EXHIBIT 10.1
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);
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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.
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 I.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.
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(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.
(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
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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,
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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 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.
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(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.
(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
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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 R.H. Donnelley Corporation ("RHD") and ACNielsen
Corporation ("ACNielsen") dated as of October 28, 1996.
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(ww) "1998 Distribution Agreement" shall mean the Distribution
Agreement between Cognizant Corporation, which has been renamed Nielsen
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.
(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).
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(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 I.2 References; Interpretation. References in this Agreement to any
gender include references to all genders, and references to the singular include
references to the plural and vice versa. The words "include", "includes" and
"including" when used in this Agreement shall be deemed to be followed by the
phrase "without limitation". Unless the context otherwise requires, references
in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, such
Agreement. Unless the context otherwise requires, the words "hereof", "hereby"
and "herein" and words of similar meaning when used in this Agreement refer to
this Agreement in its entirety and not to any particular Article, Section or
provision of this Agreement.
ARTICLE II. DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS AND
REPRESENTATIONS AND WARRANTIES
SECTION II.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
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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;
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(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;
(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
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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 Nielsen 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 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
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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.
14
(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 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 Gideon I. Gartner 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 II.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
15
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 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;
16
(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, (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
17
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 II.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 II.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 quicky 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
18
(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 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 II.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 II.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
19
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
Hart-Scott-Rodino 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
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
20
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
21
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.
(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
22
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 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,
23
(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
24
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 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 III.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 III.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
25
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 III.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
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
26
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.
(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.
27
(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 III.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 IV.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 IV.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.
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SECTION IV.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.
(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
29
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
30
(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 IV.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 IV.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 V.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
31
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 V.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. ss.10(a) as in effect on the date
hereof). If the parties are unable to agree on the arbitrator, the arbitrator
shall be selected in accordance with the Rules; provided that the arbitrator
shall be a U.S. national. Any controversy concerning whether an Agreement
Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived,
whether an assignee of this Agreement is bound to arbitrate, or as to the
interpretation of enforceability of this Article 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 V.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
32
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 VI.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 VI.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 VI.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 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
33
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
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Insured Claim to the extent coverage limits under a Shared Policy have been
exceeded or would be exceeded as a result of such Insured Claim.
(d) Allocation of Deductibles. In the event that both parties have bona
fide claims under any Shared Policy for which 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 VI.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 VI.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 VII.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 VII.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 VII.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 VII.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.
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SECTION VII.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
200 Nyala Farms
Westport, CT 06880
Telecopy: (203) 222-4313
Attn: General Counsel
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopy: (212) 455-2502
Attn: Joel S. Hoffman, Esq.
To Gartner:
Gartner Group, Inc.
P.O. Box 10212
56 Top Gallant Road
Stamford, CT 06904
Telecopy: (203) 316-6488
Attn: Michael Fleisher
Chief Financial Officer
36
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Telecopy: (650) 493-6811
Attn: Larry W. Sonsini, Esq.
Howard S. Zeprun, Esq.
SECTION VII.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 VII.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 VII.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 VII.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 VII.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.
38
SECTION VII.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 VII.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 VII.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 VII.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 VII.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 VII.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 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.
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SECTION VII.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.
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:
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Name:
Title:
GARTNER GROUP, INC.
By:
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Name:
Title: