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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
GARTNER GROUP, INC.
(NAME OF ISSUER)
GARTNER GROUP, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, CLASS A, PAR VALUE $0.0005 PER SHARE
COMMON STOCK, CLASS B, PAR VALUE $0.0005 PER SHARE
(TITLE OF CLASS OF SECURITIES)
366651 10 7 (CLASS A COMMON STOCK)
366651 20 6 (CLASS B COMMON STOCK)
(CUSIP NUMBER OF CLASS OF SECURITIES)
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MICHAEL D. FLEISHER
GARTNER GROUP, INC.
56 TOP GALLANT ROAD
STAMFORD, CT 06904
(203) 964-0096
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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COPY TO:
HOWARD S. ZEPRUN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
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JULY 27, 1999
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$376,800,000 $75,360
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* For the purpose of calculating the filing fee only, this amount is based on the
purchase of an aggregate of 15,700,000 shares of Common Stock, consisting of 9,600,000
shares of Common Stock, Class A, par value $0.0005 per share, and 6,100,000 shares of
Common Stock, Class B, par value $0.0005 per share, of Gartner Group, Inc. at a maximum
price of $24 per share.
** The amount of the filing fee equals 1/50th of one percent (0.02%) of the value of the
securities to be acquired.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify
the filing with which the offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the form or schedule and the date of its
filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing party: Not applicable.
Date Filed: Not applicable.
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This Issuer Tender Offer Statement on Schedule 13E-4 (this "Schedule
13E-4") relates to the offer by Gartner Group, Inc., a Delaware corporation (the
"Company" or the "Issuer"), to purchase up to 15,700,000 shares of its Common
Stock, par value $0.0005 per share, consisting of 9,600,000 shares of Common
Stock, Class A ("Class A Common Stock") and 6,100,000 shares of Common Stock,
Class B ("Class B Common Stock"; together with the Class A Common Stock, the
"Common Stock" or the "Shares"). Such shares shall be repurchased at prices not
less than $21 nor more than $24 per share, net to the seller in cash, without
interest thereon, as specified by stockholders tendering their Shares, upon the
terms and subject to the conditions set forth in the attached Offer to Purchase
dated July 27, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"), and is intended to satisfy the reporting requirements
of Section 13(e) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Copies of the Offer to Purchase and the related Letter of
Transmittal are filed with this Schedule 13E-4 as Exhibits (a)(1) and (a)(2)
hereto, respectively. Pursuant to Rule 13e-4(f)(1)(ii) under the Exchange Act,
the total number of shares to be repurchased may be increased to 17,793,644
shares, consisting of 10,879,851 shares of Class A Common Stock and 6,913,793
shares of Class B Common Stock.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Gartner Group, Inc., a Delaware corporation,
and the address of its principal executive office is 56 Top Gallant Road,
Stamford, CT 06904.
(b) The securities which are the subject of the Offer are the Company's
Class A Common Stock, and Class B Common Stock, and the Offer is for up to
15,700,000 shares of Common Stock, consisting of up to 9,600,000 shares of Class
A Common Stock and up to 6,100,000 shares of Class B Common Stock (or in each
case such lesser number of Shares as are properly tendered, provided that the
Class A Common Stock and Class B Common Stock shall only be repurchased in
proportion to the ratio of 9,600,000 shares of Class A Common Stock to 6,100,000
shares of Class B Common Stock). The shares of each class of Common Stock shall
be purchased at a price not less than $21 nor more than $24 per share, net to
the seller in cash, without interest, as specified by stockholders tendering
their shares. The purchase prices for the Class A Common Stock and Class B
Common Stock need not be identical. The Offer is being made to all holders of
Common Stock. The information set forth in the "Introduction" to the Offer to
Purchase and in Sections 1 and 10 of the Offer to Purchase is incorporated
herein by reference.
(c) The information regarding the market for the Common Stock, as set forth
in the "Introduction" to the Offer to Purchase and in Section 7 of the Offer to
Purchase, is incorporated herein by reference.
(d) This statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information regarding the source and amount of funds for the
Offer, as set forth in the "Introduction" to the Offer to Purchase and in
Section 8 of the Offer to Purchase, is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information regarding the background and purpose of the tender offer,
as set forth in the "Introduction" to the Offer to Purchase and in Section 2 of
the Offer to Purchase, is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information regarding recent transactions in securities of the Issuer,
as set forth in Sections 2 and 10 of the Offer to Purchase, is incorporated
herein by reference.
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ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information regarding arrangements relating to this offer, as set forth
in the "Introduction" to the Offer to Purchase and in Sections 2 and 10 of the
Offer to Purchase, is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
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(a)(1) The Company's audited financial statements as of and for the
fiscal years ended September 30, 1997 and 1998 are
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended September 30, 1998, as filed
with the Securities and Exchange Commission (the
"Commission").
(a)(2) The Company's unaudited financial statements as of and for
the periods ended March 31, 1998 and March 31, 1999 are
incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1999, as filed
with the Commission.
(a)(3) The information in Section 9 of the Offer to Purchase is
incorporated by reference.
(a)(4) The information in Section 9 of the Offer to Purchase is
incorporated by reference.
(b) The information in Section 9 of the Offer to Purchase is
incorporated by reference.
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ITEM 8. ADDITIONAL INFORMATION.
(a) The information set forth in Sections 2 and 10 of the Offer to Purchase
is incorporated herein by reference.
(b) The information set forth in Sections 11 and 12 of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the entire Offer to Purchase and the
related Letter of Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase.
(a)(2)-A Letter of Transmittal for Holders of Class A Common Stock.
(a)(2)-B Letter of Transmittal for Holders of Class B Common Stock.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Letter to stockholders from Michael D. Fleisher, Executive
Vice President and Chief Financial Officer of the Company,
dated July 27, 1999.
(a)(7) Letter from Bankers Trust Company, as trustee, to
participants in the IMS Health Incorporated Savings Plan,
including the Direction Form for use by participants in such
plan.
(a)(8) Letter from Fidelity Management Trust Co., as trustee, to
participants in the Gartner Group, Inc. Savings and
Investment Plan, including the Direction Form for use by
participants in such plan.*
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(a)(9) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(10) Summary Advertisement dated July 27, 1999.
(a)(11) Press Release dated July 26, 1999.
(b) Credit Agreement dated July 16, 1999, by and among the Company and certain financial institutions,
including Chase Manhattan Bank, in its capacity as a lender and as administrative agent for the
lenders.
(c) Distribution Agreement dated June 17, 1999 between the Company and IMS Health Incorporated,
including as an exhibit thereto the Agreement and Plan of Merger dated June 17, 1999 among IMS
Health Incorporated, the Company and GRGI, Inc.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
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* To be filed by Amendment.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
GARTNER GROUP, INC.
By: /s/ MICHAEL D. FLEISHER
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Name: Michael D. Fleisher
Title: Executive Vice President
and Chief Financial Officer
Dated: July 27, 1999
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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(a)(1) Offer to Purchase.
(a)(2)-A Letter of Transmittal for Holders of Class A Common Stock.
(a)(2)-B Letter of Transmittal for Holders of Class B Common Stock.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Letter to stockholders from Michael D. Fleisher, Executive
Vice President and Chief Financial Officer of the Company
dated July 27, 1999.
(a)(7) Letter from Bankers Trust Company, as trustee, to
participants in the IMS Health Incorporated Savings Plan,
including the Direction Form for use by participants in such
plan.
(a)(8) Letter from Fidelity Management Trust Co., as trustee, to
participants in the Gartner Group, Inc. Savings and
Investment Plan, including the Direction Form for use by
participants in such plan.*
(a)(9) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(10) Summary Advertisement dated July 27, 1999.
(a)(11) Press Release dated July 26, 1999.
(b) Credit Agreement dated July 16, 1999 by and among the
Company and certain financial institutions, including Chase
Manhattan Bank in its capacity as a lender and as agent for
the lenders.
(c) Distribution Agreement dated June 17, 1999 between the
Company and IMS Health Incorporated, including as an exhibit
thereto the Agreement and Plan of Merger dated June 17, 1999
among IMS Health Incorporated, the Company and GRGI, Inc.
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* To be filed by Amendment.
5
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EXHIBIT (a)(1)
GARTNER GROUP, INC.
OFFER TO PURCHASE FOR CASH
UP TO 15,700,000 SHARES OF COMMON STOCK,
CONSISTING OF
UP TO 9,600,000 SHARES OF CLASS A COMMON STOCK
AND UP TO 6,100,000 SHARES OF CLASS B COMMON STOCK,
EACH AT A PURCHASE PRICE
NOT LESS THAN $21 NOR MORE THAN $24 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME,
ON TUESDAY, AUGUST 24, 1999, UNLESS THE OFFER IS EXTENDED.
Gartner Group, Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender shares of the Company's Common Stock, Class A ("Class A
Common Stock") and Common Stock, Class B ("Class B Common Stock"; together with
the Class A Common Stock, "Common Stock") to the Company. Shares may be tendered
at prices specified by the individual stockholders tendering their shares, but
at prices not less than $21 nor more than $24 per share, net to the seller in
cash, without interest. Shares must be tendered on the terms and subject to the
conditions set forth herein and in the related letters of transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer").
The Company will determine the single per share price, net to the seller,
that it will pay for shares of Class A Common Stock properly tendered pursuant
to the Offer and not properly withdrawn (the "Class A Purchase Price"), taking
into account the number of shares of Class A Common Stock tendered and the
prices specified by tendering stockholders. Such purchase price will be the
lowest purchase price that will allow the Company to buy 9,600,000 shares of
Class A Common Stock (or such lesser number of shares as are properly tendered).
Similarly, the Company will determine the single per share price, net to the
seller, that it will pay for shares of Class B Common Stock properly tendered
pursuant to the Offer and not properly withdrawn (the "Class B Purchase Price";
the Class A Purchase Price and Class B Purchase Price are each referred to as a
"Purchase Price"), taking into account the number of shares of Class B Common
Stock tendered and the prices specified by tendering stockholders. Such purchase
price will be the lowest purchase price that will allow the Company to buy
6,100,000 shares of Class B Common Stock (or such lesser number of shares as are
properly tendered).
Notwithstanding the foregoing, the Company will only repurchase shares of
Class A Common Stock and Class B Common Stock in the same proportion as the
ratio of the numbers of shares of Class A Common Stock and Class B Common Stock
outstanding as of July 26, 1999. At such date, 63,992,550 shares of Class A
Common Stock were outstanding, representing 61.1% of the outstanding Common
Stock, and 40,689,648 shares of Class B Common Stock were outstanding,
representing 38.9% of the outstanding Common Stock. If stockholders do not
properly tender shares in these proportions, then the Company will only purchase
the largest number of properly tendered shares of each class that will enable it
to maintain these proportions, and the Purchase Price for each class will be
determined upon the basis of the number of shares of such class so purchased.
Since each Purchase Price is separately determined, the Class A Purchase
Price and Class B Purchase Price need not be identical.
Subject to the foregoing, all shares properly tendered at prices at or below
the applicable Purchase Price and not properly withdrawn will be purchased at
the applicable Purchase Price, upon the terms and subject to the conditions of
the Offer, including the proration provisions.
The Company reserves the right, in its sole discretion, to purchase more
than 15,700,000 shares pursuant to the Offer. Shares tendered at prices in
excess of the applicable Purchase Price and shares not purchased because of the
proportionality and proration provisions will be returned. See Section 14.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
The Class A Common Stock is listed and traded on the New York Stock Exchange
("NYSE") under the symbol "IT" and the Class B Common Stock is listed and traded
on the NYSE under the symbol "IT-B". On July 23,1999, the last full trading day
prior to the announcement of the Offer, the closing per share sales prices as
reported on the NYSE composite tape were $22.00 per share of Class A Common
Stock and $21.63 per share of Class B Common Stock. STOCKHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. See Section 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY, ITS BOARD OF DIRECTORS, NOR THE DEALER MANAGER MAKES ANY
RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SUCH
STOCKHOLDER'S SHARES AND, IF SO, HOW MANY SHARES OF EACH CLASS TO TENDER AND THE
PRICE OR PRICES AT WHICH SUCH SHARES SHOULD BE TENDERED. THE COMPANY'S DIRECTORS
AND OFFICERS HAVE AGREED NOT TO PARTICIPATE IN THIS OFFER.
PROCEDURES
Any stockholder wishing to tender all or any part of such stockholder's
shares of Common Stock should either (a) complete and sign a Letter of
Transmittal (or a manually signed facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver such Letter of
Transmittal, together with any required signature guarantee and any other
required documents, to EquiServe L.P., which is serving as the depositary for
the Company in connection with the Offer (the "Depositary"), and mail or deliver
the certificates for such shares to the Depositary (together with any other
documents required by the Letter of Transmittal) or tender such shares pursuant
to the procedure for book-entry transfer set forth in Section 3, or (b) request
a broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Holders of shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee should contact
such person if they desire to tender their shares. Participants in the Gartner
Group, Inc. Savings and Investment Plan or the IMS Health Incorporated Savings
Plan who desire to participate in the Offer should follow the procedures
described more fully in Section 3. Any stockholder who desires to tender shares
and whose certificates for such shares are not immediately available or cannot
be delivered to the Depositary or who cannot comply with the procedure for
book-entry transfer or whose other required documents cannot be delivered to the
Depositary, in any case, by the expiration of the Offer must tender such shares
pursuant to the guaranteed delivery procedure set forth in Section 3.
TO PROPERLY TENDER SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE AND EXECUTE
ONE OR MORE LETTERS OF TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE PRICE
AT WHICH THEY ARE TENDERING SHARES. STOCKHOLDERS SHOULD NOTE THAT A DIFFERENT
FORM OF LETTER OF TRANSMITTAL IS PROVIDED FOR EACH CLASS OF COMMON STOCK.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
The Dealer Manager for the Offer is:
[Credit First Suisse Logo]
July 27, 1999
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TABLE OF CONTENTS
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PAGE
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SUMMARY..................................................... 1
INTRODUCTION................................................ 4
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE............. 7
CERTAIN CONSIDERATIONS...................................... 8
THE OFFER................................................... 13
1. Number of Shares; Purchase Price; Proration........... 13
2. Purpose of the Offer; Certain Effects of the Offer.... 15
3. Procedures for Tendering Shares....................... 19
4. Withdrawal Rights..................................... 24
5. Purchase of Shares and Payment of Purchase Price...... 25
6. Certain Conditions of the Offer....................... 26
7. Price Range of Shares................................. 27
8. Source and Amount of Funds............................ 28
9. Certain Information Concerning the Company............ 30
10. Interests of Directors, Officers and Principal
Stockholders; Transactions and Arrangements
Concerning Shares.................................... 33
11. Effects of the Offer on the Market for Shares;
Registration Under the Exchange Act.................. 34
12. Certain Legal Matters; Regulatory Approvals........... 34
13. Certain United States Federal Income Tax
Consequences......................................... 34
14. Extension of the Offer; Termination; Amendment........ 36
15. Fees and Expenses..................................... 37
16. Miscellaneous......................................... 37
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SUMMARY
This general summary is solely for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details set forth in this Offer to Purchase.
Purchase Price................ The Company will determine a single net cash
purchase price per share of Class A Common
Stock, which will be not less than $21 nor more
than $24 per share. The Company will select the
lowest Class A Purchase Price that will allow
it to buy (a) 9,600,000 shares of Class A
Common Stock, (b) such lesser number of shares
as are validly tendered or (c) such lesser
number of validly tendered shares as are
necessary to ensure that the Company
repurchases shares of Class A Common Stock and
Class B Common Stock in the same proportion as
the ratio of the numbers of shares of Class A
Common Stock and Class B Common Stock
outstanding on July 26, 1999. All shares of
Class A Common Stock purchased by the Company
will be purchased at such Class A Purchase
Price even if tendered below such Purchase
Price.
Similarly, the Company will determine a single
net cash purchase price per share of Class B
Common Stock, which will be not less than $21
nor more than $24 per share. The Company will
select the lowest Class B Purchase Price that
will allow it to buy (a) 6,100,000 shares of
Class B Common Stock, (b) such lesser number of
shares as are validly tendered or (c) such
lesser number of validly tendered shares as are
necessary to ensure that the Company
repurchases shares of Class A Common Stock and
Class B Common Stock in the same proportion as
the ratio of the numbers of shares of Class A
Common Stock and Class B Common Stock
outstanding on July 26, 1999. All shares of
Class B Common Stock purchased by the Company
will be purchased at such Class B Purchase
Price even if tendered below such Purchase
Price.
The Purchase Price of each class of Common
Stock will be determined based upon the number
of shares actually purchased by the Company
pursuant to the Offer. The Class A Purchase
Price and Class B Purchase Price need not be
identical.
Each stockholder desiring to tender shares of a
class must specify in the appropriate Letter of
Transmittal for the class of shares to be
tendered, (a) the number of shares of such
class tendered, and (b) the minimum price (not
less than $21 nor more than $24 per share) at
which the stockholder is willing to have shares
of such class purchased by the Company.
Stockholders wishing to maximize the
possibility that their shares will be purchased
may elect to have such stockholder's shares
purchased at the applicable class price
determined by the Dutch Auction tender process,
by checking the box in the applicable Letter of
Transmittal marked "Shares Tendered at Price
Determined by Dutch Auction." In such event,
such shares could be purchased at a price as
low as the minimum price of $21 per share or as
high as the maximum price of $24 per share.
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Numbers of Shares to be
Purchased..................... 15,700,000 shares of Common Stock, consisting
of 9,600,000 shares of Class A Common Stock and
6,100,000 shares of Class B Common Stock (or,
in each case, such lesser number of shares as
are properly tendered). However, the Company
will only repurchase shares of Class A Common
Stock and Class B Common Stock in the same
proportion as the ratio of the numbers of
shares of Class A Common Stock and Class B
Common Stock outstanding on July 26, 1999. At
such date a total of 63,992,550 shares of Class
A Common Stock (61.1%) and 40,689,648 shares of
Class B Common Stock (38.9%) were outstanding.
If stockholders do not properly tender shares
in these proportions, then the Company will
only purchase the largest number of properly
tendered shares of each class that will enable
it to maintain these proportions, and the
Purchase Price for each class will be
determined upon the basis of the number of
shares of such class so purchased.
How to Tender Shares.......... A stockholder desiring to tender shares of more
than one class, or desiring to tender shares of
the same class at different prices, must
complete the appropriate Letter of Transmittal
for each class tendered and a separate Letter
of Transmittal for each price at which shares
are tendered. See Section 3. Contact the
Information Agent, the Dealer Manager or
consult your broker for assistance.
Brokerage Commissions......... None for registered stockholders who tender
their shares directly to the Depositary.
Stockholders holding shares through brokers or
banks are urged to consult the brokers or banks
to determine whether transaction costs are
applicable if stockholders tender shares
through the brokers or banks and not directly
to the Depositary.
Stock Transfer Tax............ None, if payment is made to the registered
holder of shares.
Proration..................... If stockholders tender more shares that the
Company desires to purchase, proration will be
necessary. Proration for each stockholder
properly tendering shares, other than Odd Lot
Holders (as defined below), will be based on
the ratio of the number of shares of the class
properly tendered by such stockholder at or
below the applicable Purchase Price (and not
properly withdrawn prior to the Expiration
Date) to the total number of shares of that
class properly tendered by all stockholders,
other than Odd Lot Holders, at or below the
applicable Purchase Price (and not properly
withdrawn prior to the Expiration Date).
Odd Lots...................... There will be no proration of shares tendered
by any stockholder owning beneficially or of
record fewer than 100 shares of either class as
of the close of business on July 27, 1999 and
as of the Expiration Date, if the stockholder
tenders all shares of such class owned by the
stockholder at or below the applicable Purchase
Price prior to the Expiration Date and
completes the section entitled "Odd Lots" in
the appropriate Letter of Transmittal. See
Section 1.
Expiration and Proration
Dates......................... Tuesday, August 24, 1999, at 12:00 Midnight,
New York City time, unless the Offer is
extended by the Company.
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Payment Date.................. As soon as practicable after the termination of
the Offer.
Position of the Company and
its Board of Directors........ Neither the Company, its Board of Directors,
nor the Dealer Manager makes any recommendation
to stockholders as to whether to tender or
refrain from tendering their shares. Each
stockholder must make the decision whether to
tender shares and, if so, how many shares of
each class to tender and the price or prices at
which such shares should be tendered. Directors
and officers of the Company have agreed not to
participate in the Offer as they are prohibited
from doing so under the terms of the Company's
agreements with IMS Health Incorporated.
Withdrawal Rights............. Tendered shares may be withdrawn at any time
prior to 12:00 Midnight, New York City time, on
Tuesday, August 24, 1999, unless the Offer is
extended by the Company, and, unless previously
accepted for payment, at any time after 12:00
Midnight, New York City time, on Tuesday,
September 21, 1999. See Section 4.
Further Developments Regarding
the Offer..................... Call the Information Agent or Dealer Manager or
consult your broker.
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OFFER TO PURCHASE FOR CASH
INTRODUCTION
General. Gartner Group, Inc., a Delaware corporation (the "Company"),
invites its stockholders to tender shares of the Company's Common Stock, Class A
("Class A Common Stock") and Common Stock, Class B ("Class B Common Stock";
together with the Class A Common Stock, "Common Stock" or the "Shares") to the
Company. Shares may be tendered at prices specified by the individual
stockholders tendering their shares, but at prices not less than $21 nor more
than $24 per share, net to the seller in cash, without interest. Shares must be
tendered on the terms and subject to the conditions set forth herein and in the
related letter of transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer").
Background and Purpose of the Transaction. The Offer to Purchase is being
effected as part of a series of transactions (the "IMS Transactions") that have
previously been initiated as a result of certain agreements entered into in June
1999 between the Company and IMS Health Incorporated ("IMS Health"). IMS Health
was until recently the holder of approximately 46% of the outstanding shares of
capital stock of the Company. The IMS Transactions, of which this Offer is a
part, were implemented in order to effect the separation of the Company and IMS
Health.
This separation has been implemented through the tax-free distribution by
IMS Health to its stockholders of approximately 40.7 million shares of Class B
Common Stock held by IMS Health (the "Distribution"). In order to permit the
Distribution to be tax-free for United States federal income tax purposes, and
thereby in order to make the Distribution possible, the Company effected certain
changes to its capital structure as described more fully below. These changes
included the creation of a new class of 40,689,648 shares of Class B Common
Stock and the issuance of such Class B Common Stock to IMS Health in exchange
for a like number of shares of Class A Common Stock previously held by IMS
Health. These shares of Class B Common Stock were then distributed by IMS
Health, in the Distribution, to IMS Health stockholders of record as of July 17,
1999. In addition, in connection with the Distribution, the Company has recently
paid a $125 million cash dividend to all stockholders of record as of July 16,
1999, and is undertaking to commence a share repurchase program, including this
Offer to Purchase, to repurchase approximately 20% of the outstanding Common
Stock. The IMS Transactions were designed to give effective control of the
Company to public stockholders, to return immediate value to the Company's
stockholders, and to permit the Company and IMS Health to focus more closely on
their respective businesses in the future.
The Offer is intended to help mitigate the effects of any excess supply in
the market for the Common Stock resulting from the IMS Transactions,
particularly the Distribution, which has significantly increased the amount of
Common Stock available for sale in the public market. The Offer provides to
stockholders who are considering a sale of all or a portion of their Common
Stock the opportunity to determine the price or prices (not less than $21 nor
more than $24 per share) at which they are willing to sell shares and, where
shares are tendered by the registered owner directly to the Depositary, to sell
those shares without the usual transaction costs associated with open market
sales. In addition, the Offer may give stockholders the opportunity to sell at
prices greater than market prices prevailing prior to the announcement of the
Offer. Stockholders are urged to obtain current market quotations for their
shares. See Section 7. The Offer also allows stockholders to sell a portion of
their shares while retaining a continuing equity interest in the Company.
Stockholders who determine not to accept the Offer will realize a proportionate
increase in their relative equity interest in the Company, and thus in the
Company's future earnings and assets, subject to the Company's right to issue
additional equity securities in the future.
In determining whether to tender shares pursuant to the Offer, stockholders
should consider the possibility that they may be able to sell their shares in
the future on the NYSE or otherwise, including in connection with a sale of the
Company, at a net price higher than the applicable Purchase Price. See Section
2. The Company can give no assurance, however, as to the price at which a
stockholder may be able to sell non-tendered shares in the future.
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Purchase Prices. The Company will determine the single per share price,
not less than $21 nor more than $24 per share, net to the seller in cash,
without interest, that it will pay for shares of Class A Common Stock properly
tendered pursuant to the Offer and not properly withdrawn (the "Class A Purchase
Price"), taking into account the number of shares tendered and the prices
specified by tendering stockholders. The Company will select the lowest purchase
price that will allow it to buy 9,600,000 shares of Class A Common Stock (or
such lesser number of shares as are properly tendered at prices not less than
$21 nor more than $24 per share). All shares of Class A Common Stock acquired
pursuant to the Offer will be acquired at the one Class A Purchase Price.
Similarly, the Company will determine the single per share price, not less
than $21 nor more than $24 per share, net to the seller in cash, without
interest, that it will pay for shares of Class B Common Stock properly tendered
pursuant to the Offer and not properly withdrawn (the "Class B Purchase Price";
each of the Class A Purchase Price and Class B Purchase Price is referred to as
a "Purchase Price"), taking into account the number of shares tendered and the
prices specified by tendering stockholders. The Company will select the lowest
purchase price that will allow it to buy 6,100,000 shares of Class B Common
Stock (or such lesser number of shares as are properly tendered at prices not
less than $21 nor more than $24 per share). All shares of Class B Common Stock
acquired pursuant to the Offer will be acquired at the one Class B Purchase
Price. The Class A Purchase Price and Class B Purchase Price need not be
identical.
Proportionate Purchase of Class A and Class B. Notwithstanding any other
provision in this Offer to Purchase, the Company will only repurchase shares of
Class A Common Stock and Class B Common Stock in the same proportion as the
ratio of the numbers of shares of Class A Common Stock and Class B Common Stock
outstanding as of July 26, 1999. At such date, 63,992,550 shares of Class A
Common Stock were outstanding, representing 61.1% of the outstanding Common
Stock, and 40,689,648 shares of Class B Common Stock were outstanding,
representing 38.9% of the outstanding Common Stock. If stockholders do not
properly tender shares in these proportions, then the Company will only purchase
the largest number of properly tendered shares of each class that will enable it
to maintain these proportions, and the Purchase Price for each class will be
determined upon the basis of the number of shares of such class so purchased.
Subject to the foregoing, all shares of each class properly tendered at
prices at or below the applicable Purchase Price for such class and not properly
withdrawn will be purchased at the applicable Purchase Price, upon the terms and
subject to the conditions of the Offer, including the proportionality and
proration provisions.
Additional Purchases; Excess Shares. The Company reserves the right, in
its sole discretion, to purchase more than 15,700,000 shares of Common Stock
pursuant to the Offer, provided that the Company will only repurchase shares of
Class A Common Stock and Class B Common Stock in the same proportion as the
ratio of the numbers of shares of Class A Common Stock and Class B Common Stock
outstanding on July 26, 1999. Shares tendered at prices in excess of the
applicable Purchase Price and shares not purchased because of the
proportionality and proration provisions will be returned. See Section 14.
Conditions. The Offer is not conditioned on any minimum number of shares
being tendered. The Offer is, however, subject to certain other conditions. See
Section 6.
Market for Class A and Class B Common Stock. The Class A Common Stock is
listed and traded on the New York Stock Exchange ("NYSE") under the symbol "IT"
and the Class B Common Stock is listed and traded on the NYSE under the symbol
"IT-B". On July 23, 1999, the last full trading day prior to the announcement of
the Offer, the closing per share sales prices as reported on the NYSE composite
tape were $22.00 per share of Class A Common Stock and $21.63 per share of Class
B Common Stock. Stockholders are urged to obtain current market quotations for
the shares. See Section 7.
No Board of Directors Recommendation Regarding Stockholder Tenders. The
Board of Directors of the Company has approved the Offer. However, none of the
Company, its Board of Directors nor the Dealer Manager makes any recommendation
to stockholders as to whether to tender or refrain from tendering their shares.
Each stockholder must make the decision whether to tender such stockholder's
shares and, if so, how
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<PAGE> 8
many shares of each class to tender and the price or prices at which such shares
should be tendered. The Company's directors and executive officers have agreed
not to participate in this Offer.
Odd Lot Allocation. Upon the terms and subject to the conditions of the
Offer, if at the Expiration Date more than 9,600,000 shares of Class A Common
Stock or more than 6,100,000 shares of Class B Common Stock (or in each case
such greater number of shares as the Company may elect to purchase) are properly
tendered at or below the applicable Purchase Price and are not properly
withdrawn, the Company will buy shares first from all Odd Lot Holders of each
such class (as defined in Section 1) who properly tender (and do not properly
withdraw) all their shares of such class at prices at or below the applicable
Purchase Price, and will then buy shares on a pro rata basis from all other
stockholders who properly tender (and do not properly withdraw) shares of such
class at prices at or below the applicable Purchase Price. See Section 1.
Payment of Purchase Price; Tax Withholding; Fees and Expenses. The
Purchase Price will be paid net to the tendering stockholder in cash, without
interest, for all shares purchased. Tendering stockholders who hold shares in
their own name and who tender their shares directly to the Depositary will not
be obligated to pay brokerage commissions, solicitation fees or, subject to
Instruction 8 of the Letter of Transmittal, stock transfer taxes on the purchase
of shares by the Company pursuant to the Offer. Stockholders holding shares
through brokers or banks are urged to consult the brokers or banks to determine
whether transaction costs are applicable if shares are tendered through the
brokers or banks and not directly to the Depositary. HOWEVER, ANY TENDERING
STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE
DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS INCLUDED AS PART OF THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED UNITED STATES FEDERAL INCOME TAX BACKUP
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO THE TENDERING STOCKHOLDER OR
OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. The Company will pay all fees
and expenses of Credit Suisse First Boston Corporation ("Credit Suisse First
Boston" or the "Dealer Manager"), EquiServe L.P. (the "Depositary" or
"EquiServe") and Morrow & Co., Inc. (the "Information Agent") incurred in
connection with the Offer. See Section 15.
Outstanding Shares. As of July 26, 1999, the Company had issued and
outstanding an aggregate of 104,682,198 shares of Common Stock, consisting of
63,992,550 shares of Class A Common Stock and 40,689,648 shares of Class B
Common Stock. In addition, the Company had outstanding at such date options to
purchase an aggregate of 17,515,069 shares of Class A Common Stock ("Options")
under the Company's stock option plans (collectively the "Option Plans"). In
addition, IMS Health held at such date warrants to purchase an aggregate of
599,400 shares of Class A Common Stock (the "IMS Health Warrants"). The
15,700,000 shares of Common Stock that the Company is offering to purchase
pursuant to the Offer represent approximately 15% of the Company's Common Stock
outstanding on July 26, 1999 (approximately 13% assuming exercise of all
outstanding Options and IMS Health Warrants).
Each of the Gartner Group, Inc. Savings and Investment Plan and the IMS
Health Incorporated Savings Plan holds shares of Common Stock in accounts for
participants thereunder. A participant in the IMS Health plan may instruct
Bankers Trust Company, as trustee of the trust that holds Class B Common Stock
for the IMS Health plan, to tender all or part of the shares attributable to
their respective individual accounts under such plan (including fractional
shares, if any) by following the instructions set forth in "Procedure for
Tendering Shares -- IMS Health Savings Plan" in Section 3. Participants in the
Gartner Group plan may instruct Fidelity Management Trust Co., as trustee of the
trust that holds Class A Common Stock for the Gartner Group plan, to tender all
or part of the shares attributable to the participant's individual accounts
under such plan (including fractional shares, if any) by following the
instructions set forth in "Procedure for Tendering Shares -- Gartner Group
Savings and Investment Plan" in Section 3.
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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document and other communications to stockholders of the Company may
contain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
Company cannot give any assurance that such expectations will prove to have been
correct. Important factors that could cause actual results to differ materially
from such expectations ("Cautionary Statements") are disclosed herein and
therein, including without limitation the risks discussed under "Certain
Considerations" below. All forward-looking statements attributable to the
Company are expressly qualified in their entirety by the Cautionary Statements
described herein and in the Company's reports filed with the Securities and
Exchange Commission.
The Company does not make any express or implied representation or warranty
as to the attainability of any projected or estimated financial information
referenced or set forth herein or as to the accuracy or completeness of the
assumptions from which any such projected or estimated information is derived.
Projections or estimations of the Company's future performance are necessarily
subject to a high degree of uncertainty and may vary materially from actual
results. Reference is made to the particular discussions set forth under
"Certain Considerations" below.
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CERTAIN CONSIDERATIONS
You should consider carefully the factors described below before making a
decision regarding the tender of your shares. The risks and uncertainties
described below are not the only ones that we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
also impair our business operations.
OUR FUTURE OPERATING RESULTS DEPEND ON A VARIETY OF FACTORS, MANY OF WHICH ARE
NOT IN OUR CONTROL
Our future operating results depend upon our ability to continue to compete
successfully in the market for information products and services. We may not be
able to continue to provide the products and services that meet client needs as
the Information Technology, or IT market evolves rapidly.
Our future operating results, and our ability to compete successfully in
the IT market, will depend on:
- our ability to hire and retain a premier staff of qualified IT
analysts in a competitive employment market, and our ability to
expand our staff to support evolving client needs and growth of our
business;
- our ability to expand our product and service offerings to smaller
domestic clients;
- our ability to devote the additional management attention and
financial resources necessary to further expand our business; and
- the risks inherent in international sales, including:
- changes in market demand as a result of exchange rate
fluctuations;
- challenges in staffing and managing our foreign sales operations;
and
- higher levels of taxation on foreign income than domestic income.
OUR REVENUES DEPEND ON RENEWALS OF EXISTING CONTRACTS AND OUR ABILITY TO
GENERATE NEW BUSINESS
We measure the volume of our advisory and measurement business based on
contract value. We calculate total contract value based on the annualized value
of all advisory and measurement contracts in effect at the time of the
calculation, without regard to the duration of those contracts. While we believe
contract value is a meaningful measure of our business level, contract value at
any time may not be indicative of future advisory and measurement revenues or
cash flows. In this regard, a substantial portion of our clients have
historically renewed our services for an equal or higher level of total payments
each year, and, historically, annual revenues from these services in any fiscal
year have closely correlated to contract value at the beginning of the fiscal
year. As of June 30, 1999, approximately 85 percent of our clients had renewed
one or more services in the prior twelve months. Nonetheless, this renewal rate
is not necessarily indicative of the rate of retention of our revenue base.
Revenues and cash flows in any year depend significantly on the rate of contract
renewal through the year as well as new business generation. While we have
experienced high contract renewal rates in recent years, we may not be able to
sustain high renewal rates in the future. Any deterioration in our ability to
achieve high renewal rates or to continue to generate significant new business
would impact future growth in our business. Moreover, a significant portion of
our new business in any given year has historically been generated in the last
portion of the fiscal year. Accordingly, any slowdowns in year-to-year revenue
generation might not be apparent until late in a given fiscal year.
Deferred revenues, as presented in our balance sheets, represent
unamortized revenues from billed advisory and measurement services and products,
plus unamortized revenues of certain other billed services and products not
included in advisory and measurement. Contract value represents an annualized
value of all outstanding advisory and measurement contracts without regard to
the duration of such contracts, while deferred revenues represents unamortized
revenue remaining on all billed and outstanding advisory and measurement
contracts, plus certain other billed services and products not included in
advisory and measurement revenue. Accordingly, deferred revenues do not
correlate to contract value as of any one date.
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WE MAY NOT BE ABLE TO CONTINUE TO COMPETE SUCCESSFULLY IN THE COMPETITIVE MARKET
FOR IT PRODUCTS AND SERVICES
We believe that the principal competitive factors in our industry are:
- quality of research and analysis;
- timely delivery of information;
- customer service;
- the ability to offer products that meet changing market needs for
information and analysis; and
- price.
We believe that we compete favorably with respect to each of these factors.
However, we face competition from many companies, and we believe that
competition is increasing.
We face competition from other independent providers of similar services,
as well as our clients' internal marketing and planning departments. We also
compete indirectly against other information providers, including electronic and
print media companies and consulting firms. These indirect competitors could
choose to compete directly against us in the future. In addition, although we
have established a significant market presence, there are limited barriers to
entry into our market. New competitors continue to emerge, and additional
competitors could readily emerge in one or more of the market segments we
address. Additional competition also continues to emerge as the IT industries
change and new customer needs evolve. Increased competition could adversely
affect our operating results through downward pricing pressure and loss of
market share.
WE DEPEND ON OUR KEY EMPLOYEES AND ON OUR ABILITY TO HIRE ADDITIONAL QUALIFIED
PERSONNEL
Our future success will depend heavily upon the continued contributions of
our senior management team, professional analysts, and experienced sales
personnel. Accordingly, future operating results will be largely dependent upon
our ability to retain our key employees and to attract additional qualified
personnel. We experience intense competition for professional personnel from,
among others, other providers of IT research and analysis services, producers of
IT products, management consulting firms and financial services companies. Many
of these firms have substantially greater financial resources than we do to
attract and compensate qualified personnel. The loss of the services of key
management and professional personnel could have a material adverse effect on
our business.
WE FACE YEAR 2000 RISKS WHICH COULD NEGATIVELY IMPACT OUR BUSINESS
The Year 2000 problem results from the fact that many technology systems
have been designed using only a two-digit representation of the year portion of
the date. This has the potential to cause errors or failures in those systems
that depend on correct interpretation of the year, but cannot necessarily
correctly interpret "00" as the year "2000". While the potential ramifications
of the Year 2000 issue are significant, we believe that we are taking full
advantage of our internal resources and all necessary external resources to
understand, identify and correct all Year 2000 issues within our control. We
recognize that there are significant unknowns, and therefore potential risks,
that are outside of our control and we will take all reasonable steps to
minimize the impact of those exposures.
We are on target to have made all essential systems Year 2000 ready before
their known failure dates or January 1, 2000, whichever is sooner. All of our
products are, or are expected to be, Year 2000 ready before their known failure
dates or by January 1, 2000, whichever is sooner. Should any date-related
problems be revealed after that point, they will be fixed at no charge to the
customer or replaced with a product of equal value. Initial testing of the four
business critical applications for product delivery (GG Interactive, GG Lotus
Notes, GG Intraweb, and GG CD) has shown these applications to be compliant with
certain Company identified key functions, with full Year 2000 internal
validation expected to occur on a timely basis prior to calendar 1999 year end.
Additionally we further expect to continue to take all prudent and reasonable
steps to
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<PAGE> 12
validate the Year 2000 readiness of our direct supply chain interfaces, but we
believe that this area does and will continue to represent a significant level
of uncertainty and business risk at least through the first half of the year
2000.
We have established a separate Year 2000 account to budget and track
significant fiscal 1999 Year 2000 expenditures. All maintenance and modification
costs are expensed as incurred, while the cost of new systems is being
capitalized according to generally accepted accounting principles. Identified
Year 2000 expenses were $1.9 million for the six months ended March 31, 1999 and
are forecasted to be $3.3 million for the remaining six months of fiscal 1999.
These costs are predominantly for the budgeted replacement or upgrades of IT and
non-IT systems, but also include prorated personnel standard unit costs.
We believe that the Year 2000 problem may result in an increased percentage
of IT department budgets being directed toward Year 2000 remediation
expenditures in the near term. If this occurs, changes in customer buying
practices could result in either an increase or decrease in the demand for our
products and services and, therefore, have the potential of benefiting or
adversely impacting our future revenues and revenue patterns.
THE CLASS B COMMON STOCK CONTROLS OUR BOARD OF DIRECTORS
We have recently completed a recapitalization and certain related
transactions which could have a significant impact on control of our company.
These transactions were undertaken in connection with a Distribution Agreement
dated June 17, 1999 between us and IMS Health (the "Distribution Agreement").
IMS Health has recently distributed to its stockholders an aggregate of
40,689,648 shares of Class B Common Stock and retains an aggregate of 7,508,857
shares of Class A Common Stock (including 599,400 shares issuable on exercise of
warrants held by IMS Health). Our Class B Common Stock is identical in all
respects to our Class A Common Stock, except that the Class B Common Stock is
entitled to elect at least 80% of the members of our Board of Directors.
Therefore, subject to the effectiveness of one provision in our certificate of
incorporation (as described in the next paragraph), holders of a majority of the
Class B Common Stock will be able to elect at least 80% of our Board of
Directors, and any person or group of persons that acquires a majority of the
outstanding shares of Class B Common Stock will be able to obtain control of our
company through the election of directors. The Class B Common Stock thus may
render our company more susceptible to unsolicited takeover bids from third
parties.
The risk of a takeover of our Board is partially mitigated by our recent
establishment of a classified Board of Directors. Our Board has been divided
into three classes, with one class of directors to be elected each year for
staggered three-year terms. As a result of this classified Board, a potential
acquiror can only elect a majority of the Board of Directors over the course of
two annual elections of directors. Accordingly, the creation of a classified
Board of Directors mitigates in part the increased risk of unsolicited takeover
bids that resulted from the creation and issuance of the Class B Common Stock.
This takeover risk may also be mitigated in part by a provision in our
certificate of incorporation that will take effect if we receive a letter ruling
from the Internal Revenue Service ("IRS") that the provision will not impair the
tax treatment of the IMS Transactions. This provision states that so long as any
person or entity, or group of persons or entities acting in concert,
beneficially owns 15% or more of the outstanding shares of Class B Common Stock,
then such person, entity or group may vote in any election of directors only the
number of shares of Class B Common Stock for which it owns an equivalent
percentage of Class A Common Stock. The purpose of this provision is to ensure
that no person, entity or group can seek to obtain control of our Board of
Directors solely by acquiring a majority of the outstanding shares of Class B
Common Stock. This provision is intended to protect our public stockholders by
ensuring that anyone seeking to take over our board must acquire control of the
outstanding shares of each class of Common Stock.
OUR RECENT CASH DIVIDEND AND INCURRENCE OF INDEBTEDNESS COULD LIMIT FUTURE
OPERATIONAL FLEXIBILITY.
As a result of the IMS Transactions, we will expend a significant portion
of our cash and incur significant indebtedness. This will result in significant
interest costs and debt repayment obligations, and will limit the
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availability of additional borrowings for other corporate purposes such as cash
acquisitions or significant investments in new areas of business.
