Exhibit 10.8
INTERCOMPANY SERVICES AGREEMENT
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This Intercompany Services Agreement ("Agreement"), dated as of May 15,
1998, between Cognizant Corporation, a Delaware corporation ("Cognizant"), and
Cognizant Technology Solutions Corporation, a Delaware corporation (the
"Company").
WHEREAS, the Company is a subsidiary of Cognizant;
WHEREAS, the Company expects to effect a public offering of its Class A
Common Stock (the "IPO");
WHEREAS, Cognizant has provided the Company with various corporate
services, as more fully delineated below;
WHEREAS, following completion of the IPO, Cognizant will continue to
control the Company, and is willing to continue to provide many of the services
to the Company historically provided by it, and the Company is willing to accept
and pay for such services, as provided herein; and
WHEREAS, Cognizant intends to reorganize (the "Reorganization") by
splitting the ▇▇▇▇▇▇▇ Media Research business from the rest of its businesses,
creating two publicly held companies, IMS Health Incorporated ("IMS HEALTH") and
▇▇▇▇▇▇▇ Media Research, and, in connection therewith, the capital stock of the
Company theretofore held by Cognizant will thereafter be held by IMS HEALTH;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, Cognizant and the Company hereby agree
as follows:
1. CORPORATE SERVICES TO BE MADE AVAILABLE.
During the Term (as hereinafter defined), Cognizant agrees to make
available to the Company, as required from time to time by the Company, the
services described below (collectively, the "Corporate Services") on the terms
provided herein:
(a) payroll and accounts payable services, to be provided by
Cognizant's shared transaction services center;
(b) tax advice and services, including, without limitation, the
preparation of federal, state and local tax returns, to be provided by
Cognizant's internal tax staff;
(c) risk management services, to be provided by Cognizant's
controller's staff (or through third parties providing such services to
Cognizant);
(d) financial advice and services, including, without limitation,
assistance with respect to the raising of additional capital, cash
management and treasury management, to be provided by Cognizant's treasury
staff;
(e) personnel administration advice and services, including, without
limitation, the administration of employee insurance plans, savings plans
and other employee benefit plans, to be provided by Cognizant's human
resources staff;
(f) real estate services, including, without limitation, evaluation,
development and negotiation activities, and lease administration, to be
provided by Cognizant's corporate staff;
(g) electronic mail services; and
(h) such other services (other than legal services), not specified
above, which are of the type normally performed by the corporate staffs of
public corporations, to be provided by Cognizant's corporate staff.
In providing the Corporate Services to the Company, Cognizant's officers and
employees shall conduct themselves in accordance with any written policies and
procedures of the Company that are provided to Cognizant.
2. HEALTH AND WELFARE BENEFITS.
During the Term, but only for so long as Cognizant shall continue to
beneficially own at least 50%, by voting power, of the outstanding voting stock
of the Company, the employees of the Company shall continue to be eligible to be
covered by Cognizant's Employee Benefit Plans (as hereinafter defined) to the
extent, and on the same basis, as immediately prior to the Effective Date, as
such coverage shall be determined by the Company for any eligible employee;
PROVIDED, HOWEVER, that Cognizant shall have no obligation to provide such
coverage if it shall thereby become a "multiple employer welfare agent" within
the meaning of ERISA (as hereinafter defined). As used in this Agreement,
"Employee Benefit Plans" shall mean and include all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), entered into or maintained by Cognizant for the benefit of
its and its subsidiaries employees.
