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APPENDIX A
DISTRIBUTION AGREEMENT
BETWEEN
IMS HEALTH INCORPORATED
AND
GARTNER GROUP, INC.
DATED AS OF JUNE 17, 1999
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS.......................................................... 2
SECTION 1.1 General..................................................... 2
SECTION 1.2 References; Interpretation.................................. 6
ARTICLE II. DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS AND
REPRESENTATIONS AND WARRANTIES...................................... 7
SECTION 2.1 The Distribution and Other Transactions..................... 7
SECTION 2.2 The Cash Dividend and the Stock Repurchase.................. 10
SECTION 2.3 Financing................................................... 12
SECTION 2.4 Certain Limitations on Actions by IMS HEALTH................ 12
SECTION 2.5 Declaration Date; Further Assurances........................ 13
SECTION 2.6 Representations and Warranties.............................. 13
ARTICLE III. INDEMNIFICATION.................................................... 17
SECTION 3.1 Indemnification by Gartner.................................. 17
SECTION 3.2 Indemnification by IMS HEALTH............................... 17
SECTION 3.3 Procedures for Indemnification in Third Party Claims........ 17
SECTION 3.4 Indemnification Payments.................................... 19
ARTICLE IV. COVENANTS........................................................... 19
SECTION 4.1 Access to Information....................................... 19
SECTION 4.2 Confidentiality............................................. 19
SECTION 4.3 Standstill.................................................. 19
SECTION 4.4 Public Announcements........................................ 21
SECTION 4.5 Required Consents........................................... 21
ARTICLE V. DISPUTE RESOLUTION................................................... 21
SECTION 5.1 Negotiation................................................. 21
SECTION 5.2 Arbitration................................................. 21
SECTION 5.3 Continuity of Service and Performance....................... 22
ARTICLE VI. INSURANCE........................................................... 22
SECTION 6.1 Separation of Insurance Coverages........................... 22
SECTION 6.2 Policy Rights............................................... 22
SECTION 6.3 Post-Distribution Date Claims............................... 22
SECTION 6.4 Agreement for Waiver of Conflict and Shared Defense......... 24
SECTION 6.5 Cooperation................................................. 24
ARTICLE VII. MISCELLANEOUS...................................................... 24
SECTION 7.1 Complete Agreement; Construction............................ 24
SECTION 7.2 Counterparts................................................ 24
SECTION 7.3 Survival of Agreements...................................... 24
SECTION 7.4 Expenses.................................................... 24
SECTION 7.5 Notices..................................................... 24
SECTION 7.6 Waivers..................................................... 25
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SECTION 7.7 Amendments.................................................. 25
SECTION 7.8 Assignment.................................................. 25
SECTION 7.9 Successors and Assigns...................................... 25
SECTION 7.10 Termination................................................. 25
SECTION 7.11 Subsidiaries................................................ 26
SECTION 7.12 Third Party Beneficiaries................................... 26
SECTION 7.13 Title and Headings.......................................... 26
SECTION 7.14 Exhibits and Schedules...................................... 26
SECTION 7.15 GOVERNING LAW............................................... 26
SECTION 7.16 Consent to Jurisdiction..................................... 26
SECTION 7.17 Severability................................................ 27
EXHIBITS
Exhibit 2.1(d) Undertaking of Gartner Group, Inc. under 1996 Distribution
Agreement.
Exhibit 2.1(d)(ii) Undertaking of Gartner Group, Inc. under 1998
Distribution Agreement.
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DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of June 17, 1999 (this "Agreement"),
between IMS HEALTH INCORPORATED, a Delaware corporation ("IMS HEALTH"), and
GARTNER GROUP, INC., a Delaware corporation ("Gartner").
WHEREAS, IMS HEALTH owns, directly and indirectly, as of the close of
business on the date hereof, 47,599,105 shares of Class A Common Stock, par
value $.0005 per share ("Class A Common Stock"), of Gartner;
WHEREAS, simultaneously with the execution hereof, Gartner, IMS HEALTH, and
GRGI, INC., a Delaware corporation and a wholly owned subsidiary of IMS HEALTH
("Merger Sub"), are entering into an Agreement and Plan of Merger in the form
attached hereto as Exhibit A-1 (the "Recapitalization Agreement"), pursuant to
which, among other things, Merger Sub will merge with and into Gartner with the
consequent capital stock changes resulting in (i) IMS HEALTH acquiring, in
exchange for 40,689,648 shares of Class A Common Stock held by it 40,689,648
shares of a new Class B Common Stock, par value $.0005 per share ("Class B
Common Stock" and, together with the Class A Common Stock, the "Gartner Common
Stock"), of Gartner, which class of stock shall be entitled to elect 80% of the
members of the board of directors of Gartner and in all other respects shall be
substantially identical to the Class A Common Stock, and (ii) IMS retaining
6,909,457 shares of Class A Common Stock (the "Retained Shares") and the
Warrants (as defined herein) to purchase 599,400 shares of Class A Common Stock,
and all other stockholders of Gartner retaining all their shares of Class A
Common Stock, which class of stock shall be entitled to elect 20% of the members
of the board of directors of Gartner (the "Recapitalization");
WHEREAS, the Board of Directors of IMS HEALTH has determined that it is
appropriate, desirable and in the best interests of IMS HEALTH and its
stockholders to distribute on the Distribution Date (as defined herein) all the
shares of Class B Common Stock that IMS HEALTH will receive in the
Recapitalization, on the terms and subject to the conditions set forth in this
Agreement, to the holders of record of the Common Stock, par value $.01 per
share, of IMS HEALTH ("IMS HEALTH Common Stock"), as of the Distribution Record
Date (as defined herein), on a pro rata basis (the "Distribution");
WHEREAS, the Board of Directors of Gartner has determined that it is
appropriate, desirable and in the best interests of Gartner and its stockholders
that the Distribution be consummated, and the Recapitalization is a necessary
and desirable means to enable the Distribution to occur;
WHEREAS, IMS HEALTH has received a ruling from the Internal Revenue Service
to the effect that the Distribution will be a tax-free distribution within the
meaning of Section 355 of the Code (as defined herein);
WHEREAS, upon the terms and subject to the conditions of this Agreement,
the board of directors of Gartner shall declare the Cash Dividend (as defined
herein), payable on a pro rata basis to holders of record of Gartner Common
Stock as of the date immediately preceding the Distribution Record Date;
WHEREAS, upon the terms and subject to the conditions of this Agreement,
Gartner will commence the Stock Repurchase (as defined herein) after the
Distribution for a number of shares of Class A Common Stock and Class B Common
Stock equal to 19.99% of the total number of outstanding shares of Gartner
Common Stock; and
WHEREAS, each of IMS HEALTH and GARTNER has determined that it is necessary
and desirable to set forth the principal corporate transactions required to
effect the Distribution, the Recapitalization, the Cash Dividend and the Stock
Repurchase and to set forth other agreements that will govern certain other
matters following the Distribution.
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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.
(c) "Agreement Disputes" shall have the meaning set forth in Section
5.1.
(d) "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.
(e) "Business Entity" shall mean any corporation, partnership, limited
liability company or other entity which may legally hold title to Assets.
(f) "Cash Dividend" shall have the meaning set forth in Section
2.2(a).
(g) "Cash Dividend Date" shall mean the date immediately preceding the
Distribution Date.
(h) "Cash Dividend Record Date" shall mean the date immediately
preceding the Distribution Record Date.
(i) "Claims Administration" shall mean the processing of claims made
under the Shared Policies, including the reporting of claims to the
insurance carriers and the management of the defense of claims.
(j) "Class A Common Stock" shall have the meaning set forth in the
recitals hereto.
(k) "Class B Common Stock" shall have the meaning set forth in the
recitals hereto.
(l) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the Treasury regulations promulgated thereunder, including any
successor legislation.
(m) "Commission" shall mean the U.S. Securities and Exchange
Commission.
(n) "Dataquest Agreement" shall mean that certain Acquisition
Agreement dated as of November 27, 1995 by and among Gartner Group, Inc.,
Bosa Acquisition Corp., Gartner Group U.K. Ltd., Gartner Group GMBH, The
Dun & Bradstreet Corporation, Dataquest Incorporated, Dataquest Europe
Limited and Dataquest GMBH.
(o) "Declaration Date" shall mean the date, mutually agreed between
IMS HEALTH and Gartner, on which (i) the IMS HEALTH Board of Directors
shall declare the Distribution, (ii) the Gartner Board of Directors shall
declare the Cash Dividend and (iii) the Certificate of Merger effecting the
Recapitalization shall be filed with the Secretary of State of the State of
Delaware.
(p) "DGCL" shall mean the General Corporation Law of the State of
Delaware.
(q) "Distribution" shall have the meaning set forth in the recitals
hereto.
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(r) "Distribution Agent" shall mean the distribution agent selected by
IMS HEALTH to effect the Distribution, which may be Gartner's stock
transfer agent.
(s) "Distribution Date" shall mean the date determined by the Board of
Directors of IMS HEALTH following the consummation of the Recapitalization
for the mailing of certificates of Class B Common Stock to stockholders of
IMS HEALTH in the Distribution. The Distribution Date shall be a date as
soon as practicable following the Declaration Date, but not more than
thirty days after the filing of the Certificate of Merger relating to the
Recapitalization.
(t) "Distribution Record Date" shall mean the date determined by the
Board of Directors of IMS HEALTH as the record date for the determination
of the holders of record of IMS HEALTH Common Stock entitled to receive
shares of Class B Common Stock in the Distribution.
(u) "Effective Time" shall mean immediately prior to the midnight, New
York time, that ends the 24-hour period comprising the Distribution Date.
(v) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
(w) "Financing Commitments" shall have the meaning set forth in
Section 2.3.
(x) "Form 8-A" shall mean a Gartner registration statement on Form 8-A
pursuant to which the Class B Common Stock shall be registered under the
Exchange Act, including all amendments thereto.
(y) "Gartner" shall have the meaning set forth in the heading of this
Agreement.
(z) "Gartner Business" shall mean each and every business conducted at
any time prior to, on or after the Effective Time by Gartner or any
current, former, or future Subsidiary of Gartner or other Business Entity
controlled by Gartner, whether or not such Subsidiary is a Subsidiary of
Gartner or such Business Entity is controlled by Gartner on the date
hereof.
(aa) "Gartner Business Entity" shall mean any Business Entity a
majority of the equity interests of which are owned, directly or
indirectly, by Gartner.
(bb) "Gartner Group" shall mean Gartner and each Person that is a
Subsidiary of Gartner immediately prior to the Effective Time.
(cc) "Gartner Indemnitees" shall mean Gartner, each member of the
Gartner 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.
(dd) "Gartner Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise out of, result from or are related to the
operation of the Gartner Business or the ownership of the assets of the
Gartner Business by Gartner, any current, former or future Subsidiary of
Gartner or any Business Entity controlled by Gartner, whether such
Liabilities arise before, on or after the Effective Time and whether known
or unknown, fixed or contingent, and shall include, without limitation:
(i) any and all Liabilities to which IMS HEALTH or its predecessors
and successors may become subject arising from or based upon its status
or alleged status as a "controlling person" (as defined under Section 15
of the Securities Act and Section 20 of the Exchange Act) of Gartner
relating to (a) the Proxy Statement (or any amendment thereto) (except
for liabilities which Gartner incurs solely as a result of written
information relating to IMS HEALTH supplied by IMS HEALTH for inclusion
in the Proxy Statement) or (b) any other report or document filed by
Gartner with the Commission at any time before, on or after the
Effective Time (except for liabilities which Gartner incurs solely as a
result of written information relating to IMS HEALTH or the IMS HEALTH
Business supplied by IMS HEALTH for inclusion in such report or
document);
(ii) any and all Liabilities that are expressly contemplated by
this Agreement or the Recapitalization Agreement (or the Schedules
hereto or thereto) as Liabilities to be assumed by Gartner or any member
of the Gartner Group or to remain with Gartner or any member of the
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Gartner Group and any Liabilities under this Agreement for a breach by
Gartner of any representation, warranty or covenant herein; and
(iii) any and all Liabilities which IMS HEALTH or any of its
Subsidiaries and any Affiliates may be subject to or which may be
asserted against any of them arising from or based upon any sublease by
Gartner or a Subsidiary of Gartner or other Business Entity controlled
by Gartner of office space in Nanterre, France, Paris, France or Tokyo,
Japan where RHD or any of its predecessors or any of their successors or
their respective Affiliates occupy space on the premises, including
pursuant to any sublease agreement or amendment or other agreement
related thereto.
(ee) "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.
(ff) "IMS HEALTH Business" shall mean each and every business
conducted at any time by IMS HEALTH or any current, former or future
Subsidiary of IMS HEALTH (other than Gartner and its Subsidiaries) prior to
the Effective Time or other Business Entity controlled by IMS HEALTH (other
than Gartner and its Subsidiaries), whether or not such Subsidiary is a
Subsidiary of IMS HEALTH or such Business Entity is controlled by IMS
HEALTH on the date hereof, except for the Gartner Business.
(gg) "IMS HEALTH Business Entity" shall mean any Business Entity a
majority of the equity interests of which are owned, directly or
indirectly, by IMS HEALTH.
(hh) "IMS HEALTH Common Stock" shall mean the common stock, par value
$.01 per share, of IMS HEALTH.
(ii) "IMS HEALTH Distribution" shall mean the distribution of the
common stock of IMS HEALTH described in Exhibit 2.1(d)(i).
(jj) "IMS HEALTH Group" shall mean IMS HEALTH and each Person (other
than any member of the Gartner Group) that is a Subsidiary of IMS HEALTH
immediately prior to the Effective Time.
(kk) "IMS HEALTH Indemnitees" shall mean IMS HEALTH, each member of
the IMS HEALTH 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, except Gartner Indemnitees
who would not otherwise be an IMS HEALTH Indemnitee.
(ll) "IMS HEALTH Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise out of, result from or are related to the
operation of the IMS HEALTH Business or the ownership of the assets of the
IMS HEALTH Business by IMS HEALTH, any predecessor entity of IMS HEALTH
(and all predecessors thereto) or any Subsidiary of or Business Entity
controlled by any such predecessor, any current, former, or future
Subsidiary of IMS HEALTH or any Business Entity controlled by IMS HEALTH
(other than, in each case, Gartner and its Subsidiaries) whether such
Liabilities arise before, on or after the Effective Time and whether known
or unknown, fixed or contingent, and shall include, without limitation:
(i) any and all Liabilities that are expressly contemplated by this
Agreement or the Recapitalization Agreement (or the Schedules hereto or
thereto) as Liabilities to be assumed by IMS HEALTH or any member of the
IMS HEALTH Group or to remain with IMS HEALTH or any member of the IMS
HEALTH Group and any Liabilities under this Agreement for a breach by
IMS HEALTH of any representation, warranty or covenant herein; and
(ii) any and all Liabilities which Gartner incurs solely as a
result of written information relating to IMS HEALTH or the IMS HEALTH
Business supplied by IMS HEALTH for inclusion in the Proxy Statement or
any report or document filed by Gartner with the Commission.
(mm) "Indemnifying Party" shall have the meaning set forth in Section
3.3.
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(nn) "Indemnitee" shall have the meaning set forth in Section 3.3.
(oo) "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,
the reporting to insurance carriers of any losses or claims, and the
distribution of Insurance Proceeds as contemplated by this Agreement.
(pp) "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.
(qq) "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 policy limits, deductibles,
co-insurance, uncollectibility or retrospectively-rated premium
adjustments.
(rr) "IRS" shall mean the Internal Revenue Service.
(ss) "IRS Ruling" shall have the meaning set forth in Section
2.1(b)(i).
(tt) "IRS Supplemental Ruling" shall mean a ruling from the IRS
requested by IMS HEALTH providing, among other things, that neither the
Recapitalization nor the Distribution will be taken into account in
applying Section 355(e)(2)(A)(ii) of the Code.
(uu) "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 the Recapitalization 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.
(vv) "1996 Distribution Agreement" shall mean the Distribution
Agreement among Cognizant Corporation, The Dun & Bradstreet Corporation,
which has been renamed the ▇.▇. ▇▇▇▇▇▇▇▇▇ Corporation ("RHD") and ACNielsen
Corporation ("ACNielsen") dated as of October 28, 1996.
(ww) "1998 Distribution Agreement" shall mean the Distribution
Agreement between Cognizant Corporation, which has been renamed ▇▇▇▇▇▇▇
Media Research, Inc. ("NMR"), and IMS HEALTH dated as of June 30, 1998.
(xx) "NYSE" shall mean the New York Stock Exchange, Inc.
(yy) "NYSE Listing Application" shall mean the application to be
submitted by Gartner to the NYSE for the listing of the Class B Common
Stock.
(zz) "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.
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(aaa) "Policies" shall mean insurance policies and insurance contracts
of any kind (other than life and benefits policies or contracts), including
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.
(bbb) "Proxy Statement" shall have the meaning set forth in the
Recapitalization Agreement.
(ccc) "Recapitalization" shall have the meaning set forth in the
recitals hereto.
(ddd) "Recapitalization Agreement" shall have the meaning set forth in
the recitals hereto.
(eee) "Retained Shares" shall have the meaning set forth in the
recitals hereto.
(fff) "Required Consents" shall have the meaning set forth in Section
4.5.
(ggg) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(hhh) "Share Increase" shall have the meaning set forth in the
Recapitalization Agreement.
(iii) "Shared Policies" shall mean all Policies, current or past,
which are owned or maintained by or on behalf of IMS HEALTH or any
Subsidiary of IMS HEALTH immediately prior to the Effective Time which
relate to the Gartner Business and the IMS HEALTH Business.
(jjj) "Stock Repurchase" shall have the meaning set forth in Section
2.2(b).
(kkk) "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).
(lll) "Third Party Claim" shall have the meaning set forth in Section
3.3.
(mmm) "Transition Services Agreement" shall mean the Amended and
Restated Transition Services Agreement dated as of June 30, 1998, among The
Dun & Bradstreet Corporation, The New Dun & Bradstreet Corporation, NMR,
IMS HEALTH, ACNielsen Corporation and Gartner.
(nnn) "Warrants" shall mean the Warrant dated as of November 1, 1996
and amended as of February 20, 1999 issued by Gartner exercisable for
539,460 shares of Class A Common Stock as of the date hereof and the
Warrant dated as of November 1, 1996 and amended as of February 20, 1999
issued by Gartner exercisable for 59,940 shares of Class A Common Stock as
of the date hereof.
(ooo) "Warrant Shares" shall mean the shares of Class A Common Stock
issuable by Gartner pursuant to the Warrants.
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.
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ARTICLE II.
DISTRIBUTION AND OTHER TRANSACTIONS;
CERTAIN COVENANTS AND REPRESENTATIONS AND WARRANTIES
SECTION 2.1 The Distribution and Other Transactions.
(a) The Distribution. Subject to the conditions set forth in Section 2.1(b)
of this Agreement, on the Declaration Date the Board of Directors of IMS HEALTH
shall declare the Distribution upon the terms set forth in this Agreement. To
effect the Distribution, IMS HEALTH shall cause the Distribution Agent to
distribute, on or as soon as practicable following the Distribution Date, on a
pro rata basis and taking into account Section 2.1(c), to the holders of record
of IMS HEALTH Common Stock on the Distribution Record Date, all shares of Class
B Common Stock held by IMS HEALTH on the Distribution Date. During the period
commencing on the date the certificates representing shares of Class B Common
Stock are delivered to the Distribution Agent and ending upon the date(s) on
which certificates evidencing such shares are mailed to holders of record of IMS
HEALTH Common Stock on the Distribution Record Date or on which fractional
shares of Class B Common Stock are sold on behalf of such holders, the
Distribution Agent shall hold the certificates representing shares of Class B
Common Stock on behalf of such holders. IMS HEALTH shall deliver to the Agent
the share certificates representing the shares of Class B Common Stock held by
IMS HEALTH which are to be distributed to the holders of IMS HEALTH Common Stock
in the Distribution. IMS HEALTH agrees to reimburse the Distribution Agent for
its reasonable costs, expenses and fees in connection with the Distribution.
Gartner agrees, if required by IMS HEALTH, to provide all certificates
evidencing shares of Class B Common Stock that IMS HEALTH shall require in order
to effect the Distribution.
(b) Conditions to the Distribution. The IMS HEALTH Board of Directors shall
declare the Distribution on the Declaration Date following the satisfaction or
waiver by IMS HEALTH, as determined by IMS HEALTH in its sole discretion, of the
conditions set forth below:
(i) The private letter ruling received from the IRS providing that,
among other things, the Recapitalization and the Distribution will qualify
as tax-free transactions for federal income tax purposes under Sections 354
and 355 of the Code, respectively (the "IRS Ruling") shall continue in
effect; and IMS HEALTH and Gartner shall have complied with all provisions
set forth in the IRS Ruling, the request for the IRS Supplemental Ruling
and, if granted prior to such time, the IRS Supplemental Ruling, in each
case, that are required to be complied with prior to the Declaration Date;
(ii) Any material governmental approvals and consents necessary to
consummate the Distribution and the other transactions contemplated hereby
and by the Recapitalization Agreement shall have been obtained and shall be
in full force and effect;
(iii) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Distribution and the other transactions
contemplated hereby and by the Recapitalization Agreement shall be in
effect and no other event outside the control of IMS HEALTH shall have
occurred or failed to occur that prevents the lawful consummation of the
Distribution;
(iv) The Recapitalization, the Cash Dividend, the Stock Repurchase and
the Distribution shall be in compliance with applicable federal and state
securities and other applicable laws;
(v) Each of Gartner and IMS HEALTH shall have received all the
Required Consents;
(vi) All conditions to the Recapitalization shall have been satisfied
or waived and no circumstances shall exist that would reasonably be
expected to prevent the consummation of the Recapitalization immediately
following the declaration of the Distribution;
(vii) The Cash Dividend shall be declared by the Board of Directors of
Gartner substantially simultaneously with the declaration of the
Distribution and no circumstances shall exist that would reasonably be
expected to prevent the prompt payment of the Cash Dividend;
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(viii) The Stock Repurchase shall have been authorized and not revoked
by the Board of Directors of Gartner, or shall be so authorized
simultaneously with the declaration of the Distribution and shall be
committed to by Gartner to the satisfaction of IMS HEALTH;
(ix) The Form 8-A shall have been filed with the Commission and there
shall be no impediment to the certification by the NYSE to the Commission
of the listing of the Class B Common Stock;
(x) The Class B Common Stock shall have been approved for listing on
the NYSE, subject to official notice of issuance;
(xi) Each of the representations and warranties of Gartner set forth
in this Agreement shall have been true and correct in all material respects
when made and shall be true and correct in all material respects as of the
Declaration Date; and Gartner shall have performed or complied in all
material respects with all agreements and covenants required to be
performed by it under this Agreement and the Recapitalization Agreement at
or prior to the Declaration Date; and IMS HEALTH shall have received a
certificate of the chief executive officer of Gartner as to the foregoing;
(xii) IMS HEALTH shall have received copies of the Financing
Commitments from Gartner, Gartner shall have complied with Section 2.3
hereof, and IMS HEALTH, acting reasonably, shall be satisfied that funds
available pursuant to such Financing Commitments, together with funds
internally available to Gartner, shall be sufficient to consummate the Cash
Dividend and the Stock Repurchase;
(xiii) All actions and other documents and instruments reasonably
necessary in connection with the transactions contemplated hereby shall
have been taken or executed, as the case may be, in form and substance
reasonably satisfactory to IMS HEALTH; and
The foregoing conditions are for the sole benefit of IMS HEALTH and shall not
give rise to or create any duty on the part of IMS HEALTH to waive or not waive
any such condition.
(c) Sale of Fractional Shares. IMS HEALTH shall appoint the Distribution
Agent as agent for each holder of record of IMS HEALTH Common Stock who would
receive in the Distribution any fractional share of Class B Common Stock. The
Distribution Agent shall aggregate all such fractional shares and sell them in
an orderly manner after the Distribution Date in the open market and, after
completion of such sales, distribute a pro rata portion of the net proceeds from
such sales, based upon the gross selling price of all such fractional shares net
of all selling expenses, to each stockholder of IMS HEALTH who would otherwise
have received a fractional share. IMS HEALTH shall reimburse the Distribution
Agent for its reasonable costs, expenses and fees (other than selling expenses)
in connection with the sale of fractional shares of Class B Common Stock and the
distribution of the proceeds thereof in accordance with this Section 2.1(c).
(d) Undertaking of Gartner. On or prior to the Distribution Date, Gartner
will undertake (i) to each of RHD and ACNielsen 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(d)(i) hereto, and (ii) to ▇▇▇▇▇▇▇ Media
Research, Inc. ("NMR") 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(d)(ii) hereto. IMS HEALTH (together with its successors and
permitted assigns, jointly and severally) will indemnify Gartner against any and
all liabilities to RHD, ACNielsen and NMR (including fees and expenses of
counsel, which will be reimbursed as incurred) which Gartner or its successors
and permitted assigns may become subject as a result of the undertakings
referred to herein. This provision is not intended to limit in any respect any
of Gartner's obligations under Section 3.1 hereof with respect to Gartner
Liabilities.
(e) Other Actions. (i) IMS HEALTH shall prepare and mail, at such time as
determined by IMS HEALTH, to the holders of IMS HEALTH Common Stock, such
information concerning Gartner, its business, operations and management, the
Distribution and the tax consequences thereof and such other matters as IMS
HEALTH shall reasonably determine or as may be required by law. IMS HEALTH shall
give Gartner and its counsel reasonably appropriate advance opportunity to
review such document and shall consider in good faith any comments Gartner
timely delivers to IMS HEALTH with respect to such
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information. Gartner agrees to cooperate with IMS HEALTH in the preparation of,
and provide any information reasonably requested by IMS HEALTH for inclusion in,
such mailing. Gartner shall cause its officers to certify in writing to IMS
HEALTH that all information provided to IMS HEALTH for such mailing is true and
accurate in all material respects. IMS HEALTH and Gartner will prepare, and
Gartner will, to the extent required under applicable law, file with the
Commission any such documentation, including any no action letters or other
requests for interpretive or regulatory assistance, if any, which IMS HEALTH and
Gartner reasonably determine are necessary or desirable to effectuate the
Distribution and the other transactions contemplated hereby and by the
Recapitalization Agreement and IMS HEALTH and Gartner shall each use its
commercially reasonable efforts to obtain all necessary approvals from the
Commission with respect thereto as soon as practicable.
(ii) IMS HEALTH and Gartner shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of the
United States (and any comparable laws under any foreign jurisdiction) in
connection with the Distribution and the other transactions contemplated
hereby and by the Recapitalization Agreement.
(iii) Gartner shall prepare and file, and shall use its commercially
reasonable efforts to have approved, an application for the listing on the
NYSE of the Class B Common Stock to be distributed in the Distribution,
subject to official notice of issuance. IMS HEALTH shall provide, upon
request by Gartner, information reasonably necessary to Gartner for its
preparation and filing of such application.
(iv) Subject to Section 2.1(e)(vii), Gartner shall prepare and file
the Form 8-A (which may include or incorporate by reference information
contained in the Proxy Statement) with the Commission as promptly as
practicable following the execution hereof, and shall use its commercially
reasonable efforts to cause the Form 8-A to become effective under the
Exchange Act immediately following the consummation of the Recapitalization
or as soon thereafter as practicable. IMS HEALTH shall provide, upon
request by Gartner, information reasonably necessary to Gartner for its
preparation and filing of such Form 8-A.
(v) On or prior to the Distribution Date, each of IMS HEALTH and
Gartner shall take those actions and consummate those other transactions in
connection with the Distribution that are contemplated by the IRS Ruling,
the ruling request therefor or any related submissions by IMS HEALTH to the
IRS (which shall have been reviewed by Gartner), including, to the extent
applicable, the IRS Supplemental Ruling and the request therefor.
(vi) In addition to those matters specifically set forth above, IMS
HEALTH and Gartner also shall take all reasonable steps necessary and
appropriate to cause the conditions set forth in Section 2.1(b) to be
satisfied and to effect the Distribution on the Distribution Date.
(vii) Until the Distribution Date, Gartner agrees that prior to filing
with the Commission any report or other document that contains any
disclosure relating to the Distribution, this Agreement, the
Recapitalization Agreement or any of the transactions contemplated hereby
or thereby, it shall give IMS HEALTH and its counsel reasonably appropriate
advance opportunity to review such report or other document and shall
consider in good faith any comments IMS HEALTH may deliver to Gartner with
respect to or for inclusion in such report or document.
(viii) Prior to the Distribution Date, Gartner shall not amend, and
the Gartner Board of Directors shall not approve any amendment to,
Gartner's restated Certificate of Incorporation or By-Laws, other than the
amendments that will take effect upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware in connection
with the Recapitalization in accordance with the terms of the
Recapitalization Agreement.
(ix) IMS HEALTH agrees to be present in person or by proxy at each and
every stockholders meeting of Gartner at which the Recapitalization, the
Governance Provisions and the Share Increase (each as defined in the
Recapitalization Agreement) are submitted to the stockholders of Gartner
for consideration at such meeting, and to vote, or cause to be voted, all
shares of Gartner Class A Common Stock owned directly or indirectly by it
and its Subsidiaries in favor of the Recapitalization, the
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Governance Provisions and the Share Increase; provided that the Governance
Provisions and the Share Increase are to become effective solely upon the
effectiveness of the Merger; and similarly to execute any written consent
submitted to stockholders by Gartner in favor of the Recapitalization, the
Governance Provisions and the Share Increase.
(x) Effective upon the consummation of the Distribution, the
Stockholder's Agreement dated as of March 19, 1993, between Gartner and The
Dun & Bradstreet Corporation and the Amended and Restated Registration
Agreement dated as of March 19, 1993, among Gartner, The Dun & Bradstreet
Corporation, D&B Enterprises, Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall each
automatically terminate and become void and of no further force or effect.
(xi) Except as expressly provided otherwise herein, all agreements and
arrangements existing on the date hereof between IMS HEALTH or any of its
Subsidiaries on the one hand and Gartner and any of its Subsidiaries on the
other hand, whether written or oral, including those relating to the
purchase and sale of products and services, shall continue in full force
and effect in accordance with their terms and consistent with past practice
from the date hereof, through the Distribution Date and thereafter.
(xii) Nothing contained in this Agreement shall in any way affect the
relative rights and liabilities of the parties to the Dataquest Agreement.
SECTION 2.2 The Cash Dividend and the Stock Repurchase.
(a) The Cash Dividend. Subject to the conditions set forth in Section
2.2(c) of this Agreement, on the Declaration Date the Board of Directors of
Gartner shall declare a pro rata cash dividend to all holders of record of
Gartner Common Stock as of the Cash Dividend Record Date in the aggregate amount
of $125 million (the "Cash Dividend").
(b) Stock Repurchase. Subject to the conditions set forth in Section 2.2(c)
of this Agreement, Gartner shall, as soon as practicable following completion of
the Recapitalization and the Distribution, in compliance with the rules and
regulations of the Commission, including Regulation 13E under the Exchange Act,
commence a "Dutch auction" tender offer (the "Self Tender Offer") for a number
of shares of Class A Common Stock and Class B Common Stock in the aggregate
equal to at least 15% of the total number of shares of Gartner Common Stock
outstanding immediately following the Distribution (the "Minimum Self Tender
Amount"), with such purchases allocated between shares of Class A Common Stock
and Class B Common Stock on a pro rata basis based on the relative numbers of
shares of such classes outstanding immediately following the Distribution ("Pro
Rata"). Subject to the previous sentence, Gartner shall acquire all shares
properly tendered in response to such Self Tender Offer as promptly as
practicable following commencement thereof, subject to reasonable and customary
conditions and other terms and reasonable range of purchase prices based on
recent trading prices of Gartner Class A and Class B Common Stock, which
conditions, terms and ranges shall be determined by the Board of Directors of
Gartner in good faith. Subject to the conditions set forth in Section 2.2(c) of
this Agreement, Gartner shall, as soon as practicable following completion of
the Self Tender Offer, in compliance with the rules and regulations of the
Commission, including Rule 10b-18 under the Exchange Act, purchase through an
open-market stock purchase program an amount of shares of Common Stock equal to
(i) 4.99% of the number of shares of Gartner Common Stock plus or minus (ii) the
amount, if any, by which the Minimum Self Tender Amount is less than or exceeds,
respectively, the number of shares of Gartner Common Stock actually purchased in
the Self Tender Offer (the "Minimum Open Market Amount"), with such purchases
allocated Pro Rata between shares of Class A Common Stock and Class B Common
Stock (the "Open Market Repurchase Program" and, together with the Self Tender
Offer, the "Stock Repurchase"). Gartner shall commence the Open Market
Repurchase Program as promptly as practicable (subject to market conditions)
after the Self Tender Offer and shall in any event complete the Open Market
Repurchase Program in an orderly manner within two years after the Distribution
Date. Gartner agrees that it will not repurchase any shares of Class A Common
Stock or Class B Common Stock in the Self Tender Offer beneficially owned by any
of its directors or officers and will not knowingly repurchase any shares of
Class A Common Stock or Class B Common Stock in the Stock Repurchase
beneficially owned by any of its directors or officers (it being understood that
in the case of the
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Open Market Repurchase Program effected through brokers, Gartner shall be deemed
not to have knowledge of the identity of any seller).
(c) Conditions of the Cash Dividend and Stock Repurchase. The obligation of
the Board of Directors of Gartner to declare the Cash Dividend on the
Declaration Date and consummate the Stock Repurchase following completion of the
Recapitalization and the declaration of the Distribution shall be conditioned
upon the satisfaction or waiver by Gartner, as determined by Gartner in its sole
discretion, of the following conditions:
(i) The IRS Ruling shall continue in effect; and IMS HEALTH shall have
complied with all provisions set forth in the IRS Ruling, the request for
the IRS Supplemental Ruling and, if granted prior to such time, the IRS
Supplemental Ruling that, in each case, are required to be complied with by
it prior to the Declaration Date;
(ii) All conditions to the Recapitalization shall have been satisfied
or waived and no circumstances shall exist that would reasonably be
expected to prevent the consummation of the Recapitalization immediately
following the declaration of the Cash Dividend;
(iii) The Distribution shall be declared by the Board of Directors of
IMS HEALTH substantially simultaneously with the declaration of the Cash
Dividend and no circumstances shall exist that would reasonably be expected
to prevent the prompt consummation of the Distribution;
(iv) Any material governmental approvals and consents necessary to
consummate the Cash Dividend or the Stock Repurchase, as the case may be,
shall have been obtained and shall be in full force and effect;
(v) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition in each case
preventing the consummation of the Cash Dividend, the Stock Repurchase or
the Distribution shall be in effect, and no other event outside the control
of Gartner shall have occurred or failed to occur that prevents the lawful
consummation of the Cash Dividend, the Stock Repurchase or the
Distribution;
(vi) The Recapitalization, the Cash Dividend, the Stock Repurchase and
the Distribution shall be in compliance with applicable federal and state
securities and other applicable laws;
(vii) The Form 8-A shall have been filed with the Commission and there
shall be no impediment to the certification by NYSE to the Commission of
the listing of the Class B Common Stock;
(viii) The Class B Common Stock shall have been approved for listing
on the NYSE, subject to official notice of issuance;
(ix) Each of the representations and warranties of IMS HEALTH set
forth in this Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material respects
as of the Declaration Date; and IMS HEALTH shall have performed or complied
in all material respects with all agreements and covenants required to be
performed by it under this Agreement and the Recapitalization Agreement at
or prior to the Declaration Date; and Gartner shall have received a
certificate of the chief executive officer of IMS HEALTH as to the
foregoing;
(x) All actions and other documents and instruments reasonably
necessary in connection with the transactions contemplated hereby shall
have been taken or executed, as the case may be, in form and substance
reasonably satisfactory to Gartner; and
(xi) Each of Gartner and IMS HEALTH shall have received all the
Required Consents.
The foregoing conditions are for the sole benefit of Gartner and shall not give
rise to or create any duty on the part of Gartner to waive or not waive any such
condition.
(d) Certain Limitations on Expenditures by Gartner. Until such time as the
Cash Dividend is paid to Gartner's stockholders, Gartner shall not, and shall
not permit any of its Subsidiaries to, without the prior written consent of IMS
HEALTH, (i) pay any other cash dividends on any of its capital stock,
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(ii) repurchase any shares of its capital stock, except purchases necessary to
offset (x) exercises of pre-existing employee stock options and (y) stock
issuances under Gartner's Employee Stock Purchase Plan, or (iii) acquire any
Assets or securities or make any capital expenditures which, when aggregated
with any acquisition of Assets or securities or capital expenditures made since
November 12, 1998, utilize more than $120 million in cash in the aggregate,
excluding (1) transfers between Gartner and any direct or indirect wholly-owned
Subsidiary of Gartner or between direct or indirect wholly-owned Subsidiaries of
Gartner, (2) cash payments under Net Share-Settled Forward Purchase Contracts
entered into with DMG Securities as set forth in Schedule 2.2(d) into prior to
November 12, 1998 and not amended subsequent to such date and (3) up to $30
million of capital contributions to investments by the venture fund known as the
SI Fund, of which Gartner is the sole limited partner.
SECTION 2.3 Financing.
(a) Gartner hereby represents and warrants to IMS HEALTH that it has
secured financing commitments which, when added to its available cash and
reasonably anticipated cash flow through the Declaration Date, will permit
payment of the Cash Dividend and the completion of the Stock Repurchase, with
sufficient cash available to meet the needs of Gartner's business, and which are
subject only to customary conditions (the "Financing Commitments") and has
provided copies of such Financing Commitments to IMS HEALTH.
(b) As promptly as practical following the date hereof, Gartner shall
negotiate and execute definitive loan agreements for the financing contemplated
by the Financing Commitments, which agreements shall make the funds to be
borrowed thereunder available to Gartner with only customary conditions. Gartner
shall provide copies of such loan agreements to IMS HEALTH and shall provide
such other documents and information in connection therewith as IMS HEALTH shall
reasonably request.
(c) Gartner shall be responsible for all fees and expenses of the lenders
and other advisors in obtaining the Financing Commitments; provided, however,
that, in the event the Financing Commitments are obtained more than 60 days in
advance of the payment date for the Cash Dividend, IMS HEALTH shall be
responsible for one-half of the amount by which the commitment fee for the
Financing Commitments exceeds the commitment fee that would have been payable
under the Financing Commitments if they were obtained 60 days in advance of the
payment date for the Cash Dividend.
SECTION 2.4 Certain Limitations on Actions by IMS HEALTH. The parties
agree that under the IRS Ruling IMS HEALTH is obligated to dispose of the
Retained Shares and the Warrant Shares as quickly as feasible and in this regard
the parties agree that, subject to representations and undertakings made by IMS
HEALTH after the date hereof in order to obtain the IRS Supplemental Ruling,
(a) IMS HEALTH (i) shall not sell, transfer or otherwise dispose of,
or issue any derivative security with respect to, the Retained Shares or
the Warrant Shares for the period of 90 days following the Distribution
Date and (ii) thereafter will not sell, transfer or otherwise dispose of,
or issue any derivative security with respect to any Retained Shares or
Warrant Shares, except (x) sales on the NYSE of Retained Shares or Warrant
Shares in an amount (collectively) in any day in excess of 25% of the
average daily trading volume of the Gartner Common Stock for the
immediately preceding four weeks as reported on the NYSE composite tape
(excluding shares sold, transferred or otherwise disposed of on the NYSE by
IMS HEALTH or as to which IMS HEALTH issues a derivative security that
trades on the NYSE, in each case, during such four week period), (y) in
transactions which the parties agree in good faith would not reasonably be
expected to have an adverse impact on the trading prices of the Gartner
Common Stock as reported on the NYSE composite tape and (z) sales of shares
to any institutional investor who agrees in writing not to sell, transfer
or otherwise dispose of, or issue any derivative security with respect to,
such shares until the later of 30 days from the date of such sale or the
one year anniversary of the Declaration Date; and
(b) following the Distribution, in all matters requiring a vote of the
holders of Class A Common Stock at any stockholder meeting or by written
consent of the stockholders for such time as IMS
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HEALTH holds the Retained Shares, IMS HEALTH will vote the Retained Shares
and any Warrant Shares in proportion to the votes cast by all other holders
of Class A Common Stock voting.
SECTION 2.5 Declaration Date; Further Assurances. (a) The parties agree
that the Declaration Date shall occur as soon as reasonably practicable
following the satisfaction or waiver of the conditions to the declaration of the
Distribution set forth in Section 2.1(b) (other than the declaration of the Cash
Dividend) and the conditions to the declaration of the Cash Dividend set forth
in Section 2.2(c) (other than the declaration of the Distribution). The parties
shall cause their respective Boards of Directors to meet telephonically or at
the same location on the Declaration Date and each shall take such corporate
action at such meeting as shall be required to effect the transactions
contemplated hereby and by the Recapitalization Agreement. Immediately following
such meetings, Gartner shall take all actions required to consummate the
Recapitalization in accordance with the terms of the Recapitalization Agreement,
including the filing of the Certificate of Merger relating to the
Recapitalization with the Secretary of State of the State of Delaware.
(b) In case at any time after the date hereof any further action is
reasonably necessary or desirable to carry out the Recapitalization, Cash
Dividend, Distribution or Stock Repurchase or any other purpose of this
Agreement or the Recapitalization Agreement, the proper officers of each party
to this Agreement shall take all such necessary action. Without limiting the
foregoing, IMS HEALTH and Gartner shall use their commercially reasonable
efforts promptly to obtain all consents and approvals, to enter into all
amendatory agreements and to make all filings and applications that may be
required for the consummation of the transactions contemplated by this Agreement
and the Recapitalization Agreement, including all applicable governmental and
regulatory filings.
SECTION 2.6 Representations and Warranties. (a) Gartner hereby represents
and warrants to IMS HEALTH as follows:
(i) Organization; Good Standing. Gartner is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate power required to consummate the
transactions contemplated hereby and by the Recapitalization Agreement.
(ii) Authorization. The execution, delivery and performance by Gartner
of this Agreement and the Recapitalization Agreement and the consummation
by Gartner of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Gartner,
other than the formal declaration of the Cash Dividend, formal initiation
of the Stock Repurchase and the approval of the Recapitalization by the
stockholders of Gartner. Each of this Agreement and the Recapitalization
Agreement constitutes, and each other agreement or instrument executed and
delivered or to be executed and delivered by Gartner pursuant to this
Agreement or the Recapitalization Agreement will, upon such execution and
delivery, constitute, a legal, valid and binding obligation of Gartner,
enforceable against Gartner in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(iii) Consents and Filings. Except (w) for the NYSE Listing
Application, (x) the IRS Ruling, (y) as required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and (z) for the filing of the Proxy Statement and the Form 8-A and
any other reports or documents required to be filed under the Exchange Act,
no consent of, or filing with, any Governmental Entity which has not been
obtained or made is required for or in connection with the execution and
delivery of this Agreement or the Recapitalization Agreement by Gartner,
and the consummation by Gartner of the transactions contemplated hereby or
thereby.
(iv) Noncontravention. The execution, delivery and performance of this
Agreement and the Recapitalization Agreement by Gartner does not, and the
consummation by Gartner of the transactions contemplated hereby and thereby
will not, (x) violate any applicable federal, state or local statute, law,
rule or regulation, (y) violate any provision of the Certificate of
Incorporation or By-Laws of Gartner, or (z) violate any provision of, or
result in the termination or acceleration of, or entitle any party to
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accelerate any obligation or indebtedness under, any mortgage, lease,
franchise, license, permit, agreement, instrument, law, order, arbitration
award, judgment or decree to which Gartner or any of its Subsidiaries is a
party or by which any of them are bound.
(v) Litigation. There are no actions or suits against Gartner pending,
or to the knowledge of Gartner, threatened which seek to, and Gartner is
not subject to any judgments, decrees or orders which, enjoin or rescind
the transactions contemplated by this Agreement or the Recapitalization
Agreement or otherwise prevent Gartner from complying with the terms and
provisions of this Agreement or the Recapitalization Agreement.
(vi) Change of Control Adjustments. None of the Recapitalization, Cash
Dividend, Stock Repurchase or Distribution or any of the other transactions
contemplated hereby or by the Recapitalization Agreement will constitute a
"change of control" or otherwise result in the increase or acceleration of
any benefits, including to employees of Gartner, under any agreement to
which Gartner or any of its Subsidiaries is a party or by which it or any
of its Subsidiaries is bound.
(vii) Surplus and Solvency. Gartner has on the date hereof, and at the
Declaration Date and the Cash Dividend Date will have, surplus (as defined
in and computed in accordance with Sections 154 and 244 of the DGCL) in
excess of the amounts of cash required to effect the Cash Dividend and
Stock Repurchase. Gartner is on the date hereof, and immediately after the
payment of the Cash Dividend will be, and at all times during the period it
is effecting the Stock Repurchase will be, Solvent. For purposes of this
Section 2.7(a)(vii), "Solvent" means, at any date of determination, (x) the
fair saleable value of Gartner's consolidated assets will exceed Gartner's
consolidated liabilities as of such date, (y) Gartner will not have as of
such date an unreasonably small amount of capital with which to conduct its
business and (z) Gartner will be able to pay its debts as they mature.
(viii) Certain Transactions. Except for transactions or other actions
that occurred prior to July 1, 1997 or that are described in Schedule
2.6(a), neither Gartner nor any other member of the Gartner Group has
engaged in any transaction or taken any other action through the date
hereof involving or relating to the stock of Gartner or options, warrants
or other rights to acquire stock of Gartner. None of the transactions and
other actions described in Schedule 2.6(a) which occurred prior to October
1, 1998 (the "Proposal Date") were undertaken by Gartner in contemplation
of the Distribution or are related to the Distribution (the parties agree
that the concept of the Distribution was solely conceived by IMS HEALTH and
first communicated to Gartner on the Proposal Date), and all transactions
and actions by Gartner described in Schedule 2.6(a) which occurred between
the Proposal Date and the date hereof were undertaken in the ordinary
course of business, and if other than compensatory stock plan issuances,
were pursuant to a letter of intent which was executed by Gartner prior to
the Proposal Date.
(b) IMS HEALTH hereby represents and warrants to Gartner as follows:
(i) Organization; Good Standing. IMS HEALTH is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate power required to consummate the
transactions contemplated hereby and by the Recapitalization Agreement.
(ii) Authorization. The execution, delivery and performance by IMS
HEALTH of this Agreement and the Recapitalization Agreement and the
consummation by IMS HEALTH of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of IMS HEALTH, other than the formal declaration of the Distribution.
Each of this Agreement and the Recapitalization Agreement constitutes, and
each other agreement or instrument executed and delivered or to be executed
and delivered by IMS HEALTH pursuant to this Agreement will, upon such
execution and delivery, constitute, a legal, valid and binding obligation
of IMS HEALTH, enforceable against IMS HEALTH in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
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(iii) Consents and Filings. Except (x) for the IRS Ruling, and (y) as
required under the HSR Act and any other reports or documents required to
be filed under the Exchange Act, no material consent of, or filing with,
any Governmental Entity which has not been obtained or made is required to
be obtained or made by IMS HEALTH for or in connection with the execution
and delivery of this Agreement or the Recapitalization Agreement by IMS
HEALTH, and the consummation by IMS HEALTH of the transactions contemplated
hereby or thereby.
(iv) Noncontravention. The execution, delivery and performance of this
Agreement and the Recapitalization Agreement by IMS HEALTH does not, and
the consummation by IMS HEALTH of the transactions contemplated hereby and
thereby will not, (x) violate any applicable federal, state or local
statute, law, rule or regulation, (y) violate any provision of the
Certificate of Incorporation or By-Laws of IMS HEALTH or (z) violate any
provision of, or result in the termination or acceleration of, or entitle
any party to accelerate any obligation or indebtedness under, any mortgage,
lease, franchise, license, permit, agreement, instrument, law, order,
arbitration award, judgment or decree to which IMS HEALTH or any of its
Subsidiaries is a party or by which any of them are bound.
(v) Litigation. There are no actions or suits against IMS HEALTH
pending, or to the knowledge of IMS HEALTH, threatened which seek to, and
IMS HEALTH is not subject to any judgments, decrees or orders which, enjoin
or rescind the transactions contemplated by this Agreement or the
Recapitalization Agreement or otherwise prevent IMS HEALTH from complying
with the terms and provisions of this Agreement or the Recapitalization
Agreement.