We have previously declared a $125 million cash dividend payable to
stockholders of record on July 16, 1999. In addition, we are undertaking the
repurchase of approximately 15% of our outstanding Common Stock under this Offer
to Purchase and will repurchase up to an additional 5% in open market purchases
within the next 2 years.
In order to pay the cash dividend to our stockholders and finance the stock
repurchase program, we will use available cash and are incurring up to
approximately $500 million of debt financing. These transactions will limit the
amount of cash or borrowings available to us in the future, which could
adversely affect our future operations in various ways, including the following:
- we could become increasingly vulnerable to general adverse economic and
industry conditions;
- we will be required to dedicate a substantial portion of our cash flow
from operations to the payment of principal of, and interest on, our
indebtedness, which will reduce the availability of cash flow to fund
activities that might otherwise benefit us; these include cash
acquisitions, additional investments in new business areas, capital
expenditures, working capital needs, and other general corporate
requirements;
- we will have reduced ability to obtain additional financing to fund such
potentially beneficial future activities; and
- we may be placed at a competitive disadvantage as compared to less
leveraged or better capitalized competitors, because of reduced ability
to invest in our business.
WE WILL INCUR DEBT SERVICE OBLIGATIONS IN CONNECTION WITH THE RECAPITALIZATION
OF OUR COMPANY THAT WE MAY NOT BE ABLE TO MEET
Our ability to make principal and interest payments on our outstanding debt
will depend on our future operating performance. Our future operating
performance itself depends on a number of factors, many of which are outside of
our control. These factors include prevailing economic conditions and financial,
competitive and other factors affecting our business and operations. Although we
believe, based on current levels of operations, that our cash flow from
operations, together with other sources of liquidity, will be adequate to make
required payments of principal and interest on our debt, whether at or prior to
maturity, to finance anticipated capital expenditures and to fund working
capital requirements, we cannot assure you that our sources of cash will indeed
be sufficient for such purposes. If we are unable to generate sufficient cash
flow from operations, or if we require additional equipment loans or equipment
and working capital lines of credit in the future to service our debt, we may be
required to sell our assets, reduce our capital expenditures, refinance all or a
portion of our existing indebtedness or obtain other sources of financing. We
cannot assure you we would have access to sources of refinancing on commercially
reasonable terms, or at all.
WE HAVE ASSUMED POTENTIALLY LARGE TAX LIABILITIES UNDER THE DISTRIBUTION
AGREEMENT WITH IMS HEALTH
In connection with the IMS Transactions, IMS distributed to its public
stockholders, on a pro rata basis, the Class B Common Stock that IMS received
from us in the recapitalization. The Distribution, the recapitalization and the
related transactions were effected based on receipt by IMS of a favorable ruling
from the IRS that the Distribution would be tax-free to IMS and its
stockholders. However, even with the IRS ruling, it is possible that, under
certain circumstances, actions by us following the Distribution (such as the
acquisition of our company or substantial acquisitions using our stock) could
cause the Distribution to become taxable to IMS and its stockholders. Under the
terms of the Distribution Agreement, we are required to indemnify IMS for
additional taxes, if any, attributable to our actions outside of the scope of
certain permitted actions by us. This indemnification obligation could result in
liabilities to us of $300 million or more.
These potential obligations could substantially limit our ability to engage
in acquisitions or certain other transactions during the two-year period
following the recapitalization and the related transactions. These potential tax
liabilities may also make our company less attractive to a potential acquiror.
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STOCK SALES FOLLOWING THE DISTRIBUTION MAY LOWER OUR STOCK PRICE
IMS Health distributed on July 26, 1999, to its stockholders of record as
of July 17, 1999, a total of 40,689,648 shares of Class B Common Stock. In
addition, IMS Health retains 6,909,457 shares of Class A Common Stock (the
"Retained Shares") and warrants to purchase an additional 599,400 shares of
Class A Common Stock (the "Warrant Shares"). The ruling from the IRS obtained in
connection with the IMS Transactions requires that IMS Health dispose of the
Retained Shares and Warrant Shares as quickly as feasible, and IMS Health
intends to dispose of all such shares within one year following July 26, 1999,
the date of the Distribution. IMS Health has agreed, however, that it will not
dispose of such securities for a period of 90 days following the Distribution,
and thereafter will dispose of such shares in an agreed manner intended to
mitigate the market impact of such dispositions. Although we believe that
dispositions of shares in such manner should mitigate the impact on the market
for our common stock, such additional sales could also impact such market
adversely. IMS Health stockholders may sell into the public market all or a
substantial portion of the shares they received in the Distribution. Certain
large stockholders may be required to sell a significant amount of our shares
if, after the Distribution, by virtue of their holdings in our company plus
their holdings in IMS Health, they hold a larger amount of our stock than they
are permitted under their internal investment guidelines. Sales of substantial
amounts of our stock by IMS Health or by the IMS Health stockholders who
received our stock in the Distribution could substantially increase the trading
volume of our Common Stock and could result in downward pressure on our stock
prices due to the increased supply.
THE CREATION OF A CLASSIFIED BOARD OF DIRECTORS MAY DELAY OR PREVENT A CHANGE OF
CONTROL
Our Board has been divided into a classified Board consisting of three
classes with one class of directors to be elected each year. A potential
acquiror could only elect a majority of the Board of Directors over the course
of two annual elections of directors, which could make our company less
attractive to potential acquirors and could therefore have the effect of
depriving our stockholders of an opportunity to sell their shares at a premium
over prevailing market prices to a third-party bidder.
YOU MAY BE ABLE TO SELL YOUR SHARES AT A HIGHER PRICE THAN WE ARE OFFERING
We will determine the purchase prices for shares tendered in the Offer
based upon the numbers of shares tendered and upon the prices of shares
tendered, subject to the terms of the Offer. The purchase prices will not
necessarily represent the fair market value of the shares tendered, as would be
determined by two equal parties engaged in a purchase and sale transaction.
Accordingly, you may be able to sell your shares at a higher price than we are
offering. Moreover, the price of the shares could rise over time following
completion of the Offer, as a result of positive business results, general
market conditions or other factors. Therefore, if you do not tender your shares
in the Offer, you may be able to sell your shares in the future at a higher
price than we are offering.
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THE OFFER
1. NUMBER OF SHARES; PURCHASE PRICE; PRORATION.
Number of Shares to be Repurchased. Upon the terms and subject to the
conditions of the Offer, the Company will purchase up to 15,700,000 shares of
Common Stock, consisting of up to 9,600,000 shares of Class A Common Stock and
up to 6,100,000 shares of Class B Common Stock, or such lesser number of shares
as are properly tendered (and not properly withdrawn in accordance with Section
4) prior to the Expiration Date (as defined below) at prices not less than $21
nor more than $24 per share, net to the seller in cash, without interest, for
each of the Class A Common Stock and the Class B Common Stock. The purchase
price of the Class A Common Stock and the Class B Common Stock need not be
identical. The Company reserves the right to purchase more than 15,700,000
shares pursuant to the Offer; in accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Company may purchase
pursuant to the Offer an additional amount of shares not to exceed 2% of the
outstanding shares without amending or extending the Offer. See Section 14.
Expiration Date. The term "Expiration Date"means 12:00 Midnight, New York
City time, on Tuesday, August 24, 1999 unless and until the Company, in its sole
discretion, shall have extended the period of time during which the Offer will
remain open, in which event the term "Expiration Date" shall refer to the latest
time and date at which the Offer, as so extended by the Company, shall expire.
See Section 14 for a description of the Company's right to extend, delay,
terminate or amend the Offer. In the event of an over-subscription of either
class subject to the Offer as described below, shares of that class properly
tendered at or below the applicable Purchase Price prior to the Expiration Date
will be subject to proration, except for Odd Lots (as defined below). If (i) the
Company (a) increases the price to be paid for shares above $24 per share or
decreases the price to be paid for shares below $21 per share, (b) materially
increases the Dealer Manager fee, or (c) decreases the number of shares being
sought, and (ii) the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that notice of the change is first published, sent or given in the manner
specified in Section 14, then the Offer will be extended until the expiration of
such period of ten business days.
Class A Purchase Price. The Company will, upon the terms and subject to
the conditions of the Offer, determine a single purchase price (not less than
$21 nor more than $24 per share) that it will pay for shares of Class A Common
Stock properly tendered pursuant to the Offer and not properly withdrawn (the
"Class A Purchase Price"), taking into account the number of shares so tendered
and the prices specified by tendering stockholders. The Company will select the
lowest purchase price that will allow it to buy 9,600,000 shares of Class A
Common Stock (or such lesser number of shares as are properly tendered at prices
not less than $21 nor more than $24 per share). All shares of Class A Common
Stock acquired pursuant to the Offer will be acquired at the one Class A
Purchase Price.
Class B Purchase Price. Similarly, the Company will determine a single
purchase price (not less than $21 nor more than $24 per share) that it will pay
for shares of Class B Common Stock properly tendered pursuant to the Offer and
not properly withdrawn (the "Class B Purchase Price"; each of the Class A
Purchase Price and Class B Purchase Price is referred to as a "Purchase Price"),
taking into account the number of shares tendered and the prices specified by
tendering stockholders. The Company will select the lowest purchase price that
will allow it to buy 6,100,000 shares of Class B Common Stock (or such lesser
number of shares as are properly tendered at prices not less than $21 nor more
than $24 per share). All shares of Class B Common Stock acquired pursuant to the
Offer will be acquired at the one Class B Purchase Price. The Class A Purchase
Price need not be identical to the Class B Purchase Price.
Proportionate Repurchase of Class A Common Stock and Class B Common
Stock. Notwithstanding the foregoing, the Company will only repurchase shares
of Class A Common Stock and Class B Common Stock in the same proportion as the
ratio of the numbers of shares of Class A Common Stock and Class B Common Stock
as of July 26, 1999. At such date, 63,992,550 shares of Class A Common Stock
were outstanding, representing 61.1% of the outstanding Common Stock, and
40,689,648 shares of Class B Common Stock were outstanding, representing 38.9%
of the outstanding Common Stock. If stockholders do not properly tender
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<PAGE> 16
shares in these proportions, then the Company will only purchase the largest
number of properly tendered shares of each class that will enable it to maintain
these proportions, and the Purchase Price for each class will be determined upon
the basis of the number of shares of such class so purchased.
Subject to the foregoing, as promptly as practicable following the
Expiration Date, the Company will, in its sole discretion, determine the
Purchase Price that it will pay for shares of each class properly tendered
pursuant to the Offer and not properly withdrawn, taking into account the number
of shares of such class tendered and the prices specified by tendering
stockholders. All shares properly tendered at prices at or below the applicable
Purchase Price for such class and not properly withdrawn will be purchased at
the applicable Purchase Price, upon the terms and subject to the conditions of
the Offer, including the proportionality and proration provisions.
THE OFFER IS NOT CONDITIONED ON THE TENDER OF ANY MINIMUM NUMBER OF SHARES,
BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
Priority of Purchase within Each Class. Upon the terms and subject to the
conditions of the Offer, if more than 9,600,000 shares of Class A Common Stock
or more than 6,100,000 shares of Class B Common Stock (or such greater number of
shares of either such class as the Company may elect to purchase) have been
properly tendered at prices at or below the applicable Purchase Price and not
properly withdrawn prior to the Expiration Date, the Company will purchase
properly tendered shares of each such class in the order set forth below:
(a) first, the Company will repurchase all shares of such class properly
tendered and not properly withdrawn prior to the Expiration Date by any
Odd Lot Holder (as defined below) who:
(1) tenders all shares of such class owned beneficially or of record by
such Odd Lot Holder at a price at or below the Purchase Price for
such class (tenders of fewer than all the shares of such class owned
by such Odd Lot Holder will not qualify for this preference); and
(2) completes the section entitled "Odd Lots" in the appropriate Letter
of Transmittal and, if applicable, in the Notice of Guaranteed
Delivery; and
(b) second, after the purchase of all of the foregoing shares, the Company
will repurchase all other shares of such class properly tendered at
prices at or below the Purchase Price for such class and not properly
withdrawn prior to the Expiration Date, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional shares), as
described below.
Odd Lots. For purposes of the Offer, the term "Odd Lots" means, with
respect to either class of Common Stock, all shares of such class properly
tendered prior to the Expiration Date at prices at or below the applicable
Purchase Price and not properly withdrawn by any person (an "Odd Lot Holder")
who owned beneficially or of record as of the close of business on July 27,
1999, and who continues to own beneficially or of record as of the Expiration
Date, an aggregate of fewer than 100 shares of such class as certified in the
appropriate place in the Letter of Transmittal and, if applicable, in the Notice
of Guaranteed Delivery. In order to qualify for this preference, an Odd Lot
Holder must tender all shares of such class of Common Stock owned by the Odd Lot
Holder. As set forth above, Odd Lots will be accepted for payment before
proration, if any, of the purchase of other tendered shares of such class. This
preference is not available to partial tenders or to beneficial or record
holders of an aggregate of 100 or more shares of a class, even if these holders
have separate accounts or certificates representing fewer than 100 shares of
such class. Any Odd Lot Holder wishing to tender all of such stockholder's
shares of a class of Common Stock pursuant to the Offer should complete the
section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in
the Notice of Guaranteed Delivery, and follow the procedures for Odd Lot Holders
described in Section 3.
The Company also reserves the right, but will not be obligated, to purchase
all shares of a class of Common Stock duly tendered by any stockholder who
tenders any shares of such class at or below the applicable Purchase Price and
who, as a result of proration, would then own an aggregate of fewer than 100
shares of such class. If the Company exercises this right, it will increase the
number of shares of such class that it is offering to purchase in the Offer by
the number of shares purchased through the exercise of such
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<PAGE> 17
right, provided that in any event the Company will purchase Class A Common Stock
and Class B Common Stock in the required proportions indicated above.
Proration. In the event that proration of tendered shares of either class
of Common Stock is required, the Company will determine the proration factor as
soon as practicable following the Expiration Date. Proration for each
stockholder tendering shares of such class, other than Odd Lot Holders, shall be
based on the ratio of the number of shares of such class properly tendered and
not properly withdrawn by such stockholder to the total number of shares of such
class properly tendered and not properly withdrawn by all stockholders, other
than Odd Lot Holders, at or below the applicable Purchase Price. Because of the
difficulty in quickly determining the number of shares properly tendered
(including shares tendered by guaranteed delivery procedures, as described in
Section 3) and not properly withdrawn, and because of the Odd Lot procedure, the
Company expects that it will not be able to announce the final proration factor
or commence payment for any shares purchased pursuant to the Offer until
approximately five business days after the Expiration Date. The preliminary
results of any proration will be announced by press release as promptly as
practicable after the Expiration Date. Stockholders may obtain preliminary
proration information from the Information Agent or the Dealer Manager and may
be able to obtain such information from their brokers.
As described in Section 13, the number of shares that the Company will
purchase from a stockholder pursuant to the Offer may affect the United States
federal income tax consequences to the tendering stockholder and, therefore, may
be relevant to a stockholder's decision whether or not to tender shares. The
Letter of Transmittal affords each tendering stockholder the opportunity to
designate the order of priority in which shares tendered are to be purchased in
the event of proration.
This Offer to Purchase and the related Letter of Transmittal (i) are being
mailed to stockholders who were record holders of shares of Common Stock as of
July 27, 1999, (ii) will be furnished to brokers, banks and similar persons
whose names, or the names of whose nominees, appear on the Company's stockholder
list as of July 27, 1999 or, if applicable, who are listed as participants in a
clearing agency's security position listing as of July 27, 1999, for subsequent
transmittal to beneficial owners of shares and (iii) are being furnished to the
Trustee of the Gartner Group, Inc. Savings and Investment Plan and the Trustee
of the IMS Health Incorporated Savings Plan on behalf of the participants in
those plans.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
This Offer to Purchase is being effected pursuant to the IMS Transactions,
which were initiated as a result of certain agreements entered into in June 1999
between the Company and IMS Health. IMS Health was until recently the holder of
approximately 46% of the outstanding shares of capital stock of the Company. The
IMS Transactions, of which this Offer is a part, were implemented in order to
effect the separation of the Company and IMS Health.
This separation has been implemented through the Distribution, a tax-free
distribution by IMS Health to its stockholders of approximately 40.7 million
shares of Class B Common Stock of the Company held by IMS Health. In order to
permit the Distribution to be tax-free for United States federal income tax
purposes, and thereby in order to make the Distribution possible, the Company
effected certain changes to its capital structure as described more fully below.
These changes included the creation of a new class of 40,689,648 shares of Class
B Common Stock and the issuance of such Class B Common Stock to IMS Health in
exchange for a like number of shares of Class A Common Stock previously held by
IMS Health. These shares of Class B Common Stock were then distributed by IMS
Health on July 26, 1999, in the Distribution, to IMS Health stockholders of
record as of July 17, 1999. In addition, in connection with the Distribution,
the Company has recently paid a $125 million cash dividend to all stockholders
of record as of July 16, 1999, and is undertaking to commence a share repurchase
program, including this Offer to Purchase, to repurchase approximately 20% of
the Company's outstanding Common Stock. The IMS Transactions were designed to
give effective control of the Company to public stockholders, to return
immediate value to the Company's stockholders, and to permit the Company and IMS
Health to focus more closely on their respective businesses in the future.
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<PAGE> 18
IMS Health or its predecessors have held a substantial equity position in
the Company since April 1993. After its initial public offering in October 1993,
the Company remained a majority-owned subsidiary of The Dun & Bradstreet
Corporation ("D&B"). In 1996, D&B created a new, publicly traded corporation,
Cognizant Corporation ("Cognizant"), by means of a tax-free spin-off of
Cognizant to the stockholders of D&B. In 1998, Cognizant undertook a similar
spin-off to its stockholders, creating IMS Health as a new, publicly traded
corporation. By means of these transactions, the Company was first a
majority-owned subsidiary of D&B, then became a majority-owned (and,
subsequently, a minority-owned) subsidiary of Cognizant, and then a 46%-owned
subsidiary of IMS Health. IMS Health's predecessors held at least a majority of
the Company's outstanding equity securities from the Company's initial public
offering in October 1993 through August 1997.
Prior to the spin-off of Cognizant in 1996, management of D&B had actively
sought to maintain a majority interest in the Company. D&B continued to purchase
shares of the Company's Common Stock to offset the effects of stock issuances by
the Company resulting from acquisitions or exercises of stock options under the
Company's benefit plans. When Cognizant succeeded to D&B's shares of Common
Stock of the Company in 1996, Cognizant indicated that it intended to maintain
its share ownership in the Company. However, both the Company and Cognizant
cautioned stockholders that changing business conditions and other factors could
cause Cognizant to reassess its ownership interest in the Company.
Management of Cognizant actively began to review this practice in 1997. In
April 1997, Cognizant announced that it would no longer purchase the Company's
Common Stock to offset dilutive issuances by the Company. As a result of share
issuances under the Company's employee benefits plans as well as acquisitions,
Cognizant's ownership interest in the Company fell below 50% in the third
calendar quarter of 1997.
In July 1998, Cognizant effected a separation into two independent publicly
traded companies -- IMS Health and Nielsen Media Research Inc. -- each of which
is focused on a single industry. At that time IMS Health succeeded to
Cognizant's ownership interest in securities of the Company.
IMS Health's management indicated to the Company at the time of IMS
Health's spin-off from Cognizant that the Company was not critical to IMS
Health's business strategy. This caused the Company to believe that some
divestiture of the Company's stock was a likely possibility at a future point.
In October 1998, IMS Health indicated to the Company's Board of Directors that
IMS Health had determined to divest itself of its Common Stock of the Company in
the near future. IMS Health indicated that it had determined to do so for a
number of reasons. The reasons indicated to the Company included:
- Continuation of IMS Health's strategic plan to become sharply focused on
its core businesses.
- Allowing the Company also to become more sharply focused on its core
businesses as an independent company.
- Concern that, because the two businesses were not strategically related,
management of the two companies would be distracted from focusing on
their separate businesses and industries.
- The expectation that IMS Health's stockholders would benefit were IMS
Health to divest itself of its interest in the Company, allowing each of
IMS Health and the Company to be perceived by investors as a "pure play"
investment in its services industries.
- The reduction in the volatility in IMS Health's earnings caused by the
inclusion therein of a portion of the Company's earnings.
In October 1998, the Company and IMS Health undertook negotiations of
potential transactions, in which the Company sought to structure a transaction
which would meet the objectives of IMS Health, as expressed to the Company, but
at the same time provide the best long-term value for the Company's
stockholders.
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A number of potential scenarios were considered by the Company, including:
- public market sales of the Common Stock held by IMS Health;
- the repurchase by the Company of all or a significant portion of the
Common Stock held by IMS Health;
- the sale of the Common Stock held by IMS Health to a single buyer; and/or
- the sale of the Company to a third party.
The Company's Board of Directors understood that IMS Health had committed
itself to complete a transaction as quickly as possible, and the Company's Board
believed that some of the potential transactions that IMS Health could undertake
might not be in the best interests of the Company's other stockholders.
Accordingly, the Company's management, at the direction of the Company's Board,
sought to negotiate with IMS Health a mutually acceptable transaction that would
achieve IMS Health's stated objectives and would also provide short- and
long-term value to the Company's stockholders.
Ultimately, the continued negotiations and discussions with stockholders
resulted in the terms of the IMS Transactions as described herein and as set
forth in the Distribution Agreement and the related Agreement and Plan of Merger
dated June 17, 1999 among the Company, IMS Health and GRGI, Inc., a wholly owned
subsidiary of IMS Health (the "Merger Agreement").
The Company's Board believes that the IMS Transactions suit the purposes of
both IMS Health and the Company. The IMS Transactions allow for the orderly
transfer of IMS Health's large ownership interest to its stockholders, resulting
in the Company's being a widely held public company without any controlling
stockholder. The IMS Transactions also allow IMS Health to dispose of its
investment in the Company and deliver value to its stockholders, while at the
same time providing value for the Company's stockholders. The Company's Board
believes the IMS Transactions should not result in the adverse effects
associated with other transactions that IMS Health could have undertaken,
including the transfer of effective control of the Company to a third party or
the undertaking of a large public offering.
More specifically, the IMS Transactions consist of the following:
(a) Recapitalization. To effect a distribution that would be tax-free
to IMS Health and its stockholders, current tax law requires, among other
things, that IMS Health own, at the time of the Distribution, capital stock
of the Company having the right to elect 80% of the Board of Directors of
the Company, and that IMS Health distribute all of such stock to its
stockholders in a single transaction. Accordingly, the Company's
certificate of incorporation has been amended to create a new class of
Class B Common Stock (the "Recapitalization"). The shares of Class B Common
Stock are entitled to elect at least 80% of the Board of Directors of the
Company but otherwise are identical to the current Class A Common Stock
(including with respect to voting rights on fundamental transactions
affecting the Company). The Class B shares were issued to IMS Health on a
one-for-one basis in exchange for Class A Common Stock held by IMS Health,
by means of the merger of GRGI, Inc., a newly formed, wholly owned
subsidiary of IMS Health, into the Company.
(b) Cash Dividend. The Company has recently declared a $125 million
cash dividend ($ 1.1945 per share) to all stockholders of record as of July
16, 1999 (the "Cash Dividend").
(c) Distribution. Following the declaration of the Cash Dividend, IMS
Health consummated the Distribution, pursuant to which IMS Health on July
26, 1999 distributed to its public stockholders of record as of July 17,
1999, on a pro-rata basis, all of the 40,689,648 shares of Class B Common
Stock that IMS Health received in the Recapitalization.
(d) Stock Repurchase. The Company agreed with IMS Health to undertake
this Offer to Purchase, in which the Company is offering to repurchase
approximately 15% of its outstanding shares of Common Stock. THE COMPANY
HAS ALSO AGREED TO REPURCHASE APPROXIMATELY AN ADDITIONAL 5% OF THE COMMON
STOCK OUTSTANDING FOLLOWING THE DISTRIBUTION (INCREASED OR DECREASED TO THE
EXTENT THE ACTUAL NUMBER OF SHARES PURCHASED PURSUANT TO THE OFFER IS LESS
THAN OR GREATER THAN THE 15% SOUGHT TO BE
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<PAGE> 20
PURCHASED HEREBY), ALLOCATED BETWEEN CLASS A COMMON STOCK AND CLASS B
COMMON STOCK IN THE SAME PROPORTION AS PURSUANT TO THE OFFER. These
additional repurchases will be effected by means of open market purchases
over a two-year period following the Distribution (the "Open Market
Repurchase").
The Offer is intended to help mitigate the adverse effects of any excess
supply in the market for the Common Stock resulting from the IMS Transactions,
including in particular the Distribution, which has significantly increased the
amount of Common Stock available for sale in the public market. The Offer
provides to stockholders who are considering a sale of all or a portion of their
Common Stock the opportunity to determine the price or prices (not less than $21
nor more than 24 per share) at which they are willing to sell shares, and, where
shares are tendered by the registered owner directly to the Depositary, to sell
those shares, without the usual transaction costs associated with open market
sales. In addition, Odd Lot Holders who hold shares in their names and tender
their shares directly to the Depositary and whose shares are purchased pursuant
to the Offer will avoid the payment of brokerage commissions. In addition, the
Offer may give stockholders the opportunity to sell at prices greater than
market prices prevailing prior to the announcement of the Offer. Stockholders
are urged to obtain current market quotations for the Shares. See Section 7. The
Offer also allows stockholders to sell a portion of their shares while retaining
a continuing equity interest in the Company. Stockholders who determine not to
accept the Offer will realize a proportionate increase in their relative equity
interest in the Company, and thus in the Company's future earnings and assets,
subject to the Company's right to issue additional equity securities in the
future. Stockholders may be able to sell non-tendered shares in the future on
the NYSE or otherwise, including in connection with a sale of the Company, at a
net price higher than the applicable Purchase Price. The Company can give no
assurance, however, as to the price at which a stockholder may be able to sell
non-tendered shares in the future.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NONE
OF THE COMPANY, ITS BOARD OF DIRECTORS NOR THE DEALER MANAGER MAKES ANY
RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES AND NONE HAS AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION.
STOCKHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER,
CONSULT WITH THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES OF EACH CLASS TO TENDER AND
THE PRICE OR PRICES AT WHICH SUCH SHARES SHOULD BE TENDERED.
Future Purchases of Common Stock by the Company. The Company is obligated
to effect a certain amount of open market repurchases of Common Stock prior to
July 26, 2001 under the terms of the agreements with IMS Health. The total
number of shares the Company is obligated to repurchase in the open market is
the difference between (i) 20,936,438 shares (approximately 20% of the total
number of shares of Common Stock outstanding on July 26, 1999) and (ii) the
total number of shares of Common Stock repurchased under this Offer. Shares of
Class A Common Stock and Class B Common Stock will be repurchased in such open
market purchases in the same proportion as the numbers of shares of Class A
Common Stock and Class B Common Stock purchased under the Offer. Future
purchases may be on the same terms or on terms which are more or less favorable
to stockholders than the terms of the Offer. However, Rule 13e-4 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prohibits the
Company and its affiliates from purchasing any shares, other than pursuant to
the Offer, until at least ten business days after the Expiration Date. Under the
terms of the IMS Agreements, if the Company effects any other repurchases of
shares in the future, the Company could become subject to significant potential
tax indemnity obligations. Accordingly, it is unlikely the Company will
undertake any further repurchases of shares (beyond those described in this
paragraph) within the two years following the July 26, 1999 Distribution.
Possible Issuance of Repurchased Shares. Any shares the Company acquires
pursuant to the Offer will be available for the Company to issue without further
stockholder action (except as required by applicable law or the rules applicable
to companies with shares traded on the NYSE or any other securities exchange on
which the Common Stock may be listed) for purposes including, but not limited
to, the acquisition of other businesses, the raising of additional capital for
use in the Company's business and the satisfaction of obligations under existing
or future employee benefit plans. The Company has no current plans for the
issuance of shares repurchased pursuant to the Offer. The Company is subject to
potential tax indemnification
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exposure to IMS Health if the Company issues Common Stock in the two years
following the Distribution in excess of certain limited issuances to which IMS
Health agreed in the Distribution Agreement.
No Planned Corporate Transactions. Except as disclosed in this Offer to
Purchase, the Company currently has no plans or proposals that relate to or
would result in (a) the acquisition by any person of additional securities of
the Company or the disposition of securities of the Company; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (d) any change in the present Board of Directors or management of
the Company; (e) any material change in the present dividend rate, dividend
policy, indebtedness or capitalization of the Company; (f) any other material
change in the Company's corporate structure or business; (g) any change in the
Company's Certificate of Incorporation or By-Laws or other actions which may
impede the acquisition of control of the Company by any person; (h) a class of
equity security of the Company being delisted from a national securities
exchange or ceasing to be authorized for quotation in an inter-dealer quotation
system of a registered national securities association; (i) a class of equity
security of the Company becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act; or (j) the suspension of the
Company's obligation to file reports pursuant to Section 15(d) of the Exchange
Act.
3. PROCEDURES FOR TENDERING SHARES.
Letter of Transmittal. A Letter of Transmittal is provided for use by
stockholders tendering shares of Class A Common Stock. A different Letter of
Transmittal is provided for use by stockholders tendering shares of Class B
Common Stock. Stockholders tendering shares should select the proper Letter of
Transmittal for each class of shares tendered.
Proper Tender of Shares. In order to tender Shares properly pursuant to
the Offer (other than a tender through ATOP delivery procedures as described
below), a stockholder must do the following: (i) complete and duly execute the
appropriate Letter of Transmittal (or facsimile thereof) for the class of Shares
tendered, in accordance with the instructions included within the Letter of
Transmittal (together with a signature guarantee if required as well as any
other documents required by the Letter of Transmittal) and deliver the same to
the Depositary at its address set forth on the back cover of this Offer to
Purchase, which material must be received by the Depositary prior to 12:00
Midnight, New York City time, on the Expiration Date, and (ii) either (A)
deliver the stock certificate or certificates evidencing the tendered Shares to
the Depositary at its address set forth on the back cover of this Offer to
Purchase, which certificate(s) must also be received by the Depositary prior to
12:00 Midnight, New York City time, on the Expiration Date, or (B) deliver the
Shares being tendered in accordance with the procedures for book-entry transfer
described below (and, if the tendering stockholder has not delivered a Letter of
Transmittal, then a confirmation of such delivery, including an Agent's Message
(as defined below) must be received by the Depositary), in which case the
appropriate material must be received by the Depositary prior to 12:00 Midnight,
New York City time, on the Expiration Date or (C) comply with the guaranteed
delivery procedures described below. In order to tender Shares by means of the
Automated Tender Offer Program ("ATOP") of the Book-Entry Transfer Facility (as
defined below), the procedures for ATOP delivery, as described below, must be
duly and timely completed prior to 12:00 Midnight, New York City time, on the
Expiration Date.
IN ACCORDANCE WITH INSTRUCTION 6 OF THE LETTER OF TRANSMITTAL, IN ORDER TO
TENDER SHARES PURSUANT TO THE OFFER, A STOCKHOLDER MUST EITHER (a) CHECK THE BOX
IN THE SECTION OF THE LETTER OF TRANSMITTAL CAPTIONED "SHARES TENDERED AT PRICE
DETERMINED BY DUTCH AUCTION" OR (b) CHECK ONE OF THE BOXES IN THE SECTION OF THE
LETTER OF TRANSMITTAL CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES
ARE BEING TENDERED" TO INDICATE THE PRICE (IN MULTIPLES OF $0.125) AT WHICH
SHARES ARE BEING TENDERED.
Stockholders who desire to tender shares of more than one class or who
desire to tender shares of the same class at more than one price must complete a
separate Letter of Transmittal for each class of shares tendered and a separate
Letter of Transmittal for each price at which shares of such class are tendered,
provided that the same specific shares cannot be tendered (unless properly
withdrawn previously in
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accordance with the terms of the Offer) at more than one price. TO PROPERLY
TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE APPROPRIATE
SECTION OF EACH LETTER OF TRANSMITTAL.
IN ADDITION, ODD LOT HOLDERS WHO TENDER ALL SHARES OF A CLASS MUST COMPLETE
THE SECTION CAPTIONED "ODD LOTS" IN THE LETTER OF TRANSMITTAL FOR THAT CLASS
AND, IF APPLICABLE, IN THE NOTICE OF GUARANTEED DELIVERY, TO QUALIFY FOR THE
PREFERENTIAL TREATMENT AVAILABLE TO ODD LOT HOLDERS AS SET FORTH IN SECTION 1.
STOCKHOLDERS WHO HOLD SHARES THROUGH BROKERS OR BANKS ARE URGED TO CONSULT
THE BROKERS OR BANKS TO DETERMINE WHETHER TRANSACTION COSTS ARE APPLICABLE IF
STOCKHOLDERS TENDER SHARES THROUGH THE BROKERS OR BANKS AND NOT DIRECTLY TO THE
DEPOSITARY.
Signature Guarantees and Method of Delivery. No signature guarantee is
required: (i) if the Letter of Transmittal is signed by the registered holder of
the shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company (the "Book-Entry Transfer Facility")
whose name appears on a security position listing as the owner of the shares)
tendered therewith and such holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (ii) if shares are tendered for
the account of a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing constituting an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal. If a certificate is registered in the name of a person
other than the person executing a Letter of Transmittal, or if payment is to be
made, or shares not purchased or tendered are to be issued, to a person other
than the registered holder, then the certificate must be endorsed or accompanied
by an appropriate stock power, in either case, signed exactly as the name of the
registered holder appears on the certificate, with the signature guaranteed by
an Eligible Institution.
In all cases, payment for shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such shares (or a timely confirmation of the book-entry
transfer of the shares into the Depositary's account at the Book-Entry Transfer
Facility as described above), a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF
DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an account with respect
to the shares subject to this Offer, for purposes of the Offer, at the
Book-Entry Transfer Facility within two business days after the date of this
Offer to Purchase, and any financial institution that is a participant in the
Book-Entry Transfer Facility's system may make book-entry delivery of the shares
by causing the Book-Entry Transfer Facility to transfer shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for transfer. Although delivery of shares may be effected through a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature guarantees, or an
Agent's Message (as defined below), or in the case of a tender through the
Book-Entry Transfer Facility's ATOP program the specific acknowledgement, in
each case together with any other required documents, and all such documents
must, in any case, be transmitted to and received by the Depositary at its
address set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedure described below. The confirmation of a book-entry transfer of
Common Stock into the Depositary's account at the Book-Entry Transfer Facility
as described above is referred to as a "Book-Entry Confirmation."
The term "Agent's Message" means a message, transmitted by the Book Entry
Transfer Facility to and received by the Depositary and forming a part of a Book
Entry Confirmation, which states that the Book Entry Transfer Facility has
received an express acknowledgement from the participant in the Book Entry
Transfer
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<PAGE> 23
Facility tendering the Shares that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that the Company may
enforce such agreement against the participant.
Participants in the Book-Entry Transfer Facility may tender shares in
accordance with the Book-Entry Transfer Facility's ATOP program to the extent it
is available to such participants for the shares they wish to tender. A
stockholder tendering through ATOP must expressly acknowledge that the
stockholder has received and agreed to be bound by the Letter of Transmittal and
that the Letter of Transmittal may be enforced against such stockholder.
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
United States Federal Income Tax Backup Withholding. Under the United
States federal income tax backup withholding rules, unless an exemption applies
under the applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the Offer must be withheld and remitted
to the IRS, unless the stockholder or other payee provides its taxpayer
identification number (employer identification number or social security number)
to the Depositary (as payor) and certifies under penalties of perjury that such
number is correct. Therefore, each tendering stockholder should complete and
sign the Substitute Form W-9 included as part of the Letter of Transmittal so as
to provide the information and certification necessary to avoid backup
withholding. If the Depositary is not provided with the correct taxpayer
identification number, the United States Holder (as defined in Section 13
herein) also may be subject to a penalty imposed by the IRS. If withholding
results in an overpayment of taxes, a refund may be obtained. Certain "exempt
recipients" (including, among others, all corporations and certain Non-United
States Holders (as defined in Section 13 herein)) are not subject to these
backup withholding and information reporting requirements. In order for a
Non-United States Holder to qualify as an exempt recipient, that stockholder
must submit an IRS Form W-8 or a Substitute Form W-8, signed under penalties of
perjury, attesting to that stockholder's exempt status. Such statements can be
obtained from the Depositary. See Instruction 14 of the Letter of Transmittal.
TO PREVENT UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31%
OF THE GROSS PAYMENTS MADE TO STOCKHOLDERS FOR SHARES PURCHASED PURSUANT TO THE
OFFER, EACH STOCKHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH
BACKUP WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF
TRANSMITTAL.
Withholding for Non-United States Holders. Even if a Non-United States
Holder has provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes equal to 30% of the
gross payments payable to the Non-United States Holder or his agent unless (a)
the Depositary determines that a reduced rate of withholding is available
pursuant to a tax treaty or that an exemption from withholding is applicable
because the gross proceeds are effectively connected with the conduct of a trade
or business within the United States or (b) the Non-United States Holder
establishes to the satisfaction of the Company and the Depositary that the sale
of shares by such Non-United States Holder pursuant to the Offer will qualify as
a "sale or exchange," rather than as a distribution taxable as a dividend, for
United States federal income tax purposes. See Section 13. In order to obtain a
reduced rate of withholding pursuant to a tax treaty, a Non-United States Holder
must deliver to the Depositary before the payment a properly completed and
executed IRS Form 1001. In order to obtain an exemption from withholding on the
grounds that the gross proceeds paid pursuant to the Offer are effectively
connected with the conduct of a trade or business within the United States, a
Non-United States Holder must deliver to the Depositary a properly completed and
executed IRS Form 4224. The Depositary will determine a stockholder's status as
a Non-United States Holder and eligibility for a reduced rate of, or exemption
from, withholding by reference to any outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate
that such reliance is not warranted. A Non-United States Holder may be eligible
to obtain a refund of all or a portion of any tax withheld if such Non-United
States Holder meets the "complete termination," "substantially
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<PAGE> 24
disproportionate" or "not essentially equivalent to a dividend" tests described
in Section 13 or is otherwise able to establish that no tax or a reduced amount
of tax is due.
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING,
INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE
REFUND PROCEDURE.
Guaranteed Delivery. If a stockholder desires to tender shares of Common
Stock pursuant to the Offer and the stockholder's share certificates are not
immediately available or cannot be delivered to the Depositary prior to the
Expiration Date (or the procedure for book-entry transfer cannot be completed on
a timely basis) or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date, the shares may nevertheless be
tendered, provided that all of the following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, overnight courier, telegram
or facsimile transmission, on or prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in
the form the Company has provided with this Offer to Purchase (specifying
the price at which the shares are being tendered), including (where
required) a signature guarantee by an Eligible Institution in the form set
forth in such Notice of Guaranteed Delivery; and
(c) the certificates for all tendered shares of Common Stock, in
proper form for transfer (or confirmation of book-entry transfer of such
shares into the Depositary's account at the Book-Entry Transfer Facility),
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) and any required signature
guarantees or other documents required by the Letter of Transmittal, are
received by the Depositary within three NYSE trading days after the date of
receipt by the Depositary of the Notice of Guaranteed Delivery.
Return of Tendered and Unpurchased Shares. If any tendered shares of
Common Stock are not purchased, or if less than all shares evidenced by a
stockholder's certificates are tendered, certificates for unpurchased shares
will be returned as promptly as practicable after the expiration or termination
of the Offer or, in the case of shares tendered by book-entry transfer at the
Book-Entry Transfer Facility, the shares will be credited to the appropriate
account maintained by the tendering stockholder at the Book-Entry Transfer
Facility, in each case without expense to the stockholder.
Company Stock Option Plans. The Company is not offering, as part of the
Offer, to purchase any options ("Options") outstanding under the Company's
compensatory stock option and purchase plans (the "Option Plans") and tenders of
Options will not be accepted. Holders of Options who wish to participate in the
Offer may either (i) comply with the procedure for guaranteed delivery set forth
above without having to exercise their Options until after the Expiration Date
(provided, however, that an Option holder will not be required to make the
requisite tender through an Eligible Institution and may personally execute and
deliver the Notice of Guaranteed Delivery) or (ii) exercise their Options and
purchase shares of Class A Common Stock and then tender the shares pursuant to
the Offer, provided that, in the case of either (i) or (ii), any exercise of an
Option and tender of shares is in accordance with the terms of the Option Plans
and the Options. In no event are any Options to be delivered to the Depositary
in connection with a tender of shares hereunder. An exercise of an Option cannot
be revoked even if shares received upon the exercise and tendered in the Offer
are not purchased in the Offer for any reason.
Gartner Savings Plan. As of July 26, 1999, the Gartner Group, Inc. Savings
and Investment Plan (the "Gartner Savings Plan") held approximately 77,500
shares of Class A Common Stock, all of which were attributable to the individual
accounts of the plan's participants. Such shares will, subject to the
limitations of the Employee Retirement Income Security Act of 1974, as amended,
and the applicable regulations thereunder, be eligible to be tendered (or not
tendered) in accordance with the instructions of participants to Fidelity
Management Trust Co., the trustee of such plan (the "Gartner Trustee"). Shares
for which the Gartner Trustee does not receive instructions from participants
will not be tendered. The Gartner Trustee will make available to participants
under the Gartner Savings Plan all documents furnished to stockholders generally
in connection with the Offer. Each such participant will also receive a Gartner
Savings Plan
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<PAGE> 25
Direction Form (as defined below) with which the participant may instruct the
Gartner Trustee regarding the Offer. Each participant may direct that some, all,
or none of the shares attributable to such participant's account under the
Gartner Savings Plan (including fractional shares, if any) be tendered. Each
participant may also specify (a) the price at which such shares are to be
tendered or (b) that the price be determined by the Dutch Auction tender
process. The Gartner Trustee will provide additional information in a separate
letter with respect to the application of the Offer to participants in the
Gartner Savings Plan. Participants in such plan may not use the Letter of
Transmittal to direct the tender of shares attributable to their individual
accounts, but must use the Gartner Savings Plan Direction Form (the "Gartner
Savings Plan Direction Form") sent to them. Although the Offer is not scheduled
to expire until 12:00 Midnight, New York City time, on August 24, 1999, unless
extended, participants in the Gartner Savings Plan must return their Gartner
Savings Plan Direction Forms to Management Information Services, as agent for
the Gartner Trustee, so they are received by such agent no later than 5:00 p.m.,
New York City time, on Wednesday, August 18, 1999, unless extended.
All proceeds received by the Gartner Trustee on account of shares purchased
from the Gartner Savings Plan will be invested on behalf of each participant in
the Fidelity Money Market Trust: Retirement Money Market Portfolio, pending
further distributions by the participant. Such proceeds will be reinvested as
soon as administratively practical. PARTICIPANTS IN THE GARTNER SAVINGS PLAN ARE
URGED TO READ ALL OF THE MATERIALS RELATED TO THE OFFER CAREFULLY.
IMS Health Savings Plan. As of July 26, 1999, the IMS Health Incorporated
Savings Plan (the "IMS Health Savings Plan") held approximately 41,040 shares of
Class B Common Stock of the Company, all of which were attributable to the
individual accounts of the plan's participants. Such shares will, subject to the
limitations of the Employee Retirement Income Security Act of 1974, as amended,
and the applicable regulations thereunder, be eligible to be tendered (or not
tendered) in accordance with the instructions of participants to Bankers Trust
Company, the trustee of such plan (the "IMS Trustee"). Shares for which the IMS
Trustee does not receive instructions from participants will not be tendered.
The IMS Trustee will make available to participants under the IMS Health Savings
Plan all documents furnished to stockholders generally in connection with the
Offer. Each such participant will also receive an IMS Health Savings Plan
Direction Form (as defined below) upon which the participant may instruct the
IMS Trustee regarding the Offer. Each participant may direct that some, all, or
none of the shares attributable to such participant's account under the IMS
Health Savings Plan (including fractional shares, if any) be tendered. Each
participant may also specify (a) the price at which such shares are to be
tendered or (b) that the price be determined by the Dutch Auction tender
process. The IMS Trustee will provide additional information in a separate
letter with respect to the application of the Offer to participants in the IMS
Health Savings Plan. Participants in such plan may not use the Letter of
Transmittal to direct the tender of shares attributable to their individual
accounts, but must use the IMS Health Savings Plan Direction Form (the "IMS
Health Savings Direction Form") sent to them. Although the Offer is not
scheduled to expire until 12:00 Midnight, New York City time, on August 24,
1999, unless extended, participants in the IMS Health Savings Plan must return
their IMS Health Savings Plan Direction Forms to the IMS Trustee, so they are
received by the IMS Trustee no later than 5:00 p.m., New York City time, on
Friday, August 20, 1999, unless extended.
All proceeds received by the IMS Trustee on account of shares purchased
from the IMS Health Savings Plan will be invested initially in the IMS 401(k)
Plan Fixed Income Fund. Account balances in the IMS 401(k) Plan Fixed Income
Fund may then be transferred pursuant to the terms of the IMS Health Savings
Plan. PARTICIPANTS IN THE IMS HEALTH SAVINGS PLAN ARE URGED TO READ ALL OF THE
MATERIALS RELATED TO THE OFFER CAREFULLY.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of shares
of Common Stock of each class to be accepted, the price to be paid for shares to
be accepted, and the validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of shares will be determined by the
Company, in its sole discretion, and its determination shall be final and
binding on all parties. The Company reserves the absolute right to reject any or
all tenders of any shares that it determines are not in proper form or the
acceptance for payment of or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the
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<PAGE> 26
absolute right to waive any of the conditions of the Offer or any defect or
irregularity in any tender with respect to any particular shares or any
particular stockholder and the Company's interpretation of the terms of the
Offer will be final and binding on all parties. No tender of shares will be
deemed to have been properly made until all defects or irregularities have been
cured by the tendering stockholder or waived by the Company. None of the
Company, the Dealer Manager, the Depositary, the Information Agent or any other
person will be obligated to give notice of any defects or irregularities in
tenders, nor will any of them incur any liability for failure to give any
notice.
Tendering Stockholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of shares pursuant to any of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer, as well as the tendering stockholder's
representation and warranty to the Company that (a) the stockholder has a net
long position in the shares of each class of Common Stock tendered or equivalent
securities at least equal to the number of shares of such class tendered, within
the meaning of Rule 14e-4 promulgated by the Commission under the Exchange Act
and (b) such tender of shares complies with Rule 14e-4. It is a violation of
Rule 14e-4 for a person, directly or indirectly, to tender shares for that
person's own account unless, at the time of tender and at the end of the
proration period (including any extensions thereof), the person so tendering (i)
has a net long position equal to or greater than the amount of (x) shares of
Common Stock of the respective class tendered or (y) other securities
convertible into or exchangeable or exercisable for the shares tendered and will
acquire the shares of Common Stock of the respective class for tender by
conversion, exchange or exercise and (ii) will deliver or cause to be delivered
the shares tendered in accordance with the terms of the Offer. Rule 14e-4
provides a similar restriction applicable to the tender or guarantee of a tender
on behalf of another person. The Company's acceptance for payment of shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering stockholder and the Company upon the terms and conditions of the
Offer.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST
BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY. ANY SUCH DOCUMENTS
DELIVERED TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE
WILL NOT BE DEEMED TO BE PROPERLY TENDERED.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of shares of Common
Stock pursuant to the Offer are irrevocable. Shares tendered pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date and, unless
previously accepted for payment by the Company pursuant to the Offer, may also
be withdrawn at any time after 12:00 Midnight, New York City time, on Tuesday,
September 21, 1999.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic, telex or facsimile transmission form and must be received
in a timely manner by the Depositary at its address set forth on the back cover
of this Offer to Purchase. Any such notice of withdrawal must specify the name
of the tendering stockholder, the number of shares of Common Stock of each class
to be withdrawn and the name of the registered holder of such shares. If the
certificates for shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the tendering stockholder must also submit the serial numbers shown on the
particular certificates for shares of each class to be withdrawn and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of shares tendered for the account of an
Eligible Institution). If shares have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3, the notice of withdrawal also
must specify the name and the number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn shares and must otherwise comply with
such Book-Entry Transfer Facility's procedures. All questions as to the form and
validity (including the time of receipt) of any notice of withdrawal will be
determined by the Company, in its sole discretion, which determination shall be
final and binding. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person will be obligated to give notice of any
defects or irregularities in any notice of withdrawal nor will any of them incur
liability for failure to give any notice.
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Withdrawals may not be rescinded and any shares properly withdrawn will
thereafter be deemed not properly tendered for purposes of the Offer unless the
withdrawn shares are properly retendered prior to the Expiration Date by
following one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of shares of
Common Stock or is unable to purchase shares pursuant to the Offer for any
reason, then, without prejudice to the Company's rights under the Offer, the
Depositary may, subject to applicable law, retain tendered shares on behalf of
the Company, and such shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company (i) will determine the
Class A Purchase Price it will pay for shares of Class A Common Stock properly
tendered and not properly withdrawn prior to the Expiration Date, taking into
account the number of shares of Class A Common Stock so tendered and the prices
specified by tendering stockholders, as well as the proportionality and
proration provisions and the other conditions of the Offer; (ii) will determine
the Class B Purchase Price it will pay for the shares of Class B Common Stock
properly tendered and not properly withdrawn prior to the Expiration Date,
taking into account the number of shares of Class B Common Stock so tendered and
the prices specified by tendering stockholders, the proportionality and
proration provisions and the other conditions of the Offer; and (iii) will
accept for payment and pay for (and thereby purchase) shares properly tendered
at prices at or below the applicable Purchase Price and not properly withdrawn
prior to the Expiration Date. For purposes of the Offer, the Company will be
deemed to have accepted for payment (and therefore purchased) shares of Class A
Common Stock that are properly tendered at or below the Class A Purchase Price
and not properly withdrawn and shares of Class B Common Stock that are properly
tendered at or below the Class B Purchase Price and not properly withdrawn
(subject in each case to the proportionality and proration provisions and other
terms and conditions of the Offer) only when, as and if it gives oral or written
notice to the Depositary of its acceptance of shares for payment pursuant to the
Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company (i) will accept for payment and pay a
single Class A Purchase Price for up to 9,600,000 shares of Class A Common Stock
(subject to increase or decrease as provided in Section 14) properly tendered,
or such lesser number of shares as are properly tendered and not properly
withdrawn as permitted in Section 4, and (ii) will accept for payment and pay a
single Class B Purchase Price for up to 6,100,000 shares of Class B Common Stock
(subject to increase or decrease as provided in Section 14) properly tendered,
or such lesser number of shares as are properly tendered and not properly
withdrawn as permitted in Section 4. The Class A Purchase Price and the Class B
Purchase Price need not be identical.
The Company will pay for shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Company and transmitting payment to the tendering stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered shares of each class of Common Stock accepted for
payment as soon as practicable after the Expiration Date; however, the Company
expects that it will not be able to announce the final results of any proration
and commence payment for shares purchased until approximately five business days
after the Expiration Date. Certificates for all shares tendered and not
purchased, including all shares of any class tendered at prices in excess of the
Purchase Price for such class and shares not purchased due to proration, will be
returned to the tendering stockholder (or, in the case of shares tendered by
book-entry transfer, will be credited to the account maintained with the
Book-Entry Transfer Facility by the participant who so delivered the shares) at
the Company's expense as promptly as practicable after the Expiration Date or
termination of the Offer without expense to the tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE BE PAID BY THE COMPANY BY
REASON OF ANY DELAY IN MAKING PAYMENT. In addition, if certain events occur, the
Company may not be obligated to purchase shares pursuant to the Offer. See
Section 6.
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The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of shares purchased pursuant to the Offer. If, however, payment
of the applicable Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) if unpurchased shares are to be registered in the name
of, any person other than the registered holder, or if tendered certificates are
registered in the name of any person other than the person signing the Letter of
Transmittal, the amount of all stock transfer taxes, if any (whether imposed on
the registered holder or the other person), payable on account of the transfer
to the person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 8 of the Letter of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED UNITED STATES FEDERAL INCOME TAX BACKUP
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO THE STOCKHOLDER OR OTHER PAYEE
PURSUANT TO THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES FOR NON-UNITED STATES HOLDERS.
6. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company will not be
required to accept for payment, purchase or pay for any shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after July 26, 1999 and prior to
the Expiration Date any of the following events shall have occurred (or shall
have been determined by the Company to have occurred) and, in the Company's
reasonable judgment and regardless of the circumstances giving rise thereto
(including any action or omission to act by the Company), the occurrence of such
event makes it undesirable to proceed with the Offer or to proceed with
acceptance of shares for payment:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly (i) challenges the making of the Offer, the acquisition of
some or all of the shares pursuant to the Offer or otherwise relates in any
manner to the Offer, or (ii) in the Company's reasonable judgment, could
materially and adversely affect the business, condition (financial or
other), assets, income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries or materially impair the contemplated benefits of the
Offer to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the tendered shares illegal or otherwise restrict or prohibit
consummation of the Offer, (ii) delay or restrict the ability of the
Company, or render the Company unable, to accept for payment or pay for
some or all of the tendered shares, (iii) materially impair the
contemplated benefits of the Offer to the Company, or (iv) materially and
adversely affect the business, condition (financial or other), assets,
income, operations or prospects of the Company and its subsidiaries, taken
as a whole, or otherwise materially impair in any way the contemplated
future conduct of the business of the Company or any of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any
government or governmental, regulatory or administrative agency, authority
or tribunal on, or any event
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that, in the Company's reasonable judgment, might affect, the extension of
credit by banks or other lending institutions in the United States, (v) any
significant decrease in the market price of the Company's Common Stock or
any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the reasonable
judgment of the Company, have a material adverse effect on the Company's
business condition (financial or other), assets, income, operations or
prospects or the trading in the Company's Common Stock, (vi) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof, or (vii) any decline in
either the Dow Jones Industrial Average or the Standard and Poor's Index of
500 Industrial Companies by an amount in excess of 10% measured from the
close of business on July 26, 1999;
(d) a tender or exchange offer for any or all of the shares of Common
Stock of the Company (other than the Offer), or any merger, business
combination or other similar transaction with or involving the Company or
any subsidiary, shall have been proposed, announced or made by any person;
(e) (i) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding shares of any class
of Common Stock of the Company (other than (A) any such person, entity or
group who has a Schedule 13G on file with the Commission as of July 26,
1999 relating to share ownership in the Company and does not effect a
change in filing status to Schedule 13D, or (B) any person, entity or group
who (1) first becomes subject to reporting of its beneficial ownership
position on Schedule 13G as a result of the Distribution, (2) had a current
Schedule 13G on file with the Commission as of July 26, 1999 relating to
share ownership in IMS Health, and (3) does not effect a change in filing
status to Schedule 13D), (ii) any person, entity or group who has a
Schedule 13G on file with the Commission as of July 26, 1999 with respect
to share ownership in the Company shall have changed its filing status from
Schedule 13G status to Schedule 13D status, or shall have acquired or
proposed to acquire beneficial ownership of an additional 2% or more of the
outstanding shares of any class of Common Stock of the Company, or (iii)
any person, entity or group shall have filed a Notification and Report Form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
or shall have made a public announcement reflecting an intent to acquire
the Company or any of its subsidiaries or any of their respective assets or
securities other than in connection with a transaction authorized by the
Board of Directors of the Company;
(f) any change or changes shall have occurred in the business,
condition (financial or other), assets, income, operations, prospects or
stock ownership of the Company or its subsidiaries that, in the Company's
reasonable judgment, is or may be material to the Company or its
subsidiaries; or
(g) the Company determines that the consummation of the Offer and the
purchase of shares of Common Stock may cause any class of Common Stock to
be delisted from the NYSE or to be eligible for deregistration under the
Exchange Act.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
omission by the Company) giving rise to any such condition, and may be waived by
the Company, in whole or in part, at any time and from time to time in its
reasonable discretion. The Company's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above will be final and binding.
7. PRICE RANGE OF SHARES.
The Company's Class A Common Stock has been listed on the NYSE since
September 15, 1998. Previously, the Class A Common Stock was listed on the
Nasdaq National Market. The Class B Common Stock has been listed on the NYSE
since July 19, 1999. The following table sets forth, for the fiscal quarters
indicated, the high and low closing sales prices per share in each of such
fiscal quarters.
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<PAGE> 30
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------- --------------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
Fiscal 1997:
1st Quarter..................................... $38.88 $29.75 -- --
2nd Quarter..................................... 42.06 20.38 -- --
3rd Quarter..................................... 35.94 20.63 -- --
4th Quarter..................................... 36.63 25.50 -- --
Fiscal 1998:
1st Quarter..................................... 37.25 26.75 -- --
2nd Quarter..................................... 40.81 33.38 -- --
3rd Quarter..................................... 35.19 30.44 -- --
4th Quarter..................................... 35.19 20.88 -- --
Fiscal 1999:
1st Quarter..................................... 24.56 17.88 -- --
2nd Quarter..................................... 25.63 20.88 -- --
3rd Quarter..................................... 24.50 19.00 -- --
4th Quarter (through July 23, 1999)............. 22.00 20.31 21.63 20.25
</TABLE>
On July 23, 1999, the last full trading day prior to the announcement of
the Offer, the closing sales prices of the Common Stock as reported on the NYSE
composite tape were $22 per share of Class A Common Stock and $21.63 per share
of Class B Common Stock. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
DIVIDENDS
The Company recently declared a special, non-recurring cash dividend of
$1.1945 per share. The record date for the dividend was July 16, 1999, and the
payment date was July 22, 1999. The Company has paid no other cash dividends
since its initial public offering.
8. SOURCE AND AMOUNT OF FUNDS.
Assuming the Company purchases an aggregate of 15,700,000 shares of Common
Stock pursuant to the Offer at a maximum Purchase Price of $24 per share, the
Company expects the maximum aggregate cost, including all fees and expenses
applicable to the Offer, to be approximately $380 million. The Company expects
to fund such cost from available cash and marketable securities plus borrowings
under the Company's credit facility described below. At June 30, 1999, the
Company had available cash and marketable securities of $156 million, after
setting aside $125 million for payment of a $1.1945 per share cash dividend to
holders of Common Stock of record as of July 16, 1999.
The Company entered into an agreement on July 16, 1999 (the "Closing Date")
with The Chase Manhattan Bank, as administrative agent for the participating
financial institutions thereunder, providing for a maximum of $500 million of
credit facilities, consisting of a $350 million term loan and a $150 million
senior revolving credit facility. The principal terms of such facility are as
follows:
General Description of Credit Facility. The Credit Agreement provides for
credit facilities (the "Credit Facilities") in a maximum aggregate principal
amount of $500 million, consisting of a $350 million term loan (the "Term
Facility") and a $150 million senior revolving credit facility (the "Revolving
Facility"). The Term Facility can be advanced in multiple drawings during the
first year after the closing date of the Credit Facilities ("Closing Date"),
subject to certain customary conditions on the date of any such loan. On the
date that is six months after the Closing Date, the aggregate principal amount
available to be borrowed under the Term Facility will be reduced, to the extent
necessary, so that the remaining undrawn Term Commitments are no greater than
$100 million. Amounts repaid under the Term Facility may not be reborrowed.
Loans under the Revolving Facility will be available for a period of five years
after the Closing Date, subject to certain
28
<PAGE> 31
customary conditions on the date of any such loan. Amounts repaid by the Company
under the Revolving Facility may be reborrowed.
Interest Rates; Fees. Interest on the loans outstanding under the Credit
Facilities will accrue based on one or more rates selected by the Company, based
on (1) the alternate base rate (the "Alternate Base Rate") or (2) a Eurodollar
rate (the "LIBO Rate"), in each case plus an applicable margin (the "Applicable
Margin"). The Alternate Base Rate is defined as the greatest of (a) the prime
commercial lending rate of The Chase Manhattan Bank, (b) the secondary market
rate for certificates of deposit, adjusted for reserves and assessments, plus 1%
and (c) the federal funds rate published from time to time by the Federal
Reserve Bank of New York, plus 1/2%. The LIBO Rate is defined as the rate for
U.S. Euro dollar deposits for one, two, three or six months offered to the
administrative agent in the applicable interbank market two business days prior
to the date the loan is to be made. The Applicable Margin will be based on the
ratio of (x) the Company's total consolidated indebtedness to (y) the Company's
consolidated earnings before interest expense, taxes, depreciation and
amortization (the "Leverage Ratio") as of the end of any fiscal quarter. The
Applicable Margin for the Alternate Base Rate will range from 0% to 0.50% per
annum and will initially be 0.25% per annum. The Applicable Margin for the LIBO
Rate will range from 0.75% to 1.75% per annum, and will initially be 1.50% per
annum.
The Company is charged a commitment fee per annum on the average daily
unused amount of the Credit Facilities. The amount of the commitment fee is
based on the Leverage Ratio, and will range from 0.25% to 0.35% per annum. The
initial commitment fee is 0.30% per annum. The commitment fee for the Revolving
Facility is payable quarterly in arrears. The commitment fee for the Term
Facility is payable on the one year anniversary of the Closing Date.
Repayment. Loans made under the Term Facility will mature five years after
the Closing Date and will amortize in eight equal semi-annual installments
commencing 18 months after the Closing Date. Loans made under the Revolving
Facility will mature five years after the Closing Date. The Company intends to
repay the loans prior to the maturity dates if feasible, but has no present
schedule for prepayment planned.
Guarantees. The obligations of the Company under the Credit Facilities are
guaranteed by all direct or indirect significant domestic subsidiaries of the
Company.
Prepayments. The Company is permitted to make prepayments on loans under
the Credit Facilities at any time, upon prior notice to the administrative
agent. In addition, the Company is required to make prepayments on loans under
the Term Facility with (1) 100% of the net cash proceeds of any issuances of
indebtedness by the Company and its subsidiaries, if on a pro forma basis, after
giving effect to such issuances, the Company's Leverage Ratio is equal to or
greater than 2.25 to 1.00, and (2) 50% of the net cash proceeds of any issuances
of indebtedness by the Company and its subsidiaries, if on a pro forma basis,
after giving effect to such issuances, the Company's Leverage Ratio is less than
2.25 to 1.00, in each case subject to limited exceptions.
Conditions and Covenants. The obligations of the lenders to make loans
under the Credit Facilities are subject to the satisfaction of certain
conditions precedent that are customary in similar credit facilities or
otherwise appropriate under the circumstances. The Company and its subsidiaries
are subject to certain negative covenants contained in the Credit Agreement,
including restrictions on (1) the incurrence of additional indebtedness and
other obligations and the granting of liens, (2) mergers, acquisitions and asset
sales, (3) investments, loans and advances, (4) sale and leaseback transactions,
(5) changes in the nature of business conducted and (6) actions that create
significant indemnification obligations. Cash dividends, distributions,
redemptions and stock repurchases are prohibited, provided that the Company may,
so long as no default or event of default exists or would result under the
Credit Agreement, (a) pay the Cash Dividend, (b) effect the Stock Repurchase,
(c) pay other dividends and make other distributions, redemptions and
repurchases in an aggregate amount not in excess of $50 million, and (d) make
other cash dividends, distributions, redemptions and stock repurchases so long
as the Company's Leverage Ratio, on a pro forma basis after giving effect to the
action in question, is less than 1.50 to 1.00.
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<PAGE> 32
The Credit Agreement contains customary affirmative covenants, including
compliance with ERISA, environmental and other laws, payment of taxes,
maintenance of corporate existence and rights, maintenance of insurance,
financial reporting and use of proceeds of loans. In addition, the Credit
Agreement requires the Company to maintain compliance with certain specified
financial covenants, including (1) a Leverage Ratio of not more than 2.75 to
1.00, (2) a ratio of the Company's consolidated earnings before interest
expense, taxes, depreciation and amortization to consolidated cash interest
expense of not less than 5.00 to 1.00, (3) a ratio of the annualized value of
all of the Company's advisory and measurement contracts in effect at a given
time, without regard to the duration of those contracts (the "Contract Value")
to consolidated indebtedness due in more than one year from the date of
calculation of not less than 1.25 to 1.00, and (4) minimum Contract Value of not
less than $350 million.
Events of Default. The Credit Agreement also includes events of default
that are typical for similar credit facilities, including non-payment of
principal, interest or fees, violation of covenants, inaccuracy of
representations and warranties in any material respect, cross-default to certain
other indebtedness and agreements, bankruptcy and insolvency events, material
judgments, certain defaults under ERISA and change in control. The occurrence of
any of these events of default could result in acceleration of the Company's
obligations under the Credit Agreement.
The preceding summary of the Credit Facility is qualified in its entirety
by reference to the text of the Credit Facility, which has been filed as an
exhibit to the Issuer Tender Offer Statement on Schedule 13E-4 (the "Schedule
13E-4") to which this Offer to Purchase is attached as an exhibit. A copy of the
Schedule 13E-4 may be obtained from the Commission in the manner provided in
Section 9.
9. CERTAIN INFORMATION CONCERNING THE COMPANY.
Gartner Group, Inc., founded in 1979, is the world's leading independent
provider of research and analysis on the computer hardware, software,
communications and related information technology ("IT") industries. The
Company's products and services provide strategic and tactical advice for
organizations trying to understand, apply and deploy information technology on a
global basis. The Company's integrated products and services help enterprises
stay abreast of rapidly changing IT trends -- a critical ingredient when making
multi-million dollar IT purchasing, marketing or investment decisions. The
Company's products and services are organized along client segments: IT
users -- enterprises that purchase and deploy IT products and services to gain
productivity or competitive advantage, and IT vendors -- companies that develop
and provide IT products.
Approximately 75 percent of the Company's total revenues are annual
renewable subscription-based products, where contracts are paid up-front and
revenue is recognized ratably over the life of the contract. Total revenues have
grown every year since the Company's inception in 1979. In fiscal 1998, revenue
was $642 million, a 30 percent compounded annual growth rate since 1993. Through
a field sales force of over 750 professionals and a global analytical staff of
over 800 industry experts, the Company sells products and services to over 9,000
organizations worldwide. The Company employs over 3,200 associates and has
locations in 50 countries in North and South America, Europe, Asia, Australia
and Africa.
Selected Historical Consolidated Financial Information
The following selected historical information as of and for each of the two
fiscal years ended September 30, 1998 and 1997 was derived from the audited
consolidated financial statements and other information and data included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1998 (the
"1998 Annual Report"), which is incorporated by reference. The following
selected historical financial information as of and for each of the six months
ended March 31, 1999 and March 31, 1998 was derived from the unaudited condensed
consolidated financial statements and other information and data included in the
Company's Quarterly Report on Form 10-Q for the period ended March 31, 1999,
which is incorporated by reference. More comprehensive financial information is
included in such reports, and the financial information that follows is
qualified in its entirety by reference to such reports, as such reports may be
amended from time to time, and all the financial statements and related notes
contained therein, copies of which may be obtained as set forth below under the
caption "Additional Information."
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<PAGE> 33
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR FOR THE SIX MONTHS
ENDED SEPTEMBER 30, ENDED MARCH 31,
-------------------- ----------------------
1998 1997 1999 1998
-------- -------- ---------- --------
(IN THOUSANDS EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue............................... $641,957 $511,239 $ 361,708 $312,232
Net income.................................. $ 88,347 $ 73,130 $ 58,929 $ 45,743
Net income per common share:
Basic....................................... $0.88 $0.77 $0.57 $0.46
Diluted..................................... $0.84 $0.71 $0.56 $0.43
Ratio of earnings to fixed charges(1) -- -- -- --
BALANCE SHEET DATA:
Working capital............................. $ 96,244 $ 53,425 $ 153,071 $104,259
Total assets................................ $832,871 $645,312 $ 896,398 $751,384
Total assets net of intangible assets....... $988,657 $777,507 $1,096,143 $890,735
Total debt.................................. $-- $-- $-- $--
Stockholders' equity........................ $414,938 $269,870 $ 499,005 $378,309
Book value per common share(2)................ $4.10 $2.79 $4.81 $3.76
</TABLE>
(1) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings before income taxes and fixed charges. "Fixed
charges" consists of interest expense and amortization of debt expenses. As
the Company had no debt outstanding during the six months ended March 31,
1999 and 1998 or the fiscal years ended September 30, 1998 and 1997, the
ratio of earnings to fixed charges is not applicable.
(2) Book value per share is calculated as total stockholders' equity divided by
the number of shares outstanding at the end of the period.
Selected Unaudited Pro Forma Consolidated Financial Information
The following selected unaudited pro forma consolidated financial
information gives effect to the Recapitalization, the purchase of an aggregate
of 15,700,000 shares of Common Stock pursuant to the Offer, the purchase of an
aggregate of approximately 5,200,000 additional shares of Common Stock in open
market purchases (the "Open Market Purchases") following completion of the
Offer, the $125 million cash dividend of July 16, 1999, borrowings under the
Company's credit facility and the payment of related fees and expenses, based on
the assumptions described in the Notes to Selected Unaudited Consolidated Pro
Forma Financial Information below, as if such transactions had occurred on the
first day of each of the periods presented, with respect to statement of
operations data, and on March 31, 1999 and September 30, 1998, with respect to
balance sheet data. The selected unaudited consolidated pro forma financial
information should be read in conjunction with the Selected Historical
Consolidated Financial Information set forth above and does not purport to be
indicative of the results that would actually have been obtained, or results
that may be obtained in the future, or the financial condition that would have
resulted, if the Recapitalization, the purchase of shares pursuant to the Offer,
the $125 million cash dividend of July 16, 1999, borrowings under the Company's
credit facility and the payment of related fees and expenses had been completed
at the dates indicated. The pro forma statements reflect the Open Market
Purchases because the Company is obligated to effect such purchases under the
terms of its agreements with IMS Health. The Open Market Purchases will comprise
an aggregate of 5,236,438 shares of Common Stock (representing approximately 5%
of the number of shares of Common Stock outstanding on July 26, 1999), increased
or decreased to the extent the actual number of shares purchased pursuant to the
Offer is less than or greater than the 15% sought to be purchased hereby. See
Section 2.
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<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1998 MARCH 31, 1999
------------------------- ------------------------
PRO FORMA(1)(2) PRO FORMA(1)(2)
------------------------- ------------------------
$21.00 $24.00 $21.00 $24.00
PER SHARE PER SHARE PER SHARE PER SHARE
---------- ----------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue............................. $641,957 $ 641,957 $ 361,708 $ 361,708
Net income................................ $ 70,249 $ 67,633 $ 49,844 $ 48,427
Net income per common share:
Basic..................................... $ 0.70 $ 0.84 $ 0.61 $ 0.59
Diluted................................... $ 0.83 $ 0.80 $ 0.59 $ 0.57
Ratio of earnings to fixed charges(3)....... 4.9x 4.3x 6.3x 5.5x
BALANCE SHEET DATA:
Working capital........................... $(33,936) $ (84,425) $ (56,502) $ (64,339)
Total assets.............................. $649,863 $ 649,863 $ 704,976 $ 704,976
Total assets, net of intangible assets.... $988,657 $ 988,657 $1,096,143 $1,096,143
Total debt................................ $383,180 $ 445,880 $ 374,766 $ 437,466
Stockholders' equity...................... $(43,634) $(108,951) $ 49,446 $ (14,672)
Book value per common share(4).............. $ (0.54) $ (1.35) $ 0.59 $ (0.18)
Number of shares outstanding(4)............. 80,878 80,878 80,878 83,531
</TABLE>
- ---------------
NOTES TO SELECTED UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(1) The pro forma information assumes 20,900,000 shares to be purchased at $21
and $24 per share. At $21.00 per share, the purchase is assumed to be
financed through approximately $450 million aggregate principal amount of
borrowings under the Company's credit facility and the balance from
available cash. At $24 per share, the purchase is assumed to be financed
through approximately $500 million aggregate principal amount of borrowings
under the Company's credit facility and the balance from available cash.
Interest per annum on borrowings under the Credit Agreement is assumed to be
7.1%.
(2) The pro forma information assumes expenses directly related to the Offer and
related financing expenses of approximately $5.0 million in the aggregate,
and direct costs of acquiring Treasury stock of approximately $1.6 million.
(3) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of earnings before income taxes, and fixed charges.
"Fixed Charges" consists of interest expense and amortization of debt
expenses.
(4) Book value per share is calculated as total stockholders' equity divided by
the number of shares outstanding at the end of the period, giving effect to
the repurchase of 15,700,000 shares of Common Stock as contemplated hereby
and additional repurchases of approximately 5,200,000 shares of Common Stock
in the open market as required by the Company's agreements with IMS Health.
Additional Information
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
proxy statements distributed to the Company's stockholders and filed with the
Commission. Financial statements are required to be disclosed in quarterly
reports on Form 10-Q and annual reports on Form 10-K filed with the Commission.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 2120, Washington, D.C. 20549; at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World
Trade Center, New York, New York 10048. Copies of such material may also be
obtained by mail, upon payment of the Commission's customary charges, from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a web site on the
Internet at http://www.sec.gov that contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
Such reports, proxy statements and other information concerning the Company can
also be inspected at the offices of the NYSE, 20 Broad Street, New York, NY
10005.
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<PAGE> 35
10. INTERESTS OF DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS; TRANSACTIONS
AND ARRANGEMENTS CONCERNING SHARES.
As of July 26, 1999, the Company had outstanding an aggregate of
104,682,198 shares of Common Stock, consisting of 63,992,550 shares of Class A
Common Stock and 40,689,648 shares of Class B Common Stock. In addition, the
Company had outstanding at such date Options to purchase an aggregate of
17,515,069 shares of Class A Common Stock and the IMS Health Warrants to
purchase an aggregate of 599,400 shares of Class A Common Stock. The 15,700,000
shares that the Company is offering to purchase pursuant to the Offer represent
approximately 15% of the shares outstanding on July 26, 1999 (approximately 13%
assuming exercise of all outstanding Options and IMS Health Warrants).
The Company's current directors and executive officers as a group (14
persons) beneficially own (based on holdings as of June 30, 1999) an aggregate
of 2,319,729 shares of Class A Common Stock, representing approximately 3.6% of
the outstanding Class A Common Stock and 2.2% of the outstanding Common Stock as
a whole, assuming in each case the exercise by such persons of their currently
exercisable Options. The Company's officers and directors have agreed not to
participate in the Offer to Purchase, as they are are prohibited from doing so
under the terms of the IMS Transactions. Such persons own in the aggregate less
than 10,000 shares of Class B Common Stock.
Based on the Company's records and on information provided to the Company
by its directors, executive officers and subsidiaries, neither the Company, nor
any associate or subsidiary of the Company nor, to the Company's knowledge, any
of the directors or executive officers of the Company or any of its
subsidiaries, nor any associates or subsidiaries of any of the foregoing, has
effected any transactions involving the Common Stock during the 40 business days
prior to the date hereof, except for the IMS Transactions.
Pursuant to the Distribution Agreement with IMS Health, the Company is
obligated to effect this Offer to Purchase plus the repurchase of additional
shares of Common Stock in the Open Market Repurchase. See Section 2.
IMS Health is obligated, under the tax ruling it obtained in connection
with the IMS Transactions, to dispose of the shares of Class A Common Stock
retained by IMS Health following the Distribution as quickly as feasible.
Following the Distribution, IMS Health retained a total of 6,909,457 shares of
Class A Common Stock (the "Retained Shares") and 599,400 shares of Class A
Common Stock (the "Warrant Shares") issuable on exercise of warrants held by IMS
Health. IMS Health intends to dispose of all such shares within one year
following July 26, 1999, the date of the Distribution (the "Distribution Date").
IMS Health has agreed, however, in order to reduce the impact of such
transactions on the market for the Company's Common Stock, that IMS Health (i)
will not sell, transfer or otherwise dispose of, or issue any derivative
security with respect to, the Retained Shares or Warrant Shares for the period
of 90 days following the Distribution Date and (ii) thereafter will not sell,
transfer or otherwise dispose of, or issue any derivative security with respect
to, any Retained Shares or Warrant Shares, except (x) sales on the NYSE of
Retained Shares or Warrant Shares in an amount (collectively) in any day in an
amount not in excess of 25% of the average daily trading volume of the Company's
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 Company and IMS Health agree in good faith would not
reasonably be expected to have an adverse impact on the trading prices of the
Company's 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 July 26, 2000.
Except as otherwise described herein, neither the Company nor, to the
Company's knowledge, IMS Health nor any of the affiliates, directors or
executive officers of the Company or IMS Health, is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly, to the Offer with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any such securities,
joint
33
<PAGE> 36
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations.
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of shares of Common Stock pursuant to the Offer will
reduce the number of shares that might otherwise be traded publicly and may
reduce the number of stockholders. Nonetheless, the Company anticipates that
there will be a sufficient number of shares of Common Stock of each class
outstanding and publicly traded following consummation of the Offer to ensure a
continued trading market on the NYSE for the Class A Common Stock and Class B
Common Stock.
The Class A Common Stock and Class B Common Stock constitute "margin
securities" under the rules of the Federal Reserve Board. This has the effect,
among other things, of allowing brokers to extend credit to their customers
using such shares as collateral. The Company believes that, following the
purchase of shares pursuant to the Offer, the Class A Common Stock and Class B
Common Stock will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company believes that its
purchase of shares of Common Stock pursuant to the Offer will not result in the
Class A Common Stock or Class B Common Stock becoming subject to deregistration
under the Exchange Act.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit material to
the Company's business that is reasonably likely to be adversely affected by the
Company's acquisition of shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority, agency, or tribunal domestic or foreign, that would be required for
the acquisition or ownership of shares by the Company as contemplated herein.
Should any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought or taken. The
Company is unable to predict whether it will be required to delay the acceptance
for payment of or payment for shares tendered pursuant to the Offer pending the
outcome of any such matter. There can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to the Company's business. The
Company's obligations under the Offer to accept for payment and pay for shares
are subject to certain conditions. See Section 6.
13. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following summary describes the principal United States federal income
tax consequences to United States Holders (as defined below) of an exchange of
shares pursuant to the Offer. Those Stockholders who do not participate in the
exchange should not incur any United States federal income tax liability from
the exchange. This summary is based upon the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), existing United States Treasury
Regulations promulgated thereunder, published rulings, administrative
pronouncements and judicial decisions, changes to which could affect the tax
consequences described herein (possibly on a retroactive basis).
This summary addresses only shares of Common Stock held as capital assets.
It does not address all of the tax consequences that may be relevant to
particular stockholders in light of their personal circumstances, or to certain
types of stockholders (such as certain financial institutions, dealers or
traders in securities or commodities, insurance companies, tax-exempt
organizations or persons who hold shares as a position in a "straddle" or as
part of a "hedging" or "conversion" transaction or that have a functional
currency other than the United States dollar). This summary may not be
applicable with respect to shares acquired as compensation (including shares
acquired upon the exercise of stock options or which were or are subject to
forfeiture restrictions). This summary also does not address the state, local or
foreign tax consequences of
34
<PAGE> 37
participating in the Offer. EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S
TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES TO SUCH HOLDER OF PARTICIPATION IN
THE OFFER.
A "United States Holder" is a holder of shares that for United States
federal income tax purposes is (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized in or under the laws of
the United States or any State or division thereof (including the District of
Columbia), (iii) an estate the income of which is subject to United States
federal income taxation regardless of its source or (iv) a trust (a) the
administration over which a United States court can exercise primary supervision
and (b) all of the substantial decisions of which one or more United States
persons have the authority to control and certain other trusts considered United
States Holders for federal income tax purposes. A "Non-United States Holder" is
a holder of shares other than a United States Holder.
A United States Holder participating in the exchange will be treated either
as having sold shares or as having received a dividend distribution from the
Company. In that regard, under Section 302 of the Code, a United States Holder
whose shares are exchanged pursuant to the Offer will be treated as having sold
shares if the exchange (i) results in a "complete termination" of all of such
holder's equity interest in the Company, (ii) is a "substantially
disproportionate" redemption with respect to such holder or (iii) is "not
essentially equivalent to a dividend" with respect to such holder. In applying
each of the Section 302 tests, a United States Holder will be treated as owning
shares actually or constructively owned by certain related individuals and
entities.
The receipt of cash by a shareholder will result in a "complete
termination" of the shareholder's interest if either (1) all of the stock of the
Company that is actually and constructively owned by the shareholder is
transferred pursuant to the Offer or (2) all of the stock of the Company
actually owned by the shareholder is sold pursuant to the Offer and the
shareholder is eligible to waive, and effectively waives, the attribution of
stock of the Company constructively owned by the shareholder in accordance with
the procedures described in the Code. An exchange of shares will be
"substantially disproportionate" with respect to a United States Holder if the
percentage of the then outstanding shares actually and constructively owned by
such holder immediately after the exchange of shares (treating shares exchanged
pursuant to the Offer as no longer outstanding) pursuant to the Offer is less
than 80% of the percentage of the shares actually and constructively owned by
such holder immediately before the exchange (treating shares exchanged pursuant
to the Offer as outstanding). A United States Holder will satisfy the "not
essentially equivalent to a dividend" test if the reduction in such holder's
proportionate interest in the Company constitutes a "meaningful reduction" given
such holder's particular facts and circumstances. The IRS has concluded in a
published ruling that even a minor reduction in the percentage interest of a
stockholder whose relative stock interest in a publicly held corporation is
minimal and who exercises no control over corporate affairs constitutes such a
"meaningful reduction."
If a United States Holder is treated as having sold shares, such holder
will recognize capital gain or loss equal to the difference between the amount
of cash received and such holder's adjusted tax basis in the shares sold to the
Company. A United States Holder who acquired shares from IMS Health in the
Distribution will have an aggregate adjusted tax basis in such holder's IMS
Health shares and Company shares equal to the aggregate basis in such holder's
IMS Health shares immediately before the Distribution and such aggregate basis
shall be allocated between such holder's IMS Health shares and Company shares in
proportion to the relative fair market values of each. Any such gain or loss
will be capital gain or loss and will be long-term capital gain or loss if the
United States Holder's holding period of the shares exceeds one year as of the
date of the exchange. Any long-term capital gain recognized by United States
Holders that are individuals, estates or trusts will be taxable at a maximum
rate of 20%. However, any short-term capital gain recognized by United States
Holders that are individuals, estates or trusts and any long-term or short-term
capital gain recognized by United States Holders that are corporations will be
taxable at regular income tax rates.
If a United States Holder who participates in the Offer is not treated as
having sold shares, such holder will be treated as receiving a dividend to the
extent of such holder's rateable share of the Company's earnings and profits.
Such a dividend will be includible in the United States Holder's gross income as
ordinary income without reduction for the adjusted tax basis of the shares
exchanged. In such event, the United States Holder's
35
<PAGE> 38
adjusted tax basis in its shares exchanged in the Offer generally will be added
to such holder's adjusted tax basis in the remaining shares. A dividend received
by a corporate United States Holder may be (i) eligible for a dividends-received
deduction (subject to applicable limitations) and (ii) subject to the
"extraordinary dividend" provisions of the Code. To the extent, if any, that the
cash received by a United States Holder exceeds the Company's earnings and
profits, it will be treated first as a tax-free return of such United States
Holder's tax basis in the shares and thereafter as capital gain.
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to Non-United States Holders and the
backup withholding tax requirements.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH STOCKHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE OFFER, INCLUDING
THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
14. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 6 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
shares not previously accepted for payment or paid for or, subject to applicable
law, to postpone payment for shares upon the occurrence of any of the conditions
specified in Section 6 hereof by giving oral or written notice of such
termination or postponement to the Depositary and making a public announcement
thereof. The Company's reservation of the right to delay payment for shares
which it has accepted for payment is limited by Rule 13e-4(f)(5) promulgated
under the Exchange Act, which requires that the Company must pay the
consideration offered or return the shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 6 shall have occurred or shall be
deemed by the Company to have occurred, to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer to holders of shares or by decreasing or increasing the
number of shares being sought in the Offer). Amendments to the Offer may be made
at any time and from time to time by public announcement thereof. In the case of
an extension, such announcement will be issued no later than 9:00 a.m., New York
City time, on the next business day after the last previously scheduled or
announced Expiration Date. Any material change to the terms of the Offer will be
disseminated promptly to stockholders in a manner reasonably designed to inform
stockholders of such change. Without limiting the manner in which the Company
may choose to inform stockholders, except as required by applicable law, the
Company shall have no obligation to publish, advertise or otherwise communicate
any such change other than by making a release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. Under these rules, the minimum
period during which an offer must remain open following material changes in the
terms of the Offer or information concerning the Offer (other than a change in
price or a change in percentage of securities sought) will depend on the facts
and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
shares, materially increases the Dealer Manager fee or increases or decreases
the number of shares being sought in the Offer and, in the event of an increase
in the number of shares being sought, such increase exceeds 2% of the number of
outstanding shares of Common Stock, and (ii) the Offer is scheduled to expire at
any time earlier than the expiration of a period ending on the tenth business
day from, and including, the date that such notice of an increase or decrease is
first published, sent or given in the manner specified in this Section 14, the
Offer will be extended until the expiration of such period of ten business days.
For the purposes of the Offer, a "business day" means any day
36
<PAGE> 39
other than a Saturday, Sunday or Federal holiday and consists of the time period
from 12:01 am through 12:00 midnight, New York City time.
15. FEES AND EXPENSES.
The Company has retained Credit Suisse First Boston to act as its financial
advisor, as well as the Dealer Manager, in connection with the Offer. Credit
Suisse First Boston will receive customary fees for its services. The Company
also has agreed to reimburse Credit Suisse First Boston for certain reasonable
out-of-pocket expenses incurred in connection with the Offer, including
reasonable fees and expenses of counsel, and to indemnify Credit Suisse First
Boston against certain liabilities in connection with the Offer, including
liabilities under the federal securities laws. Credit Suisse First Boston has
rendered various investment banking and other advisory services to the Company
in the past, for which it has received customary compensation, and may render
similar services to the Company in the future.
The Company has retained Morrow & Co., Inc. to act as Information Agent and
EquiServe L.P. to act as Depositary in connection with the Offer. The
Information Agent may contact holders of shares by mail, telephone, facsimile,
telex, telegraph and personal interviews and may request brokers, dealers and
other nominee stockholders to forward materials relating to the Offer to
beneficial owners. The Information Agent and the Depositary will each receive
reasonable and customary compensation for their respective services, will be
reimbursed by the Company for certain reasonable out-of-pocket expenses and will
be indemnified against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws.
No fees or commissions will be payable by the Company to brokers, dealers
or other persons (other than fees to the Dealer Manager and the Information
Agent as described above) for soliciting tenders of shares pursuant to the
Offer. Stockholders holding shares through brokers or banks are urged to consult
the brokers or banks to determine whether transaction costs are applicable if
stockholders tender shares through such brokers or banks and not directly to the
Depositary. The Company will, however, upon request, reimburse brokers, dealers,
commercial banks, trust companies and other nominees for customary mailing and
handling expenses incurred by them in forwarding the Offer and related materials
to the beneficial owners of shares held by them as a nominee or in a fiduciary
capacity. No broker, dealer, commercial bank, trust company or other nominee has
been authorized to act as the agent of the Company, the Dealer Manager, the
Information Agent or the Depositary for purposes of the Offer. The Company will
pay or cause to be paid all stock transfer taxes, if any, on its purchase of
shares except as otherwise provided in Section 5 or Instruction 8 in the Letter
of Transmittal.
16. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer or the acceptance of shares pursuant
thereto is not in compliance with any applicable law, the Company will make a
good faith effort to comply with the applicable law. If, after such good faith
effort, the Company cannot comply with the applicable law, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
shares in such jurisdiction. In any jurisdiction where the securities, blue sky
or other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on the Company's behalf by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of the
jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission the Schedule 13E-4 which
contains additional information with respect to the Offer. Such Schedule 13E-4,
including the exhibits and any amendments thereto, may be examined, and copies
may be obtained, at the same places and in the same manner as is set forth in
Section 9 with respect to information concerning the Company.
37
<PAGE> 40
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGER IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE DEALER
MANAGER.
GARTNER GROUP, INC.
JULY 27, 1999
38
<PAGE> 41
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for shares and any other
required documents should be sent or delivered by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
EQUISERVE L.P.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight, Certified or By First Class Mail:
Securities Transfer & Reporting Express Mail Delivery: EquiServe L.P.
Services, Inc. EquiServe L.P. Corporate Actions
c/o EquiServe L.P. Corporate Actions P.O. Box 9573
100 William Street, Galleria 40 Campanelli Drive Boston, MA 02205-8686
New York, NY 10038 Braintree, MA 02184
</TABLE>
Phone:
(781)575-3120
Facsimile Transmission:
(781) 575-4826
Confirm Receipt of Facsimile by Telephone:
(781) 575-4816
------------------------
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at the telephone
numbers and addresses set forth below. Stockholders may also contact their
broker, dealer, commercial bank, trust company or nominee for assistance
concerning the Offer. To confirm delivery of Shares, stockholders are directed
to contact the Depositary.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 Park Avenue, Fifth Floor
New York, NY 10022
Banks and Brokerage Firms, call: (800) 662-5200 (toll free)
Stockholders, please call: (800) 566-9061 (toll free)
THE DEALER MANAGER FOR THE OFFER IS:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010-3629
(800) 881-8320 (toll free)
39
<PAGE> 1
EXHIBIT (a)(2)-A
LETTER OF TRANSMITTAL
TO TENDER SHARES OF
CLASS A COMMON STOCK OF
GARTNER GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 27, 1999
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, AUGUST 24, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
EQUISERVE L.P.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight, Certified or By First Class Mail:
Securities Transfer & Reporting Express Mail Delivery: EquiServe L.P.
Services, Inc. EquiServe L.P. Corporate Actions
c/o EquiServe L.P. Corporate Actions P.O. Box 9573
100 William Street, Galleria 40 Campanelli Drive Boston, MA 02205-8686
New York, NY 10038 Braintree, MA 02184
</TABLE>
Telephone:
(781) 575-3120
Facsimile Transmission:
(781) 575-4826
Confirm Receipt of Facsimile by Telephone:
(781) 575-4816
------------------------
THIS LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS, SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. THIS LETTER OF
TRANSMITTAL MAY BE USED ONLY FOR THE TENDER OF SHARES OF CLASS A COMMON STOCK.
STOCKHOLDERS DESIRING TO TENDER SHARES OF CLASS B COMMON STOCK MUST DULY
COMPLETE AND RETURN THE FORM OF LETTER OF TRANSMITTAL (AVAILABLE FROM THE
INFORMATION AGENT) FOR CLASS B COMMON STOCK.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(IF BLANK PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF CLASS A NUMBER
CERTIFICATE SHARES REPRESENTED OF SHARES
NUMBER(S)(1) BY CERTIFICATE(S)(1) TENDERED(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL SHARES:
- --------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by stockholders tendering shares by book-entry transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered.
See Instruction 4.
- --------------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which shares are to be purchased
in event of proration. See Instruction 10.
1st: 2nd: 3rd: 4th: 5th:
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A PROPER DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE PROPER DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE PROPER DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be completed only if (a) certificates
representing shares of Class A Common Stock (as defined below) are to be
forwarded herewith, or (b) a tender of shares of Class A Common Stock is to be
made concurrently by book-entry transfer to the account maintained by the
Depositary at The Depository Trust Company (hereinafter referred to as the
"Book-Entry Transfer Facility") pursuant to Section 3 of the Offer to Purchase
(as defined below). Stockholders who desire to tender shares of Class A Common
Stock pursuant to the Offer (as defined below), but whose share certificates are
not immediately available or who cannot deliver such certificates and all other
documents required by this Letter of Transmittal to the Depositary on or prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or
who cannot comply with the procedure for book-entry transfer on a timely basis,
may nevertheless tender their shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
Stockholders who desire to tender shares of both Class A Common Stock and
Class B Common Stock must complete an appropriate, separate Letter of
Transmittal for each separate class of shares. Moreover, stockholders who wish
to tender portions of their shares of a class at different prices must complete
an appropriate separate Letter of Transmittal for each price at which they wish
to tender shares of that class.
[ ] CHECK HERE IF ANY CERTIFICATE REPRESENTING SHARES TENDERED HEREBY HAS BEEN
LOST, STOLEN, DESTROYED OR MUTILATED. SEE INSTRUCTION 16.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
----------------------------------------------------------------------------
Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
----------------------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
----------------------------------------------------------------------------
Window Ticket Number (if any):
----------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 3
To Gartner Group Inc.:
The undersigned hereby tenders to Gartner Group, Inc., a Delaware
corporation (the "Company"), the above-described shares of the Company's Common
Stock, Class A, par value $0.0005 per share ("Class A Common Stock" or
"Shares"), at the price per share indicated in this Letter of Transmittal, net
to the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated July 27, 1999 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered hereby in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to all Shares tendered hereby and orders the registration of all
such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (with full
knowledge that the Depositary also acts as the agent of the Company) with
respect to such Shares, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to: (a)
deliver certificate(s) representing such Shares or transfer ownership of such
Shares on the account books maintained by the Book-Entry Transfer Facility,
together, in either such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company upon receipt by the
Depositary, as the undersigned's agent, of the Class A Purchase Price (as
defined below) with respect to such Shares; (b) present certificates for such
Shares for cancellation and transfer on the Company's books; and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares, all in accordance with the terms and subject to the conditions of the
Offer.
The undersigned hereby covenants, represents and warrants to the Company
that:
(a) the undersigned has full power and authority to tender, sell,
assign and transfer the Shares tendered hereby, and when and to the extent
the same are accepted for payment by the Company, the Company will acquire
good, marketable and unencumbered title thereto, free and clear of all
security interests, liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to the sale or transfer of
such Shares, and not subject to any adverse claims;
(b) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that (i) the undersigned has a net long
position in the Shares or equivalent securities at least equal to the
Shares tendered within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), and (ii) such tender of
Shares complies with Rule 14e-4;
(c) the undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby; and
(d) the undersigned has read, understands and agrees to all of the
terms and conditions of the Offer.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Offer. The
undersigned acknowledges that no interest will be paid on the Class A Purchase
Price for tendered Shares regardless of any extension of the Offer or any delay
in making payment of such Class A Purchase Price.
<PAGE> 4
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and legal
representatives of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed,
if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender should be set forth in the appropriate boxes
above. The price at which such Shares are being tendered should be indicated in
the box below.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single purchase price (not
less than $21 nor more than $24 per share), net to the seller in cash without
interest, that it will pay for shares of Class A Common Stock properly tendered
pursuant to the Offer and not properly withdrawn (the "Class A Purchase Price"),
taking into account the number of shares so tendered and the prices specified by
tendering stockholders; such specified price shall only be in multiples of
$0.125. The undersigned understands that the Company will select the lowest
purchase price that will allow it to buy 9,600,000 shares of Class A Common
Stock (or such lesser number of shares of such class as are properly tendered).
The undersigned understands that all shares of Class A Common Stock acquired
pursuant to the Offer will be acquired at the one Class A Purchase Price. The
undersigned understands that, similarly, the Company will determine a single
purchase price (not less than $21 nor more than $24 per share), net to the
seller in cash without interest, that it will pay for shares of Common Stock,
Class B, par value $0.0005 per share of the Company ("Class B Common Stock")
properly tendered pursuant to the Offer and not properly withdrawn (the "Class B
Purchase Price"; each of the Class A Purchase Price and Class B Purchase Price
is referred to as a "Purchase Price"), taking into account the number of shares
tendered and the prices specified by tendering stockholders; such specified
price shall only be in multiples of $0.125. The undersigned understands that the
Company will select the lowest purchase price that will allow it to buy
6,100,000 shares of Class B Common Stock (or such lesser number of shares of
such class as are properly tendered). The undersigned understands that all
shares of Class B Common Stock acquired pursuant to the Offer will be acquired
at the one Class B Purchase Price. The undersigned understands that the Class A
Purchase Price need not be identical to the Class B Purchase Price.
The undersigned understands that the Company will only repurchase shares of
Class A Common Stock and Class B Common Stock in the same proportion as the
ratio of the numbers of shares of Class A Common Stock and Class B Common Stock
outstanding as of July 26, 1999. At such date, 63,992,550 shares of Class A
Common Stock were outstanding, representing 61.1% of the outstanding Common
Stock, and 40,689,648 shares of Class B Common Stock were outstanding,
representing 38.9% of the outstanding Common Stock. If stockholders do not
properly tender shares in these proportions, then the Company will only purchase
the largest number of properly tendered shares of each class that will enable it
to maintain these proportions, and the Purchase Price for each class will be
determined upon the basis of the number of shares of such class so purchased.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the undersigned at the address
indicated above, unless otherwise indicated in the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" below.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
<PAGE> 5
The aggregate net Class A Purchase Price for the Shares tendered hereby and
purchased by the Company will be paid by check issued to the order of the
undersigned and mailed to the address indicated above, unless otherwise
indicated the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" below. A separate check will be issued for
purchases of Class A Common Stock and purchases of Class B Common Stock. The
undersigned acknowledges that the Company has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder(s) thereof, or to order the registration or transfer of any
Shares tendered by book-entry transfer, if the Company does not purchase any
such Shares.
<PAGE> 6
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 7, 8 AND 11, 14 AND 15.)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Class A Purchase Price are to be issued in
the name of someone other than the undersigned, or if Shares tendered hereby and
delivered by book-entry transfer which are not purchased are to be returned by
credit to an account at the Book-Entry Transfer Facility other than that
designated above.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name:
- ------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
[ ] Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Account Number:
- ------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 11.)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Class A Purchase Price are to be mailed or
sent to someone other than the undersigned, or to the undersigned at an address
other than that designated above.
Mail: [ ] Check [ ] Share Certificate(s) to:
Name:
- ------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
SELECTION OF PURCHASE PRICE
(SEE INSTRUCTION 6.)
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
[ ] The undersigned wants to maximize the chance of having the Company
purchase all Shares the undersigned is tendering (subject to the proportionality
and proration provisions of the Offer). Accordingly, by CHECKING THIS BOX
INSTEAD OF ONE OF THE PRICES BELOW*, the undersigned hereby tenders shares of
Class A Common Stock and is willing to accept the Class A Purchase Price
resulting from the Dutch Auction tender process. This action will result in
receiving a price per Share as low as $21 or as high as $24.
------------------------
CHECK THE BOX ABOVE OR CHECK ONE BOX BELOW*
------------------------
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE*, the
undersigned hereby tenders shares of Class A Common Stock at the price checked.
This action could result in none of the Shares being purchased if the Class A
Purchase Price for the Shares is less than the price checked. A stockholder who
desires to tender Shares at more than one price must complete a separate Letter
of Transmittal for each price at which Shares are tendered. The same Shares
cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
<TABLE>
<S> <C> <C> <C> <C>
[ ] $21.00 [ ] $21.675 [ ] $22.25 [ ] $22.875 [ ] $23.50
[ ] $21.125 [ ] $21.75 [ ] $22.375 [ ] $23.00 [ ] $23.675
[ ] $21.25 [ ] $21.875 [ ] $22.50 [ ] $23.125 [ ] $23.75
[ ] $21.375 [ ] $22.00 [ ] $22.675 [ ] $23.25 [ ] $23.875
[ ] $21.50 [ ] $22.125 [ ] $22.75 [ ] $23.375 [ ] $24.00
</TABLE>
- ---------------
* If you do not indicate the purchase price of Shares being tendered, it will be
assumed that all Shares are tendered at the Dutch Auction price.
<PAGE> 7
ODD LOTS
(SEE INSTRUCTION 9.)
To be completed ONLY if shares are being tendered by or on behalf of a
person owning beneficially or of record as of the close of business on July 27,
1999 and who continues to own, beneficially or of record, as of the Expiration
Date, an aggregate of fewer than 100 shares of Class A Common Stock. The
undersigned either (check one box):
[ ] was the beneficial or record owner of, as of the close of business on July
27, 1999, and continues to own beneficially or of record as of the
Expiration Date, an aggregate of fewer than 100 shares of Class A Common
Stock, all of which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owners thereof, shares with respect to
which it is the record holder, and (b) believes, based upon representations
made to it by such beneficial owners, that each such person was the
beneficial or record owner of, as of the close of business on July 27,
1999, and continues to own beneficially or of record as of the Expiration
Date, an aggregate of fewer than 100 shares of Class A Common Stock, all of
which are being tendered.
IMPORTANT
STOCKHOLDERS SIGN HERE
(PLEASE COMPLETE AND RETURN THE ATTACHED SUBSTITUTE FORM W-9.)
(Must be signed by the registered holder(s) exactly as the name(s) of such
holder(s) appear(s) on certificate(s) for Shares or on a security position
listing or by person(s) authorized to become the registered holder(s) thereof by
certificates and documents transmitted with this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 7.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- ---------------------------
Name(s):------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------------
Address:
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone Number (including area code):
----------------------------------------
Facsimile Number:
--------------------------------------------------------------
E-mail address:
---------------------------
Taxpayer Identification or Social Security Number:
------------------------------
(SEE SUBSTITUTE FORM W-9.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 7.)
Authorized Signature:
- ---------------------------------------------
Dated:
- ---------------------------
Name: *
--------------------------------------------------------------------------
(PLEASE PRINT)
Title:
---------------------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone Number (including area code):
------------------------------------------------
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which term, for purposes hereof, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of such Shares) tendered hereby exactly as the name of such
registered holder appears on the certificate(s) for such Shares tendered with
this Letter of Transmittal and payment and delivery are to be made directly to
such owner, unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing constituting
an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 7.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed only if certificates
for shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender of Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. The Depositary must receive on or prior to the Expiration Date (a)
a properly completed and duly executed Letter of Transmittal or a manually
signed facsimile thereof in accordance with the instructions of the Letter of
Transmittal, including any required signature guarantees, together with the
stock certificates evidencing the tendered shares and any other documents
required by the Letter of Transmittal, at one of its addresses set forth on the
back cover of the Offer to Purchase, (b) such Shares delivered pursuant to the
procedures for book-entry transfer described in Section 3 of the Offer to
Purchase (and a confirmation of such delivery is received by the Depositary,
including an Agent's Message as defined below, if the tendering stockholder has
not delivered a Letter of Transmittal) or (c) such Shares validly tendered
through the Book-Entry Transfer Facility's Automated Tender Offer Program
("ATOP"). The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to, and received by the Depositary and forming a
part of the Book-Entry Confirmation (as defined in Section 3 of the Offer to
Purchase), which states that the Book-Entry Transfer Facility has received an
express acknowledgement from the participant in the Book-Entry Transfer Facility
tendering the Shares that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Company may enforce such
agreement against the participant. If certificates are to be forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery.
Participants in the Book-Entry Transfer Facility may tender their Shares in
accordance with ATOP to the extent it is available to such participants for the
Shares they wish to tender. A stockholder tendering through ATOP must expressly
acknowledge that the stockholder has reviewed and agreed to be bound by the
Letter of Transmittal and that the Letter of Transmittal may be enforced by the
Company against such stockholder.
Stockholders whose certificates are not immediately available or who cannot
deliver certificates and all other required documents to the Depositary before
the Expiration Date, or whose Shares cannot be delivered on a timely basis
pursuant to the procedure for book-entry transfer, may in any such case, tender
their Shares by or through any Eligible Institution by properly completing and
duly executing and delivering a Notice of Guaranteed Delivery (or facsimile of
it) and by otherwise complying with the guaranteed delivery procedure set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such
tender must be made by or through an Eligible Institution, (b) a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by the Company (with any required signature guarantees) must be
received by the Depositary prior to the Expiration Date, and (c) certificates
for all physically delivered Shares in proper form for transfer or by
confirmation of book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, in each
case together with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) with any required signature guarantees
(or, in the case of book-entry transfer an Agent's Message or, in the case of a
tender through ATOP, the specified acknowledgement), and all other documents
required by this Letter of Transmittal, must be received by the Depositary
within three New York Stock Exchange trading days after receipt by the
Depositary of such Notice of Guaranteed Delivery, all as provided in Section 3
of the Offer to Purchase.
<PAGE> 9
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be properly tendered pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box entitled
"Description of Shares Tendered" above is inadequate, the certificate numbers
and/or the number of Shares should be listed on a separate signed schedule and
attached to this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered" in the box entitled
"Description of Shares Tendered" above. In such case, if any tendered Shares are
purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s) thereof, unless otherwise specified in either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" in this Letter of Transmittal, as soon as practicable
after the Expiration Date. Unless otherwise indicated, all Shares represented by
the certificate(s) set forth above and delivered to the Depositary will be
deemed to have been tendered.
5. Class of Shares Tendered. For shares to be properly tendered, the
stockholder must complete the proper Letter of Transmittal. A stockholder
wishing to tender shares of Class A Common Stock and shares of Class B Common
Stock must complete an appropriate separate Letter of Transmittal for each such
class of shares. This Letter of Transmittal may be used to tender shares of
Class A Common Stock. The form of Letter of Transmittal for use in tendering
shares of Class B Common Stock is available from the Information Agent or the
Depositary.
6. Indication of Price at Which Shares are Being Tendered. For Shares to
be properly tendered, the stockholder must check the box indicating the price
per Share at which such holder is tendering Shares under "PRICE (IN DOLLARS) PER
SHARE AT WHICH SHARES ARE BEING TENDERED" or the box indicating "SHARES TENDERED
AT PRICE DETERMINED BY DUTCH AUCTION" in this Letter of Transmittal. ONLY ONE
BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED, THERE IS NO PROPER TENDER
OF SHARES. IF NO BOX IS CHECKED, IT WILL BE ASSUMED THAT THE TENDERING
STOCKHOLDER ELECTED TO TENDER THE SHARES AT THE PRICE DETERMINED BY THE DUTCH
AUCTION. A stockholder wishing to tender portions of such holder's Shares at
different prices must complete a separate Letter of Transmittal for each price
at which such holder wishes to tender each such portion of such holder's Shares.
The same Shares cannot be tendered (unless previously properly withdrawn as
provided in Section 4 of the Offer to Purchase) at more than one price.
7. Signatures on Letter of Transmittal; Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares tendered hereby are registered in the names of two or
more joint holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles hereof) as there are different
registrations of certificates.
<PAGE> 10
(d) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, no endorsement(s) of certificate(s) representing
such Shares or separate stock power(s) are required unless payment is to be
made, or the certificate(s) for Shares not tendered or not purchased are to be
issued, to a person other than the registered holder(s) thereof. If this Letter
of Transmittal is signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or certificate(s) for Shares
not tendered or not purchased are to be issued to a person other than the
registered holder(s) thereof, such certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificate(s), and THE
SIGNATURE(S) ON SUCH CERTIFICATE(S) OR STOCK POWER(S) MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, such person should so indicate when signing this Letter
of Transmittal and must submit proper evidence satisfactory to the Company of
their authority so to act.
8. Stock Transfer Taxes. Except as provided in this Instruction 8, no
stock transfer tax stamps or funds to cover such stamps need accompany this
Letter of Transmittal. The Company will pay any stock transfer taxes payable on
the transfer to it of Shares purchased pursuant to the Offer. If, however,
either (a) payment of the Class A Purchase Price for Shares tendered hereby and
accepted for purchase is to be made to any person other than the registered
holder(s); or (b) Shares not tendered or not purchased are to be registered in
the name(s) of any person(s) other than the registered holder(s); or (c)
certificate(s) representing tendered shares are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal, then the
Depositary will deduct from such Purchase Price the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person(s) or
otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption therefrom is
submitted. See Section 5 of the Offer to Purchase.
9. Odd Lots. As described in Section 1 of the Offer to Purchase, if the
Company purchases fewer than all shares of Class A Common Stock tendered before
the Expiration Date and not properly withdrawn, the shares purchased first will
consist of all shares of Class A Common Stock properly tendered by any
stockholder who owned, beneficially or of record, as of the close of business on
July 29, 1999 and as of the Expiration Date, an aggregate of fewer than 100
shares of Class A Common Stock, and who tenders all of such holder's shares of
Class A Common Stock at or below the Class A Purchase Price (an "Odd Lot
Holder"). This preference will not be available unless the box captioned "Odd
Lots" is completed.
10. Order of Purchase in Event of Proration. As described in Section 1 of
the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the United States federal income tax treatment of the Purchase
Price for the Shares purchased. See Sections 3 and 13 of the Offer to Purchase.
11. Special Payment and Delivery Instructions. If certificate(s) for
Shares not tendered or not purchased and/or check(s) are to be issued in the
name of a person other than the undersigned or if such certificates and/or
checks are to be sent to someone other than the undersigned or to the
undersigned at a different address, the box entitled "Special Payment
Instructions" and/or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal should be completed as applicable and signatures must be
guaranteed as described in Instruction 1.
12. Irregularities. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to any particular Shares or any particular stockholder, and
the Company's interpretation of the terms of the Offer (including these
Instructions) will be final and binding on all parties. No tender of Shares will
be deemed to be properly made until all defects and irregularities have been
cured by the tendering stockholder or waived by the Company. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as the Company shall determine. None of the Company, the Dealer Manager (as
defined in the Offer to Purchase), the Depositary, the Information Agent (as
defined in the Offer to Purchase) or any other person is or will be obligated to
give notice of any defects or irregularities in tenders and none of them will
incur any liability for failure to give any such notice.
<PAGE> 11
13. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from, the Information Agent or the
Dealer Manager at their addresses and telephone numbers set forth on the back
cover of the Offer to Purchase or from brokers, dealers, commercial banks or
trust companies.
14. Tax Identification Number and Backup Withholding. United States
federal income tax law generally requires that a stockholder whose tendered
Shares are accepted for purchase, or such stockholder's assignee (in either
case, the "Payee"), provide the Depositary with such Payee's correct Taxpayer
Identification Number ("TIN"), which, in the case of a Payee who is an
individual, is such Payee's social security number. If the Depositary is not
provided with the correct TIN or an adequate basis for an exemption, such Payee
may be subject to a $50 penalty imposed by the Internal Revenue Service and
backup withholding in an amount equal to 31% of the gross proceeds received
pursuant to the Offer. If withholding results in an overpayment of taxes, a
refund may be obtained.
To prevent backup withholding, each Payee must provide such Payee's correct
TIN by completing the Substitute Form W-9 set forth herein, certifying that the
TIN provided is correct (or that such Payee is awaiting a TIN) and that (a) the
Payee is exempt from backup withholding, (b) the Payee has not been notified by
the Internal Revenue Service that such Payee is subject to backup withholding as
a result of a failure to report all interest or dividends, or (c) the Internal
Revenue Service has notified the Payee that such Payee is no longer subject to
backup withholding.
If the Payee does not have a TIN, such Payee should (a) consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for instructions on applying for a TIN, (b) write "Applied
For" in the space provided in Part 1 of the Substitute Form W-9, and (c) sign
and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer
Identification Number set forth herein. If the Payee does not provide such
Payee's TIN to the Depositary within sixty (60) days, backup withholding will
begin and continue until such Payee furnishes such Payee's TIN to the
Depositary. Note that writing "Applied For" on the Substitute Form W-9 means
that the Payee has already applied for a TIN or that such Payee intends to apply
for one in the near future.
If Shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to report.
Exempt Payees (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt Payee
should write "Exempt" in Part 2 of Substitute Form W-9. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8 Certificate of Foreign Status, signed under penalty of perjury attesting to
such exempt status. Such form may be obtained from the Depositary.
<PAGE> 12
15. Withholding on Non-United States Holder. Even if a Non-United States
Holder (as defined below) has provided the required certification to avoid
backup withholding, the Depositary will withhold United States federal income
taxes equal to 30% of the gross payments payable to a Non-United States Holder
or such holder's agent unless (a) the Depositary determines that a reduced rate
of withholding is available pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are effectively connected
with the conduct of a trade or business within the United States, or (b) the
Non-United States Holder establishes to the satisfaction of the Company and the
Depositary that the sale of shares by such Non-United States Holder pursuant to
the Offer will qualify as a "sale or exchange," rather than as a distribution
taxable as a dividend for United States federal income tax purposes. For this
purpose, a "Non-United States Holder" is any stockholder that for United States
federal income tax purposes is not (a) a citizen or resident of the United
States, (b) a corporation or partnership created or organized in or under the
laws of the United States or any State or division thereof (including the
District of Columbia), (c) an estate the income of which is subject to United
States federal income taxation regardless of the source of such income, or (d) a
trust (i) the administration over which a United States court can exercise
primary supervision and (ii) all of the substantial decisions of which one or
more United States persons have the authority to control. Notwithstanding the
foregoing, to the extent provided in United States Treasury Regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons also will not be Non-United States Holders. In order to obtain a reduced
rate of withholding pursuant to a tax treaty, a Non-United States Holder must
deliver to the Depositary before the payment a properly completed and executed
IRS Form 1001. In order to obtain an exemption from withholding on the grounds
that the gross proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United States, a Non-United
States Holder must deliver to the Depositary a properly completed and executed
IRS Form 4224. The Depositary will determine a stockholder's status as a
Non-United States Holder and eligibility for a reduced rate of, or an exemption
from, withholding by reference to outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate
that such reliance is not warranted. A Non-United States Holder may be eligible
to obtain a refund of all or a portion of any tax withheld if such Non-United
States Holder meets the "complete termination," "substantially disproportionate"
or "not essentially equivalent to a dividend" tests described in Section 13 of
the Offer to Purchase or is otherwise able to establish that no tax or a reduced
amount of tax is due.
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING,
INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE
REFUND PROCEDURE.
16. Lost, Stolen, Destroyed or Mutilated Certificates. If any
certificate(s) representing Shares has been lost, stolen, destroyed or
mutilated, the stockholder should promptly notify the Depositary by checking the
box set forth above and indicating the number of Shares so lost, stolen,
destroyed or mutilated. Such stockholder will then be instructed by the
Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, stolen, destroyed or
mutilated certificates have been followed. Stockholders may contact the
Depositary at (781) 575-3120 to expedite such process.
THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED (OR
MANUALLY SIGNED FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES REPRESENTING
SHARES BEING TENDERED OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR, IN THE CASE OF
TRANSFER THROUGH ATOP A SPECIFIC ACKNOWLEDGEMENT, AND ALL OTHER REQUIRED
DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE.
STOCKHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH THIS
LETTER OF TRANSMITTAL.
<PAGE> 13
PAYER: EQUISERVE L.P.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- Taxpayer Identification Number -- for ---------------------------------
FORM W-9 all accounts, enter taxpayer identification Note: If the account is in more than
DEPARTMENT OF THE number in the box at right and certify by one name, see the chart in the
TREASURY, INTERNAL REVENUE signing and dating below. (If awaiting TIN or enclosed Guidelines to determine which
SERVICE Employer TIN:, write "Applied For"). number to give the payer.
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN")
----------------------------------------------------------------------------------------
PART 2 -- For payees exempt from backup withholding, please write "EXEMPT" here (see the
enclosed Guidelines):
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
PART 3 -- Certification -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup
withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends
or (c) the IRS has notified me that I am no longer subject to backup withholding.
Certification Instructions -- You must cross out item (2) above if you have been notified by the IRS that you are
currently subject to backup withholding because of underreporting interest or dividends on your tax return and you have
not been notified by the IRS that you are no longer subject to backup withholding. (Also see instructions in the enclosed
Guidelines.)
- -------------------------------------------------------------------------------------------------------------------------
Signature: ____________________________________________________________________________________ Date: _________________
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL
SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and that I mailed or delivered an application to
receive a TIN to the appropriate Internal Revenue Service Center or Social
Security Administration Office (or I intend to mail or deliver an application in
the near future). I understand that, notwithstanding the information I provided
in Part III of the Substitute Form W-9 above (and the fact that I have completed
this Certificate of Awaiting Taxpayer Identification Number), if I do not
provide a TIN to the Depositary within sixty (60) days, the Depositary is
required to withhold 31% of all cash payments made to me thereafter until I
provide a number.
Signature: Date:
------------------------------------------ -------------------
<PAGE> 14
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, NY 10022
Banks and Brokerage Firms call: (800) 662-5200 (toll free)
Stockholders please call: (800) 566-9061 (toll free)
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010-3629
(800) 881-8320 (toll free)
<PAGE> 1
EXHIBIT (a)(2)-B
LETTER OF TRANSMITTAL
TO TENDER SHARES OF
CLASS B COMMON STOCK OF
GARTNER GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 27, 1999
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY AUGUST 24, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
EQUISERVE L.P.
<TABLE>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
Securities Transfer & Reporting EquiServe L.P. EquiServe L.P.
Services, Inc. Corporate Actions Corporate Actions
c/o EquiServe L.P. 40 Campanelli Drive P.O. Box 9573
100 William Street, Galleria Braintree, MA 02184 Boston, MA 02205-8686
New York, NY 10038
</TABLE>
Telephone:
(781) 575-3120
Facsimile Transmission:
(781) 575-4826
Confirm Receipt of Facsimile by Telephone:
(781) 575-4816
------------------------
THIS LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS, SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. THIS LETTER OF
TRANSMITTAL MAY BE USED ONLY FOR THE TENDER OF SHARES OF CLASS B COMMON STOCK.
STOCKHOLDERS DESIRING TO TENDER SHARES OF CLASS A COMMON STOCK MUST DULY
COMPLETE AND RETURN THE FORM OF LETTER OF TRANSMITTAL (AVAILABLE FROM THE
INFORMATION AGENT) FOR CLASS A COMMON STOCK.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S)
(IF BLANK, PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON SHARES TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMBER OF CLASS B NUMBER
CERTIFICATE SHARES REPRESENTED OF SHARES
NUMBER(S)(1) BY CERTIFICATE(S)(1) TENDERED(2)
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
TOTAL SHARES
- --------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by stockholders tendering shares by book-entry transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares described above are being tendered.
See Instruction 4.
- --------------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which shares are to be purchased
in event of proration. See Instruction 10.
1st: 2nd: 3rd: 4th: 5th:
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A PROPER DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE PROPER DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE PROPER DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be completed only if (a) certificates
representing shares of Class B Common Stock (as defined below) are to be
forwarded herewith, or (b) a tender of shares is to be made concurrently by
book-entry transfer to the account maintained by the Depositary at The
Depository Trust Company (hereinafter referred to as the "Book-Entry Transfer
Facility") pursuant to Section 3 of the Offer to Purchase (as defined below).
Stockholders who desire to tender shares of Class B Common Stock pursuant to the
Offer (as defined below), but whose share certificates are not immediately
available or who cannot deliver such certificates and all other documents
required by this Letter of Transmittal to the Depositary on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot comply with the procedure for book-entry transfer on a timely basis, may
nevertheless tender their shares pursuant to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. See Instruction 2.
Stockholders who desire to tender shares of both Class A Common Stock and
Class B Common Stock must complete an appropriate, separate Letter of
Transmittal for each separate class of shares. Moreover, stockholders who wish
to tender portions of their shares of a class at different prices must complete
an appropriate separate Letter of Transmittal for each price at which they wish
to tender shares of that class.
[ ] CHECK HERE IF ANY CERTIFICATE REPRESENTING SHARES TENDERED HEREBY HAS BEEN
LOST, STOLEN, DESTROYED OR MUTILATED. SEE INSTRUCTION 16.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
----------------------------------------------------------------------------
Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
--------------------------------------------------------------------
Window Ticket Number (if any):
----------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE
ACCOMPANYING INSTRUCTIONS CAREFULLY.
<PAGE> 3
To Gartner Group Inc.:
The undersigned hereby tenders to Gartner Group, Inc., a Delaware
corporation (the "Company"), the above-described shares of the Company's Common
Stock, Class B, par value $0.0005 per share ("Class B Common Stock" or the
"Shares") at the price per share indicated in this Letter of Transmittal, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated July 27, 1999 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered hereby in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to all Shares tendered hereby and orders the registration of all
such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (with full
knowledge that the Depositary also acts as the agent of the Company) with
respect to such Shares, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to: (a)
deliver certificate(s) representing such Shares or transfer ownership of such
Shares on the account books maintained by the Book-Entry Transfer Facility,
together, in either such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company upon receipt by the
Depositary, as the undersigned's agent, of the Class B Purchase Price (as
defined below) with respect to such Shares; (b) present certificates for such
Shares for cancellation and transfer on the Company's books; and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares, all in accordance with the terms and subject to the conditions of the
Offer.
The undersigned hereby covenants, represents and warrants to the Company
that:
(a) the undersigned has full power and authority to tender, sell,
assign and transfer the Shares tendered hereby, and when and to the extent
the same are accepted for payment by the Company, the Company will acquire
good, marketable and unencumbered title thereto, free and clear of all
security interests, liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to the sale or transfer of
such Shares, and not subject to any adverse claims;
(b) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that (i) the undersigned has a net long
position in the Shares or equivalent securities at least equal to the
Shares tendered within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), and (ii) such tender of
Shares complies with Rule 14e-4;
(c) the undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby; and
(d) the undersigned has read, understands and agrees to all of the
terms and conditions of the Offer.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Offer. The
undersigned acknowledges that no interest will be paid on the Class B Purchase
Price for tendered Shares regardless of any extension of the Offer or any delay
in making payment of such Class B Purchase Price.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and legal
representatives of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable.
<PAGE> 4
The name(s) and address(es) of the registered holder(s) should be printed,
if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender should be set forth in the appropriate boxes
above. The price at which such Shares are being tendered should be indicated in
the box below.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single purchase price (not
less than $21 nor more than $24 per share), net to the seller in cash without
interest, that it will pay for shares of Class B Common Stock properly tendered
pursuant to the Offer and not properly withdrawn (the "Class B Purchase Price"),
taking into account the number of shares so tendered and the prices specified by
tendering stockholders; such specified price shall only be in multiples of
$0.125. The undersigned understands that the Company will select the lowest
purchase price that will allow it to buy 6,100,000 shares of Class B Common
Stock (or such lesser number of shares of such class as are properly tendered).
The undersigned understands that all shares of Class B Common Stock acquired
pursuant to the Offer will be acquired at the one Class B Purchase Price. The
undersigned understands that similarly, the Company will determine a single
purchase price (not less than $21 nor more than $24 per share), net to the
seller in cash, without interest, that it will pay for shares of Common Stock,
Class A, par value $0.0005 per share, of the Company ("Class A Common Stock")
properly tendered pursuant to the Offer and not properly withdrawn (the "Class A
Purchase Price"; each of the Class A Purchase Price and Class B Purchase Price
is each referred to as a "Purchase Price"), taking into account the number of
shares tendered and the prices specified by tendering stockholders; such
specified price shall only be in multiples of $0.125. The undersigned
understands that the Company will select the lowest purchase price that will
allow it to buy 9,600,000 shares of Class A Common Stock (or such lesser number
of shares of such class as are properly tendered). The undersigned understands
that all shares of Class A Common Stock acquired pursuant to the Offer will be
acquired at the one Class A Purchase Price. The undersigned understands that the
Class A Purchase Price need not be identical to the Class B Purchase Price.
The undersigned understands that the Company will only repurchase shares of
Class A Common Stock and Class B Common Stock in the same proportion as the
ratio of the numbers of shares of Class A Common Stock and Class B Common Stock
outstanding as of July 26, 1999. At such date, 63,992,550 shares of Class A
Common Stock were outstanding, representing 61.1% of the outstanding Common
Stock, and 40,689,648 shares of Class B Common Stock were outstanding,
representing 38.9% of the outstanding Common Stock. If stockholders do not
properly tender shares in these proportions, then the Company will only purchase
the largest number of properly tendered shares of each class that will enable it
to maintain these proportions, and the Purchase Price for each class will be
determined upon the basis of the number of shares of such class so purchased.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the undersigned at the address
indicated above, unless otherwise indicated in the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" below.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
<PAGE> 5
The aggregate net Class B Purchase Price for the Shares tendered hereby and
purchased by the Company will be paid by check issued to the order of the
undersigned and mailed to the address indicated above, unless otherwise
indicated in the box entitled "Special Payment Instructions" or the box entitled
"Special Delivery Instructions" below. A separate check will be issued for
purchases of Class A Common Stock and purchases of Class B Common Stock. The
undersigned acknowledges that the Company has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder(s) thereof, or to order the registration or transfer of any
Shares tendered by book-entry transfer, if the Company does not purchase any
such Shares.
<PAGE> 6
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 7, 8, 11, 14 AND 15.)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Class B Purchase Price are to be issued in
the name of someone other than the undersigned, or if Shares tendered hereby and
delivered by book-entry transfer which are not purchased are to be returned by
credit to an account at the Book-Entry Transfer Facility other than that
designated above.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name:
- ------------------------------------------------------------
(PLEASE PRINT)
Address:
- ------------------------------------------------------------
- ------------------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
[ ] Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Account Number:
- -----------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 11.)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Class B Purchase Price are to be mailed or
sent to someone other than the undersigned, or to the undersigned at an address
other than that designated above.
Mail: [ ] Check [ ] Share Certificate(s) to:
Name:
- ----------------------------------------------------------
(PLEASE PRINT)
Address:
- ----------------------------------------------------------
- ----------------------------------------------------------
(ZIP CODE)
- ----------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
SELECTION OF PURCHASE PRICE
(SEE INSTRUCTION 6).
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
[ ] The undersigned wants to maximize the chance of having the Company
purchase all Shares the undersigned is tendering (subject to the proportionality
and proration provisions of the Offer). Accordingly, BY CHECKING THIS BOX
INSTEAD OF ONE OF THE PRICES BELOW*, the undersigned hereby tenders shares of
Class B Common Stock and is willing to accept the Class B Purchase Price
resulting from the Dutch Auction tender process. This action will result in
receiving a price per Share as low as $21 or as high as $24.
------------------------
CHECK THE BOX ABOVE OR CHECK ONE BOX BELOW*
------------------------
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE*, the
undersigned hereby tenders shares of Class B Common Stock at the price checked.
This action could result in none of the Shares being purchased if the Class B
Purchase Price for the Shares is less than the price checked. A stockholder who
desires to tender Shares at more than one price must complete a separate Letter
of Transmittal for each price at which Shares are tendered. The same Shares
cannot be tendered at more than one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
<TABLE>
<S> <C> <C> <C> <C>
[ ] $21.00 [ ] $21.675 [ ] $22.25 [ ] $22.875 [ ] $23.50
[ ] $21.125 [ ] $21.75 [ ] $22.375 [ ] $23.00 [ ] $23.675
[ ] $21.25 [ ] $21.875 [ ] $22.50 [ ] $23.125 [ ] $23.75
[ ] $21.375 [ ] $22.00 [ ] $22.675 [ ] $23.25 [ ] $23.875
[ ] $21.50 [ ] $22.125 [ ] $22.75 [ ] $23.375 [ ] $24.00
</TABLE>
- ---------------
* If you do not indicate the purchase price of Shares being tendered, it will be
assumed that all Shares are tendered at the Dutch Auction price.