3. INSURANCE.
(a) During the Term, but only for so long as Cognizant shall continue
to beneficially own at least 50%, by voting power, of the outstanding
voting stock of the Company, the Company shall be insured under all
insurance policies maintained by Cognizant, including, without limitation,
primary, excess and umbrella policies, comprehensive general liability
policies, director and officer liability, fiduciary liability, automobile
liability, aircraft liability, property, workers' compensation and employee
dishonesty insurance policies, that provide coverage for Cognizant and its
subsidiaries, including the Company and its business, property, directors
and employees (such policies being referred to herein as the "Shared
Policies"). If any person shall assert a claim against the Company or any
of its subsidiaries (including, without limitation, where the Company or
its subsidiaries are joint defendants with other persons) with respect to
any claim, suit, action, proceeding, injury, loss, liability, damage or
expense that may arise
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out of an insured or insurable occurrence under one or more of the Shared
Policies, Cognizant shall, at the time such claim is asserted, to the
extent any such Shared 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, the Company as the agent
and attorney-in-fact to assert and to collect any related insurance
proceeds under such Shared Policy, and shall further be deemed to assign,
without need of further documentation, to the Company any and all rights of
an insured party under such Shared Policy with respect to such asserted
claim, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer and the right to any
applicable insurance proceeds thereunder; PROVIDED, HOWEVER, that nothing
in this Section 3 shall be deemed to constitute (or to reflect) an
assignment of the Shared Policies, or any of them, to the Company.
(b) Except as otherwise provided in Section 3(a) hereof, from and
after the Effective Date, Cognizant shall be responsible for
administration, including claims administration, of the Shares Policies;
PROVIDED that the retention of such responsibilities by Cognizant 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 Shared Policies as
contemplated by the terms of this Agreement; and PROVIDED FURTHER that
Cognizant's retention 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 Shared Policy. Cognizant may discharge its administrative
responsibilities under this Section 3(b) 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 Shared 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 Cognizant relating to administration contemplated by this Section 3(b)
shall be reimbursed in accordance with the terms of Section 4 hereof.
(c) The Company may claim coverage for insured claims under any
Shared Policy as and to the extent that such insurance is available up to
the full extent of the applicable limits of liability of such Shared Policy
(and may receive any insurance proceeds with respect thereto), subject to
the terms of this Section 3.
(d) Except as set forth herein, Cognizant shall not be liable to the
Company for claims not reimbursed by insurers for any reason not within the
control of Cognizant, 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
Cognizant or the Company or any defect in such claim or its processing.
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(e) In the event that the aggregate limits on any Shared Policies are
exceeded by the aggregate of outstanding insured claims by the parties
hereto, such 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 either 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 the Shared Policies
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.
(f) 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.
(g) The parties agree to use their commercially reasonable efforts to
cooperate with respect to the various insurance matters contemplated by
this Agreement.
4. FEES FOR SERVICES AND OTHER BENEFITS.
(a) For the Corporate Services, employee benefit plans and insurance
benefits to be provided by Cognizant to the Company hereunder, the Company
shall pay the following fees to Cognizant:
(i) for Corporate Services provided by Cognizant's shared
transaction services department, the fee set forth on Schedule 1
attached hereto;
(ii) for electronic mail, the fee set forth on Schedule 2
attached hereto;
(iii) for the employee benefit plans coverage, the fee set forth
on Schedule 3 attached hereto; and
(iv) for the insurance coverage, the fee set forth on Schedule
4 attached hereto.
Other than as set forth above, no fee shall be payable to Cognizant by the
Company for the Corporate Services provided hereunder.
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(b) The Company agrees to pay to Cognizant on the first business day
of each fiscal quarter that portion of the fees, determined as set forth in
Section 4(a), attributable to such quarter.
(c) The Company also agrees to reimburse Cognizant, within 15
Business Days (as hereinafter defined) of presentation of invoices
therefor, for all out-of-pocket expenses incurred by Cognizant in providing
Corporate Services. As used herein, "Business Day" shall mean any day that
is not a Saturday, Sunday or day on which banking institutions in New York,
New York are not required to be open.
5. REQUIREMENT OF APPROVAL BY INDEPENDENT DIRECTORS OF THE COMPANY.
All determinations on behalf of the Company made pursuant to Sections 3, 4,
7, 8 and 9(c) hereof must be approved by at least a majority of directors of the
Company who are not employed by or otherwise affiliated with Cognizant, the
Company (other than solely as a result of being a director thereof) or any of
their respective affiliates (the "Independent Directors"). In carrying out
their duties pursuant to this Agreement, the Independent Directors may retain
such independent accountants, lawyers and other experts as they deem necessary
or prudent to retain, and the expenses of all such professionals shall be
reimbursed by the Company.
