health Incorporated	Synavant, Inc.
By: ROBERT H. STEINFELD	By: CHRISTINE PELLIZZARI
Name: Robert H. Steinfeld	Name: Christine Pellizzari
Title: SVP - General Counsel	Title: Secretary
Date: June 16, 2003	Date: June 16, 2003


Dendrite International, Inc.
By: CHRISTINE PELLIZZARI
Name: Christine Pellizzari
Title: Vice President, General Counsel and Secretary
Date: June 16, 2003

-2-

EX-10.45 7 equalization_plan.htm Exhibit - Synavant, Inc. - Savings Equalization Plan

SYNAVANT INC.

SAVINGS EQUALIZATION PLAN

I. PURPOSE OF THE PLAN

The purpose of the Synavant Inc. Savings Equalization Plan (the “Plan”) is to provide a means of equalizing the benefits of those employees participating in the Synavant Inc. Savings Plan (the “401(k) Plan”) whose matching contributions under the 401(k) Plan are or will be limited by the application of Sections 401(a)(17) or 415 of the Internal Revenue Code of 1986, as amended (the “Code”), or by reason of the exclusion from the definition of Compensation under the 401(k) Plan of amounts deferred under any nonqualified deferred compensation plan. The Plan is intended to be an “excess benefit plan” as that term is defined in Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) with respect to those participants whose benefits under the 401(k) Plan have been limited by Section 415 of the Code, and a plan which is unfunded and is maintained by an employer primarily for the purposes of providing deferred compensation for a select group of management or highly compensated employees for purposes of ERISA.

II. ADMINISTRATION OF THE PLAN

Synavant Inc. (the “Corporation” or the “Company”) shall administer the Plan, except that any action authorized to be taken by the Company hereunder may also be taken by any committee or person(s) duly authorized by the Board of Directors of the Company or the duly authorized delegees of such duly authorized committee or person(s). The Company shall have full authority to determine all questions arising in connection with the Plan, including interpreting its provisions and construing all of its terms; may adopt procedural rules; and may employ and rely on such legal counsel, such actuaries, such accountants and such agents as it may deem advisable to assist in the administration of the Plan. All of its rules, interpretations and decisions shall be applied in a uniform manner to all participants similarly situated and decisions of the Company shall be conclusive and binding on all persons.

III. PARTICIPATION IN THE PLAN

All members of the 401(k) Plan shall be eligible to participate in this Plan whenever their benefits under the 401(k) Plan as from time to time in effect would exceed the limitations on benefits and contributions imposed by Sections 401(a)(17) or 415 of the Code or would be limited by reason of the exclusion from the definition of Compensation under the 401(k) Plan of amounts deferred under any nonqualified deferred compensation plan. For purposes of this Plan, benefits of a participant in this Plan shall be determined as though no provisions were contained in the 401(k) Plan incorporating limitations imposed by Sections 401(a)(17) or 415 of the Code or excluding from the definition of Compensation amounts deferred under any nonqualified deferred compensation plan.

IV. EQUALIZED BENEFITS

If member participating contributions or Company contributions to the 401(k) Plan for any calendar year are limited by reason of the application of Sections 401(a)(17) or 415 of the Code or the exclusion from the definition of Compensation under the 401(k) Plan of amounts deferred under any nonqualified deferred compensation plan, the Corporation shall pay the participant, on or about March 1st of the following year, an amount equal to:

(1) the Company matching contributions that otherwise would have been credited to such participant’s account under the 401(k) Plan if the limitations imposed by Sections 401(a)(17) and 415 of the Code and the exclusion from the definition of Compensation under the 401(k) Plan of amounts deferred under any nonqualified deferred compensation plan did not apply, plus

(2) an interest factor equal to one-half of the annual return which would have been received by the participant had such payment been invested eighty percent (80%) in the Fixed Income Fund of the 401(k) Plan and twenty percent (20%) in the S&P 500 Index Fund of the 401(k) Plan during the year, less

(3) any applicable withholding taxes.

V. MISCELLANEOUS

This Plan may be terminated at any time by the Board of Directors of the Corporation, in which event the rights of participants to their accrued benefits shall become nonforfeitable. This Plan may also be amended at any time by the Board of Directors of the Corporation, except that no such amendment shall deprive any participant of benefits accrued at the time of such amendment. Notwithstanding the foregoing, the Employee Benefits Committee of the Corporation may amend the Plan without the approval of the Board of Directors of the Corporation with respect to amendments that such Committee determines do not have a significant effect on the cost of the Plan.

Benefits payable under this Plan shall not be funded and shall be made out of the general funds of the Corporation; provided, however, that the Corporation reserves the right to establish a trust fund as an alternate source of benefits payable under the Plan and to the extent payments are made from such trust, such payments will satisfy the Corporation’s obligations under this Plan.

No right to payment or any other interest under this Plan may be alienated, sold, transferred, pledged, assigned, or made subject to attachment, execution, or levy of any kind.

Nothing in this Plan shall be construed as giving any employee the right to be retained in the employ of the Corporation. The Corporation expressly reserves the right to dismiss any employee at any time without regard to the effect which such dismissal might have upon him under the Plan.

This Plan shall be construed, administered and enforced according to the laws of the State of Georgia unless preempted by federal law.

VI. EFFECTIVE DATE

This Plan shall be effective as of the date on which shares of common stock of the Company that are owned by IMS Health Incorporated are distributed to the holders of record of shares of IMS Health Incorporated.

EX-31.1 8 ex311-10q.htm Certification of CEO Pursuant to 18 U.S.C. Section 1350

CERTIFICATIONS

I, John E. Bailye, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Dendrite International, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 13, 2003

JOHN E. BAILYE
——————————————
John E. Bailye
Chairman and Chief Executive Officer

EX-31.2 9 ex312-10q.htm Certification of CFO Pursuant to 18 U.S.C. Section 1350

I, Kathleen E. Donovan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Dendrite International, Inc.;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

Date: August 13, 2003

KATHLEEN E. DONOVAN
——————————————
Kathleen E. Donovan
Senior Vice President and Chief Financial Officer

EX-32 10 ex32-10q.htm Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350

Exhibit 32

CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Dendrite International, Inc. (the “Company”) for the quarterly period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John E. Bailye, as Chief Executive Officer of the Company, and Kathleen E. Donovan, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his or her knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

JOHN E. BAILYE
——————————————
Name:  John E. Bailye
Title:   Chairman of the Board and Chief Executive Officer
Date:   August 13, 2003

KATHLEEN E. DONOVAN
——————————————
Name:  Kathleen E. Donovan
Title:    Senior Vice President and Chief Financial Officer
Date:   August 13, 2003

-----END PRIVACY-ENHANCED MESSAGE-----

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2003

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ___ to ___

Commission File Number 0-26138

1200 Mount Kemble Avenue Morristown, NJ 07960 ———————————————————— (Address, including zip code, of principal executive offices)

(973) 425-1200 ———————————————————— (Registrant’s telephone number, including area code)

DENDRITE INTERNATIONAL, INC. INDEX

DENDRITE INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)(UNAUDITED)

DENDRITE INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)

DENDRITE INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)

DENDRITE INTERNATIONAL, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

2. Net Income Per Share

3. Comprehensive Income

4. Reclassifications

5. Stock Based Compensation

6. Restructuring Charge

7. Acquisitions

9. Goodwill and Intangible Assets

10. Line of Credit

11. Customer and Geographic Segment Data

12. Income Taxes

13. Recent Accounting Pronouncements

FORWARD-LOOKING STATEMENTS

OVERVIEW

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

RECENT DEVELOPMENTS

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2003 AND 2002

SIX MONTHS ENDED JUNE 30, 2003 AND 2002

LIQUIDITY AND CAPITAL RESOURCES

Contractual Obligations and Commitments

FACTORS THAT MAY AFFECT FUTURE RESULTS

OUR BUSINESS IS HEAVILY DEPENDENT ON THE PHARMACEUTICAL INDUSTRY

WE DEPEND ON A FEW MAJOR CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUES

BUSINESS AND ECONOMIC PRESSURES ON OUR MAJOR CUSTOMERS MAY CAUSE A DECREASE IN DEMAND FOR OUR NEW PRODUCTS AND SERVICES

OUR LENGTHY SALES AND IMPLEMENTATION CYCLES MAKE IT DIFFICULT TO PREDICT OUR QUARTERLY REVENUES

OUR FIXED COSTS MAY LEAD TO FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS IF REVENUES FALL BELOW EXPECTATIONS

WE MAY BE UNABLE TO SUCCESSFULLY INTRODUCE NEW PRODUCTS OR RESPOND TO TECHNOLOGICAL CHANGE

INCREASED COMPETITION MAY RESULT IN PRICE REDUCTIONS AND DECREASED DEMAND FOR OUR PRODUCTS AND SERVICES

WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY IN THE INTERNET-RELATED PRODUCTS AND SERVICES MARKET NOR CAN WE PROVIDE ASSURANCES THAT THE DEMAND FOR INTERNET-RELATED PRODUCTS AND SERVICES WILL INCREASE