SECTION 2.7. Certain Post-Distribution Transactions. (a)(i) Gartner and
IMS HEALTH shall each comply and shall cause its Subsidiaries to comply with and
otherwise not take action inconsistent with each representation made by such
respective party to the IRS in connection with the requests by IMS HEALTH for
the IRS Ruling and the IRS Supplemental Ruling, if any, and (ii) until two years
after the Distribution Date, Gartner 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) If Gartner (or any of its Subsidiaries) fails to comply with any of its
obligations under Section 2.7(a) above or takes any action or fails to take any
required action, and such failure to comply, action or omission contributes to a
determination that the Distribution fails to qualify under Section 355(a) of the
Code or that the Gartner 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 Gartner shall indemnify and hold harmless IMS HEALTH and each member
of the consolidated group of which IMS HEALTH is a member and the shareholders
of IMS HEALTH from and against any and all federal, state and local taxes,
including any interest, penalties or additions to tax, imposed upon or incurred
by IMS HEALTH, any member of its group or any stockholder of IMS HEALTH 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) (any such tax, interest, penalty or
addition to tax, an "IMS HEALTH Tax Liability"); provided however that,
notwithstanding any other provision of this Agreement, Gartner shall not be
required to indemnify and hold harmless, and shall have no liability to, IMS
HEALTH or any member of the consolidated group of which IMS HEALTH is a member
or any stockholder of IMS Health for any such IMS HEALTH Tax Liability imposed
or incurred (or that would have been imposed or incurred) solely as a result of
(i) the Recapitalization and the Distribution,
(ii) sales or other dispositions of Gartner Common Stock or warrants
to purchase Gartner Common Stock by IMS HEALTH or any affiliate or IMS
HEALTH after the Distribution Date,
(iii) repurchases by Gartner pursuant to and in compliance with
Section 2.2(b) of this Agreement or the repurchases that are set forth in
the IRS Ruling, or the request for the IRS Supplemental Ruling or, if
granted at such time, the IRS Supplemental Ruling or any other IRS ruling
that may be obtained by IMS HEALTH substantially similar to the requested
IRS Supplemental Ruling,
(iv) issuances by Gartner after the date hereof through the second
anniversary of the Distribution Date of stock options and other stock
awards under compensatory stock programs, in the ordinary course
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of business and consistent with past practice, to acquire an amount of
Class A Common Stock equal to or less than 4% of the outstanding Gartner
Common Stock on the date hereof,
(v) issuances by Gartner after the second anniversary of the
Distribution Date of stock options and other stock awards under
compensatory stock programs, unless, in the case of any such issuance, such
issuance was pursuant to a plan, undertaking or understanding adopted or
entered into during such two-year period and not exempt under clause (iv)
hereof,
(vi) issuances by Gartner of Class A Common Stock after the date
hereof pursuant to the exercise of outstanding stock options and other
rights under compensatory stock programs existing at the date hereof,
(vii) issuances by Gartner of Class A Common Stock after the date
hereof pursuant to the exercise of stock options and other rights referred
to in clauses (iv) or (v) hereof,
(viii) issuances by Gartner of Class A Common Stock after the date
hereof and within two years following the Distribution Date (other than
issuances excluded under clauses (vi) or (vii)) that, in the aggregate,
amount to 1% or less of the outstanding Gartner Common Stock on the date
hereof,
(ix) issuances by Gartner of Class A Common Stock after the second
anniversary of the Distribution Date, unless, in the case of any such
issuance, such issuance was pursuant to a plan, undertaking or
understanding adopted or entered into during such two-year period and not
exempt under clause (viii) hereof,
(x) transactions prior to the date hereof that are described in
Schedule 2.6(a),
(xi) transactions or any series of related transactions in Gartner
Common Stock before or after the Distribution Date by any person or group
(as defined under the Exchange Act) unless such transactions result in such
person or group acquiring holdings of Gartner capital stock sufficient to
allow such person or group to elect a majority of the Board of Directors of
Gartner,
(xii) issuances of Gartner Common Stock upon any exercise or exercises
of the Warrants,
(xiii) dispositions of shares of Gartner Common Stock by the holders
thereof, or
(xiv) any combination of the transactions described in clauses (i)
through (xiii) of this Section 2.7(b).
Notwithstanding the foregoing, Gartner shall not indemnify IMS HEALTH for
any IMS HEALTH Tax Liability that results from any inaccuracy or incompleteness
in any representation made by IMS HEALTH to the IRS in connection with the
requests for the IRS Ruling or the IRS Supplemental Ruling or failure by IMS
HEALTH to comply with any representation or undertaking by IMS HEALTH to the IRS
in connection with the IRS Ruling, the IRS Supplemental Ruling or any requests
therefor.
(c) In the event the IRS Supplemental Ruling is issued providing that
grants and exercises of stock options and other stock rights under compensatory
benefit plans of Gartner will not be taken into account in applying Section
355(e)(2)(A)(ii) (the "Stock Award Relief"), then (i) the limitation of Section
2.7(b)(iv) shall be expanded to permit the unlimited grant of stock options and
other stock awards after the date hereof in the ordinary course of business and
(ii) the limitation on issuances of Class A Common Stock in Section 2.7(b)(viii)
shall be expanded from 1% or less to 3.5% or less of the outstanding Gartner
Common Stock on the Distribution Date. Gartner agrees not to seek any private
letter ruling seeking the relief sought in the IRS Supplemental Ruling request
other than a private letter ruling (i) seeking the Stock Award Relief or (ii)
providing that section (b)(4)(B) of the certificate of incorporation of Gartner
to be effective upon consummation of the Recapitalization, which relates to the
voting ability of any person or group beneficially owning 15% of more of the
outstanding shares of the Class B Common Stock, will not have any adverse effect
on the IRS Ruling and any other private letter ruling issued by the IRS to IMS
HEALTH or any predecessor or former parent of IMS HEALTH. Subject to the last
sentence of this Section 2.7(c), in the event a private letter ruling is issued
by the IRS to Gartner providing the Stock Award Relief and such ruling is in
form and substance satisfactory to IMS HEALTH in its good faith judgment, then
(i) the limitation of
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Section 2.7(b)(iv) shall be expanded to permit the unlimited grant of stock
options and other stock awards after the date hereof in the ordinary course of
business and (ii) the limitation on issuances of Class A Common Stock in Section
2.7(b)(viii) shall be expanded from 1% or less to 3.5% or less of the
outstanding Gartner Common Stock on the date hereof. In no event shall Gartner
file with, or otherwise make to, the IRS a request for a private letter ruling
providing for the Stock Award Relief prior to the Distribution Date.
ARTICLE III.
INDEMNIFICATION
SECTION 3.1 Indemnification by Gartner. (a) Gartner shall indemnify,
defend and hold harmless the IMS HEALTH Indemnitees from and against any and all
Gartner Liabilities or third party allegations of Gartner Liabilities.
(b) Gartner shall indemnify, defend and hold harmless the IMS HEALTH
Indemnitees and the shareholders of IMS HEALTH from and against any liability of
any member of the IMS HEALTH Group or any shareholder of IMS HEALTH arising from
any inaccuracy in, or failure by Gartner to comply with, any representation made
by Gartner to the IRS in connection with the requests by IMS HEALTH for the IRS
Ruling and the IRS Supplemental Ruling; provided, however, that, notwithstanding
the foregoing, Gartner shall not indemnify IMS HEALTH, any IMS HEALTH Indemnitee
or any shareholder of IMS HEALTH for any liability that results from any
inaccuracy or incompleteness in any representation made by IMS HEALTH to the IRS
in connection with requests for the IRS Ruling or the IRS Supplemental Ruling or
failure by IMS HEALTH to comply with any representation made by IMS HEALTH to
the IRS in connection with the requests for the IRS Ruling or the IRS
Supplemental Ruling.
SECTION 3.2 Indemnification by IMS HEALTH. (a) Except as otherwise
specifically set forth in any provision of this Agreement, IMS HEALTH shall
indemnify, defend and hold harmless the Gartner Indemnitees from and against any
and all IMS HEALTH Liabilities or third party allegations of IMS HEALTH
Liabilities.
(b) IMS HEALTH shall indemnify, defend and hold harmless the Gartner
Indemnitees from and against (i) any and all federal, state and local taxes,
including any interest, penalties or additions to tax, that result solely from
the Recapitalization or from the application of Treasury Regulation Section
1.1502-6 or any similar provision of state, local or other tax law and (ii) any
liability of any member of the Gartner Group arising solely from any inaccuracy
in, or failure by IMS Health to comply with, any representation made by IMS
Health to the IRS in connection with the requests by IMS Health for the IRS
Ruling and the IRS Supplemental Ruling; provided, however, that, notwithstanding
the foregoing, IMS HEALTH shall not indemnify Gartner or any Gartner Indemnitee
for any liability that results from any inaccuracy or incompleteness in any
representation made by Gartner to the IRS in connection with requests for the
IRS Ruling or the IRS Supplemental Ruling or failure by Gartner to comply with
any representation made by Gartner to the IRS in connection with the requests
for the IRS Ruling or the IRS Supplemental Ruling.
SECTION 3.3 Procedures for Indemnification in Third Party Claims.
(a) Third Party Claims. If a claim or demand is made against a Gartner
Indemnitee or an IMS HEALTH 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 the
terms 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 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 business days) after the Indemnitee's receipt
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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 with respect to which
a claim for indemnification is made pursuant to Section 3.1 or Section 3.2
hereof, 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 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.
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 (which will not be unreasonably withheld);
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 (as between the Indemnifying Party and the
Indemnitee), 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.
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(b) Subrogation. 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) Remedies Not Exclusive. 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.
ARTICLE IV.
COVENANTS
SECTION 4.1 Access to Information. (a) 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 Gartner and IMS HEALTH 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 such other
party's performance of its obligations under this Agreement or the
Recapitalization Agreement or such party's financial, tax and other reporting
obligations.
(b) A party providing information 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 information or access to information.
SECTION 4.2 Confidentiality. Each of Gartner and its Subsidiaries and IMS
HEALTH and its Subsidiaries shall keep, and shall cause its employees,
consultants, advisors and agents 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 is then in the public domain
through no fault of such party or (B) such information has been lawfully
acquired from other sources by such party or (C) this Agreement or the
Recapitalization Agreement or any other agreement entered into pursuant hereto
or thereto permits the use or disclosure of such information) to the extent such
information (i) relates to or was acquired during the period up to the Effective
Time or pursuant to Section 4.1, or (ii) is based upon or is derived from
information described in the preceding clause (i), 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.
SECTION 4.3 Standstill. (a) Subject to Sections 4.3(b) and 4.3(c), each of
IMS HEALTH and Gartner agree not to solicit, initiate or encourage the
commencement of negotiations or continue any current negotiations regarding any
proposal for the acquisition by any third party of any shares of capital stock
of Gartner (other than issuances of common stock by Gartner pursuant to employee
stock plans in the ordinary course of business) or the acquisition of Gartner
through any other means including a merger or purchase of assets (an
"Acquisition Proposal") until the earlier to occur of the termination of this
Agreement or the time at which the Distribution is consummated; provided,
however, that IMS HEALTH may respond to any unsolicited inquiries or proposals
solely to indicate that it is bound by this Section 4.3.
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(b) IMS HEALTH shall be relieved of its obligations under Section 4.3(a) if
any of the following occur:
(i) Gartner fails to comply with its obligations with respect to the
Financing Commitments set forth in Section 2.3 hereof in a manner that
would reasonably be expected to permit consummation of the Distribution (A)
on or prior to July 31, 1999 or (B) if, without violation of the foregoing,
the Distribution is not consummated by such date, as promptly as possible
thereafter;
(ii) Gartner fails to comply with Section 2.2(d) herein;
(iii) Gartner fails to use commercially reasonable efforts to obtain
the approval for listing of the Class B Common Stock on the NYSE in a
manner that would reasonably be expected to permit consummation of the
Distribution (A) on or prior to July 31, 1999 or (B) if, without violation
of the foregoing, the Distribution is not consummated by such date, as
promptly as possible thereafter;
(iv) Gartner fails to use commercially reasonable efforts to obtain
clearance from the SEC to mail the Proxy Statement as promptly as
practicable after the date hereof;
(v) Gartner fails to use commercially reasonable efforts to call a
special meeting of stockholders to seek approval of the Recapitalization
and the Governance Proposals to be held on or prior to July 16, 1999,
except that the meeting so noticed may be adjourned solely to the extent
necessary to obtain sufficient votes for approval;
(vi) Pursuant to Section 4.3(c)(ii), Gartner takes any action that
would otherwise be prohibited by Section 4.3(a); provided, however, if
Gartner takes any action permitted under Section 4.3(c)(ii) to evaluate any
Acquisition Proposal and Gartner promptly provides to IMS HEALTH (A) copies
of any correspondence and other documents received from the person making
such Acquisition Proposal (including the identity of such person, but
excluding confidential business information of such person provided for due
diligence unless IMS HEALTH executes an appropriate nondisclosure agreement
acceptable to such person making the Acquisition Proposal), (B) copies of
analyses, advice and other information provided in writing to the Board of
Directors of Gartner in connection with such Acquisition Proposal, (C)
copies of analyses, advice and other information provided in writing to
management of Gartner by financial advisors to Gartner in connection with
such Acquisition Proposal, (D) any advice regarding any revised proposal
provided to Gartner by the person making such Acquisition Proposal (other
than changes in terms or structure that are not material), and (E) any
determination made by the Board of Directors of Gartner in response to such
proposal, then IMS HEALTH shall not be relieved of its obligations under
Section 4.3(a) until the earliest of (x) any public disclosure by the
Gartner Board of Directors' approval or recommendation of any Acquisition
Proposal, (y) any public disclosure by the Gartner Board of Directors of
the withdrawal of its approval or recommendation of any of the transactions
contemplated hereby or by the Recapitalization Agreement or (z) ten
business days from receipt by Gartner of the Acquisition Proposal; provided
further that IMS HEALTH shall not be relieved of its obligations under
Section 4.3(a) if, prior to the expiration of such 10-business day period,
Gartner shall have ceased to evaluate, discuss or negotiate or take any
other action with respect to such Acquisition Proposal and delivers to IMS
HEALTH a certificate executed by an executive officer of Gartner to the
foregoing effect;
(vii) Gartner fails (x) to take any affirmative action or consummate
any affirmative transaction specified by the terms of the IRS Ruling, the
request for the IRS Supplemental Ruling or, if granted prior to such time,
the IRS Supplemental Ruling or (y) takes any action or pursues any
transaction (other than any action or transaction contemplated by this
Agreement) or fails to take any actions or consummate any transaction which
would reasonably be expected to adversely affect the IRS Ruling, the
request for the IRS Supplemental Ruling or, if granted prior to such time,
the IRS Supplemental Ruling;
(viii) Gartner fails to use commercial reasonable efforts to obtain
the approval of its stockholders of the Recapitalization or takes any
action or makes any public statement inconsistent with the foregoing; or
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(ix) Gartner breaches or fails to comply with any of its material
obligations set forth in this Agreement or the Recapitalization Agreement
and fails to cure such breach or failure within 15 days following notice
from IMS HEALTH.
(c) Gartner shall be relieved of its obligations under Section 4.3(a) if:
(i) IMS HEALTH breaches or fails to comply with any of its material
obligations set forth in this Agreement or the Recapitalization Agreement
and fails to cure such breach or failure within 15 days following notice
from Gartner; or
(ii) After receipt of a bona fide written Acquisition Proposal, the
Board of Directors of Gartner in good faith determines, based upon the
advice of its outside counsel regarding the Board's duties, that the Board
will breach its fiduciary duties to stockholders of Gartner if it does not
commence discussions or negotiations with the person making such
Acquisition Proposal.
SECTION 4.4 Public Announcements. Each of IMS HEALTH and Gartner agrees
that no public release or announcement concerning the Recapitalization, Cash
Dividend, or Stock Repurchase shall be issued by either party without the prior
written consent of the other (which shall not be unreasonably withheld), except
as such release or announcement may be required by law or the rules or
regulations of any United States securities exchange, in which case the party
required to make the release or announcement shall use its commercially
reasonable efforts to allow each other party reasonable time to comment on each
release or announcement in advance of such issuance.
SECTION 4.5 Required Consents. Each of IMS HEALTH and Gartner shall use
commercially reasonable efforts to obtain all of the consents, waivers or
authorizations required in connection with the completion of the
Recapitalization and the Distribution as are listed on Schedule 4.5 (the
"Required Consents").
ARTICLE V.
DISPUTE RESOLUTION
SECTION 5.1 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 the
Recapitalization Agreement or otherwise arising out of, or in any way related to
this Agreement or the Recapitalization Agreement or the transactions
contemplated hereby and thereby, including any claim based on contract, tort,
statute or constitution (but excluding any controversy, dispute or claim between
a party hereto and a third-party beneficiary hereof) (collectively, "Agreement
Disputes"), the general counsels of the parties shall negotiate in good faith
for a reasonable period of time to settle such Agreement Dispute, provided 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 5.2
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 the Recapitalization Agreement to which such Agreement Dispute
relates shall not be deemed to have passed until such Agreement Dispute has been
resolved.
SECTION 5.2 Arbitration. If after such reasonable period such general
counsels 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. sec.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
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arbitration has been waived, whether an assignee of this Agreement is bound to
arbitrate, or as to the interpretation of enforceability of this Article V 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 6.17 hereof. The arbitrator shall be entitled,
if appropriate, to award any remedy in such proceedings, including 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 5.3 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, the Transition Services Agreement, and the
Recapitalization Agreement during the course of dispute resolution pursuant to
the provisions of this Article V with respect to all matters not subject to such
dispute, controversy or claim.
ARTICLE VI.
INSURANCE
SECTION 6.1 Separation of Insurance Coverages. Gartner shall take all
reasonable steps necessary and appropriate to have in effect, on or prior to the
Distribution Date or as soon thereafter as reasonably practicable, separate
Policies in respect of Gartner Liabilities (including without limitation
Liabilities which exist on the date of this Agreement or which arise prior to
the Effective Time) to replace any insurance coverage provided to Gartner and
its Subsidiaries under the Shared Policies.
SECTION 6.2 Policy Rights. Each of IMS HEALTH and Gartner shall retain
any and all rights of an insured party under each of the remaining Shared
Policies, subject to the terms of such Shared Policies and any limitations or
obligations contemplated by this Article VI, 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 on
or prior to the Distribution Date, 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.