6. INFORMATION AND WITNESSES.
Cognizant shall provide to the Company and the Company shall provide to
Cognizant, upon the other's written request, at reasonable times, full and
complete access to, and duplication rights with respect to, any and all such
Information (as hereinafter defined) as the other may reasonably request and
require, and Cognizant shall use commercially reasonable efforts to make
available to the Company, and the Company shall use commercially reasonable
efforts to make available to Cognizant, upon the other's written request, the
officers, directors, employees and agents of Cognizant and the Company,
respectively, as witnesses to the extent that such persons may reasonably be
required in connection with any legal, administrative or other proceedings to
which the Company or Cognizant, as the case may be, may from time to time be a
party; provided, however, that neither Cognizant nor the Company need provide
any Information or make available witnesses to the other to the extent that
doing so would (i) unreasonably interfere with the performance by any person of
such person's duties to the party to which a request under this Section 4 is
made or otherwise cause unreasonable burden to such party, (ii) result in a
waiver of any attorney-client or work product privilege of such party or its
legal counsel, (iii) require either Cognizant or the Company to provide any
Information which relates to the subject matter of any legal, administrative or
other proceeding to which Cognizant and the Company are adverse parties or (iv)
result in any breach of any agreement with a third party; and provided, further,
that the party providing Information or making available witnesses pursuant to
this Section 4 shall be entitled to receive from the other party, upon
presentation of reasonably detailed invoices therefor, payment of its
out-of-pocket costs (including reasonable attorneys' fees) incurred in
connection with providing Information or making witnesses available. The term
"Information" as used in this Section 4 means any books, records, contracts,
instruments, data, facts and other information in the possession or under the
control of either
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Cognizant or the Company necessary or desirable for use in legal, administrative
or other proceedings and for auditing, accounting and tax purposes.
7. TERM OF AGREEMENT.
This Agreement shall become effective on the initial closing date of the
IPO (the "Effective Date") and shall remain in effect (the "Term") through
December 31, 1998, and shall continue in effect thereafter for successive
one-year terms unless terminated by either party upon not less than 60 days'
written notice prior to the end of the initial term or any renewal term.
8. PRIOR SERVICES.
It is recognized that certain services of the kind described in Section 1
have been and will continue to be performed by Cognizant for the benefit of the
Company prior to the commencement of the term of this Agreement. As soon as
practicable after the Effective Date, Cognizant and the Company shall review
such services and value them in the manner set forth in Section 4 (except for
insurance, for which the fee shall be at the rate of $2,667 per month) and,
subject to approval of at least a majority of the Independent Directors as set
forth in Section 5, the Company shall pay Cognizant such fee and reimburse
Cognizant for such expenses as shall have been so determined and approved.
9. MISCELLANEOUS.
(a) NONASSIGNABILITY OF AGREEMENT; ASSIGNMENT TO IMS HEALTH. Except
(i) by operation of law, (ii) in connection with the sale of all or
substantially all the assets of a party hereto or (iii) in connection with
the Reorganization, this Agreement shall not be assignable, in whole or in
part, directly or indirectly by either party hereto without the prior
written consent of the other, and any attempt to assign any rights or
obligations arising under this Agreement without such consent shall be
void; PROVIDED, HOWEVER, that the provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by Cognizant and
the Company and their respective successors and permitted assigns,
including, without limitation, IMS HEALTH. In connection with the
Reorganization, Cognizant shall assign this Agreement to IMS HEALTH,
whereupon all references herein to Cognizant shall be deemed to be
references to IMS HEALTH.
(b) FURTHER ASSURANCES. Subject to the provisions hereof, each of
the parties hereto shall make, execute, acknowledge and deliver such other
actions and documents as may be reasonably required in order to effectuate
the purposes of this Agreement, and to comply with all applicable laws,
regulations, orders and decrees, and obtain all required consents and
approvals and make all required filings with any governmental agency, other
regulatory or administrative agency, commission or similar authority, as
may be necessary or desirable in connection herewith.