OUR INTERNATIONAL OPERATIONS HAVE RISKS THAT OUR DOMESTIC OPERATIONS DO NOT

WE MAY FACE RISKS ASSOCIATED WITH OUR ACQUISITIONS

AN INABILITY TO MANAGE GROWTH COULD ADVERSELY AFFECT OUR BUSINESS

WE MAY FACE RISKS ASSOCIATED WITH EVENTS WHICH MAY AFFECT THE WORLD ECONOMY

CATASTROPHIC EVENTS COULD NEGATIVELY AFFECT OUR INFORMATION TECHNOLOGY INFRASTRUCTURE

OUR SUCCESS DEPENDS ON RETAINING OUR KEY SENIOR MANAGEMENT TEAM AND ON ATTRACTING AND RETAINING QUALIFIED PERSONNEL

OUR BUSINESS DEPENDS ON PROPRIETARY TECHNOLOGY THAT WE MAY NOT BE ABLE TO PROTECT COMPLETELY

IF OUR THIRD PARTY VENDORS ARE UNABLE TO SUCCESSFULLY RESPOND TO TECHNOLOGICAL CHANGE OR IF WE DO NOT MAINTAIN OUR RELATIONSHIPS WITH THIRD PARTY VENDORS, INTERRUPTIONS IN THE SUPPLY OF OUR PRODUCTS MAY RESULT

THE RESULTS DERIVED FROM CURRENT AND FUTURE STRATEGIC RELATIONSHIPS MAY PROVE TO BE LESS FAVORABLE THAN ANTICIPATED

OUR DATA SOLUTIONS ARE DEPENDENT UPON STRATEGIC RELATIONSHIPS WHICH, IF NOT MAINTAINED, COULD UNDERMINE THE CONTINUED VIABILITY OF THESE SOLUTIONS

FEDERAL AND STATE LAWS AND REGULATIONS COULD DEPRESS THE DEMAND FOR SOME OF OUR SOLUTIONS

GOVERNMENTAL REGULATION MAY MATERIALLY AND ADVERSELY AFFECT THE COMPANY’S ABILITY TO DISTRIBUTE CONTROLLED SUBSTANCES THROUGH THE MAIL

DIFFICULTIES IN SUBLEASING, SELLING OR OTHERWISE DISPOSING OF CERTAIN OF OUR FACILITIES MAY NEGATIVELY IMPACT UPON OUR EARNINGS

UNANTICIPATED CHANGES IN OUR ACCOUNTING POLICIES MAY BE REQUIRED BECAUSE OF MANDATES BY ACCOUNTING STANDARDS SETTING ORGANIZATIONS AND COULD HAVE A MATERIAL IMPACT ON OUR FINANCIAL STATEMENTS

PROVISIONS OF OUR CHARTER DOCUMENTS AND NEW JERSEY LAW MAY DISCOURAGE AN ACQUISITION OF DENDRITE

OUR COMMON STOCK MAY BE SUBJECT TO PRICE FLUCTUATIONS

EXECUTION COPY

DISTRIBUTION AGREEMENT

IMS HEALTH INCORPORATED

SYNAVANT INC.

Dated as of August 31, 2000

DISTRIBUTION AGREEMENT

ARTICLE IDEFINITIONS

ARTICLE IIDISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS

ARTICLE IIIINDEMNIFICATION

ARTICLE IVACCESS TO INFORMATION

ARTICLE VADMINISTRATIVE SERVICES

ARTICLE VIDISPUTE RESOLUTION

ARTICLE VIIINSURANCE

ARTICLE VIIIMISCELLANEOUS

AMENDMENT

[SIGNATURE PAGE FOLLOWS]

IMS HEALTH INCORPORATED

Amendment ToRestated Xponent Data License AgreementDated April 26, 2001Between IMS Health Incorporated And Interactive Marketing Division of Synavant, Inc.

1. Background

2. Term Extension

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the quarterly period ended June 30, 2003

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _ to _

1200 Mount Kemble Avenue
Morristown, NJ 07960
————————————————————
(Address, including zip code, of
principal executive offices)

(973) 425-1200
————————————————————
(Registrant’s telephone number, including area code)

DENDRITE INTERNATIONAL, INC.
INDEX

DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

DENDRITE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

DENDRITE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

DENDRITE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

ARTICLE I
DEFINITIONS

ARTICLE II
DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS

ARTICLE III
INDEMNIFICATION

ARTICLE IV
ACCESS TO INFORMATION

ARTICLE V
ADMINISTRATIVE SERVICES

ARTICLE VI
DISPUTE RESOLUTION

ARTICLE VII
INSURANCE

ARTICLE VIII
MISCELLANEOUS

Amendment To
Restated Xponent Data License Agreement
Dated April 26, 2001
Between IMS Health Incorporated And
Interactive Marketing Division of Synavant, Inc.

CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002