<PAGE> 7
ODD LOTS
(SEE INSTRUCTION 9.)
To be completed ONLY if shares are being tendered by or on behalf of a
person owning beneficially or of record as of the close of business on July 27,
1999 and who continues to own beneficially or of record as of the Expiration
Date, an aggregate of fewer than 100 shares of Class B Common Stock. The
undersigned either (check one box):
[ ] was the beneficial or record owner of, as of the close of business on July
27, 1999, and continues to own beneficially or of record, as of the
Expiration Date, an aggregate of fewer than 100 shares of Class B Common
Stock, all of which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owners thereof, shares with respect to
which it is the record holder, and (b) believes, based upon representations
made to it by such beneficial owners, that such person was the beneficial
or record owner of, as of the close of business on July 27, 1999, and
continues to own beneficially or of record, as of the Expiration Date, an
aggregate of fewer than 100 shares of Class B Common Stock, all of which
are being tendered.
IMPORTANT
STOCKHOLDERS SIGN HERE
(PLEASE COMPLETE AND RETURN THE ATTACHED SUBSTITUTE FORM W-9.)
(Must be signed by the registered holder(s) exactly as the name(s) of such
holder(s) appear(s) on certificate(s) for Shares or on a security position
listing or by person(s) authorized to become the registered holder(s) thereof by
certificates and documents transmitted with this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 7.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Dated:
- ---------------------------
Name(s):
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------------
Address:
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone Number (including area code):
------------------
Facsimile Number:
-------------------------
E-mail address:
---------------------------
Taxpayer Identification or Social Security Number:
------------------------------------------
(SEE SUBSTITUTE FORM W-9.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 7.)
Authorized Signature:
----------------------------------------------------------------
Dated:
- ---------------------------
Name:
--------------------------------------------------------------------------
(PLEASE PRINT)
Title:
---------------------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone Number (including area code):
------------------------------------------------
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which term, for purposes hereof, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of such Shares) tendered hereby exactly as the name of such
registered holder appears on the certificate(s) for such Shares tendered with
this Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing constituting
an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 7.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed only if certificates
for shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender of Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. The Depositary must receive on or prior to the Expiration Date (a)
a properly completed and duly executed Letter of Transmittal or a manually
signed facsimile thereof in accordance with the instructions of the Letter of
Transmittal, including any required signature guarantees, together with the
stock certificates evidencing the tendered shares and any other documents
required by the Letter of Transmittal, at one of its addresses set forth on the
back cover of the Offer to Purchase, (b) such Shares delivered pursuant to the
procedures for book-entry transfer described in Section 3 of the Offer to
Purchase (and a confirmation of such delivery is received by the Depositary,
including an Agent's Message (as defined below), if the tendering stockholder
has not delivered a Letter of Transmittal) or (c) such Shares validly tendered
through the Book-Entry Transfer Facility's Automated Tender Offer Program
("ATOP"). The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to, and received by the Depositary and forming a
part of the Book-Entry Confirmation (as defined in Section 3 of the Offer to
Purchase), which states that the Book-Entry Transfer Facility has received an
express acknowledgement from the participant in the Book-Entry Transfer Facility
tendering the Shares that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Company may enforce such
agreement against the participant. If certificates are to be forwarded to the
Depositary in multiple deliveries, a properly completed and duly executed Letter
of Transmittal must accompany each such delivery.
Participants in the Book-Entry Transfer Facility may tender their Shares in
accordance with ATOP to the extent it is available to such participants for the
Shares they wish to tender. A stockholder tendering through ATOP must expressly
acknowledge that the stockholder has reviewed and agreed to be bound by the
Letter of Transmittal and that the Letter of Transmittal may be enforced by the
Company against such stockholder.
Stockholders whose certificates are not immediately available or who cannot
deliver certificates and all other required documents to the Depositary before
the Expiration Date, or whose Shares cannot be delivered on a timely basis
pursuant to the procedure for book-entry transfer, may, in any such case, tender
their Shares by or through any Eligible Institution by properly completing and
duly executing and delivering a Notice of Guaranteed Delivery (or facsimile of
it) and by otherwise complying with the guaranteed delivery procedure set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such
tender must be made by or through an Eligible Institution, (b) a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by the Company (with any required signature guarantees) must be
received by the Depositary prior to the Expiration Date, and (c) certificates
for all physically delivered Shares in proper form for transfer or confirmation
of book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered electronically, in each case together with a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) with any required signature guarantees (or, in the case of
book-entry transfer an Agent's Message or, in the case of a tender through ATOP,
the specified acknowledgement), and all other documents required by this Letter
of Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after receipt by the Depositary of such Notice of
Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
<PAGE> 9
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be properly tendered pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box entitled
"Description of Shares Tendered" above is inadequate, the certificate numbers
and/or the number of Shares should be listed on a separate signed schedule and
attached to this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered" in the box entitled
"Description of Shares Tendered" above. In such case, if any tendered Shares are
purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s) thereof, unless otherwise specified in either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" in this Letter of Transmittal, as soon as practicable
after the Expiration Date. Unless otherwise indicated, all Shares represented by
the certificate(s) set forth above and delivered to the Depositary will be
deemed to have been tendered.
5. Class of Shares Tendered. For Shares to be properly tendered, the
stockholder must complete the proper Letter of Transmittal. A stockholder
wishing to tender shares of Class A Common Stock and shares of Class B Common
Stock must complete an appropriate separate Letter of Transmittal for each such
class of shares. This Letter of Transmittal may be used to tender shares of
Class B Common Stock. The form of Letter of Transmittal for use in tendering
shares of Class A Common Stock is available from the Information Agent or the
Depositary.
6. Indication of Price at Which Shares are Being Tendered. For Shares to
be properly tendered, the stockholder must check the box indicating the price
per Share at which such holder is tendering Shares under "PRICE (IN DOLLARS) PER
SHARE AT WHICH SHARES ARE BEING TENDERED" or the box indicating "SHARES TENDERED
AT PRICE DETERMINED BY DUTCH AUCTION" in this Letter of Transmittal. ONLY ONE
BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED, THERE IS NO PROPER TENDER
OF SHARES. IF NO BOX IS CHECKED, IT WILL BE ASSUMED THAT THE TENDERING
STOCKHOLDER ELECTED TO TENDER THE SHARES AT THE PRICE DETERMINED BY THE DUTCH
AUCTION. A stockholder wishing to tender portions of such holder's Shares at
different prices must complete a separate Letter of Transmittal for each price
at which such holder wishes to tender each such portion of such holder's Shares.
The same Shares cannot be tendered (unless previously properly withdrawn as
provided in Section 4 of the Offer to Purchase) at more than one price.
7. Signatures on Letter of Transmittal; Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares tendered hereby are registered in the names of two or
more joint holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles hereof) as there are different
registrations of certificates.
<PAGE> 10
(d) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, no endorsement(s) of certificate(s) representing
such Shares or separate stock power(s) are required unless payment is to be
made, or the certificate(s) for Shares not tendered or not purchased are to be
issued to a person other than the registered holder(s) thereof. If this Letter
of Transmittal is signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or certificate(s) for Shares
not tendered or not purchased are to be issued to a person other than the
registered holder(s) thereof, such certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificate(s), and the
SIGNATURE(S) ON SUCH CERTIFICATE(S) OR STOCK POWER(S) MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, such person should so indicate when signing this Letter
of Transmittal and must submit proper evidence satisfactory to the Company of
their authority so to act.
8. Stock Transfer Taxes. Except as provided in this Instruction 8, no
stock transfer tax stamps or funds to cover such stamps need accompany this
Letter of Transmittal. The Company will pay any stock transfer taxes payable on
the transfer to it of Shares purchased pursuant to the Offer. If, however,
either (a) payment of the Purchase Price for Shares tendered hereby and accepted
for purchase is to be made to any person other than the registered holder(s); or
(b) Shares not tendered or not purchased are to be registered in the name(s) of
any person(s) other than the registered holder(s); or (c) certificate(s)
representing tendered shares are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal, then the Depositary
will deduct from such Purchase Price the amount of any stock transfer taxes
(whether imposed on the registered holder(s), such other person(s) or otherwise)
payable on account of the transfer to such person, unless satisfactory evidence
of the payment of such taxes or any exemption therefrom is submitted. See
Section 5 of the Offer to Purchase.
9. Odd Lots. As described in Section 1 of the Offer to Purchase if the
Company purchases fewer than all shares of Class B Common Stock tendered before
the Expiration Date and not properly withdrawn, the shares purchased first will
consist of all shares of Class B Common Stock properly tendered by any
stockholder who owned, beneficially or of record, as of the close of business on
July 27, 1999 and as of the Expiration Date, an aggregate of fewer than 100
shares of Class B Common Stock, and who tenders all of such holder's shares of
Class B Common Stock at or below the Class B Purchase Price (an "Odd Lot
Holder"). This preference will not be available unless the box captioned "Odd
Lots" is completed.
10. Order of Purchase in Event of Proration. As described in Section 1 of
the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the United States federal income tax treatment of the Purchase
Price for the Shares purchased. See Sections 3 and 13 of the Offer to Purchase.
11. Special Payment and Delivery Instructions. If certificate(s) for
Shares not tendered or not purchased and/or check(s) are to be issued in the
name of a person other than the undersigned or if such certificates and/or
checks are to be sent to someone other than the undersigned or to the
undersigned at a different address, the box entitled "Special Payment
Instructions" and/or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal should be completed as applicable and signatures must be
guaranteed as described in Instruction 1.
12. Irregularities. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to any particular Shares or any particular stockholder, and
the Company's interpretation of the terms of the Offer (including these
Instructions) will be final and binding on all parties. No tender of Shares will
be deemed to be properly made until all defects and irregularities have been
cured by the tendering stockholder or waived by the Company. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as the Company shall determine. None of the Company, the Dealer Manager (as
defined in the Offer to Purchase), the Depositary, the Information Agent (as
defined in the Offer to Purchase) or any other person is or will be obligated to
give notice of any defects or irregularities in tenders and none of them will
incur any liability for failure to give any such notice.
13. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from, the Information Agent or the
Dealer Manager at their addresses and telephone numbers set forth on the back
cover of the Offer to Purchase or from brokers, dealers, commercial banks or
trust companies.
<PAGE> 11
14. Tax Identification Number and Backup Withholding. United States
federal income tax law generally requires that a stockholder whose tendered
Shares are accepted for purchase, or such stockholder's assignee (in either
case, the "Payee"), provide the Depositary with such Payee's correct Taxpayer
Identification Number ("TIN"), which, in the case of a Payee who is an
individual, is such Payee's social security number. If the Depositary is not
provided with the correct TIN or an adequate basis for an exemption, such Payee
may be subject to a $50 penalty imposed by the Internal Revenue Service and
backup withholding in an amount equal to 31% of the gross proceeds received
pursuant to the Offer. If withholding results in an overpayment of taxes, a
refund may be obtained.
To prevent backup withholding, each Payee must provide such Payee's correct
TIN by completing the Substitute Form W-9 set forth herein, certifying that the
TIN provided is correct (or that such Payee is awaiting a TIN) and that (a) the
Payee is exempt from backup withholding, (b) the Payee has not been notified by
the Internal Revenue Service that such Payee is subject to backup withholding as
a result of a failure to report all interest or dividends, or (c) the Internal
Revenue Service has notified the Payee that such Payee is no longer subject to
backup withholding.
If the Payee does not have a TIN, such Payee should (a) consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for instructions on applying for a TIN, (b) write "Applied
For" in the space provided in Part 1 of the Substitute Form W-9, and (c) sign
and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer
Identification Number set forth herein. If the Payee does not provide such
Payee's TIN to the Depositary within sixty (60) days, backup withholding will
begin and continue until such Payee furnishes such Payee's TIN to the
Depositary. Note that writing "Applied For" on the Substitute Form W-9 means
that the Payee has already applied for a TIN or that such Payee intends to apply
for one in the near future.
If Shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to report.
Exempt Payees (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt Payee
should write "Exempt" in Part 2 of Substitute Form W-9. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8 Certificate of Foreign Status, signed under penalty of perjury attesting to
such exempt status. Such form may be obtained from the Depositary.
15. Withholding on Non-United States Holders. Even if a Non-United States
Holder (as defined below) has provided the required certification to avoid
backup withholding, the Depositary will withhold United States federal income
taxes equal to 30% of the gross payments payable to a Non-United States Holder
or such holder's agent unless (a) the Depositary determines that a reduced rate
of withholding is available pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are effectively connected
with the conduct of a trade or business within the United States or (b) the
Non-United States Holder establishes to the satisfaction of the Company and the
Depositary that the sale of shares by such Non-United States Holder pursuant to
the Offer will qualify as a "sale or exchange," rather than as a distribution
taxable as a dividend for United States federal income tax purposes. For this
purpose, a "Non-United States Holder" is any stockholder that for United States
federal income tax purposes is not (a) a citizen or resident of the United
States, (b) a corporation or partnership created or organized in or under the
laws of the United States or any State or division thereof (including the
District of Columbia), (c) an estate the income of which is subject to United
States federal income taxation regardless of the source of such income, or (d) a
trust (i) the administration over which a United States court can exercise
primary supervision and (ii) all of the substantial decisions of which one or
more United States persons have the authority to control. Notwithstanding the
foregoing, to the extent provided in United States Treasury Regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons also will not be Non-United States Holders. In order to obtain a reduced
rate of withholding pursuant to a tax treaty, a Non-United States Holder must
deliver to the Depositary before the payment a properly completed and executed
IRS Form 1001. In order to obtain an exemption from withholding on the grounds
that the gross proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United States, a Non-United
States Holder must deliver to the Depositary a properly completed and executed
IRS Form 4224. The Depositary will determine a stockholder's status as a
Non-United States Holder and eligibility for a reduced rate of, or an exemption
from, withholding by reference to outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate
that such reliance is not warranted. A Non-United States Holder may be eligible
to obtain a refund of all or a portion of any tax withheld if such Non-United
States Holder meets the "complete termination," "substantially disproportionate"
or "not essentially equivalent to a dividend" tests described in Section 13 of
the Offer to Purchase or is otherwise able to establish that no tax or a reduced
amount of tax is due.
<PAGE> 12
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING,
INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE
REFUND PROCEDURE.
16. Lost, Stolen, Destroyed or Mutilated Certificates. If any
certificate(s) representing Shares has been lost, stolen, destroyed or
mutilated, the stockholder should promptly notify the Depositary by checking the
box set forth above and indicating the number of Shares so lost, stolen,
destroyed or mutilated. Such stockholder will then be instructed by the
Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, stolen, destroyed or
mutilated certificates have been followed. Stockholders may contact the
Depositary at (781) 575-3120 to expedite such process.
THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED (OR
MANUALLY SIGNED FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES REPRESENTING
SHARES BEING TENDERED OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR, IN THE CASE OF
TRANSFER THROUGH ATOP, A SPECIFIC ACKNOWLEDGEMENT, AND ALL OTHER REQUIRED
DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE.
STOCKHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH THIS
LETTER OF TRANSMITTAL.
PAYER: EQUISERVE L.P.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- Taxpayer Identification Number -- for ---------------------------------
FORM W-9 all accounts, enter taxpayer identification Note: If the account is in more than
number in the box at right and certify by one name, see the chart in the
DEPARTMENT OF THE TREASURY, signing and dating below. (If awaiting TIN or enclosed Guidelines to determine which
INTERNAL REVENUE SERVICE Employer TIN:, write "Applied For"). number to give the payer.
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN") ----------------------------------------------------------------------------------------
PART 2 -- For payees exempt from backup withholding, please write "EXEMPT" here (see the
enclosed Guidelines):
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
PART 3 -- Certification -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT (1) The
number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me), and (2) I am not subject to backup
withholding because: (a) I am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to report all interest or dividends
or (c) the IRS has notified me that I am no longer subject to backup
withholding.
Certification Instructions -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding. (Also
see instructions in the enclosed Guidelines.)
- --------------------------------------------------------------------------------
Signature: __________________________________ Date: ____________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL
SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and that I mailed or delivered an
application to receive a TIN to the appropriate Internal Revenue Service
Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that, notwithstanding
the information I provided in Part III of the Substitute Form W-9 above (and
the fact that I have completed this Certificate of Awaiting Taxpayer
Identification Number), if I do not provide a TIN to the Depositary within
sixty (60) days, the Depositary is required to withhold 31% of all cash
payments made to me thereafter until I provide a number.
Signature: _______________________________________ Date: _________________
<PAGE> 13
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, NY 10022
Banks and Brokerage Firms call: (800) 662-5200 (toll free)
Stockholders please call: (800) 566-9061 (toll free)
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, NY 10010-3629
(800) 881-8320 (toll free)
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
GARTNER GROUP, INC.
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if certificates
evidencing shares of Common Stock, Class A, par value $0.0005 per share ("Class
A Common Stock"), or Common Stock, Class B, par value $0.0005 per share ("Class
B Common Stock", and together with the Class A Common Stock, the "Common Stock"
or the "Shares"), of Gartner Group, Inc., a Delaware corporation (the
"Company"), are not immediately available, or if the procedure for book-entry
transfer set forth in the Offer to Purchase dated July 27, 1999 (the "Offer to
Purchase") and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer") cannot be
completed on a timely basis or time will not permit all required documents,
including a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), to reach the Depositary prior to the
Expiration Date (as defined in the Offer to Purchase).
This Notice of Guaranteed Delivery, properly completed and duly executed,
may be delivered by hand, mail or facsimile transmission to the Depositary. See
Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY.
The Depositary for the Offer is:
EQUISERVE L.P.
<TABLE>
<S> <C> <C>
By Overnight Delivery, By Hand Delivery: By Mail:
Certified or Express Mail:
EquiServe L.P. Securities Transfer & Reporting EquiServe L.P.
Corporate Actions Services, Inc. Corporate Actions
40 Campanelli Drive c/o EquiServe L.P. P.O. Box 9573
Braintree, MA 02184 100 William Street, Galleria Boston, MA 02205-8686
New York, NY 10038
</TABLE>
Telephone:
(781) 575-3120
Facsimile Transmission:
(781) 575-4826
Confirm Receipt of Facsimile by Telephone:
(781) 575-4816
------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY TO THE DEPOSITORY. DELIVERIES TO THE BOOK-ENTRY
TRANSFER FACILITY WILL NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
1
<PAGE> 2
This Notice of Guaranteed Delivery form is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
TO GARTNER GROUP, INC.:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal, receipt both of which is hereby acknowledged, the number of shares
specified below pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CLASS OF SHARES BEING TENDERED*: (CHECK ONE BOX ONLY)
[ ] CLASS A COMMON STOCK
[ ] CLASS B COMMON STOCK
- -------------------------------------------------------------------------------------------------------------
CERTIFICATE TOTAL NUMBER OF SHARES
NUMBER(S)** REPRESENTED BY CERTIFICATES NUMBER OF SHARES TENDERED***
<S> <C> <C>
- ----------------------------- --------------------------------------- ---------------------------------------
- ----------------------------- --------------------------------------- ---------------------------------------
- ----------------------------- --------------------------------------- ---------------------------------------
- ----------------------------- --------------------------------------- ---------------------------------------
- ----------------------------- --------------------------------------- ---------------------------------------
Total shares:
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Indicate in this box the order (by certificate number) in which Shares are to
be purchased in event of proration.**** See Instruction 10 of the Letter of
Transmittal.
1st: 2nd: 3rd: 4th: 5th:
- --------------------------------------------------------------------------------
* Stockholders who desire to tender both Class A Common Stock and Class B
Common Stock must complete a separate Notice of Guaranteed Delivery for
each class. If you do not indicate the class being tendered, we will
review the certificates for the Shares tendered. If all such certificates
relate to one class of Shares, the tender will be proper. However, if
such certificates relate to more than one class of Shares, the tender
will not be proper. See Instruction 5 of the Letter of Transmittal.
** If available. DOES NOT need to be completed by stockholders tendering
shares by book-entry transfer.
*** Unless otherwise indicated, it will be assumed that all shares evidenced
by each certificate delivered to the Depositary are being tendered
hereby. See Instruction 4 of the Letter of Transmittal.
**** If you do not designate an order, in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary.
- --------------------------------------------------------------------------------
2
<PAGE> 3
SELECTION OF PURCHASE PRICE
(SEE INSTRUCTION 6 OF LETTER OF TRANSMITTAL)
- --------------------------------------------------------------------------------
The undersigned is tendering Shares at a price as follows (check one box):
SHARES TENDERED AT PRICE DETERMINED BY DUTCH AUCTION:
[ ] The undersigned wants to maximize the chance of having the Company
purchase all Shares the undersigned is tendering (subject to the proportionality
and proration provisions of the Offer to Purchase). Accordingly, BY CHECKING
THIS BOX INSTEAD OF ONE OF THE PRICES BELOW*, the undersigned hereby tenders
Shares and is willing to accept the Purchase Price resulting from the Dutch
Auction tender process. This action will result in receiving a price per Share
as low as $21 or as high as $24.
------------------------
CHECK THE BOX ABOVE OR CHECK ONE BOX BELOW*
------------------------
SHARES TENDERED AT PRICE DETERMINED BY STOCKHOLDER:
By checking ONE of the boxes below INSTEAD OF THE BOX ABOVE*, the
undersigned hereby tenders Shares at the price checked. This action could result
in none of the Shares being purchased if the Purchase Price for the Shares is
less than the price checked. A stockholder who desires to tender Shares at more
than one price must complete a separate Notice of Guaranteed Delivery for each
price at which Shares are tendered. The same Shares cannot be tendered at more
than one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
<TABLE>
<S> <C> <C> <C> <C>
[ ] $21.00 [ ] $21.675 [ ] $22.25 [ ] $22.875 [ ] $23.50
[ ] $21.125 [ ] $21.75 [ ] $22.375 [ ] $23.00 [ ] $23.675
[ ] $21.25 [ ] $21.875 [ ] $22.50 [ ] $23.125 [ ] $23.75
[ ] $21.375 [ ] $22.00 [ ] $22.675 [ ] $23.25 [ ] $23.875
[ ] $21.50 [ ] $22.125 [ ] $22.75 [ ] $23.375 [ ] $24.00
</TABLE>
- ---------------
* If you do not indicate the purchase price of Shares being tendered, it will be
assumed that all Shares are tendered at the Dutch Auction price.
3
<PAGE> 4
ODD LOTS
(SEE INSTRUCTION 9 OF LETTER OF TRANSMITTAL)
To be completed ONLY if shares of a class are being tendered by or on
behalf of a person owning beneficially or of record, as of the close of business
on July 27, 1999 and who continues to own beneficially or of record, as of the
Expiration Date, an aggregate of fewer than 100 shares of a class of Common
Stock. The undersigned either (check one box):
[ ] was the beneficial or record owner of, as of the close of business on
July 27, 1999, and continues to own, beneficially or of record, as of
the Expiration Date, an aggregate of fewer than 100 Shares of the
class of Common Stock tendered, all of which are being tendered; or
[ ] is a broker, dealer, commercial bank, trust company or other nominee
that (a) is tendering for the beneficial owner thereof Shares with
respect to which it is the record holder, and (b) believes, based upon
representations made to it by such beneficial owner, that such person
was the beneficial or record owner of, as of the close of business on
July 27, 1999, and continues to own beneficially or of record, as of
the Expiration Date, an aggregate of fewer than 100 shares of the
class of Common Stock tendered, all of which are being tendered.
Signature(s):
-----------------------------------------------
-----------------------------------------------
Name(s) of
Record Holder(s):
-----------------------------------------------
------------------------------------------------
Please Type or Print
Address:
------------------------------------------------
------------------------------------------------
Zip Code
Telephone No. (including area code):
------------
Facsimile Number:
------------------------------------
E-mail address:
-------------------------------------
If Shares will be delivered by
book-entry transfer, provide the
following information:
Account Number:
-----------------------------------------------
Date:
-----------------------------------------------
4
<PAGE> 5
GUARANTEE
(NOT TO BE USED FOR A SIGNATURE GUARANTEE.)
THE UNDERSIGNED, A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS ASSOCIATION
OR OTHER ENTITY WHICH IS A MEMBER IN GOOD STANDING OF THE SECURITIES TRANSFER
AGENTS MEDALLION PROGRAM OR A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS
ASSOCIATION OR OTHER ENTITY WHICH IS AN "ELIGIBLE GUARANTOR INSTITUTION," AS
SUCH TERM IS DEFINED IN RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (EACH OF THE FOREGOING CONSTITUTING AN "ELIGIBLE INSTITUTION"),
HEREBY GUARANTEES THE DELIVERY TO THE DEPOSITARY OF THE SHARES TENDERED HEREBY,
IN PROPER FORM FOR TRANSFER, OR A CONFIRMATION THAT THE SHARES TENDERED HEREBY
HAVE BEEN DELIVERED PURSUANT TO THE PROCEDURE FOR BOOK-ENTRY TRANSFER SET FORTH
IN THE OFFER TO PURCHASE INTO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY
TRANSFER FACILITY, TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER
OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) OR AN AGENT'S MESSAGE
(AS DEFINED IN THE OFFER TO PURCHASE) OR THROUGH ATOP (AS DEFINED IN THE OFFER
TO PURCHASE) AND ANY REQUIRED SIGNATURE GUARANTEES OR OTHER REQUIRED DOCUMENTS,
ALL WITHIN THREE (3) NEW YORK STOCK EXCHANGE TRADING DAYS AFTER RECEIPT BY THE
DEPOSITARY OF THIS NOTICE OF GUARANTEED DELIVERY.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing shares or a confirmation of book-entry transfer or, in
the case of transfer through ATOP, a specified acknowledgement to the Depositary
within the time period set forth herein. Failure to do so could result in a
financial loss to such Eligible Institution.
Name of Firm:
--------------------------------------
Address:
--------------------------------------
--------------------------------------
Zip Code
Telephone No. (Including area code):
--------------------------------------
Authorized Signature:
--------------------------------------
Name:
--------------------------------------
Please Print
Title:
--------------------------------------
Date:
--------------------------------------
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS FORM. CERTIFICATES FOR SHARES
SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL.
5
<PAGE> 1
EXHIBIT (a)(4)
[CREDIT SUISSE FIRST BOSTON LETTERHEAD]
GARTNER GROUP, INC.
OFFER TO PURCHASE FOR CASH
UP TO 15,700,000 SHARES OF COMMON STOCK,
CONSISTING OF
UP TO 9,600,000 SHARES OF CLASS A COMMON STOCK AND
UP TO 6,100,000 SHARES OF CLASS B COMMON STOCK,
EACH AT A PURCHASE PRICE NOT LESS THAN $21
NOR MORE THAN $24 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, AUGUST 24, 1999, UNLESS THE OFFER IS EXTENDED.
July 27, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Gartner Group, Inc., a Delaware corporation (the "Company"), has engaged us
to act as Dealer Manager in connection with its offer to purchase up to
15,700,000 shares (or such lesser number of shares as are properly tendered) of
its Common Stock, par value $0.0005 per share, consisting of up to 9,600,000
shares of Common Stock, Class A, par value $0.0005 per share ("Class A Common
Stock"), and up to 6,100,000 shares of Common Stock, Class B, par value $0.0005
per share ("Class B Common Stock"; together with the Class A Common Stock, the
"Shares" or the "Common Stock"), at prices not less than $21 nor more than $24
per share, net to the seller in cash, without interest, as specified by
stockholders tendering their Shares, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated July 27, 1999 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single per share price, not less than $21 nor more than $24
per share, net to the seller in cash, without interest, that it will pay for
shares of Class A Common Stock properly tendered pursuant to the Offer and not
properly withdrawn (the "Class A Purchase Price"), taking into account the
number of shares of Class A Common Stock so tendered and the prices specified by
tendering stockholders. The Company will select the lowest purchase price that
will allow it to buy 9,600,000 shares of Class A Common Stock (or such lesser
number of shares of Class A Common Stock as are properly tendered). All shares
of Class A Common Stock acquired pursuant to the Offer will be acquired at the
one Class A Purchase Price.
Similarly, the Company will determine the single per Share price, not less
than $21 nor more than $24 per Share, net to the seller in cash, without
interest, that it will pay for shares of Class B Common Stock properly tendered
pursuant to the Offer and not properly withdrawn (the "Class B Purchase Price";
each of the Class A Purchase Price and Class B Purchase Price is referred to as
a "Purchase Price"), taking into account the number of shares of Class B Common
Stock so tendered and the prices specified by tendering stockholders. The
Company will select the lowest purchase price that will allow it to buy
6,100,000 shares of Class B Common Stock (or such lesser number of shares of
Class B Common Stock as are properly tendered). All shares of Class B Common
Stock acquired pursuant to the Offer will be acquired at the one Class B
Purchase Price. The Class A Purchase Price and Class B Purchase Price need not
be identical.
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<PAGE> 2
Notwithstanding the foregoing, the Company will only repurchase shares of
Class A Common Stock and Class B Common Stock in the same proportion as the
ratio of the numbers of shares of Class A Common Stock and Class B Common Stock
outstanding as of July 26, 1999. At such date, 63,992,550 shares of Class A
Common Stock were outstanding, representing 61.1% of the outstanding Common
Stock, and 40,689,648 shares of Class B Common Stock were outstanding,
representing 38.9% of the outstanding Common Stock. If stockholders do not
properly tender shares in these proportions, then the Company will only purchase
the largest number of properly tendered shares of each class that will enable it
to maintain these proportions, and the Purchase Price for each class will be
determined upon the basis of the number of shares of such class so purchased.
Subject to the foregoing, all shares of a class of Common Stock properly
tendered prior to the Expiration Date (as defined in the Offer to Purchase) at
prices at or below the Purchase Price for that class and not properly withdrawn,
will be purchased at such Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proportionality and proration provisions.
Shares tendered at prices in excess of such Purchase Price and shares not
purchased because of the proportionality and proration provisions will be
returned at the Company's expense to the stockholders who tendered such shares.
The Company reserves the right, in its sole discretion, to purchase more
than an aggregate of 15,700,000 shares pursuant to the Offer; provided that the
Company will only repurchase shares of Class A Common Stock and Class B Common
Stock in the same proportion as the ratio of the numbers of shares of Class A
Common Stock and Class B Common Stock outstanding on July 26, 1999.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 9,600,000 shares of Class A Common Stock or more than
6,100,000 shares of Class B Common Stock (or in each case such greater number of
shares as the Company may elect to purchase) are properly tendered at or below
the Class A or Class B Purchase Price, respectively, and not properly withdrawn,
the Company will buy shares of a given class first from any person (an "Odd Lot
Holder") who owned beneficially or of record as of the close of business on July
27, 1999 and who continues to own beneficially or of record as of the Expiration
Date, an aggregate of fewer than 100 shares of such class and so certified in
the appropriate place on the Letter of Transmittal (and, if applicable, on a
Notice of Guaranteed Delivery), and who properly tenders all such person's
shares of such class at or below the applicable Purchase Price, and then on a
pro rata basis from all other stockholders who properly tender shares of that
class at prices at or below the applicable Purchase Price (and do not properly
withdraw such shares prior to the Expiration Date).
For your information and for forwarding to those of your clients for whom
you hold shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. The Offer to Purchase dated July 27, 1999;
2. The Letters of Transmittal for your use and for the information of
your clients (together with the accompanying Substitute Form W-9).
Different Letters of Transmittal are to be used to tender shares of Class A
Common Stock and shares of Class B Common Stock. Copies of each separate
form are enclosed. Facsimile copies of the Letters of Transmittal (with
manual signatures) may be used to tender Shares;
3. A letter to the stockholders of the Company dated July 27, 1999
from Michael D. Fleisher, Executive Vice President and Chief Financial
Officer of the Company;
2
<PAGE> 3
4. The Notice of Guaranteed Delivery to be used to accept the Offer
and tender Shares pursuant to the Offer if none of the procedures for
tendering Shares set forth in the Offer to Purchase can be completed on a
timely basis;
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with an Instruction Form provided for obtaining such clients'
instructions with regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to EquiServe L.P., as Depositary for
the Offer (the "Depositary").
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY,
AUGUST 24, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof)
including any required signature guarantees and any other required documents
should be sent to the Depositary together with either certificate(s)
representing tendered Shares or timely confirmation of their book-entry
transfer, in accordance with the instructions set forth in the Offer to Purchase
and the related Letter of Transmittal.
Holders of Shares whose certificate(s) for such Shares are not immediately
available or who cannot deliver such certificate(s) and all other required
documents to the Depositary, or complete the procedures for book-entry transfer,
prior to the Expiration Date may tender their Shares according to the procedure
for guaranteed delivery set forth in Section 3 of the Offer to Purchase.
No fees or commissions will be payable by the Company or any officer,
director, stockholder, agent or other representative of the Company to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer (other than fees paid to Credit Suisse First Boston Corporation, as Dealer
Manager, or Morrow & Co., Inc., as Information Agent, as described in the Offer
to Purchase). The Company will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients whose Shares are held by you as a nominee or
in a fiduciary capacity. The Company will pay or cause to be paid any stock
transfer taxes applicable to its purchase of Shares, except as otherwise
provided in the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Credit Suisse First Boston Corporation, as Dealer Manager, Eleven Madison
Avenue, New York, New York 10010-3629, (800) 881-8320 (toll free), or to Morrow
& Co., Inc., as Information Agent, 445 Park Avenue, Fifth Floor, New York, NY
10022, (800) 662-5200 (toll free). Requests for additional copies of the
enclosed materials may be directed to the Dealer Manager or the Information
Agent at their respective addresses and telephone numbers set forth above.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
EXHIBIT (a)(5)
GARTNER GROUP, INC.
OFFER TO PURCHASE FOR CASH
UP TO 15,700,000 SHARES OF COMMON STOCK,
CONSISTING OF
UP TO 9,600,000 SHARES OF CLASS A COMMON STOCK AND
UP TO 6,100,000 SHARES OF CLASS B COMMON STOCK,
EACH AT A PURCHASE PRICE NOT LESS THAN $21 NOR
MORE THAN $24 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, AUGUST 24, 1999, UNLESS THE OFFER IS EXTENDED.
July 27, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated July 27,
1999 (the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer") in
connection with the offer by Gartner Group, Inc., a Delaware corporation (the
"Company"), to purchase up to 15,700,000 shares of its Common Stock, par value
$0.0005 per share, consisting of up to 9,600,000 shares of Common Stock, Class A
("Class A Common Stock") and 6,100,000 shares of Common Stock, Class B ("Class B
Common Stock"; together with the Class A Common Stock, the "Shares" or the
"Common Stock"), at prices not less than $21 nor more than $24 per share, net to
the seller in cash, without interest, as specified by stockholders tendering
their Shares, upon the terms and subject to the conditions of the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single per share price, not less than $21 nor more than $24
per share, net to the seller in cash, without interest, that it will pay for
shares of Class A Common Stock properly tendered pursuant to the Offer and not
properly withdrawn (the "Class A Purchase Price"), taking into account the
number of shares of Class A Common Stock so tendered and the prices specified by
tendering stockholders. Such purchase price will be the lowest purchase price
that will allow the Company to buy 9,600,000 shares of Class A Common Stock (or
such lesser number of shares as are properly tendered).
Similarly, the Company will determine the single per share price, not less
than $21 nor more than $24 per share, net to the seller in cash, without
interest, that it will pay for shares of Class B Common Stock properly tendered
pursuant to the Offer and not properly withdrawn (the "Class B Purchase Price";
the Class A Purchase Price and Class B Purchase Price are each referred to as a
"Purchase Price"), taking into account the number of shares of Class B Common
Stock so tendered and the prices specified by tendering stockholders. Such
purchase price will be the lowest purchase price that will allow it to buy
6,100,000 shares of Class B Common Stock (or such lesser number of shares as are
properly tendered). The Class A Purchase Price and the Class B Purchase Price
need not be identical.
Notwithstanding the foregoing, however, the Class A Common Stock and Class
B Common Stock shall only be repurchased in the same proportion as the ratio of
the numbers of shares of Class A Common Stock and Class B Common Stock
outstanding as of July 26, 1999. At such date, 63,992,550 shares of Class A
Common Stock were outstanding, representing 61.1% of the outstanding Common
Stock, and 40,689,648 shares of Class B Common Stock were outstanding,
representing 38.9% of the outstanding Common Stock. If stockholders do not
properly tender shares in these proportions, then the Company will only purchase
the largest number of properly tendered shares of each class that will enable it
to maintain these proportions, and
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<PAGE> 2
the Purchase Price for each class will be determined upon the basis of the
number of shares of such class so purchased.
Subject to the foregoing, all shares of a class properly tendered prior to
the Expiration Date (as defined in the Offer to Purchase) at prices at or below
the applicable Purchase Price, and not properly withdrawn, will be purchased at
the applicable Purchase Price, upon the terms and subject to the conditions of
the Offer, including the proportionality and proration provisions. All shares of
a class acquired in the Offer will be acquired at the Purchase Price for that
class. Shares tendered at prices in excess of the applicable Purchase Price and
shares not purchased because of the proportionality and proration provisions
will be returned at the Company's expense to the stockholders who tendered such
shares.
The Company reserves the right, in its sole discretion, to purchase more
than an aggregate of 15,700,000 shares of Common Stock pursuant to the Offer,
provided that the Company will only repurchase shares of Class A Common Stock
and Class B Common Stock in the same proportion as the ratio of the numbers of
shares of Class A Common Stock and Class B Common Stock outstanding on July 26,
1999.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 9,600,000 shares of Class A Common Stock or more than
6,100,000 shares of Class B Common Stock (or in each case such greater number of
shares of such class as the Company may elect to purchase) are properly tendered
at or below the Purchase Price for such class and not properly withdrawn, the
Company will buy shares of such class first from any person (an "Odd Lot
Holder") who owned beneficially or of record, as of the close of business on
July 27, 1999, and who continues to own beneficially or of record, as of the
Expiration Date, an aggregate of fewer than 100 shares of such class and so
certified in the appropriate place on the Letter of Transmittal (and, if
applicable, on a Notice of Guaranteed Delivery) and who properly tenders all
such person's shares of such class at or below the applicable Purchase Price,
and then on a pro rata basis from all other stockholders who properly tender
shares of such class at prices at or below the applicable Purchase Price (and do
not properly withdraw such shares prior to the Expiration Date).
A TENDER OF YOUR SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD
THEREOF AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
YOUR SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any
or all of the Shares held by us for your account, upon the terms and subject to
the conditions of the Offer.
Please note the following:
1. Shares may be tendered at prices not less than $21 nor more than
$24 per share, or at the price determined by the "Dutch Auction" tender
process as indicated in the attached Instruction Form, net to the seller in
cash, without interest. You should mark the box entitled "Shares Tendered
at Price Determined by Dutch Auction" if you are willing to accept the
Purchase Price resulting from the Dutch Auction tender process. This could
result in your receiving the minimum price of $21 per share. If you do not
mark any box under "Selection of Purchase Price," it will be assumed that
you elected to tender Shares at the Dutch Auction price.
2. You may designate the order in which the Company will purchase your
shares in the event of proration.
3. The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set
forth in the Offer to Purchase.
4. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Tuesday, August 24, 1999, unless the
Offer is extended.
5. The Offer is for 15,700,000 shares of Common Stock, consisting of
9,600,000 shares of Class A Common Stock and 6,100,000 shares of Class B
Common Stock, constituting in the aggregate approximately 15% of the Shares
outstanding as of July 17, 1999. However, the Company will only
2
<PAGE> 3
repurchase shares of Class A Common Stock and Class B Common Stock in the
same proportion as the ratio of the numbers of shares of Class A Common
Stock and Class B Common Stock outstanding as of July 17, 1999. If
stockholders do not properly tender shares in these proportions, then the
Company will only purchase the largest number of properly tendered shares
of each class that will enable it to maintain these proportions, and the
Purchase Price for each class will be determined upon the basis of the
number of shares of such class so purchased.
6. The Board of Directors of the Company has approved the Offer.
However, neither the Company nor its Board of Directors nor the Dealer
Manager (as defined in the offer to Purchase makes any recommendation to
stockholders as to whether to tender or refrain from tendering Shares. Each
stockholder must make the decision whether to tender such stockholder's
Shares and, if so, how many Shares to tender and at the price or prices at
which such Shares should be tendered.
7. Tendering stockholders will not be obligated to pay any brokerage
fees or commissions or solicitation fees to the Company or the Dealer
Manager, the Depositary, or the Information Agent (each as defined in the
Offer to Purchase) or, except as set forth in the Offer to Purchase and the
Letter of Transmittal, stock transfer taxes on the transfer of Shares
pursuant to the Offer.
If (i) you owned beneficially or of record, as of the close of business on
July 27, 1999 and continue to own beneficially or of record, as of the
Expiration Date, an aggregate of fewer than 100 shares of a class; (ii) you
instruct us to tender on your behalf all such shares at or below the applicable
Purchase Price prior to the Expiration Date; and (iii) you complete the section
entitled "Odd Lots" in the attached Instruction Form, the Company, upon the
terms and subject to the conditions of the Offer, will accept all such shares
for purchase before proration, if any, of the purchase of other shares of that
class properly tendered at or below the applicable Purchase Price.
If you wish to tender shares of both Class A Common Stock and Class B
Common Stock, you must complete a separate Instruction Form for each class of
shares so tendered. We must submit separate Letters of Transmittal on your
behalf for each such class of shares. Moreover, if you wish to tender portions
of your Shares at different prices, you must complete a separate Instruction
Form for each price at which you wish to tender each such portion of your
Shares. We must submit separate Letters of Transmittal on your behalf for each
such price you will accept for each such portion tendered. The same shares
cannot be tendered at more than one price.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, all such Shares will be tendered
unless otherwise indicated on the attached Instruction Forms.