SECTION 6.3 Post-Distribution Date Claims. (a) Administration. After the
Distribution Date, IMS HEALTH shall be responsible for (i) Insurance
Administration of the Shared Policies and (ii) Claims Administration under such
Shared Policies with respect to Gartner Liabilities and IMS HEALTH Liabilities;
provided that the assumption of such responsibilities by IMS HEALTH 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 HEALTH's 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
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relevant Policy; and provided further that all direct or indirect communication
with insurers relating to the Shared Policies shall be conducted by IMS HEALTH.
IMS HEALTH may discharge its administrative responsibilities under this Section
6.3 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 HEALTH relating to
Claims Administration and Insurance Administration contemplated by this Section
6.3(a) shall be treated in accordance with the terms of the Transition Services
Agreement, if still in effect with respect to insurance and risk management, or,
if the Transition Services Agreement shall no longer be in effect with respect
to insurance and risk management, then each of Gartner and IMS HEALTH shall be
responsible for its own Claims Administration and Insurance Administration.
(b) Exceeding Policy Limits. Gartner and IMS HEALTH shall not be liable to
one another for claims not reimbursed by insurers for any reason not within the
control of Gartner or IMS HEALTH, as the case may be, including 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 Gartner or
IMS HEALTH or any defect in such claim or its processing.
(c) Allocation of Insurance Proceeds. Insurance Proceeds received with
respect to claims, costs and expenses under the remaining Shared Policies shall
be paid to IMS HEALTH, which shall thereafter administer such Policies by paying
the Insurance Proceeds to Gartner with respect to Gartner Liabilities and by
retaining the Insurance Proceeds with respect to IMS HEALTH Liabilities. Payment
of the allocable portions of Insurance Proceeds resulting from such Policies
will be made by IMS HEALTH to Gartner as appropriate upon receipt from the
insurance carrier (except as provided below in subclause (B) of clause (ii) of
this Section 6.3(c)) and following consultation with Gartner. 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: (i)
to allocate the first $150 million (or, to the extent the aggregate limits on
such Shared Policies are reinstated, $150 million plus such amount reinstated)
of Insurance Proceeds received based upon the respective percentage of the total
of their premiums paid for Shared Policies, except that in no event shall a
party be entitled to Insurance Proceeds in excess of its Insured Claims and any
amount recovered by such party in excess of such Insured Claims shall be
available to the other party to the extent of its Insured Claims; and (ii) that
all Insurance Proceeds in excess of $150 million (or, to the extent the
aggregate limits on such Shared Policies are reinstated, $150 million plus such
amount reinstated) shall be payable to and retained by IMS HEALTH: (A) first, to
the full extent of any Insured Claims of IMS HEALTH not satisfied by the first
$150 million (or, to the extent the aggregate limits on such Shared Policies are
reinstated, $150 million plus such amount reinstated) of Insurance Proceeds; and
(B) second, to the full extent of any Insured Claims of Gartner, to be paid to
Gartner only when and to the extent that (1) the aggregate Insurance Proceeds
received by IMS Health in excess of $150 million (or, to the extent the
aggregate limits on such Shared Policies are reinstated, $150 million plus such
amount reinstated) exceed the sum of (A) the aggregate amount of such proceeds
that have been paid to IMS Health in respect of Insured Claims of IMS Health
(not Gartner) and (B) the aggregate amount of Insured Claims of IMS Health (not
Gartner) that (x) IMS Health has previously submitted to the insurance carrier
or carriers, (y) have not yet been paid to IMS Health, and (z) IMS Health
continues to claim a right to receive payment on; and (2) it would be impossible
for IMS Health to submit additional Insured Claims under the Shared Policies.
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.
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(d) Allocation of Deductibles. In the event that both parties have bona
fide claims under any Shared Policy for which an aggregate deductible is
reached, 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 any such party (without giving effect to any deductible)
bears to the total Insurance Proceeds received under the applicable Shared
Policy, 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.
SECTION 6.4 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
VI 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 6.5 Cooperation. The parties agree to use their commercially
reasonable efforts to cooperate with respect to the various insurance matters
contemplated by this Agreement.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1 Complete Agreement; Construction. This Agreement and the
Recapitalization Agreement, including the Exhibits and Schedules hereto and
thereto, shall constitute the entire agreement between the parties with respect
to the subject matter hereof and thereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
SECTION 7.2 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 7.3 Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants, representations, warranties and agreements of the
parties contained in this Agreement shall survive the Distribution Date.
SECTION 7.4 Expenses. Except as set forth on Schedule 7.4 or as otherwise
set forth in this Agreement or in the Recapitalization Agreement, all costs and
expenses incurred in connection with the preparation, execution, delivery and
implementation of this Agreement and the Recapitalization Agreement, and the
Distribution and the other transactions contemplated hereby and thereby shall be
charged to and paid by the party incurring such costs and expenses.
SECTION 7.5 Notices. All notices and other communications hereunder shall
be in writing, shall be effective when received, and shall in any event be
deemed to have been received (i) upon hand delivery, (ii) three (3) days after
deposit in U.S. mail, postage prepaid, for first class delivery, (iii) one (1)
business day following the business day of timely deposit with Federal Express
or similar carrier, freight prepaid, for next business day delivery, and (iv)
one (1) business day after the date of the transmission if sent by facsimile,
provided that confirmation of transmission and receipt is confirmed and copy is
promptly sent by first class mail, postage prepaid, and shall be sent to each
party at the following respective address (or at such other address for a party
as shall be specified by like notice):
To IMS HEALTH:
IMS Health Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
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with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
To Gartner:
Gartner Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 7.6 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 7.7 Amendments. Subject to the terms of Section 7.10 hereof, this
Agreement may not be modified or amended except by an agreement in writing
signed by each of the parties hereto.
SECTION 7.8 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 party hereto, and any attempt to assign any rights
or obligations arising under this Agreement without such consent shall be void.
(b) Gartner will not distribute to its stockholders any material interest
in any material Gartner Business Entity, by way of a spin-off distribution,
split-off or exchange of interests in a Gartner Business Entity for any interest
in Gartner held by Gartner stockholders, or any similar transaction or
transactions, unless the distributed Gartner Business Entity undertakes to IMS
HEALTH to be jointly and severally liable for all Gartner Liabilities hereunder.
(c) IMS HEALTH will not distribute to its stockholders any material
interest in any material IMS HEALTH Business Entity (other than Cognizant
Technology Solutions Corporation), by way of a spin-off distribution, split-off
or exchange of interests in an IMS HEALTH Business Entity (other than Cognizant
Technology Solutions Corporation) for any interest in IMS HEALTH held by IMS
HEALTH stockholders, or any similar transaction or transactions, unless the
distributed IMS HEALTH Business Entity undertakes to Gartner to be jointly and
severally liable for all IMS HEALTH Liabilities hereunder.
SECTION 7.9 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 7.10 Termination. (a) Prior to the filing of the Certificate of
Merger, this Agreement may be terminated
(i) by IMS HEALTH and Gartner by mutual consent;
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(ii) by IMS HEALTH or Gartner if the other party is materially in
breach of any of its obligations or warranties herein or under the
Recapitalization Agreement, and following notice from the other party fails
to substantially correct such breach within 15 days;
(iii) by Gartner if, following receipt of an Acquisition Proposal, the
Board of Directors of Gartner in good faith determines, based upon the
advice of its outside counsel regarding the Board's duties (which advice
may be oral and later confirmed in writing), that the Board will breach its
fiduciary duties to stockholders of Gartner if this Agreement is not
terminated; provided that in such event Gartner shall pay the reasonable
out-of-pocket fees and expenses of counsel to IMS HEALTH incurred in
connection with this Agreement, the Recapitalization Agreement and the
transactions contemplated hereby and thereby;
(iv) by IMS HEALTH if the Board of Directors of Gartner shall or shall
resolve to (i) not recommend, or withdraw its approval or recommendation
of, the Recapitalization, the Recapitalization Agreement, this Agreement or
any of the transactions contemplated thereby or hereby, (ii) modify any
such approval or recommendation in a manner adverse to IMS HEALTH or (iii)
approve, recommend or enter into an agreement for any Acquisition Proposal;
provided that in such event Gartner shall pay the reasonable out-of-pocket
fees and expenses of counsel to IMS HEALTH incurred in connection with this
Agreement, the Recapitalization Agreement and the transactions contemplated
hereby or thereby;
(v) by IMS HEALTH if IMS HEALTH is relieved of its obligations under
Section 4.3(a) pursuant to Section 4.3(b)(vi);
(vi) by IMS HEALTH if IMS HEALTH in good faith believes that the IRS
Supplemental Ruling in form and content substantially identical to the
rulings requested in the request for the IRS Supplemental Ruling submitted
to the IRS will not be forthcoming prior to the Declaration Date; or
(vii) by IMS HEALTH or Gartner if the Recapitalization is not
consummated by July 31, 1999.
(b) Except (x) as set forth in paragraphs (a)(iii) or (a)(iv) above or (y)
for any liability in respect of any breach of this Agreement by either party, no
party shall have any liability of any kind to any other party or any other
person as a result of the termination of this Agreement under paragraphs (a)(i),
(a)(iii), (a)(iv), (a)(v) or (a)(vi) above. After the filing of the Certificate
of Merger relating to the Recapitalization, this Agreement may not be terminated
except by an agreement in writing signed by both parties.
SECTION 7.11 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 or after
the Distribution Date, except that, for purposes of this Section 7.11, Gartner
shall not be considered a Subsidiary of IMS HEALTH.
SECTION 7.12 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 7.13 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 7.14 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 7.15 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 7.16 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
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30
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 7.16. 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 7.17 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; provided, however, that the consummation of the
Recapitalization, Cash Dividend and Stock Purchase are conditioned upon and are
not severable from the Distribution, and that the Distribution is not severable
from the Recapitalization, Cash Dividend and Stock Repurchase. 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:
--------------------------------------
Name:
Title:
GARTNER GROUP, INC.
By:
--------------------------------------
Name:
Title:
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32
EXHIBIT 2.1(d)(i)
Gartner Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
56 Top ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
July , 1999
▇.▇. ▇▇▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ACNielsen Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Reference is made to (i) the Distribution Agreement (the "1996 Distribution
Agreement"), dated as of October 28, 1996, among Cognizant Corporation, which
has been renamed ▇▇▇▇▇▇▇ Media Research, Inc. ("NMR"), The Dun & Bradstreet
Corporation, which has been renamed the ▇.▇. ▇▇▇▇▇▇▇▇▇ Corporation ("RHD") and
ACNielsen Corporation ("ACNielsen") and (ii) the letter of undertaking dated
June 29, 1998 from IMS Health Incorporated ("IMS HEALTH") to RHD and ACNielsen.
In June 1998, NMR distributed to its stockholders all of the outstanding shares
of common stock of IMS HEALTH (the "IMS HEALTH Distribution"). IMS HEALTH has
announced its intention to distribute (the "Gartner Distribution") to its
stockholders all of the shares of the Class B Common Stock of Gartner Group,
Inc. ("Gartner") that IMS HEALTH will hold following the recapitalization of
Gartner contemplated by the Merger Agreement dated June 17, 1999, between
Gartner and GRGI, INC. In connection with the IMS HEALTH Distribution, IMS
HEALTH undertook (the "IMS HEALTH Undertaking") to both RHD and ACNielsen to be
jointly and severally liable for all Cognizant Liabilities (as defined in the
1996 Distribution Agreement). Under Section 8.9(c) of the 1996 Distribution
Agreement, as applicable to IMS HEALTH pursuant to the IMS HEALTH Undertaking,
IMS HEALTH may not make a distribution such as the Gartner Distribution unless
it causes the distributed entity to undertake to both RHD and ACNielsen to be
jointly and severally liable for all Cognizant Liabilities under the 1996
Distribution Agreement. Therefore, in accordance with Section 8.9(c) of the 1996
Distribution Agreement and intending to be legally bound hereby, from and after
the effective time of the Gartner Distribution, Gartner undertakes to each of
RHD and ACNielsen to be jointly and severally liable for all Cognizant
Liabilities under the 1996 Distribution Agreement.
Very truly yours,
GARTNER GROUP, INC.
By:
--------------------------------------
Name:
Title:
33
EXHIBIT 2.1(d)(ii)
Gartner Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
56 Top ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
July , ▇▇▇▇
▇▇▇▇▇▇▇ Media Research, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Reference is made to the Distribution Agreement (the "1998 Distribution
Agreement"), dated as of June 30, 1998, among Cognizant Corporation, which has
been renamed ▇▇▇▇▇▇▇ Media Research, Inc. ("NMR"), and IMS Health Incorporation
("IMS HEALTH"). In June 1998, NMR distributed to its stockholders all of the
outstanding shares of common stock of IMS HEALTH. IMS HEALTH has announced its
intention to distribute (the "Gartner Distribution") to its stockholders all of
the shares of the Class B Common Stock of Gartner Group, Inc. ("Gartner") that
IMS HEALTH will hold following the recapitalization of Gartner contemplated by
the Merger Agreement dated June 17, 1999 between Gartner and GRGI, INC. In
Section 8.9(c) of the 1998 Distribution Agreement, IMS HEALTH agreed not to make
a distribution such as the Gartner Distribution unless it causes the distributed
entity to undertake to NMR to be jointly and severally liable for all IMS HEALTH
Liabilities under the 1998 Distribution Agreement. Therefore, in accordance with
Section 8.9(c) of the 1998 Distribution Agreement and intending to be legally
bound hereby, from and after the effective time of the Gartner Distribution,
Gartner undertakes to NMR to be jointly and severally liable for all IMS HEALTH
Liabilities under the 1998 Distribution Agreement.
Very truly yours,
GARTNER GROUP, INC.
By:
--------------------------------------
Name:
Title:
34
EXHIBIT A-1
AGREEMENT AND PLAN OF MERGER dated as of June 17, 1999 (this "Agreement"),
among GARTNER GROUP, INC., a Delaware corporation (the "Company"), IMS HEALTH
INCORPORATED ("IMS HEALTH"), a Delaware corporation and GRGI, INC. ("Merger
Sub"), a Delaware corporation and a wholly owned subsidiary of IMS HEALTH.
WHEREAS, IMS HEALTH owns all of the issued and outstanding shares of Common
Stock, par value $.01 per share ("Merger Sub Common Stock"), of Merger Sub and
47,599,105 shares (approximately 46% of the total number of issued and
outstanding shares) of Class A Common Stock, par value $.0005 per share ("Class
A Common Stock"), of the Company;
WHEREAS, prior to the effectiveness of the Merger (as defined below), IMS
HEALTH plans to contribute to Merger Sub 40,689,648 shares (approximately 39% of
the total number of issued and outstanding shares) of Class A Common Stock (the
"Contributed Shares") and retain (x) 6,909,457 shares (approximately 7% of the
total number of issued and outstanding shares) of Class A Common Stock (the
"Retained Shares") and (y) warrants to purchase an aggregate of 599,400 shares
of Class A Common Stock;
WHEREAS, the Company and IMS HEALTH desire that Merger Sub merge with and
into the Company (the "Merger") upon the terms and subject to the conditions set
forth in this Agreement in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), pursuant to which all the issued and outstanding
shares of Merger Sub Common Stock shall be converted into shares of a new Class
B Common Stock, par value $.0005 per share ("Class B Common Stock"), of the
Company and all the issued and outstanding shares of Class A Common Stock (other
than the Contributed Shares held by Merger Sub, which shall be canceled with no
securities or other consideration issued in exchange therefor) shall remain
issued and outstanding;
WHEREAS, IMS HEALTH has agreed, subject to certain conditions, to
distribute all the shares of Class B Common Stock, on a pro rata basis, to the
holders of the common stock of IMS HEALTH promptly following consummation of the
Merger (the "Distribution") pursuant to the terms and conditions of a
Distribution Agreement entered into between the Company and IMS HEALTH dated as
of the date hereof (the "Distribution Agreement"), which provides for the
Distribution and certain other matters;
WHEREAS, the Boards of Directors of the Company and Merger Sub by
resolutions duly adopted have approved the terms of this Agreement and of the
Merger, and have declared the advisability of this Agreement and of the Merger;
Merger Sub has obtained the approval of its sole shareholder; and the Company
has directed the submission of this Agreement to its shareholders for approval;
and
WHEREAS, the Merger is intended to constitute a reorganization within the
meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE in consideration of the premises and the mutual agreements
and provisions herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. (a) Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined below), Merger Sub shall be
merged with and into the Company in accordance with the DGCL, whereupon the
separate corporate existence of Merger Sub shall cease, and the Company shall be
the surviving corporation (the "Surviving Corporation").
(b) Following satisfaction or waiver of all conditions to the Merger, the
Company and Merger Sub shall file a Certificate of Merger with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by the DGCL in connection with the Merger. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware or at such later time as is specified in the
Certificate of Merger (the "Effective Time").