(c) WAIVERS. No failure or delay on the part of Cognizant or the
Company in exercising any right hereunder shall operate as a waiver
thereof, nor shall any single or
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partial exercise of any such right, or any abandonment or discontinuance of
steps to enforce such right, preclude any other or further exercise thereof
or the exercise of any other right. No modification or waiver of any
provision of this Agreement nor consent to any departure by Cognizant or
the Company therefrom shall in any event be effective unless the same shall
be in writing, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Any consent or
waiver by the Company under this Section 8(c) shall be approved by the
Independent Directors.
(d) ENTIRE AGREEMENT; RULES OF CONSTRUCTION. This Agreement contains
the entire understanding of the parties with respect to the transactions
contemplated hereby. 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,
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.
(e) AMENDMENTS. This Agreement may be amended or supplemented only
in a writing executed by the parties (provided that, in the case of the
Company, such amendment or supplement shall require the approval of the
Independent Directors).
(f) NOTICES. All notices, requests and other communications
hereunder shall be in writing and shall be given (i) by mail (postage
prepaid, registered or certified mail, return receipt requested), (ii) by
hand delivery, (iii) by nationally recognized courier service or (iv) by
telecopier, receipt confirmed, addressed as follows (or to such other
address as shall be specified by a party by notice pursuant hereto):
(i) if to Cognizant, to:
Cognizant Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy to:
Cognizant Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇; and
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(ii) if to the Company, to:
Cognizant Technology Solutions Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
with copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇.
Each such notice, request or communication shall be effective (i) if mailed,
three Business Days after mailing, (ii) if delivered by hand or by nationally
recognized courier service, when delivered and (iii) if given by telecopier,
when such telecopy is transmitted and the appropriate confirmation is received.
(g) DISPUTE RESOLUTION.
(i) NEGOTIATION. In the event of a controversy dispute or claim
arising out of, in connection with or relating 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 (collectively, "Agreement
Disputes"), a representative of each of Cognizant and the Company (the
representative of the Company being selected by the Independent Directors)
shall negotiate in good faith for a reasonable period of time to settle
such Agreement Dispute; PROVIDED, HOWEVER, that such reasonable period
shall not, unless otherwise agreed by the parties in writing, exceed 30
days from the time the parties began such negotiations; PROVIDED FURTHER
that in the event of any arbitration in accordance with Section 8(g) (ii)
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 to which such Agreement Dispute relates shall not be
deemed to have passed until such Agreement Dispute has been resolved.
(ii) ARBITRATION. If after such reasonable period such
representatives 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 either party, by
arbitration conducted in New York City, before and
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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.
Section 10(a) as in effect on the date hereof). If the parties are
unable to agree on an arbitrator, the arbitrator shall be selected in
accordance with the Rules. 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 Section 8 (g) (ii) 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 undersigned agree to comply with any award made in
any such arbitration proceedings 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 the
Supreme Court of the State of New York, New York County, or the United
States District Court for the Southern District of New York. 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, that 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 relevant
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 (A) to the extent reasonably
necessary in any proceeding brought to enforce the award or for entry
of a judgment upon the award and (B) 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.
(iii) 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 during the course of
dispute resolution pursuant to the provisions of this Agreement with
respect to all matters not subject to such dispute, controversy or
claim.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
choice of law principles thereof.
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(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COGNIZANT CORPORATION
By:
----------------------------
Name:
Title:
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
By:
----------------------------
Name:
Title:
Schedule 1
1998 Charge
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U.S. Payroll and Payables Services $7,100 per month
Schedule 2
1998 Charge
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1998 Charge E-Mail Services $8,275 per month
Schedule 3
Rate (US$) per person/month
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POS Medical (only) & Dental $375
Medical/Dental/Basic Life/ Dependent
Care/Financial Planning/Disability $500
Medical/Dental/Basic Life/Retirement
Dependent Care/Financial Planning/Disability $750
Schedule 4
1998 Charge
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Insurance Coverage 8,333 per month