PLEASE FORWARD YOUR INSTRUCTION FORMS TO US AS SOON AS POSSIBLE TO ALLOW US
AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
As described in the Offer to Purchase, if more than 9,6000,000 shares of
Class A Common Stock or more than 6,100,000 shares of Class B Common Stock (or
in each case such greater number of Shares as the Company may elect to purchase)
have been properly tendered at or below the applicable Purchase Price and not
properly withdrawn prior to the Expiration Date, the Company will purchase
tendered shares of such class on the basis set forth below:
1. first, the Company will purchase all shares of such class properly
tendered and not properly withdrawn prior to the Expiration Date by any
Odd Lot Holder who:
(a) tenders all shares of such class owned beneficially or of record by
such Odd Lot Holder at a price at or below the applicable Purchase
Price (tenders of less than all shares of such class owned by such
Odd Lot Holder will not qualify for this preference); and
(b) completes the box captioned "Odd Lots" in the Letter of Transmittal
and, if applicable, in the Notice of Guaranteed Delivery; and
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<PAGE> 4
2. second, after purchasing of all of the foregoing shares of such class,
the Company will purchase all other shares of such class properly
tendered at prices at or below the applicable Purchase Price and not
properly withdrawn prior to the Expiration Date, on a pro rata basis
(with appropriate adjustments to avoid purchases of fractional shares)
as described in the Offer to Purchase.
The Offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all holders of Shares who
were holders as of July 27, 1999. The Offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares residing in any
jurisdiction in which the making of the Offer or acceptance thereof would not be
in compliance with the securities or other laws of such jurisdiction.
4
<PAGE> 1
GARTNER LOGO EXHIBIT (a)(6)
Gartner Group, Inc.
56 Top Gallant Road
Stamford, CT 06904
July 27, 1999
To Our Stockholders:
Gartner Group, Inc. (the "Company") is offering to purchase up to
15,700,000 shares of Common Stock, consisting of up to 9,600,000 shares of Class
A Common Stock and up to 6,100,000 shares of Class B Common Stock (the Class A
Common Stock and Class B Common Stock are referred to collectively as the
"Shares" or the "Common Stock") from existing stockholders (the "Offer"). The
Shares will be purchased at prices not less than $21 nor more than $24 per
share. The Company is conducting the offer through a procedure commonly referred
to as a "Dutch Auction." This procedure allows you to select the price within
the specified price range at which you are willing to sell your Shares to the
Company or to accept the Purchase Price resulting from the Dutch Auction tender
process. The actual purchase price will be determined by the Company in
accordance with the terms of the offer.
Since the Company is offering to purchase both Class A Common Stock and
Class B Common Stock, a separate Purchase Price will be determined for each
class based on the shares of each class tendered and the prices for such shares
selected by the tendering stockholders. The Class A Purchase Price will be the
lowest purchase price that will allow the Company to buy 9,600,000 shares of
Class A Common Stock (or such lower number of shares of Class A Common Stock as
are properly tendered). Similarly, the Class B Purchase Price will be the lowest
purchase price that will allow the Company to buy 6,100,000 shares of Class B
Common Stock, or such lower number of shares of Class B Common Stock as are
properly tendered).
Notwithstanding the foregoing, the Company will only purchase Class A
Common Stock and Class B Common Stock in the same proportion as the ratio of the
numbers of shares of the two classes outstanding as of July 26, 1999. At such
date, the ratio of Class A Common Stock outstanding to Class B Common Stock
outstanding was 61.1 to 38.9. If stockholders do not properly tender shares in
these proportions, then the Company will only purchase the largest number of
properly tendered shares of each class that will enable it to maintain these
proportions, and the Purchase Price for each class will be determined upon the
basis of the number of shares of such class so purchased.
All shares of Class A Common Stock that are purchased under the Offer will
be purchased at the same Class A Purchase Price, determined as provided above,
and all shares of Class B Common Stock that are purchased under the Offer will
be purchased at the same Class B Purchase Price, determined as provided above.
Any stockholder whose Shares are properly tendered directly to EquiServe
L.P., the depositary for the Offer (the "Depositary"), and purchased pursuant to
the Offer, will receive the net purchase price in cash, without interest, and
will not incur the usual transaction costs associated with open market sales or
any fees to Credit Suisse First Boston Corporation, the dealer manager for the
Offer (the "Dealer Manager"), Morrow & Co., Inc., the information agent for the
Offer (the "Information Agent") or the Depositary. Stockholders holding shares
through brokers or banks are urged to consult the brokers or banks to determine
whether transaction costs apply if shares are tendered through the brokers or
banks and not directly to the Depositary.
The terms and conditions of the Offer are explained in detail in the
enclosed Offer to Purchase and the related Letter of Transmittal. I encourage
you to read these materials carefully before making any decision with respect to
the offer. The instructions on how to tender Shares are also explained in detail
in the accompanying materials.
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<PAGE> 2
None of the Company, the Board of Directors of the Company nor Credit
Suisse First Boston Corporation makes any recommendation to stockholders as to
whether to tender or refrain from tendering their Shares. Each stockholder must
make the decision whether to tender Shares and, if so, how many shares of each
class to tender and the price or prices at which such shares should be tendered.
The directors and executive officers of the Company have agreed not to tender
any Shares pursuant to the Offer.
The Offer will expire at 12:00 Midnight, New York City time, on Tuesday,
August 24, 1999, unless extended by the Company. If you have any questions
regarding the offer or need assistance in tendering Shares, please contact
Morrow & Co., Inc., the Information Agent for the Offer. Individual stockholders
may reach the Information Agent at (800) 566-9061, and banks and brokerage firms
may reach the Information Agent at (800) 662-5200. In addition banks, brokerage
firms, and stockholders may contact Credit Suisse First Boston Corporation, the
Dealer Manager for the Offer, at (800) 881-8320.
Sincerely,
GARTNER GROUP, INC.
Michael D. Fleisher
Executive Vice President and Chief
Financial Officer
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EXHIBIT (a)(7)
IMMEDIATE ATTENTION REQUIRED
Re: IMS Health Incorporated Savings Plan
Dear Plan Participant:
All or a portion of your individual account in the IMS Health Incorporated
Savings Plan (the "Plan") is invested in common stock of IMS Health Incorporated
("IMS Health"), through the trust fund established and maintained under the
Plan. As a beneficial owner of the common stock of IMS Health ("IMS Shares"),
you received a dividend of shares of Gartner Group, Inc. Class B common stock
("Class B Shares") pursuant to the spinoff of most of IMS Health's interest in
Gartner Group, Inc. ("GartnerGroup") (the "Spin-Off"). The Class B Shares you
received pursuant to the dividend were credited to your Plan account in a
"Legacy Fund". GartnerGroup has commenced a tender offer for 6,100,000 shares of
its Class B common stock. Under the terms of the Plan, you have the power and
responsibility for directing responses to tender offers with respect to the
Class B Shares credited to your Plan account.
Enclosed are tender offer materials and a YELLOW Direction Form that
require your immediate attention. Also enclosed is a list of Questions and
Answers to help you better understand the tender offer as it relates to Plan
participants. Please refer to the letter from Michael D. Fleisher, Executive
Vice President and Chief Financial Officer of GartnerGroup and the Questions and
Answers following that letter for more information about the tender offer in
general. These materials describe an offer by GartnerGroup to purchase Class B
Shares and Gartner Group, Inc. Class A Stock ("Class A Shares") at prices not
less than $21 nor more than $24 per share. As described below, you have the
right to instruct Bankers Trust Company ("Bankers Trust"), as Trustee of the
Plan, concerning whether and on what terms to tender Class B Shares credited to
your Plan account.
IF YOU WISH TO PARTICIPATE IN THE TENDER OFFER, YOU MUST COMPLETE THE
ENCLOSED DIRECTION FORM AND RETURN IT TO BANKERS TRUST IN THE ENCLOSED RETURN
ENVELOPE SO THAT IT IS RECEIVED BY 5:00 P.M. NEW YORK CITY TIME, ON AUGUST 20,
1999, UNLESS THIS DEADLINE IS EXTENDED.
IN ACCORDANCE WITH THE TERMS OF THE PLAN, PARTICIPANTS WHO HAVE
SUCCESSFULLY TENDERED CLASS B SHARES WILL NOT RECEIVE CASH. CASH RECEIVED FOR
TENDERED CLASS B SHARES WILL BE CREDITED TO YOUR ACCOUNT AND AUTOMATICALLY
INVESTED IN THE FIXED INCOME FUND OF THE PLAN AS SOON AS ADMINISTRATIVELY
PRACTICABLE. ACCOUNT BALANCES IN THE FIXED INCOME FUND MAY THEN BE TRANSFERRED
PURSUANT TO THE TERMS OF THE PLAN. NEITHER THE SUCCESSFUL TENDER OF ANY OF YOUR
CLASS B SHARES NOR THE INVESTMENT OF THE TENDER PROCEEDS IN THE FIXED INCOME
FUND WILL CAUSE YOU TO RECOGNIZE ANY CURRENT TAXABLE GAIN OR LOSS.
IF YOU DO NOT WISH TO PARTICIPATE IN THE TENDER OFFER, YOU MAY DIRECT
BANKERS TRUST NOT TO PARTICIPATE BY CHECKING "BOX A" ON THE YELLOW DIRECTION
FORM AND RETURNING THIS FORM TO BANKERS TRUST. ALSO, IF BANKERS TRUST DOES NOT
RECEIVE A TIMELY, PROPERLY COMPLETED, SIGNED ORIGINAL YELLOW DIRECTION FORM FROM
YOU, BANKERS TRUST WILL DEEM YOU TO HAVE DIRECTED BANKERS TRUST NOT TO TENDER
ANY CLASS B SHARES.
The remainder of this letter summarizes the transaction, your rights under
the Plan and the procedures for completing the Direction Form. You should also
review the more detailed explanation provided in the Offer to Purchase and the
related Letter of Transmittal enclosed with this letter.
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<PAGE> 2
BACKGROUND
GartnerGroup has commenced a tender offer to purchase up to 6,100,000 Class
B Shares at prices not less than $21 nor more than $24 per share and up to
9,600,000 Class A Shares at prices not less than $21 nor more than $24 per
share. This type of tender offer is commonly referred to as a "Dutch Auction"
tender offer. The enclosed Offer to Purchase dated July 27, 1999 (the "Offer to
Purchase") and the related Letter of Transmittal (together with the Offer to
Purchase, the "Offer") set forth the objectives, terms and conditions of the
Offer and are being provided to all of GartnerGroup's shareowners. As described
in more detail below under "How the Offer Works", GartnerGroup will determine
the single price per share between $21 and $24 that it will apply for Class B
Shares properly tendered in the Offer. Subject to certain terms of the Offer
described in this letter and in the Offer to Purchase, this price will be the
lowest price that will allow GartnerGroup to buy 6,100,000 Class B Shares. Class
B Shares tendered at prices above this price will not be accepted by
GartnerGroup.
GartnerGroup's Offer extends to the Class B Shares held by the Plan. As of
July 27, 1999, the Plan held approximately 41,040 Class B Shares. Only Bankers
Trust, as Trustee of the Plan, can tender these Class B Shares on behalf of Plan
participants. Nonetheless, as a Plan participant and the named fiduciary of your
account, you have the right under the terms of the Plan to direct Bankers Trust
whether or not to tender some or all of the Class B Shares credited to your
individual account in the Plan. If you direct Bankers Trust to tender any of the
Class B Shares credited to your individual account, you must also specify the
price or prices at which the Class B Shares should be tendered, which may
include the per Share purchase price determined by GartnerGroup in accordance
with the terms of the Offer.
Please note that the actual tender of Class B Shares credited to your
individual account under the Plan can be made only by Bankers Trust as the owner
of record. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO TENDER DIRECTLY CLASS B SHARES CREDITED TO
YOUR INDIVIDUAL ACCOUNT UNDER THE PLAN.
NEITHER BANKERS TRUST, IMS HEALTH, GARTNERGROUP, THE BOARD OF DIRECTORS OF
GARTNERGROUP OR IMS HEALTH NOR ANY OTHER PERSON MAKES ANY RECOMMENDATIONS AS TO
WHETHER TO DIRECT THE TENDER OF SHARES, THE PRICE AT WHICH TO TENDER, OR WHETHER
TO REFRAIN FROM DIRECTING THE TENDER OF SHARES. EACH PARTICIPANT MUST MAKE HIS
OR HER OWN DECISION ON THESE MATTERS. AS A NAMED FIDUCIARY WITH RESPECT TO HIS
OR HER ACCOUNT, EACH PARTICIPANT IS SOLELY RESPONSIBLE FOR THE CONSEQUENCES OF
HIS OR HER OWN DECISIONS REGARDING TENDER.
CONFIDENTIALITY
TO ASSURE THE CONFIDENTIALITY OF YOUR DECISION, BANKERS TRUST AND ITS
AFFILIATES OR AGENTS WILL TABULATE THE DIRECTION FORMS SUBMITTED BY
PARTICIPANTS. IN ADDITION, IMS HEALTH, BANKERS TRUST AND THE PLAN RECORD KEEPER
HAVE ADOPTED PROCEDURES TO ENSURE THAT TO THE EXTENT THAT ANY GARTNERGROUP OR
IMS HEALTH PERSONNEL HAVE ACCESS TO INFORMATION RELATING TO YOUR DECISION FOR
THE PURPOSE OF ADMINISTERING THE PLAN AND MAINTAINING RECORDS NEEDED TO COMPLY
WITH ANY APPLICABLE LAWS, SUCH INFORMATION WILL BE KEPT CONFIDENTIAL BY THEM.
2
<PAGE> 3
HOW THE OFFER WORKS
The details of the Offer are described in the enclosed materials, which you
should review carefully. The following is a general summary of how the
transaction will work with respect to Plan participants, subject to the terms
and conditions of the Offer:
- GartnerGroup has offered to purchase up to 6,100,000 of its Class B
Shares at a single per share price not less than $21 nor more than $24
per Share and and up to 9,600,000 of its Class A Shares at a single per
share price not less than $21 nor more than $24 per share.
- After the expiration date of the Offer, GartnerGroup will determine the
lowest single per Share price (not less than $21 nor more than $24 per
share), that allows GartnerGroup to purchase up to 6,100,000 Class B
Shares (the "Purchase Price") and the lowest single per Class A Share
price (not less than $21 nor more than $24 per share), that allows
GartnerGroup to purchase up to 9,600,000 Class A Shares.
- Unless the Offer is terminated, amended in accordance with its terms or
the number of Class B Shares that GartnerGroup offers to purchase is
reduced, GartnerGroup will pay the Purchase Price for all Class B Shares
validly tendered at or below the Purchase Price and not withdrawn upon
the terms and subject to the conditions of the Offer. If at the
expiration of the Offer, more than 6,100,000 Class B Shares (or such
greater number as GartnerGroup may elect to purchase pursuant to the
Offer) have been validly tendered and not withdrawn, GartnerGroup will
first purchase Class B Shares tendered at or below the Purchase Price by
shareowners who hold less than 100 Class B Shares and tendered all such
Class B Shares. GartnerGroup will then purchase a pro rata portion of the
remaining Class B Shares tendered. The same per Share Purchase Price will
be paid for all Class B Shares tendered on behalf of participants at or
below the Purchase Price and accepted for purchase by GartnerGroup.
- Notwithstanding the foregoing, GartnerGroup will only purchase Class A
Shares and Class B Shares in the same proportion as the ratio of the
number of Class A Shares and Class B Shares outstanding. As such, if an
insufficient number of shares of either class of stock is tendered, the
number of shares of the other class of stock purchased under the Offer
will be reduced to maintain such proportion of repurchased shares of each
class. If the number of shares of a class of stock is reduced, the price
per share of such class will be determined based on the reduced number of
shares and the prices specified by participants in the Offer.
- Shares tendered at prices above the purchase price determined by
GartnerGroup, as described above, will not be purchased in the tender
offer.
- If you want any of the Class B Shares credited to your individual account
in the Plan sold pursuant to the Offer, you must instruct Bankers Trust
by completing the enclosed YELLOW Direction Form and returning it in the
enclosed return envelope.
- In order to be valid, your Direction Form must be RECEIVED by Bankers
Trust no later than 5:00 P.M. New York City time, on August 20, 1999
("Deadline"), unless the Deadline is extended by Bankers Trust.
Participants will be notified of any such extension.
- You need to specify on the Direction Form the per Share price(s), which
cannot be less than $21 nor more than $24, at which you wish to tender
the Class B Shares credited to your individual account in the Plan. The
per Share price(s) you specify may be a specific amount (in multiples of
$.125) and/or the Purchase Price (defined below) ultimately determined by
GartnerGroup in accordance with the terms of the Offer.
- If you own beneficially or of record as of the Deadline, an aggregate of
fewer than 100 Class B Shares (in total, including the Plan, the employee
stock purchase plan or otherwise) and you tendered all of such Class B
Shares check the Odd Lot Box.
- The Direction Form should be returned to Bankers Trust at Bankers Trust,
P.O. Box 1997, New York, NY 10117-0024. If Bankers Trust (i) does not
RECEIVE a complete, signed, original Direction Form
3
<PAGE> 4
from you by the Deadline with respect to the Class B Shares credited to
your individual account or (ii) receives an incomplete or improperly
completed Direction Form from you, Bankers Trust will automatically deem
you to have instructed Bankers Trust to NOT tender any of such Class B
Shares in response to the Offer, and Bankers Trust will not tender any
such Class B Shares. NO COPY, OVERNIGHT DELIVERY, FACSIMILE OR OTHER
ELECTRONIC TRANSMITTALS OF THE DIRECTION FORM WILL BE ACCEPTED. THE
METHOD OF DELIVERY OF THIS DIRECTION FORM IS AT THE OPTION AND RISK OF
THE TENDERING PARTICIPANT. CERTIFIED MAIL WITH RETURN RECEIPT REQUESTED
IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY.
- After the Deadline for returning the Direction Form to Bankers Trust,
Bankers Trust and its affiliates or agents will complete the tabulation
of all directions and Bankers Trust, as Trustee, will tender the
appropriate number of Class B Shares. For purposes of this tabulation,
the number of Class B Shares credited to your individual account has been
calculated based upon the number of Class B Shares held by the Plan
immediately following the Spin-Off. This number appears on your Direction
Form.
- If you direct the tender of any Class B Shares credited to your
individual account at a price in excess of the Purchase Price as finally
determined, those Class B Shares will not be purchased, and the portion
of your individual account previously invested in Class B Shares will
remain unchanged.
PROCEDURE FOR DIRECTING TRUSTEE
A Direction Form for making your direction is enclosed. If you wish to
respond to the Offer with respect to any of the Class B Shares credited to your
account in the Plan, you must complete, sign and return the enclosed YELLOW
Direction Form in the return envelope so that it is RECEIVED at Bankers Trust
Company, P.O. Box 1997, New York, NY 10117-0024 not later than 5:00 P.M. New
York City time, on August 20, 1999, unless this Deadline is extended. If your
original Direction Form is not received by this Deadline, or if it is not fully
or properly completed and signed, Bankers Trust will not tender any of your
Class B Shares in response to the Offer. The number of Class B Shares credited
to your individual account is provided on the attached Direction Form.
To properly complete your Direction Form, you must do the following:
(1) On the face of the Direction Form, check either Box A or B. CHECK
ONLY ONE BOX:
- CHECK BOX A if you do not want any of the Class B Shares credited to
your individual account tendered for sale at any price and simply want
the Plan to continue holding such Class B Shares. IF YOU DO NOT WISH
TO TENDER ANY CLASS B SHARES CREDITED TO YOUR ACCOUNT, YOU MAY, BUT
ARE NOT REQUIRED, TO RETURN THE DIRECTION FORM.
- CHECK BOX B in all other cases and complete the table immediately
below Box B. Specify the percentage of Class B Shares credited to your
individual account that you want to tender at each price indicated.
You may direct the tender of certain percentages of Class B Shares
credited to your individual account at different prices, including the
Purchase Price ultimately determined by GartnerGroup in accordance
with the terms of the Offer. To direct the tender of your Class B
Shares at different prices you must state the percentage (in whole
numbers) of Class B Shares to be sold at each indicated price by
filling in the percentage of such Class B Shares (based on the number
of Class B Shares credited to your account immediately following the
Spin-Off) on the line immediately before the price. Leave a line blank
if you want no Class B Shares tendered at that price. THE TOTAL
PERCENTAGE OF CLASS B SHARES REFLECTING YOUR INTEREST IN GARTNERGROUP
STOCK MAY NOT EXCEED 100%, BUT IT MAY BE LESS THAN OR EQUAL TO 100%.
IF THIS AMOUNT IS LESS THAN 100%, YOU WILL BE DEEMED TO HAVE
INSTRUCTED BANKERS TRUST NOT TO TENDER THE BALANCE OF THE CLASS B
SHARES CREDITED TO YOUR INDIVIDUAL ACCOUNT UNDER THE PLAN.
4
<PAGE> 5
(2) CHECK THE ODD LOT BOX if you own beneficially or of record as of
the close of business on July 27, 1999, and you do not intend to increase
or decrease such ownership prior to the Deadline, an aggregate of fewer
than 100 Class B Shares (in total, including the Plan, the employee stock
purchase plan or otherwise) and you intend to tender all of such Class B
Shares. Specify the percentage of Class B Shares credited to your
individual account that you want to tender at each price indicated pursuant
to BOX B above. THE TOTAL PERCENTAGE OF CLASS B SHARES REFLECTING YOUR
INTEREST IN GARTNERGROUP STOCK MUST EQUAL 100%.
(3) Date and sign the Direction Form in the space provided.
(4) Return the original Direction Form in the enclosed return envelope
so that it is RECEIVED by Bankers Trust at the address on the return
envelope not later than 5:00 P.M. New York City time, August 20, 1999,
unless the Deadline is extended. NO COPY, OVERNIGHT DELIVERY, FACSIMILE OR
OTHER ELECTRONIC TRANSMITTALS OF THE DIRECTION FORM WILL BE ACCEPTED. THE
METHOD OF DELIVERY OF THIS DIRECTION FORM IS AT THE OPTION AND RISK OF THE
TENDERING PARTICIPANT. CERTIFIED MAIL WITH RETURN RECEIPT REQUESTED IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY.
Your direction will be deemed irrevocable unless WITHDRAWN or CHANGED by
5:00 P.M. New York City time, on August 20, 1999, unless that Deadline is
extended. In order to make an effective withdrawal of, or any change to, your
election, you must submit a new Direction Form, which may be obtained by calling
the Employee Service Center, at (800) 251-4937. Your new Direction Form must
include your name, address and social security number. You should also check the
box indicating that the new Direction Form constitutes a withdrawal or change of
a previously submitted Direction Form. Upon receipt of a new, completed and
signed original Direction Form, your previous direction will be deemed canceled.
You may direct the re-tendering of any Class B Shares credited to your
individual account by obtaining an additional Direction Form from the Employee
Service Center and repeating the steps for directing tenders as set forth in
this letter. NO COPY, OVERNIGHT DELIVERY, FACSIMILE OR OTHER ELECTRONIC
TRANSMITTALS OF THE DIRECTION FORM WILL BE ACCEPTED. THE METHOD OF DELIVERY OF
THIS DIRECTION FORM IS AT THE OPTION AND RISK OF THE TENDERING PARTICIPANT.
CERTIFIED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
INVESTMENT OF TENDER PROCEEDS
For any Class B Shares in the Plan that are tendered to and purchased by
GartnerGroup, GartnerGroup will pay cash to the Plan. In accordance with the
Plan, the tender proceeds will be invested in the Fixed Income Fund as soon as
administratively practicable and such investment will be credited to your
individual account.
INDIVIDUAL PARTICIPANTS IN THE PLAN WILL NOT RECEIVE ANY PORTION OF THE
TENDER PROCEEDS DIRECTLY. ALL SUCH PROCEEDS WILL REMAIN IN THE PLAN AND MAY BE
WITHDRAWN ONLY IN ACCORDANCE WITH THE TERMS OF THE PLAN.
The tender and purchase by GartnerGroup of any of your Class B Shares will
not cause you to recognize any current taxable gain or loss. Because the
proceeds will be invested in the Fixed Income Fund as soon as administratively
practicable, and this period is expected to be less than 90 days, the tender and
sale to GartnerGroup of any of your Class B Shares is also not expected to
impact how future distributions will be taxed. However, in order to fully
determine how tendering Class B Shares may affect the taxation of future
distributions from the Plan, participants should consult with their tax
advisors.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH PARTICIPANT IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR.
5
<PAGE> 6
TRANSFERS, LOANS AND WITHDRAWALS DURING THE OFFER
During the Offer, loans and withdrawals will be available from all funds
under the Plan except for the Legacy Fund. The Legacy Fund will not be available
for loans or withdrawals until the Offer expires and the number of Shares
tendered is determined. In addition to tendering your Class B Shares you may
also transfer them out of the Legacy Fund by calling the Employee Service
Center. Prior to and during any month in which the Offer is outstanding,
transfers from the Legacy Fund should be reflected as a percentage of the total
number of Class B Shares credited to your account immediately following the
Spin-Off.
If you make a mistake by attempting to transfer and tender more than 100%
of your Legacy Fund account balance, the following rules will apply. The tender
will take precedence over the transfer if the Offer EXPIRES prior to the last
day for transfer requests for the month (Tuesday, August 24 for August transfers
and Thursday, September 23 for September transfers) and the transfer will be
reduced so that the aggregate of the tender and transfer equals 100% of your
account balance. On the other hand, if the last day for transfer requests occurs
prior to the expiration of the Offer, the transfer will take precedence over the
tender and the tender will be rejected in its entirety. For example:
- If you have 100 shares and you specify a tender of 60% and a transfer of
60% and THE TENDER TAKES PRECEDENCE OVER THE TRANSFER (as stated above),
60 shares will be tendered and 40 shares will be transferred.
- On the other hand, if you have 100 shares and you specify a tender of 60%
and a transfer of 60% and THE TRANSFER TAKES PRECEDENCE OVER THE TENDER
(as stated above), 60 shares will be transferred and the tender will be
rejected in its entirety (i.e., no shares will be tendered).
SHARES OUTSIDE THE PLAN
If you hold Shares outside the Plan, you will receive, under separate
cover, tender offer materials which can be used to tender such Shares. Those
tender offer materials may not be used to direct Bankers Trust to tender or not
tender the Class B Shares credited to your individual account in the Plan. The
direction to tender or not tender Class B Shares credited to your individual
account under the Plan may only be made in accordance with the procedures in
this letter and the enclosed materials. Similarly, the material you receive with
respect to the Plan may not be used to tender or not tender Shares owned
directly or indirectly outside the Plan.
FURTHER INFORMATION
If you require additional information concerning the procedure to tender
Class B Shares credited to your individual account in the Plan or the terms and
conditions of the Offer, please call the Employee Service Center, at (800)
251-4937.
Sincerely,
BANKERS TRUST COMPANY, Trustee
6
<PAGE> 7
QUESTIONS AND ANSWERS
ABOUT THE GARTNER GROUP, INC. DUTCH AUCTION TENDER OFFER
FOR PARTICIPANTS IN THE
IMS HEALTH INCORPORATED SAVINGS PLAN
Q. WHAT IS A DUTCH AUCTION TENDER OFFER?
A. In a Dutch Auction tender offer, the company offers to purchase its own
shares, establishing a maximum number of shares to purchase and setting a
price range for those share purchases. Shareholders who are interested in
participating in the Dutch Auction specify prices within that range at which
they are willing to sell all or some of their shares. Generally, the final
purchase price is the lowest price within the price range at which the
company can acquire all the shares it wants to purchase.
Q. WHY ARE PLAN PARTICIPANTS BEING ASKED TO RESPOND TO GARTNER GROUP'S TENDER
OFFER?
A. Since all or a portion of your Savings Plan account is invested in IMS Health
Incorporated Common Stock, you received a dividend of Gartner Group Class B
Common Stock when IMS Health Incorporated distributed most of its interest in
Gartner Group to IMS Health's stockholders. Gartner Group is required to
extend the tender offer to the Plan, as a holder of Gartner Group stock. The
Plan provides that you have the right to direct Bankers Trust to tender
shares of Gartner Group, Inc. Class B Common Stock held in your account under
the Plan.
Q. IF I DECIDE TO DIRECT BANKERS TRUST TO TENDER THE SHARES IN MY ACCOUNT, WILL
I BE PAID THE CASH PROCEEDS DIRECTLY?
A. No. As required by the Plan, all proceeds from any shares in your account
that are tendered and sold will be credited to your account and automatically
invested in the Fixed Income Fund as soon as administratively practicable.
You may then transfer your account balance in the Fixed Income Fund pursuant
to the terms of the Plan. The proceeds remain part of your individual account
and may not be distributed except in accordance with the applicable terms of
the Plan.
Q. IS THERE A FORM I HAVE TO RETURN?
A. Included in this mailing is a YELLOW "Direction Form." If you decide to
direct the tender of any shares, you must respond by returning a properly
completed Direction Form. No copy, facsimile or electronic transmittals of
the Direction Form will be accepted. Non-responses or invalid or improperly
completed Direction Forms (including responses to tender greater than 100% of
your Shares) will be treated by Bankers Trust as a direction not to tender
any shares. If Bankers Trust does not receive a completed, signed, original
Direction Form by the deadline stated on the YELLOW Direction Form, Bankers
Trust will automatically deem you to have instructed Bankers Trust not to
tender any shares credited to your individual account. All other forms
included in Gartner Group's tender offer materials are for your information
only and should not be completed.
Q. WHAT IF I DECIDE NOT TO TENDER MY SHARES?
A. You will continue to hold the Gartner Group Class B Common Stock in the
Legacy Fund established by the Plan. After the Tender Offer you may transfer
the shares out of the Legacy Fund but you may not increase the number of
shares you hold. On April 3, 2000 (the first business day in April) the
Legacy Fund will be liquidated and any account balances will be transferred
into the Fixed Income Fund.
Q. WHAT IF I CHANGE MY MIND AFTER I HAVE TENDERED MY SHARES?
A. In order to withdraw your election Bankers Trust must receive a new Direction
Form prior to the Deadline. Once the new completed Direction Form is
received, your previous Direction Form will be canceled. You may obtain a new
Direction Form by calling the Employee Service Center at (800) 251-4937.
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<PAGE> 8
Q. WHAT IS THE DEADLINE FOR RETURNING OR CHANGING THE "DIRECTION FORM"?
A. The form must be received by Bankers Trust no later than 5:00 P.M. New York
City time, on August 20, 1999, unless this deadline is extended by Bankers
Trust. You will be notified of any such extension. This deadline applies to
your election to tender and changes to your tender instructions including a
withdrawal of your election to tender.
Q. WILL ALL THE SHARES THAT I TENDER BE PURCHASED?
A. It depends upon the total number of shares of each class of Gartner Group
tendered in the Offer. It also depends on the price or prices you select for
tendering your Class B Common Stock. In addition, if you own less than 100
shares of Class B Common Stock in total (including the Plan, the employee
stock purchase plan or otherwise) ("Odd Lot Holder"), you tendered all the
shares you own and you tendered at a price or prices equal to or below the
"Purchase Price" then all your shares will be purchased. If you own more than
100 shares or own less than 100 shares and did not tender all your shares and
you tendered at a price equal to or below the "Purchase Price" then at least
some of your shares will be purchased. If more shares are tendered at or
below the Purchase Price than Gartner Group had offered to purchase, a pro
rata portion (after taking into account purchases of Odd Lot Holders) of the
shares you tendered will be purchased. Gartner Group will not, however,
purchase any shares you tendered in excess of the Purchase Price.
Q. IF I AM AN ODD LOT HOLDER, WHAT IS THE BENEFIT OF TENDERING ALL MY SHARES?
A. If the price that you tender is at or below the Purchase Price, all shares of
Class B Common Stock that you tender will be purchased by Gartner Group even
if shares of Class B Common Stock in excess of the amount Gartner Group has
offered to purchase are tendered. In other words, your shares will not be
subject to possible proration.
Q. HOW WILL I KNOW IF MY SHARES HAVE BEEN PURCHASED?
A. After the tender offer expires, all tenders will be tabulated by Gartner
Group which may take up to two weeks. Soon thereafter, Bankers Trust will
apply the results to the Plan and you will be advised of the number of shares
which were accepted and the Purchase Price determined under the Offer.
Q. WILL MY DECISION BE CONFIDENTIAL?
A. Yes. Your decision will be received by Bankers Trust and kept confidential by
Bankers Trust and its agents. In addition, IMS Health, Bankers Trust and the
Plan recordkeeper have adopted procedures to ensure that, to the extent that
any Gartner Group or IMS Health personnel have access to information relating
to your decision for the purpose of administering the plan and maintaining
records needed to comply with any applicable laws, such information will be
kept confidential by them.
Q. CAN I TAKE LOANS AND WITHDRAWALS DURING THE TENDER OFFER?
A. Yes, you may take loans and withdrawals from all funds during the Tender
Offer except for the Legacy Fund. The Legacy Fund will not be available for
loans and withdrawals until the Tender Offer expires and the number of shares
tendered is determined.
Q. CAN I MAKE TRANSFERS OUT OF THE LEGACY FUND DURING THE TENDER OFFER?
A. Yes, but you may not transfer and tender the same shares. If you tender and
transfer the same shares, the tender will take precedence over the transfer
if the tender offer expires prior to the last day for transfer requests for
the month (Tuesday, August 24 for August transfers and Thursday, September 23
for September transfers). On the other hand, if the last day for transfer
requests occurs prior to the expiration of the tender offer, the transfer
will take precedence over the tender.
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<PAGE> 9
Q. HOW CAN I TRANSFER A PORTION OF MY SHARES AND TENDER A PORTION OF MY SHARES?
A. You should complete and deliver the Direction Form to Bankers Trust for the
tender offer and call the Employee Service Center for transfers. All
percentages on the Direction Form and transfer instructions for the Legacy
Fund prior to and during the month in which the Offer expires should be
stated in terms of a percentage of the total number of shares credited to
your account immediately following the distribution of the Gartner Group
shares. For example, if you would like to tender 60% of your account balance
and transfer 50% of the remaining account balance (40% of the beginning
account balance), you must tender 60% on the Direction Form and transfer 20%
through the phone lines. Please see "Transfers, Loans and Withdrawals During
the Offer" in the Participant Letter attached for the treatment of
inadvertent tenders and transfers that total more than 100% of your account
balance.
Q. WHAT IF I HAVE QUESTIONS ABOUT THE OFFER?
A. Contact the Employee Service Center, at (800) 251-4937 for questions on the
terms and conditions of the tender offer and information on the procedure for
tendering shares in your individual account.
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<PAGE> 10
IMS HEALTH INCORPORATED SAVINGS PLAN
DIRECTION FORM
BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER
TO PURCHASE AND ALL OTHER ENCLOSED MATERIALS.
INSTRUCTIONS
Carefully complete the back page of this Direction Form. Then insert
today's date and sign and print your name in the spaces provided. If you wish to
tender any or all of the shares in your account in the Plan, place the completed
Direction Form in the enclosed envelope and mail it promptly. YOUR DIRECTION
FORM MUST BE RECEIVED BY BANKERS TRUST AT PO BOX 1997, NEW YORK, NY 10117-0024
NOT LATER THAN 5:00 P.M. NEW YORK CITY TIME, ON AUGUST 20, 1999, UNLESS THAT
DEADLINE IS EXTENDED AT THE SOLE DISCRETION OF BANKERS TRUST. NOT RETURNING A
PROPERLY COMPLETED ORIGINAL DIRECTION FORM BY THE DEADLINE WILL BE DEEMED A
DIRECTION TO NOT TENDER ANY SHARES IN YOUR ACCOUNT UNDER THE PLAN. Direction
Forms that are not fully or properly completed, dated and signed will be
ignored, and Bankers Trust will not tender the Shares credited to your
individual account under the Plan. The method of delivery of the Direction Form
is at the option and risk of the tendering participant. Certified mail with
return receipt request is recommended in all cases, sufficient time should be
allowed to assume delivery.
NEITHER BANKERS TRUST, IMS HEALTH, GARTNER GROUP, THE BOARD OF DIRECTORS OF
GARTNER GROUP OR IMS HEALTH NOR ANY OTHER PERSON MAKES RECOMMENDATION TO
PARTICIPANTS AS TO WHETHER TO DIRECT THE TENDER OF SHARES, OR THE PRICE AT WHICH
TO TENDER, OR WHETHER TO REFRAIN FROM DIRECTING THE TENDER OF SHARES. EACH
PARTICIPANT MUST MAKE HIS OR HER OWN DECISION ON THESE MATTERS. AS A NAMED
FIDUCIARY WITH RESPECT TO HIS OR HER ACCOUNT, EACH PARTICIPANT IS SOLELY
RESPONSIBLE FOR THE CONSEQUENCES OF HIS OR HER OWN DECISION REGARDING TENDER.
1
<PAGE> 11
(CHECK ONLY ONE BOX)
[ ] A. Please REFRAIN from tendering and continue to HOLD Gartner Group Class B
Common Stock credited to my individual account under the Plan.
[ ] B. Please TENDER Gartner Group Class B Common Stock reflecting the balance
currently credited to my individual account in the Plan in the percentage
indicated below for each of the prices provided. (The total of the
percentages may NOT exceed 100% but it may be less than or equal to 100%
(in whole percentages only) except Odd Lot Holders must equal 100%). A
blank space before a given price will be taken to mean that no Class B
Shares credited to my account are to be tendered at that price. If you
are an Odd Lot Holder and tendering all your shares, you should check the
Odd Lot box below. FILL IN THE TABLE BELOW IF YOU HAVE CHECKED BOX 2.
PERCENTAGE OF SHARES DIRECTED TO BE TENDERED: The total of all percentages
(in whole percentages only) must be less than or equal to 100% (equal to 100% in
the case of an Odd Lot participant). If the total is less than 100%, you will be
deemed to have directed Bankers Trust NOT to tender the remaining percentage.
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------% at $21.00 ------% at $21.675 ------% at $22.25 ------% at $22.875 ------% at $23.50
- ------% at $21.125 ------% at $21.75 ------% at $22.375 ------% at $23.00 ------% at $23.625
- ------% at $21.25 ------% at $21.875 ------% at $22.50 ------% at $23.125 ------% at $23.75
- ------% at $21.375 ------% at $22.00 ------% at $22.625 ------% at $23.25 ------% at $23.875
- ------% at $21.50 ------% at $22.125 ------% at $22.75 ------% at $23.375 ------% at $24.00
- ------% at the Class B Purchase Price ultimately determined through the Dutch Auction process under the
terms of the Offer. This price will not be known until after August 24, 1999.
</TABLE>
ODD LOT
[ ] By checking this box the undersigned represents that the undersigned owned
beneficially or of record as of the close of business on July 27, 1999 and
continues to own beneficially or of record as of the Deadline, an aggregate
of fewer than 100 shares of Class B Common Stock in total (including the
Plan, the employee stock purchase plan or otherwise) and is tendering all
of such shares of Class B Common Stock. PLEASE MAKE SURE THAT THE TOTAL OF
THE PERCENTAGES ABOVE DOES NOT EXCEED 100%.
WITHDRAW/CHANGE
[ ] Please check here if this Direction Form constitutes a Change or Withdrawal
of a previously submitted Direction Form.
The undersigned hereby directs Bankers Trust, as Trustee of the IMS Health
Incorporated Savings Plan (the "Plan"), to tender to Gartner Group, Inc.
("Gartner Group"), in accordance with the Offer to Purchase dated July 27, 1999,
a copy of which I have received and read, the indicated percentage of shares of
Gartner Group's Class B Common Stock, credited to my individual account in the
Plan, or to hold such shares of Class B Common Stock, in either case as provided
on this form.
Date: , 1999
--------------------------------------
Your signature
--------------------------------------
Type or print your name
2
<PAGE> 1
EXHIBIT (a)(9)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension The legal entity
trust (Do not furnish the
identification
number of the
personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account The partnership
13. Association, club or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
1
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
OF SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
including the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441
of the Code.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount renewed is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
- Payments of interest not generally subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
2
<PAGE> 3
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to non-resident
aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If
you fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
3
<PAGE> 1
EXHIBIT (a)(10)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated July 27,
1999 and the related Letter of Transmittal, and any amendments or supplements
thereto, which are being mailed to all holders of Shares. The Company is not
aware of any jurisdiction where the making of the Offer is not in compliance
with applicable law. If the Company becomes aware of any jurisdiction where the
making of the Offer or the acceptance of Shares pursuant thereto is not in
compliance with applicable law, the Company will make a good faith effort to
comply with the applicable law. If, after such good faith effort, the Company
cannot comply with the applicable law, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Company by Credit Suisse First Boston
Corporation ("Credit Suisse First Boston" or the "Dealer Manager"), or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
GARTNER GROUP, INC.
UP TO 15,700,000 SHARES OF COMMON STOCK,
CONSISTING OF
UP TO 9,600,000 SHARES OF CLASS A COMMON STOCK AND UP TO
6,100,000 SHARES OF CLASS B COMMON STOCK, EACH AT A
PURCHASE PRICE NOT MORE THAN $24.00 NOR LESS
THAN $21.00 PER SHARE IN CASH
Gartner Group, Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender up to 15,700,000 shares of Common Stock, par value
$0.0005 per share, consisting of up to 9,600,000 shares of Common Stock, Class A
("Class A Common Stock") and up to 6,100,000 shares of Common Stock, Class B
("Class B Common Stock"; together with the Class A Common Stock, the "Shares"),
to the Company at prices not more than $24.00 nor less than $21.00 per share,
net to the seller in cash, without interest thereon, as specified by
stockholders tendering Shares, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated July 27, 1999 and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, AUGUST 24, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH
IN THE OFFER TO PURCHASE.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NONE
OF THE COMPANY, ITS BOARD OF DIRECTORS NOR THE DEALER MANAGER MAKES ANY
RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
SHARES. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SUCH
STOCKHOLDER'S SHARES AND, IF SO, HOW MANY SHARES OF EACH CLASS TO TENDER AND THE
PRICE OR PRICES AT WHICH SUCH SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN
ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY
SHARES PURSUANT TO THE OFFER.
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single price per share of Class A Common Stock and the
single price per share of Class B Common Stock, neither more than $24.00 nor
less than $21.00 per share, net to the seller in cash, without interest thereon
(the "Class A
<PAGE> 2
Purchase Price" or "Class B Purchase Price," respectively), that it will pay for
Shares properly tendered pursuant to the Offer, taking into account the number
of shares of each class so tendered and the prices specified by tendering
stockholders. The Company will separately determine the lowest purchase price
for Class A Common Stock that will allow it to buy 9,600,000 shares of Class A
Common Stock and the lowest price for Class B Common Stock that will allow it to
buy 6,100,000 shares of Class B Common Stock (or in each case such lesser number
of shares of such class as are properly tendered); provided, that the Class A
Common Stock and Class B Common Stock shall only be repurchased in the same
proportion as the ratio of the numbers of shares of Class A Common Stock and
Class B Common Stock outstanding as of July 26, 1999. At such date, 63,992,550
shares of Class A Common Stock were outstanding, representing 61.1% of the
outstanding Common Stock, and 40,689,648 shares of Class B Common Stock were
outstanding, representing 38.9% of the outstanding Common Stock. If stockholders
do not properly tender shares in these proportions, then the Company will only
purchase the largest number of properly tendered shares of each class that will
enable it to maintain these proportions, and the Purchase Price for each class
will be determined upon the basis of the number of shares of each class so
purchased. The Class A Purchase Price and Class B Purchase Price need not be
identical.
Subject to the foregoing, all Shares properly tendered prior to the
Expiration Date (as defined below) at prices at or below the respective class
Purchase Price and not properly withdrawn will be purchased at the respective
class Purchase Price, upon the terms and subject to the conditions of the Offer,
including the proportionality and proration provisions. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES, REGARDLESS OF ANY
DELAY IN MAKING SUCH PAYMENT. All Shares acquired in the Offer will be acquired
at the respective class Purchase Price. The term "Expiration Date" means 12:00
Midnight, New York City time, on Tuesday, August 24, 1999, unless and until the
Company, in its sole discretion, shall have extended the period of time during
which the Offer will remain open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. The Company reserves the right, in its sole
discretion, to purchase more than 15,700,000 shares of Common Stock pursuant to
the Offer.
For purposes of the Offer, the Company will be deemed to have accepted for
payment (and therefore purchased) Shares properly tendered at or below the
respective class Purchase Price and not properly withdrawn (subject to the
proportionality and proration provisions of the Offer) only when, as and if the
Company gives oral or written notice to EquiServe L.P. (the "Depositary") of its
acceptance of such Shares for payment pursuant to the Offer. Payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of certificates for such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase)), a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) and any other documents required by the
Letter of Transmittal.
Upon the terms and subject to the conditions of the Offer, if more than
9,600,000 shares of Class A Common Stock or more than 6,100,000 shares of Class
B Common Stock (or such greater number of shares of either such class as the
Company may elect to purchase) have been properly tendered at prices at or below
the respective class Purchase Price and not properly withdrawn prior to the
Expiration Date, the Company will purchase properly tendered shares of each such
class on the following basis: (a) first, the Company will purchase all shares of
such class properly tendered and not properly withdrawn prior to the Expiration
Date by any Odd Lot Holder (as defined in the Offer to Purchase) who: (1)
tenders all shares of such class owned beneficially or of record by such Odd Lot
Holder at a price at or below the respective class Purchase Price (partial
tenders will not qualify for this preference); and (2) completes the section
entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in the
Notice of Guaranteed Delivery; and (b) second, after the purchase of all of the
foregoing shares, the Company will purchase all other shares of such class
properly tendered at prices at or below the respective class Purchase Price and
not properly withdrawn prior to the Expiration Date, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional shares of either such
class).
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 6 of the Offer to Purchase shall have
<PAGE> 3
occurred or shall be deemed by the Company to have occurred, to extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and payment for, any Shares by giving oral or written notice of such
extension to the Depositary and making a public announcement thereof. During any
such extension, all Shares previously tendered and not properly withdrawn will
remain subject to the Offer and to the rights of a tendering stockholder to
withdraw such stockholder's Shares.
Tenders of Shares pursuant to the Offer are irrevocable except that such
Shares may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by the Company pursuant to the Offer, may also
be withdrawn at any time after 12:00 Midnight, New York City time, on Tuesday,
September 21, 1999. For such withdrawal to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received by
the Depositary at its address set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the tendering
stockholder, the class of Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares. If the
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the serial numbers shown on such certificates must be submitted to the
Depositary and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution (as defined in the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer set forth
in the Offer to Purchase, any notice of withdrawal also must specify the name
and the number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares and must otherwise comply with such Book-Entry
Transfer Facility's procedures. All questions as to the form and validity
(including the time of receipt) of any notice of withdrawal will be determined
by the Company, in its sole discretion, whose determination will be final and
binding. None of the Company, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any tender or notice of withdrawal or incur any
liability for failure to give any such notification.
The information required to be disclosed by Rule 13e-4(d)(1) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal are being
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase is being made pursuant to an agreement between the
Company and IMS Health Incorporated entered into on June 17, 1999 and providing
for the disposition by IMS Health of a significant portion of its equity
interest in the Company.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION WITH
RESPECT TO THE OFFER IS MADE.
Questions and requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal, and other Offer materials, may
be directed to the Dealer Manager or the Information Agent as set forth below,
and copies will be furnished promptly at the Company's expense. No fees or
commissions will be paid to brokers, dealers or other persons (other than the
Dealer Manager and the Information Agent) for soliciting tenders of Shares
pursuant to the Offer.
<PAGE> 4
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 PARK AVENUE, 5TH FLOOR
NEW YORK, NEW YORK 10022
BANKS AND BROKERAGE FIRMS CALL: (800) 662-5200 (TOLL FREE)
STOCKHOLDERS PLEASE CALL: (800) 566-9061 (TOLL FREE)
THE DEALER MANAGER FOR THE OFFER IS:
[CREDIT SUISSE FIRST BOSTON LOGO]
ELEVEN MADISON AVENUE
NEW YORK, NEW YORK 10010-3629
(800) 881-8320 (TOLL FREE)
July 27, 1999
<PAGE> 1
EXHIBIT A.11
[GARTNER GROUP LOGO]
FOR RELEASE 6:30 A.M. EDT Jennifer L. Schlueter
Gartner Group, Inc.
203.316.6537
GARTNER GROUP, INC. TO COMMENCE TENDER OFFER
FOR UP TO 15,700,000 SHARES OF ITS COMMON STOCK
STAMFORD, Conn. - July 26, 1999 - Gartner Group, Inc. (NYSE: IT), the world's
leading authority on information technology (IT), announced today that it will
commence a "Dutch Auction" issuer tender offer to purchase for cash up to
15,700,000 shares of its outstanding Common Stock at prices not less than $21.00
and not more than $24.00 per share. The tender offer is expected to commence
Tuesday, July 27, 1999, and to expire, unless extended, at 12:00 midnight, New
York City time, on Tuesday, August 24, 1999.
Terms of the tender offer, which are described more fully in the Offer to
Purchase and the Letter of Transmittal, invite the Company's stockholders to
tender 15,700,000 shares of its Common Stock, par value $0.0005 per share. The
Company will offer to repurchase shares of Class A Common Stock and Class B
Common Stock in the same proportion as the number of shares of each class
outstanding, or 9,600,000 shares of Class A Common Stock (61 percent) and
6,100,000 shares of Class B Common Stock (39 percent). The shares of each class
of Common Stock shall be purchased at a price not less than $21.00 and not more
than $24.00 per share, as specified by the tendering stockholders.
The Company will determine the lowest single price per share net to the seller
in cash, without interest, that will allow it to purchase 9,600,000 shares of
Class A Common Stock (or such lesser number of shares as are validly tendered
and not withdrawn). Similarly, the Company will determine the lowest single
price per share net to the seller in cash, without interest, that will allow it
to purchase 6,100,000 shares of Class B Common Stock (or such lesser number of
shares as are validly tendered and not withdrawn). Such lowest single per share
price for each class will be the purchase price the Company will pay for all
shares of such class validly tendered at prices at or below such purchase price.
The purchase price of the Class A Common Stock and Class B Common Stock need not
be identical. If more than the sought number of shares of a class are tendered,
there will be a proration among tendered shares of such class.
Notwithstanding the foregoing, the Company will only repurchase shares of Class
A Common Stock and Class B Common Stock in the same proportion as the ratio of
the number of shares of each class sought pursuant to the Offer to Purchase. If
stockholders do not tender shares in these proportions, then the Company will
only purchase the largest number of properly tendered shares of each class that
will enable it to maintain these proportions, and the purchase price for each
class will be determined upon the basis of the number of shares of such class so
purchased. Shares tendered at prices in excess of the purchase price and shares
not purchased because of the proration and proportionality limitations will be
returned at the Company's expense. The Company reserves the right, in its sole
discretion, to purchase more than 15,700,000 shares pursuant to the offer.
The Offer to Purchase, the Letter of Transmittal and related documents will be
mailed to stockholders of record of the Company's common stock and will be made
available for distribution to beneficial owners of such common stock on
approximately July 28, 1999.
On July 23, 1999, the closing price of the Company's Class A Common Stock was
$22.000 and the Company's Class B Common Stock (trading "when issued") was
$21.625.
<PAGE> 2
page 2
[GARTNER GROUP LOGO]
Neither the Company, its Board of Directors nor its advisors makes any
recommendation to the stockholders as to whether to tender or refrain from
tendering their shares.
Credit Suisse First Boston Corporation will serve as the dealer manager for the
tender offer and Morrow & Co., Inc. will serve as information agent. Any
questions or requests for additional copies of the Offer to Purchase, the
Letters of Transmittal or the Notice of Guaranteed Delivery related to the offer
may be directed to the information agent at (800) 662-5200 for banks and
brokerage firms and (800) 566-9061 for stockholders. Stockholders may also
contact their broker, dealer, commercial bank or trust company for assistance
concerning the offer.
As the world's leading authority on IT, GartnerGroup provides clients with a
wide range of products and services in the areas of IT advisory services,
measurement, research, decision support, analysis and consulting. Founded in
1979, with headquarters in Stamford, Conn., GartnerGroup is at the center of a
global community serving Fortune 1000 companies from 80 locations worldwide.
GartnerGroup's unique capabilities and resources help bring clarity to the
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# # #
<PAGE> 1
EXHIBIT b
CONFORMED COPY
================================================================================
CREDIT AGREEMENT
dated as of
July 16, 1999
Among
GARTNER GROUP, INC.
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
---------------------------
CHASE SECURITIES INC. and
CREDIT SUISSE FIRST BOSTON,
as Co-arrangers
CREDIT SUISSE FIRST BOSTON,
as Syndication Agent
FLEET NATIONAL BANK,
as Documentation Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I
Definitions
SECTION 1.01. Defined Terms......................................................... 1
SECTION 1.02. Classification of Loans and Borrowings................................ 22
SECTION 1.03. Terms Generally ...................................................... 22
SECTION 1.04. Accounting Terms; GAAP................................................ 23
ARTICLE II
The Credits
SECTION 2.01. Commitments........................................................... 24
SECTION 2.02. Loans and Borrowings.................................................. 24
SECTION 2.03. Requests for Borrowings............................................... 25
SECTION 2.04. Funding of Borrowings................................................. 26
SECTION 2.05. Interest Elections.................................................... 26
SECTION 2.06. Termination and Reduction of Commitments............................. 28
SECTION 2.07. Repayment of Loans; Evidence of Debt.................................. 29
SECTION 2.08. Amortization of Term Loans............................................ 30
SECTION 2.09. Prepayment of Loans................................................... 31
SECTION 2.10. Fees.................................................................. 33
SECTION 2.11. Interest.............................................................. 33
SECTION 2.12. Alternate Rate of Interest............................................ 34
SECTION 2.13. Increased Costs....................................................... 35
SECTION 2.14. Break Funding Payments................................................ 36
SECTION 2.15. Taxes................................................................. 37
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Setoffs............ 38
SECTION 2.17. Mitigation Obligations; Replacement of Lenders........................ 40
</TABLE>
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ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers.................................................. 41
SECTION 3.02. Authorization; Enforceability......................................... 42
SECTION 3.03. Governmental Approvals; No Conflicts.................................. 42
SECTION 3.04. Financial Condition; No Material Adverse Change......................
42
SECTION 3.05. Properties............................................................ 43
SECTION 3.06. Litigation and Environmental Matters.................................. 44
SECTION 3.07. Compliance with Laws and Agreements................................... 44
SECTION 3.08. Investment and Holding Company Status................................. 44
SECTION 3.09. Taxes................................................................. 45
SECTION 3.10. ERISA................................................................. 45
SECTION 3.11. Disclosure............................................................ 45
SECTION 3.12. Subsidiaries.......................................................... 45
SECTION 3.13. Insurance............................................................. 45
SECTION 3.14. Year 2000............................................................. 46
ARTICLE IV
Conditions
SECTION 4.01. Effective Date........................................................ 46
SECTION 4.02. Each Credit Event..................................................... 48
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information............................ 49
SECTION 5.02. Notices of Material Events............................................ 50
SECTION 5.03. Existence; Conduct of Business........................................ 51
SECTION 5.04. Payment of Obligations................................................ 51
SECTION 5.05. Maintenance of Properties............................................. 51
SECTION 5.06. Insurance............................................................. 51
SECTION 5.07. Books and Records; Inspection and Audit Rights........................ 51
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SECTION 5.08. Compliance with Laws.................................................. 52
SECTION 5.09. Use of Proceeds ...................................................... 52
SECTION 5.10. Additional Subsidiaries; Significant Subsidiaries..................... 52
SECTION 5.11. Federal Reserve Regulations........................................... 53
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness.......................................................... 53
SECTION 6.02. Liens................................................................. 54
SECTION 6.03. Fundamental Changes................................................... 55
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions............ 56
SECTION 6.05 Asset Sales........................................................... 58
SECTION 6.06. Sale and Leaseback Transactions....................................... 58
SECTION 6.07. Hedging Agreements.................................................... 59
SECTION 6.08. Restricted Payments................................................... 59
SECTION 6.09. Transactions with Affiliates.......................................... 59
SECTION 6.10. Restrictive Agreements................................................ 60
SECTION 6.11. Amendment of Material Documents....................................... 60
SECTION 6.12. Interest Expense Coverage Ratio....................................... 60
SECTION 6.13. Total Balance Sheet Indebtedness to EBITDA............................ 61
SECTION 6.14. Annualized Contract Value to Total Balance Sheet Indebtedness......... 61
SECTION 6.15. Minimum Annualized Contract Value..................................... 61
SECTION 6.16. Certain Indemnity Obligations......................................... 61
ARTICLE VII
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Events of Default................................................... 61
ARTICLE VIII
The Administrative Agent............................................ 65
ARTICLE IX
Miscellaneous
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices............................................................... 67
SECTION 9.02. Waivers; Amendments................................................... 68
SECTION 9.03. Expenses; Indemnity; Damage Waiver.................................... 70
SECTION 9.04. Successors and Assigns................................................ 71
SECTION 9.05. Survival.............................................................. 75
SECTION 9.06. Counterparts; Integration; Effectiveness............................. 76
SECTION 9.07. Severability.......................................................... 76
SECTION 9.08. Right of Setoff....................................................... 76
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process............ 77
SECTION 9.10. WAIVER OF JURY TRIAL.................................................. 78
SECTION 9.11. Headings.............................................................. 78
SECTION 9.12. Confidentiality....................................................... 78
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SECTION 9.13. Interest Rate Limitation.............................................. 79
</TABLE>
SCHEDULES:
Schedule 2.01 -- Commitments
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Guarantee Agreement
Exhibit D -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E -- Form of Pledge Agreement
<PAGE> 7
CREDIT AGREEMENT dated as of July 16, 1999,
among GARTNER GROUP, INC., a Delaware corporation
(the "Borrower"), the LENDERS party hereto (the
"Lenders"), and THE CHASE MANHATTAN BANK, a New York
banking corporation, as Administrative Agent (the
"Administrative Agent").
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16th of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
<PAGE> 8
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Annualized Contract Value" means, for any date, the
annualized value of all advisory and measurement contracts of the Borrower and
its Subsidiaries in effect on such date, without regard to the duration of such
contracts, as calculated in the manner used to calculate "Contract Value" in the
Borrower's most recent annual report on Form 10-K filed with the Securities and
Exchange Commission; provided that any material changes to the method of
calculating "Annualized Contract Value" hereunder from the method used in
calculating "Contract Value" in the Borrower's annual report on Form 10-K for
the fiscal year ended September 30, 1998 shall require the consent of the
Required Lenders.
"Applicable Percentage" means, with respect to any Revolving
Lender, the percentage of the total Revolving Commitments represented by such
Lender's Revolving Commitment. If the Revolving Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day with respect to any Loan,
or with respect to the commitment fees payable hereunder, as the case may be,
the applicable rate per annum set forth below under the caption "ABR Spread",
"Eurodollar Spread" or "Commitment Fee Rate", as the case may be, based upon the
Leverage Ratio as of the most recent determination date; provided that until the
Borrower has delivered financial statements pursuant to Section 5.01(a) or (b)
covering the first two fiscal quarters that end after the date hereof, the
"Applicable Rate" shall be the applicable rate per annum set forth below in
Category 2:
<PAGE> 9
3
<TABLE>
<CAPTION>
ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------- ------ ------ ----
<S> <C> <C> <C>
Category 1
$2.25x 0.50% 1.75% 0.35%
Category 2
$1.75x but 0.25% 1.50% 0.30%
<2.25x
Category 3
$1.25x but 0% 1.25% 0.30%
<1.75x
Category 4
$1.00x but 0% 1.00% 0.30%
<1.25x
Category 5
<1.00x 0% 0.75% 0.25%
</TABLE>
For purposes of the foregoing, (a) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (b) each change in the Applicable Rate resulting
from a change in the Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change; provided
that the Leverage Ratio shall be deemed to be in Category 1 at the option of the
Administrative Agent or at the request of the Required Lenders (i) at any time
that an Event of Default has occurred and is continuing or (ii) if the Borrower
fails to deliver the consolidated financial statements required to be delivered
by it pursuant to Section 5.01(a) or (b), during the period from the expiration
of the time for delivery thereof until such consolidated financial statements
are delivered.
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices
<PAGE> 10
4
of such member in the United States; provided that if, as a result of any change
in any law, rule or regulation, it is no longer possible to determine the
Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate
as shall be determined by the Administrative Agent to be representative of the
cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Attributable Debt" means, on any date, in respect of any
lease of the Borrower or any Subsidiary entered into as part of a sale and
leaseback transaction subject to Section 6.06, (i) if such lease is a Capital
Lease Obligation, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and (ii)
if such lease is not a Capital Lease Obligation, the capitalized amount of the
remaining lease payments under such lease that would appear on a balance sheet
of such Person prepared as of such date in accordance with GAAP if such lease
were accounted for as a Capital Lease Obligation.
"Base CD Rate" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means Gartner Group, Inc., a Delaware corporation.
"Borrowing" means Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect.
<PAGE> 11
5
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of Rule 13d-5 under the Securities Exchange Act of 1934 as
in effect on the date hereof), other than, prior to the Recapitalization, IMS,
of shares representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding Common Stock; or (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding
<PAGE> 12
6
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans or Term Loans and, when used in reference to any Commitment,
refers to whether such Commitment is a Revolving Commitment or Term Commitment.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Commitment" means a Revolving Commitment or Term Commitment,
or any combination thereof (as the context requires).
"Common Stock" means common stock of the Borrower.
"Consolidated Cash Interest Expense" means, for any period,
(a) the sum of (i) the interest expense (including imputed interest expense in
respect of Capital Lease Obligations) of the Borrower and the Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP, (ii)
any interest accrued during such period in respect of Indebtedness of the
Borrower or any Subsidiary that is required to be capitalized rather than
included in consolidated interest expense for such period in accordance with
GAAP, plus (iii) any cash payments made during such period in respect of
obligations referred to in clause (b)(ii) below that were amortized or accrued
in a previous period, minus (b) the sum of (i) to the extent included in such
consolidated interest expense for such period, noncash amounts attributable to
amortization of financing costs paid in a previous period, plus (ii) to the
extent included in such consolidated interest expense for such period, noncash
amounts attributable to amortization of debt discounts or accrued interest
payable in kind for such period.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period plus (a) without
<PAGE> 13
7
duplication and to the extent deducted in determining such Consolidated Net
Income, the sum of (i) consolidated interest expense for such period, (ii)
consolidated income tax expense for such period, (iii) all amounts attributable
to depreciation and amortization for such period, (iv) any extraordinary noncash
charges for such period and (v) any noncash nonrecurring charges for such
period, and minus (b) without duplication and to the extent included in
determining such Consolidated Net Income, any extraordinary gains and
nonrecurring gains for such period, all determined on a consolidated basis in
accordance with GAAP.
"Consolidated Funded Debt" means, at any time, the sum,
without duplication of (i) the long-term obligations of the Borrower and its
Subsidiaries (excluding current maturities) plus (ii) all Indebtedness of the
Borrower and its Subsidiaries which matures one year or less from the date of
determination but is extendable or renewable at the sole option of the Borrower
or any Subsidiary in such a manner that it may become payable more than one year
from the date of determination, in each case on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, for any period, the net
income or loss of the Borrower and the Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income of SIV at any time when SIV is not a wholly-owned
Subsidiary, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of the Subsidiaries by SIV
during such period, and (b) the income or loss of any Person accrued prior to
the date it becomes a Subsidiary or is merged into or consolidated with the
Borrower or any Subsidiary or the date that such Person's assets are acquired by
the Borrower or any Subsidiary.
"Consolidated Net Tangible Assets" means, at any time, the
aggregate amount of assets (less applicable accumulated depreciation, depletion
and amortization and other reserves and other properly deductible items) of the
Borrower and its Subsidiaries, minus (a) all current
<PAGE> 14
8
liabilities of the Borrower and its Subsidiaries (excluding (i) liabilities that
by their terms are extendable or renewable at the option of the obligor to a
date more than 12 months after the date of determination and (ii) current
maturities of long-term debt) and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other intangible assets of
the Borrower and its Subsidiaries, all as set forth in the most recent
consolidated balance sheet of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any act, event or condition which constitutes
an Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings
and the environmental matters disclosed in Schedule 3.06 to the Disclosure
Letter.
"Disclosure Letter" means the letter dated the date hereof
delivered by the Borrower to the Administrative Agent and designated as the
"Disclosure Letter".
"Distribution Agreement" means the Distribution Agreement
dated as of June 17, 1999, between the Borrower and IMS, as the same may be
amended from time to time in accordance with the terms hereof.
"Dividend" means a one-time dividend in the approximate
aggregate amount of $125 million to be paid by the Borrower to the holders of
Common Stock as part of the Recapitalization.
<PAGE> 15
9
"dollars" or "$" refers to lawful money of the United States
of America.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or health and safety matters, as now or hereafter in effect.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of
<PAGE> 16
10
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes
<PAGE> 17
11
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located; (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above; and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any withholding tax that (i) is in effect and would apply to
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.15(a), or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.15(e).
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100th of 1%) of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100th of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer, assistant treasurer, controller or
assistant controller of the Borrower.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this
<PAGE> 18
12
definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
<PAGE> 19
13
"Guarantee Agreement" means the Guarantee Agreement,
substantially in the form of Exhibit C, among the Subsidiary Loan Parties and
the Administrative Agent, for the benefit of the Lenders.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"IFSC" means the wholly-owned Subsidiary to be formed under
the laws of Ireland and used in connection with the Borrower's corporate
treasury functions, including intra-group factoring and lending, cash pooling
and netting and liquidity management.
"IMS" means IMS Health Incorporated, a Delaware corporation.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding accounts
payable incurred in the ordinary course of business and not more than 60 days
past due), (f) all Indebtedness of others
<PAGE> 20
14
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party or applicant in respect of letters
of credit and letters of guaranty and (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor; provided, that,
for the avoidance of doubt, the Share Forward Purchase Agreements shall not
constitute Indebtedness.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent, for the benefit of the Lenders.
"Information Memorandum" means the Confidential Information
Memorandum dated June, 1999 relating to the Borrower and the Transactions.
"Insignificant Subsidiary" means any Subsidiary that is not a
Significant Subsidiary.
"Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing or Term Borrowing in accordance with
Section 2.05.
<PAGE> 21
15
"Interest Payment Date" means (a) with respect to any ABR
Loan, the last day of each March, June, September and December and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Leverage Ratio" means, on any date, the ratio of (a) Total
Balance Sheet Indebtedness as of such date to (b) Consolidated EBITDA for the
period of four consecutive fiscal quarters of the Borrower ended on such date
(or, if
<PAGE> 22
16
such date is not the last day of a fiscal quarter, ended on the last day
of the fiscal quarter of the Borrower most recently ended prior to such date).
"LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5 million and for a maturity comparable to
such Interest Period are offered by the principal London office of the entity
serving as Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Indemnity,
Subrogation and Contribution Agreement, the
<PAGE> 23
17
Pledge Agreement and the Guarantee Agreement (including any supplements
thereto).
"Loan Parties" means the Borrower and the Subsidiary Loan
Parties.
"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"Margin Stock" means "Margin Stock" (as defined in Regulation
U of the Board).
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects, financial condition or
contractual arrangements of the Borrower and the Subsidiaries taken as a whole,
(b) the ability of any Loan Party to perform any of its obligations under any
Loan Document or (c) the rights of or benefits available to the Lenders under
any Loan Document.
"Material Indebtedness" means Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of any one
or more of the Borrower and the Subsidiaries in an aggregate principal amount
exceeding $30 million. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of the Borrower or any Subsidiary in
respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event, (a) the cash
proceeds received in respect of such event including any cash received in
respect of any noncash proceeds, but only as and when received, net of (b) all
reasonable fees and out-of-pocket expenses paid by the
<PAGE> 24
18
Borrower and the Subsidiaries to third parties (other than Affiliates, to the
extent such fees and expenses are greater than those that would have been
obtained on an arms'-length basis) in connection with such event.
"Other Taxes" means any and all present or future recording,
stamp, documentary, excise, transfer, sales, property or similar taxes, charges
or levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Permitted Acquisitions" means any acquisition of any assets
or capital stock of another Person; provided that the Borrower's ratio of Total
Balance Sheet Indebtedness to Consolidated EBITDA is lower than 2.25 to 1.00
after giving effect to such acquisition on a pro forma basis as if such
acquisition occurred immediately prior to the first day of the period of four
consecutive fiscal quarters most recently ended prior to such acquisition.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 60 days or are being contested in compliance with
Section 5.04;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
<PAGE> 25
19
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
<PAGE> 26
20
(i) any commercial bank organized under the laws of the United States
of America or any State thereof which has a combined capital and
surplus and undivided profits of not less than $500 million or (ii) any
other commercial bank that has a rating of at least AA by S&P or Aa by
Moody's (or an equivalent rating by Fitch IBCA if neither S&P nor
Moody's provides such a rating);
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria
described in clause (c) above;
(e) direct obligations of, or obligations the principal and
interest of which are unconditionally guaranteed by, any State of the
United States or any foreign state having, at the date of its
acquisition by the Borrower or a Subsidiary, a rating of at least AA by
S&P or Aa by Moody's, in each case maturing within one year from the
date of the acquisition;
(f) money market funds organized under the laws of the United
States or any State thereof that invest solely in the foregoing
investments; and
(g) municipal and corporate auction rate preferred stock with
reset periods of no longer than 49 days.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
<PAGE> 27
21
"Pledge Agreement" means the pledge agreement dated the date
hereof between the Borrower and the Administrative Agent for the benefit of the
Lenders, substantially in the form of Exhibit E.
"Prepayment Event" means the incurrence by the Borrower or any
Subsidiary Loan Party of any Indebtedness, other than Indebtedness permitted by
clauses (a) through (h) of Section 6.01.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Recapitalization" means the planned recapitalization pursuant
to which (a) the Borrower will pay the Dividend, (b) the Common Stock will be
reclassified into Class A Common Stock and Class B Common Stock, (c) IMS will
exchange all but approximately 7,000,000 shares of Common Stock held by it for
an equal number of newly issued shares of Class B Common Stock and will
distribute such shares to its stockholders in a tax-free distribution, (d)
promptly after such reclassification, the Borrower will repurchase approximately
15% of its outstanding shares of Common Stock pursuant to the Tender Offer and
(e) thereafter, the Borrower will effect open market repurchases of
approximately 5% of its shares of Common Stock outstanding as of the date
hereof.
"Recapitalization Documents" means the Distribution Agreement
and the Agreement and Plan of Merger dated June 17, 1999 and any other documents
entered into by the Borrower or any Subsidiary in connection with the
Recapitalization.
"Register" has the meaning set forth in Section 9.04.
<PAGE> 28
22
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having
Revolving Exposures, Term Loans and unused Commitments representing more than
50% of the sum of the total Revolving Exposures, outstanding Term Loans and
unused Commitments at such time.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancelation or
termination of any Equity Interests in the Borrower or any Subsidiary or any
option, warrant or other right to acquire any such Equity Interests in the
Borrower or any Subsidiary.
"Revolving Availability Period" means the period from and
including the Effective Date to but excluding the earlier of the Revolving
Maturity Date and the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans hereunder during the
Revolving Availability Period, expressed as an amount representing the maximum
aggregate amount of such Lender's Revolving Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.06 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Revolving
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Revolving Commitment, as
applicable. The initial aggregate amount of the Lenders' Revolving Commitments
is $150 million.
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23
"Revolving Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans at such time.
"Revolving Lender" means a Lender with a Revolving Commitment
or, if the Revolving Commitments have terminated or expired, a Lender with
Revolving Exposure.
"Revolving Loan" means a Loan made pursuant to clause (b) of
Section 2.01.
"Revolving Maturity Date" means July 16, 2004.
"Sale-Leaseback Transaction" means any arrangement whereby the
Borrower or a Subsidiary shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property sold or
transferred.
"Share Forward Purchase Agreements" means those certain letter
agreements entered into on May 8, 1997, between the Borrower and Deutsche Morgan
Grenfell, in respect of the Borrower's Common Stock.
"Significant Subsidiary" means (a) any Subsidiary that is
identified as significant on Schedule 3.12 to the Disclosure Letter so long as
it has not been designated as insignificant by the Borrower in accordance with
Section 5.10 and (b) such other Subsidiaries as the Borrower may designate as
significant to the Administrative Agent in accordance with Section 5.10;
provided that at all times (i) the book value of the total assets of the
Borrower and all Significant Subsidiaries shall exceed 90% of the book value of
all assets of the Borrower and its Subsidiaries and (ii) the total revenue of
the Borrower and all Significant Subsidiaries shall exceed 90% of the total
revenue of the Borrower and its Subsidiaries, in each case for the fiscal year
most recently ended.
<PAGE> 30
24
"SIV" means SI Venture Fund L.L.C. (which is expected to
change its name to SI Venture Associates L.L.C.), a limited liability company
formed under the laws of Delaware.
"S&P" means Standard & Poor's Ratings Services.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the entity serving as
Administrative Agent is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as
<PAGE> 31
25
of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Subsidiary Loan Party" means (a) any Significant Subsidiary
that is not a Foreign Subsidiary and (b) any Subsidiary (other than a Foreign
Subsidiary) that directly or indirectly owns any capital stock of any Subsidiary
Loan Party; provided, that "Subsidiary Loan Party" shall not include SIV.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Tender Offer" means a tender offer pursuant to which the
Borrower will repurchase up to 15% (plus or minus 2%) of the shares of Common
Stock outstanding as of the date hereof.
"Term Availability Period" means the period from and including
the Effective Date to but excluding the earlier of the Term Commitment
Termination Date and the date of termination of the Term Commitments.
"Term Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Term Loan hereunder during the Term
Availability Period, expressed as an amount representing the maximum principal
amount of Term Loans that may be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.06 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Term
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Term Commitment, as
applicable. The initial aggregate amount of the Lenders' Term Commitments is
$350 million.
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26
"Term Commitment Termination Date" means July 15, 2000.
"Term Lender" means a Lender with a Term Commitment or an
outstanding Term Loan.
"Term Loan" means a Loan made pursuant to clause (a) of
Section 2.01.
"Term Maturity Date" means July 16, 2004.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Total Balance Sheet Indebtedness" means, at any date, all
Indebtedness of the Borrower and its Subsidiaries on such date that would be
reflected as a liability on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared as of such date in accordance with GAAP.
"Transactions" means (a) the Recapitalization and (b) the
execution, delivery and performance by the Borrower and the Subsidiary Loan
Parties of the Loan Documents, the borrowing of Loans and the use of proceeds
thereof.
<PAGE> 33
27
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class
and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
<PAGE> 34
28
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(b) All pro forma computations required to be made hereunder
giving effect to any acquisition, investment, sale, disposition, merger or
similar event shall reflect on a pro forma basis such event and, to the extent
applicable, the historical earnings and cash flows associated with the assets
acquired or disposed of and any related incurrence or reduction of Indebtedness,
but shall not take into account any projected synergies or similar benefits
expected to be realized as a result of such event.
<PAGE> 35
29
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions
set forth herein, each Lender agrees (a) to make Term Loans to the Borrower
during the Term Availability Period in a principal amount not exceeding its Term
Commitment, and (b) to make Revolving Loans to the Borrower from time to time
during the Revolving Availability Period in an aggregate principal amount that
will not result in such Lender's Revolving Exposure exceeding such Lender's
Revolving Commitment. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans. Amounts repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be
made as part of a Borrowing consisting of Loans of the same Class and Type made
by the Lenders ratably in accordance with their respective Commitments of the
applicable Class. The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.12, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith. Each Lender at its option may make
any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1 million
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30
and not less than $5 million. At the time that each ABR Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of $1
million and not less than $5 million; provided that an ABR Borrowing may be in
an aggregate amount that is equal to the entire unused balance of the total
Commitments of the relevant Class. Borrowings of more than one Type and Class
may be outstanding at the same time; provided that there shall not at any time
be more than a total of 10 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date or the Term Maturity Date, as applicable.
SECTION 2.03. Requests for Borrowings. To request a Revolving
Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 9:00 a.m., New York City time, three Business Days before the date of
the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
10:00 a.m., New York City time, on the Business Day of the proposed Borrowing.
Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or facsimile transmission to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving
Borrowing or Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
<PAGE> 37
31
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.04.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon (or 3:00 p.m. in the case
of an ABR Loan), New York City time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
maintained with the Administrative Agent in New York City and designated by the
Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such
<PAGE> 38
32
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing as of the date of such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Revolving Borrowing
and Term Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Revolving Borrowing of the Type resulting from
<PAGE> 39
33
such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery or facsimile transmission to the Administrative Agent
of a written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
<PAGE> 40
34
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.06. Termination and Reduction of Commitments. (a)
Unless previously terminated, (i) the Term Commitments shall terminate at 5:00
p.m., New York City time, on the Term Commitment Termination Date and (ii) the
Revolving Commitments shall terminate on the Revolving Maturity Date.
(b) The Borrower may at any time terminate, or from time to
time reduce, the Revolving Commitments; provided that (i) each reduction of the
Revolving Commitments shall be in an amount that is an integral multiple of $1
million and not less than $5 million and (ii) the Borrower shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.09, the sum of
the Revolving Exposures would exceed the total Revolving Commitments.
(c) On the date six months after the date hereof, the Term
Commitments shall automatically and permanently reduce by the amount, if any,
necessary so that the remaining undrawn Term Commitments are no greater than
$100 million.
<PAGE> 41
35
(d) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section, at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments of
any Class shall be permanent. Each reduction of the Commitments of any Class
shall be made ratably among the Lenders in accordance with their respective
Commitments of such Class.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date and (ii) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Term Loan of such Lender as provided in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and
<PAGE> 42
36
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement or the
obligations of the Lenders to make Loans or give credit for repayments.
(e) Any Lender may request that Loans of any Class made by it
be evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
SECTION 2.08. Amortization of Term Loans. (a) Subject to
adjustment pursuant to paragraph (c) of this Section, the Borrower shall repay
Term Borrowings on each date set forth below in the percentage of the aggregate
principal amount outstanding at the end of the Term Availability Period set
forth opposite such date:
Date Amount
---- ------
January 16, 2001 12.5%
July 16, 2001 12.5%
<PAGE> 43
37
January 16, 2002 12.5%
July 16, 2002 12.5%
January 16, 2003 12.5%
July 16, 2003 12.5%
January 16, 2004 12.5%
July 16, 2004 12.5%
(b) To the extent not previously paid, all Term Loans shall be
due and payable on the Term Maturity Date.
(c) Any prepayment of a Term Borrowing shall be applied to
reduce the subsequent scheduled repayments of the Term Borrowings to be made
pursuant to this Section in the inverse order of maturity.
(d) Prior to any repayment of any Term Borrowings hereunder,
the Borrower shall select the Borrowing or Borrowings to be repaid and shall
notify the Administrative Agent by telephone (confirmed by facsimile
transmission) of such selection not later than 11:00 a.m., New York City time,
three Business Days before the scheduled date of such repayment, and the
Administrative Agent shall promptly notify the Lenders of such selection. Each
repayment of a Term Borrowing shall be applied ratably to the Loans included in
the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by
accrued interest on the amount repaid.
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have
the right at any time and from time to time to prepay any Borrowing in whole or
in part, subject to the requirements of this Section and Section 2.14.
(b) In the event and on such occasion that the sum of the
Revolving Exposures exceeds the total Revolving Commitments, the Borrower shall
prepay Revolving Borrowings in an aggregate amount equal to such excess.
<PAGE> 44
38
(c) In the event and on each occasion that any Net Proceeds
are received by or on behalf of the Borrower or any Subsidiary in respect of any
Prepayment Event, the Borrower shall, within three Business Days after Net
Proceeds in an aggregate cumulative amount (since the last payment under this
paragraph (c)) of at least $5,000,000 are received, prepay Term Borrowings in an
aggregate amount equal to: (a) 50% of such Net Proceeds, if, on a pro forma
basis after giving effect to such Prepayment Event and the prepayment pursuant
to this clause (c), the Borrower's Leverage Ratio as of the most recent fiscal
quarter for which financial statements have been delivered pursuant to Section
5.01 would have been less than 2.25 to 1.00, or (b) 100% of such Net Proceeds,
in all other cases.
(d) Prior to any optional or mandatory prepayment of
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (e) of this Section.
(e) The Borrower shall notify the Administrative Agent by
telephone (confirmed by facsimile transmission) of any prepayment hereunder (i)
in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of prepayment or (ii) in
the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York
City time, one Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date, the principal amount
of each Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment; provided that, if a notice of optional prepayment is given in
connection with a conditional notice of termination of the Revolving Commitments
as contemplated by Section 2.06, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.06(d).
Promptly following receipt of any such notice, the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would
<PAGE> 45
39
be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required amount
of a mandatory prepayment. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.11.
(f) In the event the amount of any prepayment required to be
made pursuant to Section 2.09(c) shall exceed the aggregate principal amount of
the applicable outstanding ABR Term Loans (the amount of any such excess being
called the "Excess Amount"), the Borrower shall have the right, in lieu of
making such prepayment in full, to prepay all the outstanding ABR Term Loans and
to deposit an amount equal to the Excess Amount with the Administrative Agent in
a cash collateral account maintained (pursuant to documentation satisfactory to
the Administrative Agent) by and in the sole dominion and control of the
Administrative Agent. Any amounts so deposited shall be held by the
Administrative Agent as collateral for the Borrower's obligations hereunder and
applied to the prepayment of the applicable Eurodollar Loans, in the order
instructed by the Borrower, at the end of the current Interest Periods
applicable thereto, during which Interest Periods interest shall continue to
accrue pursuant to Section 2.11. On any Business Day on which (x) collected
amounts remain on deposit in or to the credit of such cash collateral account
after giving effect to the payments made on such day pursuant to Section 2.09(c)
and (y) the Borrower shall have delivered to the Administrative Agent a written
request or a telephonic request (which shall be promptly confirmed in writing)
that such remaining collected amounts be invested in the Permitted Investments
specified in such request, the Administrative Agent shall use its reasonable
efforts to invest such remaining collected amounts in such Permitted
Investments; provided, however, that the Administrative Agent shall have
continuous dominion and full control over any such investments (and over any
interest that accrues thereon) to the same extent that it has dominion and
control over such cash collateral account and no Permitted Investment shall
mature after the end of the Interest Period in respect of which it is to be
<PAGE> 46
40
applied. The Borrower shall not have the right to withdraw any amount from such
cash collateral account until the applicable Eurodollar Loans and accrued
interest thereon are paid in full, at which time the remaining funds shall be
paid to the Borrower unless a Default then exists or would result.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the average daily unused amount of each
Commitment of such Lender during the period from and including the date hereof
to but excluding the date on which such Commitment terminates. Accrued
commitment fees shall be payable in arrears (i) in the case of commitment fees
in respect of the Revolving Commitments, on the last day of March, June,
September and December of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof, and (ii) in the case of commitment fees in respect of the Term
Commitments, on the Term Availability Termination Date or any earlier date on
which such Commitments terminate. All commitment fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent for distribution, in
the case of commitment fees, to the Lenders entitled thereto. Fees paid shall
not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus the Applicable
Rate.
<PAGE> 47
41
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of
this Section.
(d) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Revolving Commitments; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base
<PAGE> 48
42
Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and
such determination shall be prima facie evidence absent demonstrative error.
SECTION 2.12. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be prima facie evidence absent demonstrative error) that adequate
and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest
Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or facsimile transmission as promptly as practicable
thereafter and, until the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice no longer exist, (i)
any Interest Election Request that requests the conversion of any Borrowing to,
or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement to the extent reflected in the Adjusted LIBO Rate);
or
<PAGE> 49
43
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by
such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise), then within 10 Business Days after demand the Borrower will pay to
such Lender, such additional amount or amounts as will compensate such Lender
for such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender, to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be prima facie evidence absent demonstrative error.
The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 Business Days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Borrower shall not
be
<PAGE> 50
44
required to compensate a Lender pursuant to this Section for any increased
costs or reductions incurred more than 180 days prior to the date that such
Lender notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 180-day period referred
to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.09(f) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.17, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
equal an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A
<PAGE> 51
45
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower within 180 days of the event giving rise to such loss, cost or expense
and shall be prima facie evidence absent demonstrative error. The Borrower shall
pay such Lender the amount shown as due on any such certificate within 10
Business Days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account
of any obligation of the Borrower hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or the applicable Lender (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law and (iv) the Borrower shall have the right to contest any
such Taxes and/or receive any refunds paid or payable with respect to the same.
(b) In addition, but without duplication of clause (a), the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.