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(c) At and after the Effective Time, the Merger shall have the effects set
forth in the DGCL. Without limiting the foregoing and subject thereto, from and
after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities and duties of the Company and Merger Sub, all as
provided under the DGCL.
SECTION 1.2. Effect on Capital Stock. At the Effective Time:
(a) All of the shares of Merger Sub Common Stock outstanding immediately
prior to the Effective Time shall be converted in the aggregate into and become
40,689,648 fully paid and non-assessable shares of Class B Common Stock of the
Surviving Corporation, and shall have the rights and privileges as set forth in
the Surviving Corporation Certificate of Incorporation, as amended hereby;
(b) each of the Contributed Shares shall automatically be canceled and
retired and shall cease to exist, and no stock of the Surviving Corporation or
other consideration shall be delivered in exchange therefor;
(c) each share of Class A Common Stock (other than shares to be canceled in
accordance with Section 1.2(b)) shall remain issued and outstanding and not be
affected by the Merger, except that all shares of Class A Common Stock remaining
outstanding at the Effective Time shall have the rights and privileges as set
forth in the Surviving Corporation Certificate of Incorporation, as amended
hereby; and
(d) each share of Class A Common Stock that is held in the treasury of the
Company shall remain in the treasury of the Company and not be affected by the
Merger, except that all shares of Class A Common Stock held in the treasury of
the Company at the Effective Time shall have the rights and privileges as set
forth in the Surviving Corporation Certificate of Incorporation, as amended
hereby.
SECTION 1.3. Share Certificates. (a) As soon as practicable after the
Effective Time,
(i) the Surviving Corporation shall deliver, or cause to be delivered,
to IMS HEALTH a number of certificates issued in the names of such persons,
in each case, as IMS HEALTH shall direct, representing in the aggregate
40,689,648 shares of Class B Common Stock which IMS HEALTH has the right to
receive upon conversion of shares of Merger Sub Common Stock pursuant to
the provisions of Section 1.2 (a) hereof;
(ii) the Surviving Corporation shall cancel the share certificate or
certificates representing the shares of Class A Common Stock owned directly
by Merger Sub; and
(iii) the share certificates representing shares of Class A Common
Stock that remain issued and outstanding under Section 1.2(c) hereof or
that remain treasury shares under Section 1.2(d) hereof shall not be
exchanged and shall continue to represent an equal number of shares of
Class A Common Stock of the Surviving Corporation without physical
substitution of share certificates of the Surviving Corporation for
existing share certificates of the Company.
(b) Any dividend or other distribution declared or made with respect to any
shares of capital stock of the Company, whether the record date for such
dividend or distribution is before or after the Effective Time, shall be paid to
the holder of record of such shares of capital stock on such record date,
regardless of whether such holder has surrendered its certificates representing
Class A Common Stock or received certificates representing Class B Common Stock
pursuant to Section 1.3(a)(i).
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1. Certificate of Incorporation. (a) In the event the adoption of
the Governance Provisions (as defined below) is approved by the stockholders of
the Company at the Stockholders Meeting (as defined below), at the Effective
Time, the Certificate of Incorporation of the Company as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, except that such Certificate of Incorporation shall be
amended as set forth in Exhibit A-1(a) hereto.
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(b) In the event the adoption of the Governance Provisions is not approved
by the stockholders of the Company at the Stockholders Meeting, at the Effective
Time, the Certificate of Incorporation of the Company as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, except that such Certificate of Incorporation shall be
amended as set forth in Exhibit A-1(b) hereto.
(c) The Certificate of Incorporation of the Surviving Corporation that
becomes effective pursuant to either Section 2.1(a) or 2.1(b) hereof is herein
referred to as the "Surviving Corporation Certificate of Incorporation."
SECTION 2.2. By-laws. (a) In the event the adoption of the Governance
Provisions is approved by the stockholders of the Company at the Stockholders
Meeting, at the Effective Time, the By-laws of the Company as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation, except that such By-laws shall be amended as set forth in Exhibit
A-1(c) hereto.
(b) In the event the adoption of the Governance Provisions is not approved
by the stockholders of the Company at the Stockholders Meeting at the Effective
Time, the By-laws of the Company as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation, except that such By-laws
shall be amended as set forth in Exhibit A-1(d) hereto.
(c) The By-laws of the Surviving Corporation as amended pursuant to either
Section 2.2(a) or 2.2(b) hereof are herein referred to as the "Surviving
Corporation By-laws".
SECTION 2.3. Directors and Officers. (a) The Surviving Corporation's board
of directors initially shall consist of ten members. From and after the
Effective Time, until the earlier of their removal or resignation or until their
successors are duly elected or appointed and qualified in accordance with
applicable law, the directors of the Surviving Corporation shall consist of the
directors of the Company in office at the Effective Time, except for ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, whose resignation shall become effective as of the Effective Time,
plus certain other persons as specified in Exhibit A-1(e) hereto and each such
director shall be designated to serve as a Class A Director or a Class B
Director (each as defined in the Surviving Corporation By-laws) as specified in
Exhibit A-1(e) hereto; provided, however, that ▇▇▇▇ ▇. ▇▇▇▇▇ may be a director
of the Company following the Merger only if, prior to the Effective Time, IMS
HEALTH receives an opinion of counsel from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ or
such other counsel acceptable to IMS HEALTH to the effect that, following the
consummation of the Merger and the Distribution, IMS HEALTH will not be an
affiliate of the Company for purposes of the disposition by IMS HEALTH of shares
of Class A Common Stock under the federal securities laws. The Company shall use
its best efforts to obtain the written resignation of any member of its Board of
Directors necessary to give effect to the foregoing.
(b) In the event the adoption of the Governance Provisions is approved by
the stockholders of the Company at the Stockholders Meeting, then at the
Effective Time the directors of the Surviving Corporation shall be divided into
three classes pursuant to the Surviving Corporation Certificate of Incorporation
as amended pursuant to Section 2.1(a) hereof, and each such director shall be
designated to serve as a Class I Director, Class II Director or Class III
Director (each as defined in the Surviving Corporation By-laws), as specified in
Exhibit C hereto.
(c) From and after the Effective Time, until the earlier of their removal
or resignation or until their successors are duly appointed and qualified in
accordance with applicable law and the Surviving Corporation By-laws, the
officers of the Company shall be the officers of the Surviving Corporation.
ARTICLE III
COVENANTS AND REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Stockholders Meeting. The Company shall, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold, a meeting of its stockholders (the "Stockholders Meeting") for
the purpose of considering, as three separate proposals, (i) the approval of the
Merger and this Agreement which, subject to the Distribution Agreement, will
commit the Directors of the Company to
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authorize the Cash Dividend (as defined in the Distribution Agreement) and Stock
Repurchase (as defined in the Distribution Agreement); (ii) the approval of
amendments to the Company's Certificate of Incorporation providing for the
proposed classified board, director removal and replacement and related
provisions in Articles IV and V of the Certificate of Incorporation of the
Company as set forth in Exhibit A-1(a) hereto to become effective solely upon
effectiveness of the Merger (the "Governance Provisions"); and (iii) the
approval of amendments to the Company's Certificate of Incorporation providing
for the increase of authorized stock which the Company may issue as set forth in
Exhibits A-1(a) and A-1(b) hereto to become effective solely upon the
effectiveness of the Merger (the "Share Increase"). The Company shall, through
its Board of Directors, continue to recommend to its stockholders approval of
the Merger and this Agreement and shall not withdraw such recommendation;
provided, however, that the Company's Board of Directors may withdraw such
recommendation if it determines in good faith, based upon the advice of outside
counsel, that the Board will violate its fiduciary duties to the stockholders of
the Company if such recommendation is not withdrawn.
SECTION 3.2. Filings; Other Actions. (a) Subject to the provisions of this
Agreement and the Distribution Agreement, the Company shall prepare and file
with the Securities and Exchange Commission (the "SEC") a proxy statement for
the solicitation of proxies in favor of (i) the approval and adoption of this
Agreement and the Merger, (ii) the approval of the Governance Provisions as
amendments to the Company's Certificate of Incorporation to become effective
solely upon the effectiveness of the Merger, and (iii) the approval of the Share
Increase as amendments to the Company's Certificate of Incorporation to become
effective solely upon the effectiveness of the Merger (the "Proxy Statement").
The Company shall not propose to its stockholders the adoption of the Governance
Provisions or the Share Increase as independent amendments to the Company's
Certificate of Incorporation, but only as amendments to become effective solely
upon the effectiveness of the Merger. The Company shall use all reasonable
efforts to have the Proxy Statement cleared by the SEC for mailing in definitive
form as promptly as practicable after such filing. The Company and IMS HEALTH
shall cooperate with each other in the preparation of the Proxy Statement and
any amendment or supplement thereto, and the Company shall notify IMS HEALTH of
the receipt of any comments of the SEC with respect to the Proxy Statement and
of any requests by the SEC for any amendment or supplement thereto or for
additional information, and shall provide to IMS HEALTH promptly copies of all
correspondence between the SEC and the Company or any of its advisors with
respect to the Proxy Statement. The Company shall give IMS HEALTH and its
counsel appropriate advance opportunity to review the Proxy Statement and all
responses to requests for additional information by and replies to comments of
the SEC, and shall incorporate therein any reasonable comments IMS HEALTH may
deliver to the Company with respect thereto, before such Proxy Statement,
response or reply is filed with or sent to the SEC. The Company agrees to use
commercially reasonable efforts, after consultation with IMS HEALTH and its
advisors, to respond promptly to all such comments of, and requests by, the SEC
and to cause the Proxy Statement to be mailed to the holders of the Company's
common stock entitled to vote at the Stockholders Meeting as soon as reasonably
possible following the execution hereof. IMS HEALTH shall provide the Company
such information concerning the business and affairs of IMS HEALTH and Merger
Sub as is reasonably required for inclusion in the Proxy Statement.
(b) Each of the Company and IMS HEALTH shall promptly, and in any event
within five business days after the execution and delivery of this Agreement,
make all filings or submissions as are required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any other
applicable law.
(c) Each of the Company and IMS HEALTH agrees promptly to furnish to the
other all copies of written communications (and summaries of the substance of
all oral communications) received by it, or any of its affiliates or
representatives from, or delivered by any of the foregoing to, any federal,
state or local or international court, commission, governmental body, agency,
authority, tribunal, board or other governmental entity (each a "Governmental
Entity") in respect of the transactions contemplated hereby.
(d) At the stockholders' meeting, IMS HEALTH agrees to vote, or cause to be
voted, all shares of Class A Common Stock of the Company owned by it and any of
its subsidiaries or affiliates in favor of the
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Merger, the other transactions contemplated by this Agreement, the Governance
Provisions and the Share Increase.
SECTION 3.3. Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties hereto agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to obtain the approval and
adoption of this Agreement by the stockholders of Gartner as contemplated by
Section 4.1(a) and Section 4.2(a) and to consummate, as soon as practicable
following such approval, the Merger and the other transactions contemplated by
this Agreement and the Distribution Agreement, including, but not limited to (i)
the obtaining of all necessary actions or non-actions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity
(including those in connection with the HSR Act), (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity with respect to the Merger or
this Agreement vacated or reversed, (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement and (v) causing all conditions to the parties' obligations to
consummate the Merger set forth in Article IV (other than those set forth in
Section 4.1(i)) to be satisfied. The Company and IMS HEALTH, upon the other's
request, shall provide all such reasonably necessary information concerning the
party's business and affairs to the other party.
SECTION 3.4. Representations and Warranties of the Company. The Company
hereby represents and warrants to IMS HEALTH and Merger Sub that:
(a) the Company's Board of Directors has approved and declared
advisable the Merger and this Agreement, has determined that the Merger and
the other transactions contemplated by the Distribution Agreement are fair
to the stockholders of the Company, and has recommended that the
stockholders of the Company vote in favor of the approval of the Merger and
this Agreement;
(b) the Company's Proxy Statement, the form of proxy and any other
solicitation material used in connection therewith and any oral
solicitations of proxies made by the Company shall not contain any
statement which, at the time and in the light of the circumstances under
which it is made, is false or misleading with respect to any material fact,
or which omits to state any material fact necessary in order to make the
statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to any solicitation of
a proxy for any of the matters to be voted upon at the Stockholders Meeting
which has become false or misleading, except that no representation or
warranty as made by the Company with respect to written information
relating to IMS HEALTH or IMS HEALTH Business for inclusion in the Proxy
Statement or any such proxy material or oral solicitation;
(c) this Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding agreement of the Company, enforceable
in accordance with its terms; and
(d) subject to the changes in the Company's capitalization
contemplated by this Agreement, the capitalization of the Company is as
follows:
(i) 200,000,000 authorized shares of Class A Common Stock of which
103,856,296 shares were outstanding at the close of business on May 31,
1999;
(ii) 1,600,000 authorized shares of Class B Common Stock of which
zero (0) shares are outstanding on the date of this Agreement;
(iii) 2,500,000 authorized shares of preferred stock of which zero
(0) shares are outstanding on the date of this Agreement; and
(iv) no shares of any other class or series of capital stock are
authorized, issued or outstanding.
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SECTION 3.5. Representations and Warranties of IMS HEALTH and Merger
Sub. Each of IMS HEALTH and Merger Sub jointly and severally represent and
warrant to the Company that:
(a) the Distribution Agreement and this Agreement have been duly
approved by the Board of Directors of each of IMS HEALTH and Merger Sub;
IMS HEALTH, as sole stockholder of Merger Sub, has approved the Merger and
this Agreement; and no stockholder approval or other further corporate
action is required on the part of IMS HEALTH or Merger Sub;
(b) this Agreement has been duly executed and delivered by IMS HEALTH
and Merger Sub and constitutes the valid and binding agreement of each such
corporation, enforceable in accordance with its terms;
(c) IMS HEALTH owns all outstanding equity securities of Merger Sub
free and clear of any claims, liens or encumbrances and no other person
holds any equity securities of Merger Sub nor has any right to acquire any
equity interest in Merger Sub;
(d) as of immediately prior to the Effective Time, all of the
Contributed Shares shall be owned beneficially and of record by Merger Sub,
free and clear of any claims, liens or encumbrances, and upon consummation
of the Merger the Contributed Shares shall automatically be canceled and
retired and shall cease to exist, and no stock of the surviving corporation
or other consideration shall be delivered or be required to be delivered in
exchange therefor, as provided in Section 1.2(b) hereof; and
(e) Merger Sub was formed by IMS HEALTH solely for the purposes of
effectuating the Merger upon the terms and subject to the conditions of
this Agreement; Merger Sub has no employees, will have no assets other than
the Contributed Shares, has not entered into any contract, agreement or
other commitments with any person except for customary corporate
organizational matters or as specifically set forth in this Agreement, and
has no liabilities, commitments or obligations of any kind (known or
unknown, fixed or contingent) except only for those obligations
specifically set forth in this Agreement.
ARTICLE IV
CONDITIONS TO THE MERGER
SECTION 4.1. Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction (or
waiver by the Company, except that the condition set forth in Section 4.1(a) may
not be waived) of the following conditions:
(a) a proposal to adopt this Agreement has been approved by the
holders of (i) a majority of the Class A Common Stock outstanding and
entitled to vote thereon and (ii) a majority of the shares of Class A
Common Stock (other than shares held of record or beneficially owned by IMS
HEALTH) present in person or by proxy at the Stockholders Meeting and
voting on such proposal;
(b) the waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated;
(c) no court, arbitrator or governmental body, agency or official
shall have issued any order, and there shall not be any statute, rule or
regulation, restraining or prohibiting the consummation of the Merger or
the Distribution and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter, prevent or
materially delay the Merger or the Distribution shall have been instituted
by any Governmental Entity before any court, arbitrator or governmental
body, agency or official and be pending;
(d) the private letter ruling from the Internal Revenue Service,
providing that, among other things, the Recapitalization and the
Distribution will qualify as tax-free transactions for federal income tax
purposes under Sections 354 and 355 of the Code, respectively (the "IRS
Ruling"), shall continue in effect and IMS HEALTH and Gartner shall have
complied with all provisions set forth in (i) the IRS Ruling, (ii) the
request for a supplemental ruling from the Internal Revenue Service
(providing, among other things, that neither the Recapitalization nor the
Distribution will be taken into account in applying
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Section 355(e)(2)(A)(ii) of the Code (the "IRS Supplemental Ruling")) and
(iii) if granted prior to such time, the IRS Supplemental Ruling, that in
each case are required to be complied with prior to the Declaration Date
(as defined in the Distribution Agreement);
(e) all actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained, except those that would not reasonably be expected to have a
material adverse affect on any party's ability to consummate the
transactions contemplated by this Agreement;
(f) the Distribution Agreement shall remain in full force and effect;
(g) all representations and warranties of IMS HEALTH set forth in the
Distribution Agreement and all representations and warranties of IMS HEALTH
and Merger Sub set forth in this Agreement shall have been true and correct
in all material respects when made, and shall remain true and correct in
all material respects as of immediately prior to the Effective Time and the
Company shall have received a certificate executed by the chief executive
officer of IMS HEALTH to such effect;
(h) all covenants to have been performed prior to the Effective Time
by IMS HEALTH and Merger Sub pursuant to this Agreement and all covenants
to have been performed prior to the Effective Time by IMS HEALTH pursuant
to the Distribution Agreement shall have been performed by IMS HEALTH and
Merger Sub in all material respects to the reasonable satisfaction of the
Company and the Company shall have received a certificate executed by the
chief executive officer of IMS HEALTH to such effect; and
(i) the Board of Directors of IMS HEALTH shall have declared, or
simultaneously shall be declaring, the Distribution.
SECTION 4.2. Conditions to the Obligations of IMS HEALTH and Merger
Sub. The obligations of IMS HEALTH and Merger Sub to consummate the Merger are
subject to the satisfaction (or waiver by IMS HEALTH and Merger Sub, except that
the condition set forth in Section 4.2(a) may not be waived) of the following
conditions:
(a) a proposal to adopt this Agreement has been approved by the
holders of (i) a majority of the Class A Common Stock outstanding and
entitled to vote thereon and (ii) a majority of the shares of Class A
Common Stock (other than shares held of record or beneficially owned by IMS
HEALTH) present in person or by proxy at the Stockholders Meeting and
voting on such proposal;
(b) the waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated;
(c) the IRS Ruling shall continue in effect and IMS HEALTH and Gartner
shall have complied with all provisions set forth in (i) the IRS Ruling,
(ii) the request for the IRS Supplemental Ruling and (iii) if granted prior
to such time, the IRS Supplemental Ruling, that in each case are required
to be complied with prior to the Declaration Date;
(d) no court, arbitrator or Governmental Entity shall have issued any
order, and there shall not be any statute, rule or regulation, restraining
or prohibiting the consummation of the Merger or the Distribution and no
proceeding challenging this Agreement or the transactions contemplated
hereby or seeking to prohibit, alter, prevent or materially delay the
Merger or the Distribution shall have been instituted by any Governmental
Entity before any court, arbitrator or governmental body, agency or
official and be pending;
(e) all actions by or in respect of or filings with any governmental
body, agency, official, or authority required to permit the consummation of
the Merger and the Distribution shall have been obtained, except those that
would not reasonably be expected to have a material adverse affect on any
party's ability to consummate the transactions contemplated by this
Agreement;
(f) the Distribution Agreement shall remain in full force and effect;
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41
(g) all representations and warranties of the Company set forth in the
Distribution Agreement and this Agreement shall have been true and correct
in all material respects when made, and shall remain true and correct in
all material respects as of immediately prior to the Effective Time and IMS
HEALTH shall have received a certificate executed by the chief executive
officer of the Company to such effect; and
(h) all covenants to have been performed prior to the Effective Time
by the Company pursuant to this Agreement or the Distribution Agreement
shall have been performed by the Company in all material respects to the
reasonable satisfaction of IMS Health and Merger Sub and IMS HEALTH shall
have received a certificate executed by the chief executive officer of the
Company to such effect.
ARTICLE V
TERMINATION
SECTION 5.1. Termination. (a) This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and IMS HEALTH;
(ii) by either the Company or IMS HEALTH, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining the
Company or Merger Sub from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and nonappealable;
(iii) by IMS HEALTH, if there shall be any law or regulation that
makes consummation of the Distribution illegal or otherwise prohibited or
if any judgment, injunction, order or decree enjoining IMS HEALTH from
consummating the Distribution is entered; or
(iv) by IMS HEALTH or the Company in the event the Distribution
Agreement is terminated.
(b) This Agreement shall terminate automatically without any action on the
part of the Company, IMS HEALTH or Merger Sub if:
(i) after a vote on the matter by the Company's stockholders at the
Stockholders Meeting, the condition set forth in Sections 4.1(a) and 4.2(a)
is not satisfied; or
(ii) the Merger is not consummated by July 31, 1999.
SECTION 5.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 5.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Notices. All notices and other communications hereunder shall
be in writing, shall be effective when received and shall in any event be deemed
to have been received (i) upon hand delivery, (ii) three (3) days after deposit
in U.S. Mail, postage prepaid, for first class delivery, (iii) one (1) business
day following the business day of timely deposit with Federal Express or similar
carrier, freight prepaid, for next business day delivery, and (iv) one (1)
business day after the date of transmission if sent by facsimile, provided that
confirmation of transmission and receipt is confirmed and copy is promptly sent
by first class mail, postage prepaid, and shall be sent to each party at the
following address (or at such other address for a party as shall be specified by
like notice):
To IMS HEALTH:
IMS Health Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
To Merger Sub:
GRGI, INC.
c/o IMS Health Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
To the Company:
Gartner Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
56 Top ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 6.2. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto.
SECTION 6.3. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as to
those matters herein which are controlled by the DGCL, and such matters shall be
construed in accordance with and governed by the laws of the State of Delaware.
SECTION 6.4. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by the other party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GARTNER GROUP, INC.
By
------------------------------------
Name:
Title:
IMS HEALTH, INCORPORATED
By
------------------------------------
Name:
Title:
GRGI, INC.
By
------------------------------------
Name:
Title:
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EXHIBIT A-1(a)
CERTIFICATE OF INCORPORATION AMENDMENTS
(WITH GOVERNANCE PROVISIONS)
The Certificate of Incorporation of the Company in effect immediately prior
to the Effective Time (the "Existing Certificate of Incorporation") shall be
amended by deleting in its entirety Article IV thereof and replacing it with the
following:(1)
"ARTICLE IV
(a) Authorized Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "common stock" and
"preferred stock." The total number of shares which this corporation is
authorized to issue is two hundred four million, one hundred thousand
(204,100,000) shares [two hundred fifty-five million (255,000,000)
shares]*. Two hundred one million, six hundred thousand (201,600,000) [Two
hundred fifty million (250,000,000)]* shares shall be designated common
stock (the "Common Stock"), of which one hundred twenty million, nine
hundred sixty thousand (120,960,000) [one hundred sixty-six million
(166,000,000)]* shares shall be designated Class A Common Stock (the "Class
A Common Stock") and eighty million, six hundred forty thousand
(80,640,000) [eighty-four million (84,000,000)]* shares shall be designated
Class B Common Stock (the "Class B Common Stock"). Two million, five
hundred thousand (2,500,000) [Five million (5,000,000)]* shares shall be
designated preferred stock (the "Preferred Stock"), all of which are
presently undesignated as to series. Each share of Preferred Stock shall
have a par value of $0.01 and each share of Common Stock shall have a par
value of $0.0005.
(b) Common Stock. The Class A Common Stock and the Class B Common
Stock shall be identical in all respects, except as otherwise expressly
provided herein, and the relative powers, preferences, rights,
qualifications, limitations and restrictions of the shares of Class A
Common Stock and Class B Common Stock shall be as follows:
(1) Cash or Property Dividends. Subject to the rights and
preferences of the Preferred Stock as set forth in any resolution or
resolutions of the Board of Directors providing for the issuance of such
stock pursuant to this Article IV, and except as otherwise provided for
herein, the holders of Class A Common Stock and Class B Common Stock are
entitled to receive dividends out of assets legally available therefor
at such times and in such per share amounts as the Board of Directors
may from time to time determine; provided that whenever a cash dividend
is paid, the same amount shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(2) Stock Dividends. If at any time a dividend is to be paid in
shares of Class A Common Stock or shares of Class B Common Stock (a
"stock dividend"), such stock dividend may be declared and paid only as
follows: only Class A Common Stock may be paid to holders of Class A
Common Stock and only Class B Common Stock may be paid to holders of
Class B Common Stock, and whenever a stock dividend is paid, the same
rate or ratio of shares shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(3) Stock Subdivisions and Combinations. The Corporation shall not
subdivide, reclassify or combine stock of either class of Common Stock
without at the same time making a proportionate subdivision or
combination of the other class.
---------------
(1) The amount of shares designated by an asterisk ("*") in Section (a) of
Article IV will be in effect in lieu of the number of shares appearing
immediately prior to such bracketed number bearing an asterisk if the Share
Increase is approved in accordance with the terms of the Agreement and Plan
of Merger.
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(4) Voting. Voting power shall be divided between the classes and
series of stock as follows:
(A) With respect to the election of directors, holders of Class
A Common Stock and holders of Voting Preferred Stock (as defined
below), voting together, shall be entitled to elect that number of
directors which constitutes 20% of the authorized number of members
of the Board of Directors (or, if such 20% is not a whole number,
then the nearest lower whole number of directors that is closest to
20% of such membership) (the "Class A Directors"). Each share of
Class A Common Stock shall have one vote in the election of the Class
A Directors and each share of Voting Preferred Stock shall have a
number of votes in the election of the Class A Directors as specified
in the resolution of the Board of Directors authorizing such Voting
Preferred Stock. Holders of Class B Common Stock shall be entitled to
elect the remaining directors (the "Class B Directors"). Each share
of Class B Common Stock shall have one vote in the election of such
directors. For purposes of this Section (b)(4) and Section (b)(5) of
this Article IV, references to the authorized number of members of
the Board of Directors (or the remaining directors) shall not include
any directors which the holders of any shares of Preferred Stock may
have the right to elect upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a
specified period of time. For purposes of this Section (b)(4),
"Special Voting Rights" means the different voting rights of the
holders of Class A Common Stock, holders of Class B Common Stock and
holders of Voting Preferred Stock with respect to the election of the
applicable percentage of the authorized number of members of the
Board of Directors as described in this Section (b)(4)(A). "Voting
Preferred Stock" means shares of each series of Preferred Stock upon
which the right to vote for directors has been conferred in
accordance with Section (c) of this Article IV, except for any right
to elect directors which may be provided upon the failure of the
Corporation to pay regular dividends on such Preferred Stock as and
when due for a specified period of time.
(B) Subject to the last sentence of this Section (b)(4)(B),
notwithstanding anything to the contrary contained in Section
(a)(4)(A) of this Article IV, for so long as any person or entity or
group of persons or entities acting in concert beneficially own 15%
or more of the outstanding shares of Class B Common Stock, then in
any election of directors or other exercise of voting rights with
respect to the election or removal of directors, such person, entity
or group shall only be entitled to vote (or otherwise exercise voting
rights with respect to) a number of shares of Class B Common Stock
that constitutes a percentage of the total number of shares of Class
B Common Stock then outstanding which is less than or equal to such
person, entity or group's Entitled Voting Percentage. For the
purposes hereof, a person, entity or group's "Entitled Voting
Percentage" at any time shall mean the percentage of the then
outstanding shares of Class A Common Stock beneficially owned by such
person, entity or group at such time. For purposes of this Section
(b)(4)(B), a "beneficial owner" of Common Stock includes any person
or entity or group of persons or entities who, directly or
indirectly, including through any contract, arrangement,
understanding, relationship or otherwise, written or oral, formal or
informal, control the voting power (which includes the power to vote
or to direct the voting) of such Common Stock. The provisions of this
Section (b)(4)(B) shall be effective only following (i) the
distribution by IMS Health Incorporated ("IMS HEALTH") to its
stockholders of all of the Class B Common Stock owned by it, (ii) the
receipt of a private letter ruling from the Internal Revenue Service
(the "IRS") to the effect that the terms of this Section (b)(4)(B)
will not have any adverse effect on the private letter ruling issued
by the IRS to IMS HEALTH on April 14, 1999 and any other private
letter ruling issued by the IRS to IMS HEALTH or any predecessor or
former parent of IMS HEALTH and (iii) the approval of the terms of
this Section (b)(4)(B) by the New York Stock Exchange, Inc. or any
other national securities exchange or automated quotation service on
which the Common Stock is then listed or admitted for trading.
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47
(C) Any Class A Director may be removed only for cause, by a
vote of a majority of the votes held by the holders of Class A Common
Stock and holders of Voting Preferred Stock, voting together as a
class. Any Class B Director may be removed only for cause, by a vote
of a majority of the votes held by the holders of Class B Common
Stock, voting separately as a class.
(D) Except as otherwise specified herein, the holders of Class A
Common Stock and holders of Class B Common Stock (i) shall in all
matters not otherwise specified in this Section (b)(4) of this
Article IV vote together (including, without limitation, with respect
to increases or decreases in the authorized number of shares of any
class of Common Stock), with each share of Class A Common Stock and
Class B Common Stock having one vote, and (ii) shall be entitled to
vote as separate classes only when required by law to do so under
mandatory statutory provisions that may not be excluded or overridden
by a provision in the Certificate of Incorporation or as provided
herein.
(E) Except as set forth in this Section (b)(4) of this Article
IV, the holders of Class A Common Stock shall have exclusive voting
power (except for any voting powers of any Preferred Stock) on all
matters at any time when no Class B Common Stock is issued and
outstanding, and the holders of Class B Common Stock shall have
exclusive voting power (except for any voting powers of any Preferred
Stock) on all matters at any time when no Class A Common Stock is
issued and outstanding.
(5) Vacancies; Increase or Decreases in Size of the Board of
Directors. Any vacancy in the office of a director created by the death,
resignation or removal of a director elected by (or appointed on behalf
of) the holders of the Class B Common Stock or the holders of the Class
A Common Stock and Voting Preferred Stock voting together as a class, as
the case may be, may be filled by the vote of the majority of the
directors (or the sole remaining director) elected by (or appointed on
behalf of) such holders of Class B Common Stock or Class A Common Stock
and Voting Preferred Stock (or on behalf of whom that director was
appointed), as the case may be, whose death, resignation or removal
created the vacancy, unless there are no such directors, in which case
such vacancy may be filled by the vote of the majority of the directors
or by the sole remaining director, regardless, in each instance, of any
quorum requirements set out in the By-laws. Any director elected by some
or all of the directors to fill a vacancy shall hold office for the
remainder of the full term of the director whose vacancy is being filled
and until such director's successor shall have been elected and
qualified unless removed and replaced pursuant to Section (b)(4)(C) of
this Article IV and this Section (b)(5). All newly-created directorships
resulting from an increase in the authorized number of directors shall
be allocated between Class A Directors and Class B Directors such that
at all times the number of directorships reserved for Class A Directors
shall be 20% of the authorized number of members of the Board of
Directors (or, if such 20% is not a whole number, then the nearest lower
whole number of directors that is closest to 20% of such membership) and
the remaining directorships are reserved for Class B Directors. No
decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director. If the number of
directors is changed, any increase or decrease shall be apportioned
among the classes of directors established pursuant to Article V so that
the number of directors in each class is as nearly equal as possible.
(6) Merger or Consolidation. In case of any consolidation of the
Corporation with one or more other corporations or a merger of the
Corporation with another corporation, each holder of a share of Class A
Common Stock shall be entitled to receive with respect to such share the
same kind and amount of shares of stock and other securities and
property (including cash) receivable upon such consolidation or merger
by a holder of a share of Class B Common Stock, and each holder of a
share of Class B Common Stock shall be entitled to receive with respect
to such share the same kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
consolidation or merger by a holder of a share of Class A Common Stock;
provided that, in any such transaction, the holders of shares of Class A
Common Stock and the holders of shares of Class B Common Stock may
receive different kinds of shares of stock if the only difference in
such shares is the inclusion of voting rights which continue the Special
Voting Rights.
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48
(7) Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, the holders of the Class A Common Stock
and Class B Common Stock shall participate equally per share in any
distribution to stockholders, without distinction between classes.
(c) Preferred Stock. Any Preferred Stock not previously designated as
to series may be issued from time to time in one or more series pursuant to
a resolution or resolutions providing for such issue duly adopted by the
Board of Directors (authority to do so being hereby expressly vested in the
Board), and such resolution or resolutions shall also set forth the voting
powers, full or limited or none, of each such series of Preferred Stock and
shall fix the designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of each such series of Preferred Stock; provided that, except
for any right to elect directors upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a specified
period of time, no series of Preferred Stock shall be entitled to vote
generally in the election of any directors of the Corporation other than
Class A Directors or to vote separately to elect one or more directors of
the Corporation. The Board of Directors is authorized to alter the
designation, rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the
Board of Directors originally fixing the number of shares constituting any
series of Preferred Stock, to increase or decrease (but not below the
number of shares of any such series than outstanding) the number of shares
of any such subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if reacquired
by the Corporation (whether by redemption, repurchase, conversion to Common
Stock or other means), shall upon such reacquisition resume the status of
authorized and unissued shares of Preferred Stock, undesignated as to
series and available for designation and issuance by the Corporation in
accordance with the immediately preceding paragraph."
The Existing Certificate of Incorporation shall be amended by deleting in
its entirety Article V thereof and replacing it with the following:
"ARTICLE V
The directors, other than those who may be elected solely by the
holders of any class or series of Preferred Stock, if any, shall be
classified, with respect to the time for which they severally hold office,
into three classes, as nearly equal in number as possible, as determined by
the Board of Directors, one class ("Class I") to hold office initially for
a term expiring at the first annual meeting of stockholders to be held
after the date this Article V becomes effective (the "Classified Board
Effective Date"), another class ("Class II") to hold office initially for a
term expiring at the second annual meeting of stockholders to be held after
the Classified Board Effective Date, and another class ("Class III") to
hold office initially for a term expiring at the third annual meeting of
stockholders to be held after the Classified Board Effective Date, with the
members of each class to hold office until their successors are elected and
qualified. Directors elected by a class or series of stock, or if
applicable, classes or series of stock voting together, shall be divided as
evenly as possible, and shall be allocated by the Board of Directors, among
Class I, Class II and Class III. At each annual meeting of stockholders,
the successors of the class of directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of their
election."
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49
EXHIBIT A-1(b)
CERTIFICATE OF INCORPORATION AMENDMENTS
(WITHOUT GOVERNANCE PROVISIONS)
The Certificate of Incorporation of the Company in effect immediately prior
to the Effective Time (the "Existing Certificate of Incorporation") shall be
amended by deleting in its entirety Article IV thereof and replacing it with the
following(1):
"ARTICLE IV
(a) Authorized Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "common stock" and
"preferred stock." The total number of shares which this corporation is
authorized to issue is two hundred four million, one hundred thousand
(204,100,000) shares [two hundred fifty-five million (255,000,000)
shares]*. Two hundred one million, six hundred thousand (201,600,000) [Two
hundred fifty million (250,000,000)]* shares shall be designated common
stock (the "Common Stock"), of which one hundred twenty million, nine
hundred sixty thousand (120,960,000) [one hundred, sixty six million
(166,000,000)]* shares shall be designated Class A Common Stock (the "Class
A Common Stock") and eighty million, six hundred forty thousand
(80,640,000) [eighty-four million (84,000,000)]* shares shall be designated
Class B Common Stock (the "Class B Common Stock"). Two million, five
hundred thousand (2,500,000) [Five million (5,000,000)]* shares shall be
designated preferred stock (the "Preferred Stock"), all of which are
presently undesignated as to series. Each share of Preferred Stock shall
have a par value of $0.01 and each share of Common Stock shall have a par
value of $0.0005.
(b) Common Stock. The Class A Common Stock and the Class B Common
Stock shall be identical in all respects, except as otherwise expressly
provided herein, and the relative powers, preferences, rights,
qualifications, limitations and restrictions of the shares of Class A
Common Stock and Class B Common Stock shall be as follows:
(1) Cash or Property Dividends. Subject to the rights and
preferences of the Preferred Stock as set forth in any resolution or
resolutions of the Board of Directors providing for the issuance of such
stock pursuant to this Article IV, and except as otherwise provided for
herein, the holders of Class A Common Stock and Class B Common Stock are
entitled to receive dividends out of assets legally available therefor
at such times and in such per share amounts as the Board of Directors
may from time to time determine; provided that whenever a cash dividend
is paid, the same amount shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(2) Stock Dividends. If at any time a dividend is to be paid in
shares of Class A Common Stock or shares of Class B Common Stock (a
"stock dividend"), such stock dividend may be declared and paid only as
follows: only Class A Common Stock may be paid to holders of Class A
Common Stock and only Class B Common Stock may be paid to holders of
Class B Common Stock, and whenever a stock dividend is paid, the same
rate or ratio of shares shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(3) Stock Subdivisions and Combinations. The corporation shall not
subdivide, reclassify or combine stock of either class of Common Stock
without at the same time making a proportionate subdivision or
combination of the other class.
---------------
(1)The amount of shares designated by an asterisk ("*") in Section (a) of
Article IV will be in effect in lieu of the number of shares appearing
immediately prior to such bracketed number bearing an asterisk if the Share
Increase is approved in accordance with the terms of the Agreement and Plan of
Merger.
1
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(4) Voting. Voting power shall be divided between the classes and
series of stock as follows:
(A) With respect to the election of directors, holders of Class
A Common Stock and holders of Voting Preferred Stock (as defined
below), voting together, shall be entitled to elect that number of
directors which constitutes 20% of the authorized number of members
of the Board of Directors (or, if such 20% is not a whole number,
then the nearest lower whole number of directors that is closest to
20% of such membership) (the "Class A Directors"). Each share of
Class A Common Stock shall have one vote in the election of the Class
A Directors and each share of Voting Preferred Stock shall have a
number of votes in the election of the Class A Directors as specified
in the resolution of the Board of Directors authorizing such Voting
Preferred Stock. Holders of Class B Common Stock shall be entitled to
elect the remaining directors (the "Class B Directors"). Each share
of Class B Common Stock shall have one vote in the election of such
directors. For purposes of this Section (b)(4) and Section (b)(5) of
this Article IV, references to the authorized number of members of
the Board of Directors (or the remaining directors) shall not include
any directors which the holders of any shares of Preferred Stock may
have the right to elect upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a
specified period of time. For purposes of this Section (b)(4),
"Special Voting Rights" means the different voting rights of the
holders of Class A Common Stock, holders of Class B Common Stock and
holders of Voting Preferred Stock with respect to the election of the
applicable percentage of the authorized number of members of the
Board of Directors as described in this Section (b)(4)(A). "Voting
Preferred Stock" means shares of each series of Preferred Stock upon
which the right to vote for directors has been conferred in
accordance with Section (c) of this Article IV, except for any right
to elect directors which may be provided upon the failure of the
Corporation to pay regular dividends on such Preferred Stock as and
when due for a specified period of time.
(B) Subject to the last sentence of this Section (b)(4)(B),
notwithstanding anything to the contrary contained in Section
(a)(4)(A) of this Article IV, for so long as any person or entity or
group of persons or entities acting in concert beneficially own 15%
or more of the outstanding shares of Class B Common Stock, then in
any election of directors or other exercise of voting rights with
respect to the election or removal of directors, such person, entity
or group shall only be entitled to vote (or otherwise exercise voting
rights with respect to) a number of shares of Class B Common Stock
that constitutes a percentage of the total number of shares of Class
B Common Stock then outstanding which is less than or equal to such
person, entity or group's Entitled Voting Percentage. For the
purposes hereof, a person, entity or group's "Entitled Voting
Percentage" at any time shall mean the percentage of the then
outstanding shares of Class A Common Stock beneficially owned by such
person, entity or group at such time. For purposes of this Section
(b)(4)(B), a "beneficial owner" of Common Stock includes any person
or entity or group of persons or entities who, directly or
indirectly, including through any contract, arrangement,
understanding, relationship or otherwise, written or oral, formal or
informal, control the voting power (which includes the power to vote
or to direct the voting) of such Common Stock. The provisions of this
Section (b)(4)(B) shall be effective only following (i) the
distribution by IMS Health Incorporated ("IMS HEALTH") to its
stockholders of all of the Class B Common Stock owned by it, (ii) the
receipt of a private letter ruling from the Internal Revenue Service
(the "IRS") to the effect that the terms of this Section (b)(4)(B)
will not have any adverse effect on the private letter ruling issued
by the IRS to IMS HEALTH on April 14, 1999 and any other private
letter ruling issued by the IRS to IMS HEALTH or any predecessor or
former parent of IMS HEALTH and (iii) the approval of the terms of
this Section (b)(4)(B) by the New York Stock Exchange, Inc. or any
other national securities exchange or automated quotation service on
which the Common Stock is then listed or admitted for trading.
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51
(C) Any Class A Director may be removed, with or without cause,
by a vote of a majority of the votes held by the holders of Class A
Common Stock and holders of Voting Preferred Stock, voting together
as a class. Any Class B Director may be removed, with or without
cause, by a vote of a majority of the votes held by the holders of
Class B Common Stock, voting separately as a class.
(D) Except as otherwise specified herein, the holders of Class A
Common Stock and holders of Class B Common Stock (i) shall in all
matters not otherwise specified in this Section (b)(4) of this
Article IV vote together (including, without limitation, with respect
to increases or decreases in the authorized number of shares of any
class of Common Stock), with each share of Class A Common Stock and
Class B Common Stock having one vote, and (ii) shall be entitled to
vote as separate classes only when required by law to do so under
mandatory statutory provisions that may not be excluded or overridden
by a provision in the Certificate of Incorporation or as provided
herein.
(E) Except as set forth in this Section (b)(4) of this Article
IV, the holders of Class A Common Stock shall have exclusive voting
power (except for any voting powers of any Preferred Stock) on all
matters at any time when no Class B Common Stock is issued and
outstanding, and the holders of Class B Common Stock shall have
exclusive voting power (except for any voting powers of any Preferred
Stock) on all matters at any time when no Class A Common Stock is
issued and outstanding.
(5) Increase or Decreases in Size of the Board of Directors. All
newly-created directorships resulting from an increase in the authorized
number of directors shall be allocated between Class A Directors and
Class B Directors such that at all times the number of directorships
reserved for Class A Directors shall be 20% of the authorized number of
members of the Board of Directors (or, if such 20% is not a whole
number, then the nearest lower whole number of directors that is closest
to 20% of such membership) and the remaining directorships are reserved
for Class B Directors. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any
incumbent director.
(6) Merger or Consolidation. In case of any consolidation of the
Corporation with one or more other corporations or a merger of the
Corporation with another corporation, each holder of a share of Class A
Common Stock shall be entitled to receive with respect to such share the
same kind and amount of shares of stock and other securities and
property (including cash) receivable upon such consolidation or merger
by a holder of a share of Class B Common Stock, and each holder of a
share of Class B Common Stock shall be entitled to receive with respect
to such share the same kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
consolidation or merger by a holder of a share of Class A Common Stock;
provided that, in any such transaction, the holders of shares of Class A
Common Stock and the holders of shares of Class B Common Stock may
receive different kinds of shares of stock if the only difference in
such shares is the inclusion of voting rights which continue the Special
Voting Rights.
(7) Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, the holders of the Class A Common Stock
and Class B Common Stock shall participate equally per share in any
distribution to stockholders, without distinction between classes.
(c) Preferred Stock. Any Preferred Stock not previously designated as
to series may be issued from time to time in one or more series pursuant to
a resolution or resolutions providing for such issue duly adopted by the
Board of Directors (authority to do so being hereby expressly vested in the
Board), and such resolution or resolutions shall also set forth the voting
powers, full or limited or none, of each such series of Preferred Stock and
shall fix the designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of each such series of Preferred Stock; provided that, except
for any right to elect directors upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a specified
period of time, no series of Preferred Stock shall be entitled to vote
generally in the election of any directors of the Corporation other than
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52
Class A Directors or to vote separately to elect one or more directors of
the Corporation. The Board of Directors is authorized to alter the
designation, rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the
Board of Directors originally fixing the number of shares constituting any
series of Preferred Stock, to increase or decrease (but not below the
number of shares of any such series than outstanding) the number of shares
of any such subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if reacquired
by the Corporation (whether by redemption, repurchase, conversion to Common
Stock or other means), shall upon such reacquisition resume the status of
authorized and unissued shares of Preferred Stock, undesignated as to
series and available for designation and issuance by the Corporation in
accordance with the immediately preceding paragraph."
The Existing Certificate of Incorporation shall be amended by deleting in
its entirety Article V thereof and renumbering Articles VI, VII, VIII and IX
thereof as Articles V, VI, VII and VIII, respectively.
The Existing Certificate of Incorporation shall be amended by deleting the
reference to Article VIII in Article VIII thereof and replacing it with "Article
VII".
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53
EXHIBIT A-1(c)
BY-LAW AMENDMENTS
(WITH GOVERNANCE PROVISIONS)
The By-laws of the Corporation in effect at the Effective Time (the
"Existing By-laws") shall be amended by adding the phrase "class and"
immediately preceding the phrase "number of shares" in the first sentence of
Section 5 of Article II thereof.
The Existing By-laws shall be amended by deleting in its entirety Section 2
of Article III thereof and replacing it with the following:
"The number of directors which shall constitute the board of directors
shall be ten (10). The number of directors may be changed from time to
time by resolution of the board of directors or the stockholders,
although in no event shall the number of directors be less than five (5)
for so long as the Special Voting Rights (as defined in Article IV,
Section (b)(4)(A) of the Certificate of Incorporation) shall be in
effect. Each director shall be elected by a plurality of the votes of
the shares of one or more class or classes or series of stock (as
provided in the Certificate of Incorporation), as the case may be,
entitled to vote for such director that are present in person or
represented by proxy at the annual meeting of stockholders. At each
annual meeting of the stockholders, the stockholders shall elect the
successors of the class of directors whose terms expire at such meeting,
to hold office until their successors are duly elected and qualified at
the third annual meeting of stockholders following the year of their
election or until their earlier death, resignation or removal as herein
or in the Certificate of Incorporation provided. The directors shall be
elected in this manner, except as provided in Section 4 of this Article
III and the Certificate of Incorporation."
The Existing By-laws shall be amended by deleting the first sentence of
Section 4 of Article III thereof and replacing it with the following:
"Vacancies resulting from newly created directorships resulting from an
increase in the authorized number of directors and vacancies resulting
from the death, resignation or removal of a director elected by (or
appointed on behalf of) the holders of one or more class or classes or
series of stock (as provided in the Certificate of Incorporation),
voting together as a class, as the case may be, shall be filled by the
vote of the majority of the directors (or the sole remaining director)
elected by (or appointed on behalf of) such holders of one or more class
or classes or series of stock (as provided in the Certificate of
Incorporation) (or on whose behalf the director was appointed), as the
case may be, whose death, resignation or removal created the vacancy, or
to which the newly-created directorship has been allocated."
The Existing By-laws shall be amended by deleting the phrase "each
newly-elected board of directors" in Section 5 of Article III thereof and
replacing it with the phrase "the board of directors."
1
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EXHIBIT A-1(d)
BY-LAW AMENDMENTS
(WITHOUT GOVERNANCE PROVISIONS)
The By-laws of the Corporation in effect at the Effective Time (the
"Existing By-laws") shall be amended by adding the phrase "class and"
immediately preceding the phrase "number of shares" in the first sentence of
Section 5 of Article II thereof.
The Existing By-laws shall be amended by deleting in its entirety Section 2
of Article III thereof and replacing it with the following:
"The number of directors which shall constitute the board of directors
shall be ten (10). The number of directors may be changed from time to
time by resolution of the board of directors or the stockholders,
although in no event shall the number of directors be less than five (5)
for so long as the Special Voting Rights (as defined in Article IV,
Section (b)(4)(A) of the Certificate of Incorporation) shall be in
effect. Each director shall be elected by a plurality of the votes of
the shares of one or more class or classes or series of stock (as
provided in the Certificate of Incorporation), as the case may be,
entitled to vote for such director that are present in person or
represented by proxy at the annual meeting of stockholders. Each
director elected shall hold office until a successor is duly elected and
qualified or until his earlier death, resignation or removal as herein
and in the Certificate of Incorporation provided. The directors shall be
elected in this manner, except as provided in Section 4 of this Article
III and the Certificate of Incorporation."
The Existing By-laws shall be amended by deleting the first sentence of
Section 4 of Article III thereof and replacing it with the following:
"Vacancies resulting from newly created directorships resulting from an
increase in the authorized number of directors and vacancies resulting
from the death, resignation or removal of a director elected by (or
appointed on behalf of) the holders of one or more class or classes or
series of stock (as provided in the Certificate of Incorporation),
voting together as a class, as the case may be, shall be filled by the
vote of the majority of the directors (or the sole remaining director)
elected by (or appointed on behalf of) such holders of one or more class
or classes or series of stock (as provided in the Certificate of
Incorporation) (or on whose behalf the director was appointed), as the
case may be, whose death, resignation or removal created the vacancy, or
to which the newly-created directorship has been allocated."
The Existing By-laws shall be amended by deleting the phrase "each
newly-elected board of directors" in Section 5 of Article III thereof and
replacing it with the phrase "the board of directors."
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55
EXHIBIT A-1(e)
DIRECTORS AT THE EFFECTIVE TIME
(IF GOVERNANCE
DIRECTORS DESIGNATED AS PROVISIONS APPROVED)
NAME OF DIRECTOR CLASS A OR CLASS B DIRECTOR CLASS
---------------- ----------------------- --------------------
▇▇▇▇ ▇. ▇▇▇▇▇....................................... Class B Term Expiring 2000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................................. Class B Term Expiring 2000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.................................. Class B Term Expiring 2000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇................................. Class A Term Expiring 2001
▇▇▇▇▇▇ ▇. ▇▇▇▇▇..................................... Class B Term Expiring 2001
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇............................... Class B Term Expiring 2001
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.................................... Class A Term Expiring 2002
▇▇▇ ▇. ▇▇▇▇▇▇....................................... Class B Term Expiring 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇....................................... Class B Term Expiring 2002
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................................. Class B Term Expiring 2002
1