(c) The Borrower shall indemnify and reimburse the
Administrative Agent and each Lender within 10 Business Days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Administrative Agent or such Lender, as the case may be, on or with
respect to any payment by or on account of any obligation of the Borrower
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
<PAGE> 52
46
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender or by the Administrative Agent on its own behalf or
on behalf of a Lender shall be prima facie evidence absent demonstrative error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate, provided that such Foreign Lender
has received written notice from the Borrower or the Administrative Agent
advising it of the availability of such exemption or reduction and supplying all
applicable documentation.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing
of Setoffs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest or
fees, or of amounts payable under Section 2.13, 2.14 or 2.15, or otherwise)
prior to the time expressly required hereunder or under such other Loan Document
for such payment
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47
(or, if no such time is expressly required, prior to 2:00 p.m., New York City
time), on the date when due, in immediately available funds, without setoff or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except that payments pursuant to Sections 2.13,
2.14, 2.15 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified
therein. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or Term Loans resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans or Term Loans and accrued interest thereon than the proportion
received by any other
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48
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Revolving Loans and Term Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
Term Loans; provided that (i) if any such participations are purchased and all
or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest (except to the extent that such purchasing
Lender is ordered by a court of competent jurisdiction to pay interest on such
recovered payment), and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for
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49
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(b), 2.16(d) or 9.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.13, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
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50
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.13 or payments required to be made pursuant to Section 2.15, such
assignment will result in a material reduction in such compensation or payments.
A Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
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51
SECTION 3.01. Organization; Powers. Each of the Borrower and
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and to own and lease its
properties as now owned or leased, and is qualified to do business in, and is in
good standing in, every jurisdiction where such qualification or such good
standing is required, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.02. Authorization; Enforceability. The Transactions
to be entered into by each Loan Party are within such Loan Party's corporate
powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to which
any Loan Party is to be a party, when executed and delivered by such Loan Party,
will constitute, a legal, valid and binding obligation of the Borrower or such
Loan Party (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any material indenture, agreement or other instrument binding upon the Borrower
or any of its Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Borrower
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52
or any of its Subsidiaries, and (d) will not result in the creation or
imposition of any material Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Lenders its consolidated
balance sheet and statements of income, stockholders equity and cash flows (i)
as of and for the fiscal year ended September 30, 1998, reported on by KPMG Peat
Marwick LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended March 31, 1999, certified by
its chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) The Borrower has heretofore furnished to the Lenders its
pro forma consolidated balance sheet as of March 31, 1999, prepared giving
effect to the Transactions as if the Transactions had occurred on such date.
Such pro forma consolidated balance sheet (i) has been prepared in good faith
based on the same assumptions used to prepare the pro forma financial statements
included in the Information Memorandum (which assumptions are believed by the
Borrower to be reasonable), (ii) is based on the best information available to
the Borrower after due inquiry, (iii) accurately reflects all adjustments
necessary to give effect to the Transactions and (iv) presents fairly, in all
material respects, the pro forma financial position of the Borrower and its
consolidated Subsidiaries as of March 31, 1999 as if the Transactions had
occurred on such date.
(c) On the date hereof, except as disclosed in the financial
statements referred to above or the notes thereto or in the Information
Memorandum and except for the Disclosed Matters, after giving effect to the
Transactions, none of the Borrower or its Subsidiaries has, as of the
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53
Effective Date, any material contingent liabilities, unusual long-term
commitments or unrealized losses.
(d) Since September 30, 1998, there has been no material
adverse change in the business, assets, operations, prospects, financial
condition or contractual arrangements of the Borrower and its Subsidiaries,
taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere in any material respect with its ability to conduct
its business as currently conducted or to utilize such properties for their
intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is
licensed or otherwise has rights to use, all trademarks, trade names,
copyrights, patents and other intellectual property material to its business,
and, to the Borrower's knowledge, the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There
are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither the
Borrower nor any of
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54
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change
in the status of the Disclosed Matters that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority (including any applicable labor laws or
regulations) applicable to it or its property and all indentures, agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default has occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. Neither
the Borrower nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries
has timely filed or caused to be filed all Tax returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) any Taxes that are being or promptly will be
contested in good faith by appropriate proceedings and for which the Borrower or
such Subsidiary, as applicable, has set aside on its books adequate reserves in
accordance with GAAP or (b) to the extent that the failure
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55
to do so could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of such Plan.
SECTION 3.11. Disclosure. Neither the Information Memorandum
nor any of the other reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 to the Disclosure
Letter sets forth the name of, and the ownership interest of the Borrower and
each other Subsidiary in, each Subsidiary and identifies each Subsidiary that is
a Significant Subsidiary and/or a Subsidiary Loan Party, in each case as of the
Effective Date.
SECTION 3.13. Insurance. Schedule 3.13 to the Disclosure
Letter sets forth a description of all insurance maintained by or on behalf of
the Borrower and its Subsidiaries as of the Effective Date. As of the Effective
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56
Date, all premiums in respect of such insurance have been paid. The Borrower
believes that the insurance maintained by or on behalf of the Borrower and its
Subsidiaries is adequate.
SECTION 3.14. Year 2000. Any reprogramming required to permit
the proper functioning, in and following the year 2000, of (a) the internal
computer systems of the Borrower and its Subsidiaries and (b) equipment
containing embedded microchips used in the Borrower's systems (whether or not
supplied by others) and the testing of all such systems and equipment, as so
reprogrammed, will be substantially completed by September 30, 1999. To the
Borrower's knowledge, any such reprogramming of systems and equipment with which
the Borrower's systems interface will be substantially completed by September
30, 1999. The Borrower does not expect the cost to the Borrower and its
Subsidiaries of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 to the Borrower and its Subsidiaries (including
reprogramming errors and the failure of others' systems or equipment) to result
in a Default or a Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders
to make Loans hereunder shall not become effective until the date on which each
of the following conditions is satisfied (or waived in accordance with Section
9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include facsimile
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
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(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders
and dated the Effective Date) of Wilson Sonsini Goodrich & Rosati,
counsel for the Borrower, substantially in the form of Exhibit B. The
Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of each Loan Party, the authorization of the Transactions and
any other legal matters relating to the Loan Parties, the Loan
Documents or the Transactions, all in form and substance satisfactory
to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02.
(e) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all
reasonable out-of-pocket expenses (including fees, charges and
disbursements of counsel) required to be reimbursed or paid by any Loan
Party hereunder or under any other Loan Document.
(f) The Administrative Agent (or its counsel) shall have
received from each party thereto a counterpart of the Guarantee
Agreement signed on behalf of such party.
(g) All consents and approvals required to be obtained from
any Governmental Authority or other
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Person in connection with the Recapitalization shall have been obtained
(including from the stockholders of the Borrower), and all applicable
waiting periods and appeal periods shall have expired, in each case
without the imposition of any materially burdensome conditions. The
Administrative Agent shall have received copies of any Recapitalization
Documents signed prior to such date and all certificates, opinions and
other documents delivered thereunder prior to such date, certified by a
Financial Officer as complete and correct.
(h) The Lenders shall have received a pro forma consolidated
balance sheet of the Borrower as of March 31, 1999, reflecting all pro
forma adjustments as if the Transactions had been consummated on such
date, and such pro forma consolidated balance sheet shall be consistent
in all material respects with the forecasts and other information
previously provided to the Lenders.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on
September 30, 1999 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender
to make a Loan on the occasion of any Borrowing is subject to receipt of the
request therefor in accordance herewith and to the satisfaction of the following
conditions:
(a) The representations and warranties of each Loan Party set
forth in the Loan Documents shall be true and correct in all material
respects on and as of the date of such Borrowing, except to the extent
they expressly relate to an earlier date, in which case as of such
earlier date.
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(b) At the time of and immediately after giving effect to such
Borrowing no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows as of the end of and
for such year, setting forth in each case in comparative form the
figures as of the end of and for the previous fiscal year, all reported
on by KPMG Peat Marwick LLP or other independent public accountants of
recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
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(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its consolidated
balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and
the then elapsed portion of the fiscal year, setting forth in each case
in comparative form the figures for the corresponding period or periods
of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer (i)
certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
6.12, 6.13, 6.14 and 6.15 and (iii) stating whether any change in GAAP
or in the application thereof has occurred since the date of the
Borrower's audited financial statements referred to in Section 3.04
and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the
extent required by accounting rules or guidelines);
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(e) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national
securities exchange; and
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the
terms of any Loan Document, as the Administrative Agent or any Lender
may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
(c) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve,
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62
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges, franchises, patents, copyrights, trademarks and
trade names material to the conduct of its business; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its Indebtedness and other
obligations, including Tax liabilities, before the same shall become delinquent
or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) the Borrower or such
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (c) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties. The Borrower will,
and will cause each of its Subsidiaries to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear and obsolescence excepted.
SECTION 5.06. Insurance. The Borrower will, and will cause
each of its Subsidiaries to, maintain, with financially sound and reputable
insurance companies insurance in such amounts (with no greater risk retention)
and against such risks as are customarily maintained by companies of established
repute engaged in the same or similar businesses operating in the same or
similar locations. The Borrower will furnish to the Lenders, upon request of the
Administrative Agent, information in reasonable detail as to the insurance so
maintained.
SECTION 5.07. Books and Records; Inspection and Audit Rights.
The Borrower will, and will cause each of its Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its
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Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, without material disruption
of the Borrower's business, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested, in each case subject to
the Lenders' confidentiality obligations under Section 9.12.
SECTION 5.08. Compliance with Laws. The Borrower will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.09. Use of Proceeds. (a) The proceeds of the Loans
will be used by the Borrower only (i) to finance, in whole or in part, the
Dividend, (ii) to finance repurchases of common stock pursuant to the Tender
Offer or on the open market and (iii) for general corporate purposes of the
Borrower and its Subsidiaries.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
SECTION 5.10. Additional Subsidiaries; Significant
Subsidiaries. The Borrower may from time to time, but no more than once each
fiscal year, by written notice to the Administrative Agent designate
Subsidiaries as "Significant Subsidiaries" or "Insignificant Subsidiaries", and
the Borrower shall make such designation as necessary to comply with the
requirements of the definition of "Significant Subsidiary". If any additional
Subsidiary is formed or acquired or becomes a Subsidiary after the date hereof,
the Borrower shall, within thirty days after such Subsidiary is formed or
acquired or becomes a Subsidiary, notify the Administrative Agent thereof and
designate such
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Subsidiary as a "Significant Subsidiary" or an "Insignificant Subsidiary". The
Borrower may designate Subsidiaries as "Significant Subsidiaries" or
"Insignificant Subsidiaries" if such designation is necessary to cure a default
described in clause (m) of Article VII, provided that the Required Lenders have
determined that the newly-designated "Significant Subsidiaries" are comparable
in all material respects to the newly-designated "Insignificant Subsidiaries."
At the time of any designation pursuant to any of the preceding three sentences,
the Borrower shall (a) provide to the Administrative Agent a certificate of a
Financial Officer (i) if any Subsidiary is being designated as "Insignificant,"
stating that no Default has occurred and is continuing after giving effect to
such designation and (ii) setting forth reasonably detailed calculations
demonstrating compliance with the requirements of the definition of "Significant
Subsidiary" immediately after such designation on a pro forma basis as if such
designation had occurred immediately prior to the first day of the fiscal year
most recently ended and (b) cause any Subsidiary that is being designated as a
"Significant Subsidiary" and is not a Foreign Subsidiary to become a party to
the Guarantee Agreement. Section 19 of the Guarantee Agreement shall apply to
designations made pursuant to this Section.
SECTION 5.11. Federal Reserve Regulations. The Borrower will,
and will cause each Subsidiary to, ensure that at no time will Margin Stock
comprise 25% or more of the assets that are (or would but for the exclusions in
Sections 6.02(e) and 6.05(d) be) subject to the restrictions of Section 6.02 or
Section 6.05.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, the Borrower covenants and agrees with the Lenders that:
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SECTION 6.01. Indebtedness. The Borrower will not, and will
not permit any Subsidiary Loan Party to, create, incur, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness created under the Loan Documents;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 to the Disclosure Letter and extensions, renewals and
replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an earlier maturity
date or decreased weighted average life thereof;
(c) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary; provided that
Indebtedness of any Subsidiary that is not a Loan Party to the Borrower
or any Subsidiary Loan Party shall be subject to Section 6.04;
(d) Guarantees by the Borrower of Indebtedness of any
Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any
other Subsidiary; provided that Guarantees by the Borrower or any
Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a
Loan Party shall be subject to Section 6.04;
(e) any Indebtedness of a Subsidiary, secured Indebtedness of
the Borrower, or Capital Lease Obligation of the Borrower; provided
that the sum, without duplication, of (i) the aggregate principal
amount of Indebtedness permitted by this clause (e) and (ii) the
Attributable Debt permitted by Section 6.06(b), shall not exceed at any
time outstanding the greater of (i) $25 million and (ii) 12.5% of
Consolidated EBITDA for the period of four consecutive fiscal quarters
most recently ended on or prior to such time;
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(f) Indebtedness of the Borrower or any Subsidiary in respect
of (i) standby or performance letters of credit; provided that the
aggregate amount of Indebtedness permitted by this clause (i) shall not
at any time exceed the greater of (A) $10 million and (B) 5% of
Consolidated EBITDA for the period of four consecutive fiscal quarters
most recently ended on or prior to such time; and (ii) trade letters of
credit;
(g) Indebtedness of any Person that becomes a Subsidiary after
the date hereof; provided that such Indebtedness exists at the time
such Person becomes a Subsidiary and is not created in contemplation of
or in connection with such Person becoming a Subsidiary;
(h) other unsecured Indebtedness in an aggregate principal
amount not exceeding at any time outstanding the greater of (i) $100
million and (ii) 50% of Consolidated EBITDA for the period of four
consecutive fiscal quarters most recently ended on or prior to such
time; and
(i) other unsecured Indebtedness of the Borrower or a
Subsidiary; provided, that the requirements of Section 2.09(c) are met
with respect to such Indebtedness.
SECTION 6.02. Liens. The Borrower will not, and will not
permit any Subsidiary Loan Party to, create, incur, assume or permit to exist
any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02
to the Disclosure Letter; provided that (i) such Lien shall not apply
to any other property or asset of the Borrower or any
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Subsidiary and (ii) such Lien shall secure only those obligations which
it secures on the date hereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on
any property or asset of any Person that becomes a Subsidiary after the
date hereof prior to the time such Person becomes a Subsidiary;
provided that (i) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary,
as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such
Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as
the case may be, and extensions, renewals and replacements thereof that
do not increase the outstanding principal amount thereof;
(d) Liens securing Indebtedness permitted by Section 6.01(e);
provided that the fair market value of the property and assets subject
to such Liens does not exceed the principal amount of such Indebtedness
by more than 25%;
(e) Liens on any Margin Stock held by the Borrower or any
Subsidiary to the extent that such Margin Stock would otherwise
comprise 25% or more of the property and assets subject to this Section
6.02; and
(f) any Lien renewing, extending or refunding any Lien
permitted by Section 6.02(b), provided that the principal amount
secured is not increased and the Lien is not extended to other
property.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not,
nor will it permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall
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have occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any Person
may merge into any Subsidiary and any Subsidiary may merge into any Person in a
transaction in which the surviving entity is or becomes a Subsidiary and (if any
party to such merger is a Subsidiary Loan Party) is or becomes a Subsidiary Loan
Party and (iii) any Subsidiary (other than a Subsidiary Loan Party) may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04;
provided further, that prior to consummating any merger pursuant to clause (i)
or (ii) of this Section 6.03, the Borrower will deliver to the Administrative
Agent a certificate of a Financial Officer demonstrating compliance immediately
following such merger, on a pro forma basis giving effect to such merger, with
Sections 6.12, 6.13, 6.14 and 6.15.
(b) The Borrower and its Subsidiaries, collectively, will not
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related or incidental thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any Equity
Interests in or evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any
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69
assets of any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof and set forth on
Schedule 6.04 to the Disclosure Letter;
(c) investments by the Borrower and its Subsidiaries in
Subsidiaries; provided that the aggregate amount of investments by Loan
Parties in, and loans and advances by Loan Parties to, and Guarantees
by Loan Parties of Indebtedness of, Subsidiaries that are not Loan
Parties (excluding all such investments, loans, advances and Guarantees
otherwise permitted pursuant to this Section 6.04) shall not at any
time outstanding exceed the greater of (i) $100 million and (ii) 37.5%
of Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on or prior to such time;
(d) loans or advances made by the Borrower to any Subsidiary
and made by any Subsidiary to the Borrower or any other Subsidiary;
provided that any such loans or advances from Loan Parties to
Subsidiaries that are not Loan Parties are represented by promissory
notes that are pledged to the Administrative Agent for the benefit of
the Lenders pursuant to the Pledge Agreement;
(e) Guarantees constituting Indebtedness permitted by Section
6.01; provided that the aggregate principal amount of Indebtedness of
Subsidiaries that are not Loan Parties that is Guaranteed by any Loan
Party shall be subject to the limitation set forth in clause (c) above;
(f) Permitted Acquisitions;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and
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suppliers, in each case in the ordinary course of business;
(h) investments by the IFSC and investments by the Borrower
and its Subsidiaries in the IFSC; provided that such investments in the
IFSC do not in the aggregate exceed $100 million;
(i) investments by SIV and investments by the Borrower and its
Subsidiaries in SIV, to the extent that such investments in SIV do not
exceed (i) $30 million in the aggregate made at any time pursuant to
approvals of the Borrower's Board of Directors on or prior to the date
hereof or (ii) $15 million made in any fiscal year of the Borrower that
ends after the date hereof; and
(j) investments not described in clauses (a) through (i)
above; provided that the aggregate amount of such investments does not
at any time outstanding exceed the greater of (i) $15 million and (ii)
7.5% of Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on or prior to such time.
SECTION 6.05. Asset Sales. The Borrower will not, and will not
permit any Subsidiary Loan Party to, sell, transfer, lease or otherwise dispose
of any asset, including any Equity Interest owned by it, nor will the Borrower
permit any of its Subsidiaries to issue any additional Equity Interest in such
Subsidiary (other than to the Borrower or another Subsidiary), except:
(a) sales of inventory, used or surplus equipment and
Permitted Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a
Subsidiary; provided that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be made in
compliance with Section 6.09;
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(c) sales, transfers and other dispositions of assets (other
than Equity Interests in a Subsidiary Loan Party) that are not
permitted by any other clause of this Section; provided that the
aggregate book value of all assets sold, transferred or otherwise
disposed of in reliance upon this clause (c) shall not, at the time of
such sale, transfer or other disposition, exceed 10% of Consolidated
Net Tangible Assets; and
(d) sales, transfers or other dispositions of any Margin Stock
held by the Borrower or any Subsidiary to the extent such Margin Stock
would otherwise comprise 25% or more of the property and assets subject
to this Section 6.05.
SECTION 6.06. Sale and Leaseback Transactions. The Borrower
will not, and will not permit any Subsidiary to, enter into any Sale-Leaseback
Transaction except:
(a) Sale-Leaseback Transactions to which the Borrower or any
Subsidiary is a party as of the date hereof; and
(b) other Sale-Leaseback Transactions; provided that the sum,
without duplication, of (i) the Indebtedness permitted by Section
6.01(e) and (ii) the aggregate Attributable Debt in respect of
Sale-Leaseback Transactions permitted by this clause (b), does not at
any time outstanding exceed the greater of (i) $25 million and (ii)
12.5% of Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on or prior to such time.
SECTION 6.07. Hedging Agreements. The Borrower will not, and
will not permit any Subsidiary Loan Party to, enter into any Hedging Agreement,
other than Hedging Agreements entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the
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management of its liabilities, including Hedging Agreements entered into in
connection with this Agreement.
SECTION 6.08. Restricted Payments. The Borrower will not, nor
will it permit any Subsidiary Loan Party to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except, so long as no Default has occurred
and is continuing or would occur as a result thereof, (i) the Borrower may
declare and pay dividends with respect to its capital stock payable solely in
additional shares of Common Stock, (ii) Subsidiaries may declare and pay
dividends ratably with respect to their capital stock, (iii) the Borrower may
make Restricted Payments pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Borrower and its
Subsidiaries, (iv) the Borrower may pay the Dividend, (v) the Borrower may
repurchase shares of Common Stock pursuant to the Tender Offer, (vi) the
Borrower may effect open market purchases of up to approximately 5% (as the same
may increase or decrease based on the number of shares acquired in the Tender
Offer) of its shares of Common Stock outstanding on the date hereof, and (vii)
the Borrower may make other Restricted Payments so long as the aggregate amount
of Restricted Payments made pursuant to this clause (vii) after the date hereof
does not exceed $50 million; (viii) Restricted Payments made pursuant to the
Share Forward Purchase Agreements; and (ix) any other cash Restricted Payment,
provided that, in the case of this clause (ix), on a pro forma basis after
giving effect to such Restricted Payment, the Borrower's Leverage Ratio is less
than 1.50 to 1.00.
SECTION 6.09. Transactions with Affiliates. The Borrower will
not, nor will it permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm's-length basis
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from unrelated third parties, (b) transactions between or among the Borrower and
the Subsidiary Loan Parties not involving any other Affiliate, (c) any
Restricted Payments permitted by Section 6.08 and (d) the Recapitalization.
SECTION 6.10. Restrictive Agreements. The Borrower will not,
nor will it permit any Subsidiary Loan Party to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.10 to the
Disclosure Letter (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary or
assets pending such sale, provided such restrictions and conditions apply only
to the Subsidiary or assets that are to be sold and such sale is permitted
hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness and (v) clause (a) of the foregoing shall
not apply to customary provisions in leases and other contracts restricting the
assignment thereof.
SECTION 6.11. Amendment of Material Documents. The Borrower
will not, nor will it permit any Subsidiary to, make or agree to any material
change in the terms of the Recapitalization from those described to the Lenders
prior
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to the date hereof in any manner that is adverse in any significant respect to
the Lenders.
SECTION 6.12. Interest Expense Coverage Ratio. The Borrower
will not permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Cash
Interest Expense, in each case for any period of four consecutive fiscal
quarters ending after the date hereof, to be less than 5.00 to 1.00.
SECTION 6.13. Total Balance Sheet Indebtedness to EBITDA. The
Borrower will not permit the ratio of (a) Total Balance Sheet Indebtedness as of
the last day of any fiscal quarter to (b) Consolidated EBITDA for the period of
four consecutive fiscal quarters ending with such fiscal quarter, to exceed 2.75
to 1.00.
SECTION 6.14. Annualized Contract Value to Total Balance Sheet
Indebtedness. The Borrower will not permit the ratio of (a) Annualized Contract
Value as of the last day of any fiscal quarter to (b) Consolidated Funded Debt
as of the last day of such fiscal quarter, to be less than 1.25 to 1.00.
SECTION 6.15. Minimum Annualized Contract Value. The Borrower
will not permit Annualized Contract Value as of the last day of any fiscal
quarter to be less than $350 million.
SECTION 6.16. Certain Indemnity Obligations. The Borrower will
not, nor will it permit any Subsidiary to, take any action, or omit to take any
action, that could reasonably be expected to result in the Borrower or any
Subsidiary being liable for any indemnity or reimbursement obligation under any
Recapitalization Document, including any indemnity or reimbursement obligation
under Section II.7 of the Distribution Agreement, except for, on any date, (a)
indemnity or reimbursement obligations that do not in the aggregate exceed $150
million or (b) indemnity or reimbursement obligations that would not in the
aggregate result in the ratio of (i) the sum of (A) Total Balance Sheet
Indebtedness as of the last day of the fiscal quarter most recently ended on or
prior to such date plus (B) the
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amount of such indemnity or reimbursement obligations to (ii) Consolidated
EBITDA for the period of four consecutive fiscal quarters most recently ended on
or prior to such date, exceeding 2.00 to 1.00.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or any other Loan
Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any
report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made or
furnished;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.03 (with
respect to the existence of the Borrower) or 5.09(a) or in Article VI;
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(e) any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other
than those specified in clause (a), (b) or (d) of this Article), and
such failure shall continue unremedied for a period of 30 days after
notice thereof from the Administrative Agent to the Borrower (which
notice will be given at the request of any Lender);
(f) the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become
due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any
Significant Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Significant
Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 60
days or an order or
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decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any Significant Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Significant
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit
in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $30 million shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 60 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets
of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a
Material Adverse Effect;
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(m) the guarantee of any Subsidiary Loan Party under the
Guarantee Agreement shall not be (or shall be claimed by the Borrower
or any Subsidiary Loan Party not to be) valid or in full force and
effect, and such failure to be valid or in full force and effect shall
not have been cured by the Borrower in accordance with the third
sentence of Section 5.10; or
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower; and in case of any
event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
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ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth in the Loan Documents. Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) the Administrative Agent shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated by the
Loan Documents that the Administrative Agent is required to exercise in writing
by the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02), and (c)
except as expressly set forth in the Loan Documents, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with
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the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall not be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
The Administrative Agent may perform any and all of its duties
and exercise its rights and powers by or through any one or more subagents
appointed by the Administrative Agent. The Administrative Agent and any such
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subagent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such subagent and to the Related
Parties of the Administrative Agent and any such subagent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor to
the Administrative Agent as provided in this paragraph, the Administrative Agent
may resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, with the prior approval
of the Borrower (which shall not be unreasonably withheld), to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York
and a minimum capital surplus of $100 million, or an Affiliate of any such bank.
Upon the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its subagents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
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Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile transmission, as follows:
(a) if to the Borrower, to it at 56 Top Gallant Road,
Stamford, CT 06902, Attention of Chief Financial Officer (Facsimile No.
(203) 316-6488) with copies to the Borrower's Treasurer at the same
address and facsimile number, to the Borrower's Legal Department
(Facsimile No. (203) 316-6525) at the same address and to Wilson
Sonsini Goodrich & Rosati, Attention of Howard Zeprun, Esq., 650 Page
Mill Road, Palo Alto California 94304-1050 (Facsimile No. (650)
493-6811);
(b) if to the Administrative Agent, to The Chase Manhattan
Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th
Floor, New York, New York 10081, Attention of Ms. Mahin Gandomi
(Facsimile No. (212) 552-5650), with a copy to The Chase Manhattan
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Bank, 999 Broad Street, Bridgeport, CT 06604, Attention of Mr. David
Short (Facsimile No. (203) 382-6314); and
(c) if to any Lender, to it at its address (or facsimile
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by
the Administrative Agent or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered
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into by the Borrower and the Required Lenders or, in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
maturity of any Loan, or the date of any scheduled payment of the principal
amount of any Term Loan under Section 2.08, or any date for the payment of any
interest or fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change Section
2.16(b) or (c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) change any of
the provisions of this Section or the percentage set forth in the definition of
"Required Lenders" or any other provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each Lender
of such Class, as the case may be), (vi) release any Subsidiary Loan Party from,
or limit or condition its obligations under, the Guarantee Agreement (except as
expressly provided in the Guarantee Agreement or in Section 5.10), in each case
without the written consent of each Lender, (vii) change any provisions of any
Loan Document in a manner that by its terms adversely affects the rights in
respect of payments due to Lenders holding Loans of any Class differently than
those holding Loans of any other Class, without the written consent of Lenders
holding a majority in interest of the outstanding Loans and unused Commitments
of each affected Class; provided further that (A) no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent
without the prior written consent of the Administrative Agent and (B) any
waiver, amendment or
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modification of this Agreement that by its terms affects the rights or duties
under this Agreement of the Revolving Lenders (but not the Term Lenders) or the
Term Lenders (but not the Revolving Lenders) may be effected by an agreement or
agreements in writing entered into by the Borrower and requisite percentage in
interest of the affected Class of Lenders that would be required to consent
thereto under this Section if such Class of Lenders were the only Class of
Lenders hereunder at the time. Notwithstanding the foregoing, any provision of
this Agreement may be amended by an agreement in writing entered into by the
Borrower, the Required Lenders and the Administrative Agent if (i) by the terms
of such agreement the Commitment of each Lender not consenting to the amendment
provided for therein shall terminate upon the effectiveness of such amendment
and (ii) at the time such amendment becomes effective, each Lender not
consenting thereto receives payment in full of the principal of and interest
accrued on each Loan made by it and all other amounts owing to it or accrued for
its account under this Agreement.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of the Loan Documents or any amendments, modifications or
waivers of the provisions thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses
incurred by the Administrative Agent, or any Lender, including the reasonable
fees, charges and disbursements of any counsel for the Administrative Agent or
any Lender, in connection with the enforcement or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made hereunder, including all such out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans.
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(b) The Borrower shall indemnify the Administrative Agent and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of any Loan
Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, (iii)
any actual or alleged presence or release of Hazardous Materials on or from any
property currently or formerly owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Administrative Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative Agent
such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such. For purposes hereof, a
Lender's "pro rata share" shall be determined based upon its share of the
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sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable within
10 Business Days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except that
the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the
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88
entire remaining amount of the assigning Lender's Commitment or Loans of either
Class, the amount of the Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $5 million unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, except that this clause (iii) shall not be
construed to prohibit the assignment of a proportionate part of all the
assigning Lender's rights and obligations in respect of one Class of Commitments
or Loans, (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500, and (v) the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article VII has occurred and is continuing. Subject to
acceptance and recording thereof pursuant to paragraph (d) of this Section, from
and after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
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(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to
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deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents;
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.13,
2.14 and 2.15 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.16(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign, or grant a
security interest in, all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment or grant of a security interest; provided that no such
pledge or assignment or grant of a security interest shall release a
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Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
(h) Notwithstanding anything to the contrary contained herein,
any Bank (a "Granting Bank") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by the Granting Bank to
the Administrative Agent and the Borrower, the option to provide to the Borrower
all or any part of any Loan that such Granting Bank would otherwise be obligated
to make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if a
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Bank shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by a SPC hereunder shall
utilize the Commitment of the Granting Bank to the same extent, and as if, such
Loan were made by such Granting Bank. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Bank). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section 9.04(h), any SPC may (i) with
notice to, but without the prior written consent of, the Borrower and the
Administrative agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Bank or to any
financial institutions (consented to by the Borrower and Administrative Agent)
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information
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relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC. This
section may not be amended without the written consent of the SPC.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
and so long as the Commitments have not expired or terminated. The provisions of
Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract among the
parties relating to the subject matter hereof and thereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof and thereof. Except as provided in Section 4.01, this
Agreement shall become effective when
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it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Borrower against any of and all the obligations of the Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
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(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Administrative Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document against the
Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (b) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
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SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative
Agent and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors on a need to know basis (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the
<PAGE> 102
96
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent or any Lender on a nonconfidential
basis from a source other than the Borrower, if the Administrative Agent or such
Lender has no actual knowledge that the provider of such information was under a
confidentiality obligation. For the purposes of this Section, "Information"
means all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information received
from the Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
<PAGE> 103
97
SECTION 9.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GARTNER GROUP, INC.,
by
/s/ Michael Fleisher
--------------------
Name: Michael Fleisher
Title: CFO & VP
<PAGE> 104
98
THE CHASE MANHATTAN BANK, individually and as
Administrative Agent,
by
/s/ Robert Anastasio
------------------------
Name: Robert Anastasio
Title: Vice President
CREDIT SUISSE FIRST BOSTON, individually and as
Syndication Agent,
by
/s/ Joel Glodowski
------------------------
Name: Joel Glodowski
Title: Managing Director
by
/s/ Robert Hetu
------------------------
Name: Robert Hetu
Title: Vice President
FLEET NATIONAL BANK, individually and as
Documentation Agent,
by
/s/ Christopher Criswell
------------------------
Name: Christopher Criswell
Title: Senior Vice
President
<PAGE> 105
BANCO ESPIRITO SANTO E
COMERCIAL DE LISBOA, NASSAU
BRANCH,
by
/s/ Andrew M. Orsen
--------------------------
Name: Andrew M. Orsen
Title: Vice President
by
/s/ Terry R. Hull
--------------------------
Name: Terry R. Hull
Title: Senior V.P.
BANK LEUMI USA,
by
/s/ Steven Laufer
--------------------------
Name: Steven Laufer
Title: Assistant Vice
President
by
/s/ Michaela Klein
--------------------------
Name: Michaela Klein
Title: Senior Vice
President
THE BANK OF NEW YORK,
by
/s/ Melinda A. White
--------------------------
Name: Melinda A. White
Title: Vice President
THE BANK OF NOVA SCOTIA,
by
/s/ J.R. Trimble
--------------------------
Name: J.R. Trimble
Title: Senior Relationship
Manager
<PAGE> 106
BANK OF AMERICA,N.A.,
by
/s/ Chitt Swamidasan
------------------------
Name: Chitt Swamidasan
Title: Vice President
BANKBOSTON, N.A.,
by
/s/ Tena C. Lindeauer
------------------------
Name: Tena C. Lindenauer
Title: Managing Director
COMERICA BANK,
by
/s/ David W. Shirey
------------------------
Name: David W. Shirey
Title: Assistant Vice
President
DAI ICHI KANGYO BANK,LTD.,
by
/s/ Nelson Y. Chang
------------------------
Name: Nelson Y. Chang
Title: Account Officer
DEUTSCHE BANK A.G., NEW YORK
AND/OR CAYMAN ISLANDS BRANCH,
by
<PAGE> 107
/s/ Susan L.Pearson
----------------------------
Name: Susan L. Pearson
Title: Assistant Vice
President
by
/s/ Alexander Karow
----------------------------
Name: Alexander Karow
Title: Assistant Vice
President
THE FIRST CHICAGO NATIONAL BANK,
by
/s/ Robert McMillan
--------------------------
Name: Robert McMillan
Title: Corporate Banking
Officer
FIRST UNION NATIONAL BANK,
by
/s/ Paul T. Savino
--------------------------
Name: Paul T. Savino
Title: Senior Vice
President
THE FUJI BANK, LIMITED,
by
/s/ Teiji Teramoto
--------------------------
Name: Teiji Teramoto
Title: Vice President &
Manager
<PAGE> 108
IBM CREDIT CORPORATION,
by
/s/ Ronald J. Bachner
--------------------------
Name: Ronald J. Bachner
Title: Manager, Commercial
Financing Solutions
Americas
MERCANTILE BANK, NATIONAL ASSOCIATION,
by
/s/ Kirk A. Porter
--------------------------
Name: Kirk A. Porter
Title: Senior Vice
President
NATIONAL CITY BANK,
by
/s/ Randall J. Rawe
--------------------------
Name: Randall J. Rawe
Title: Senior Vice
President
PEOPLE'S BANK,
by
/s/ Martin H. Anderson
--------------------------
Name: Martin H. Anderson
Title: Assistant Vice
President
<PAGE> 109
STATE STREET BANK AND TRUST COMPANY,
by
/s/ Michael J. Cronin
--------------------------
Name: Michael J. Cronin
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by
/s/ J. Bruce Meredith
--------------------------
Name: J. Bruce Meredith
Title: Senior Vice
President
SUNTRUST BANKS, INC.,
by
/s/ W. David Wisdom
--------------------------
Name: W. David Wisdom
Title: Vice President
<PAGE> 110
Schedule 2.01
Lender Commitment
- ------ ----------
[to come]
<PAGE> 111
EXHIBIT A
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of July 16, 1999 (as
amended and in effect on the date hereof, the "Credit Agreement"), among Gartner
Group, Inc., the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent for the Lenders. Terms defined in the Credit Agreement are
used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns, without
recourse to the Assignor, to the Assignee named on the reverse hereof, and the
Assignee hereby purchases and assumes, without recourse to the Assignor, from
the Assignor, effective as of the Assignment Date set forth on the reverse
hereof, the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Credit Agreement, including,
without limitation, the interests set forth on the reverse hereof in the
Commitments of the Assignor on the Assignment Date and Term Loans and Revolving
Loans owing to the Assignor which are outstanding on the Assignment Date, but
excluding accrued interest and fees to and excluding the Assignment Date. The
Assignee hereby acknowledges receipt of a copy of the Credit Agreement and the
other Loan Documents. From and after the Assignment Date (i) the Assignee shall
be a party to and be bound by the provisions of the Credit Agreement and, to the
extent of the Assigned Interest, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent of the Assigned Interest,
relinquish its rights (except as otherwise provided in the Credit Agreement) and
be released from its obligations under the Credit Agreement.
This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.15(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The [Assignee/Assignor] shall pay the fee payable to the
Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
<PAGE> 112
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
<PAGE> 113
3
Percentage Assigned of
Facility/Commitment (set forth,
to at least 8 decimals, as a
Principal Amount Assigned percentage of the aggregate
Commitments of all Lenders
thereunder)
Facility
Revolving Commitment Assigned: $ %
Term Commitment Assigned: $ %
Revolving Loans:
Term Loans:
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By: ________________________________
Name:
Title:
[Name of Assignee] , as Assignee
By: ________________________________
Name:
Title:
The undersigned hereby consent to the within assignment: 1/
Gartner Group, Inc., The Chase Manhattan Bank, as
Administrative Agent,
By: ________________________ By: ___________________________
Name: Name:
Title: Title:
- --------
1/ Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement.
<PAGE> 114
EXHIBIT B
Form of Opinion of Borrower's Counsel
[to come]
<PAGE> 115
EXHIBIT C
[FORM OF]
GUARANTEE AGREEMENT dated as of July 16,
1999, among each of the subsidiaries listed on
Schedule I hereto (each such subsidiary individually,
a "Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors") of GARTNER GROUP, INC., a
Delaware corporation (the "Borrower"), and THE CHASE
MANHATTAN BANK, a New York banking corporation
("Chase"), as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders.
Reference is made to the Credit Agreement dated as of July 16, 1999 (as
amended from time to time, the "Credit Agreement"), among the Borrower, the
lenders from time to time party thereto (the "Lenders"), and Chase, as
Administrative Agent. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
In connection therewith, each Subsidiary Guarantor has agreed to guarantee the
Obligations (as defined below) by entering into this Agreement. Each of the
Subsidiary Guarantors is a directly or indirectly owned Subsidiary of the
Borrower, and each of the Subsidiary Guarantors acknowledges that it will derive
substantial benefit from the making of the Loans by the Lenders. The obligations
of the Lenders to make Loans are conditioned on, among other things, the
execution and delivery by the Subsidiary Guarantors of a Guarantee Agreement in
the form hereof. As consideration therefor, the Subsidiary Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
<PAGE> 116
2
SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally guarantees,
jointly with the other Subsidiary Guarantors and severally, as a primary obligor
and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Administrative Agent
and the Lenders under the Credit Agreement and the other Loan Documents, (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of the Loan Parties under or pursuant to the Credit Agreement and
the other Loan Documents and (c) the due and punctual payment and performance of
all obligations of the Borrower under each Hedging Agreement entered into with
any counterparty that was a Lender at the time such Hedging Agreement was
entered into (all the monetary and other obligations described in the preceding
clauses (a) through (c) being collectively called the "Obligations"). Each
Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Subsidiary Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure
of the Administrative Agent or any Lender to assert any claim or
<PAGE> 117
3
demand or to enforce or exercise any right or remedy against the Borrower or any
other Subsidiary Guarantor under the provisions of the Credit Agreement, any
other Loan Document or otherwise or (b) any rescission, waiver (except the
effect of any waiver obtained pursuant to Section 11(b)), amendment or
modification of, or any release from any of the terms or provisions of, this
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other Subsidiary Guarantor under this Agreement.
SECTION 3. Guarantee of Payment. Each Subsidiary Guarantor further agrees
that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Administrative Agent or any Lender to any balance of any deposit account or
credit on the books of the Administrative Agent or any Lender in favor of the
Borrower or any other person or to any collateral security.
SECTION 4. No Discharge or Diminishment of Guarantee. The obligations of
each Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Administrative Agent or any Lender to assert any claim or demand
or to enforce any remedy under the Credit Agreement, any other Loan Document or
any other agreement, by any waiver or modification of any provision of any
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of any Subsidiary Guarantor
or that would
<PAGE> 118
4
otherwise operate as a discharge of any Subsidiary Guarantor as a matter of law
or equity (other than the indefeasible payment in full in cash of all the
Obligations). Each of the Subsidiary Guarantors authorizes the Administrative
Agent to (a) take and hold security for the payment of this Guarantee and the
Obligations and exchange, enforce, waive and release any such security, (b)
apply such security and direct the order or manner of sale thereof as it in its
sole discretion may determine and (c) release or substitute any one or more
endorsees, other guarantors or other obligors.
SECTION 5. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, each of the Subsidiary Guarantors waives any defense based on or
arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final and indefeasible payment
in full in cash of the Obligations. The Administrative Agent and the Lenders
may, at their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Subsidiary Guarantor hereunder except to the extent the
Obligations have been fully, finally and indefeasibly paid in cash. Pursuant to
applicable law, each of the Subsidiary Guarantors waives any defense arising out
of any such election even though such election operates, pursuant to applicable
law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of such Subsidiary Guarantor against the Borrower or any
other Subsidiary Guarantor or guarantor, as the case may be, or any security.
SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing
and not in limitation of any other right that the Administrative Agent or any
Lender has at law or in equity against any Subsidiary Guarantor by
<PAGE> 119
5
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor
hereby promises to and will forthwith pay, or cause to be paid, to the
Administrative Agent or such Lender as designated thereby in cash the amount of
such unpaid Obligations. Upon payment by any Subsidiary Guarantor of any sums to
the Administrative Agent or any Lender as provided above, all rights of such
Subsidiary Guarantor against the Borrower arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations. If any amount shall
erroneously be paid to any Subsidiary Guarantor on account of such subrogation,
contribution, reimbursement, indemnity or similar right, such amount shall be
held in trust for the benefit of the Administrative Agent and the Lenders and
shall forthwith be paid to the Administrative Agent to be credited against the
payment of the Obligations, whether matured or unmatured, in accordance with the
terms of the Loan Documents.
SECTION 7. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of
the Administrative Agent or the Lenders will have any duty to advise any of the
Subsidiary Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 8. Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and correct
in all material respects.
<PAGE> 120
6
SECTION 9. Termination. The Guarantees made hereunder (a) shall terminate
when all the Obligations have been indefeasibly paid in full and the Lenders
have no further commitment to lend under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by the Administrative Agent or any Lender or any Subsidiary
Guarantor upon the bankruptcy or reorganization of the Borrower, any Subsidiary
Guarantor or otherwise. In addition, the guarantee made by each Subsidiary
Guarantor hereunder shall automatically be terminated at such time, if any, as
such Subsidiary Guarantor ceases to be a "Significant Subsidiary" pursuant to
and in accordance with Section 5.10 of the Credit Agreement.
SECTION 10. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Subsidiary Guarantors that are
contained in this Agreement shall bind and inure to the benefit of the
Administrative Agent, the Lenders and their respective permitted successors and
assigns. This Agreement shall become effective as to any Subsidiary Guarantor
when a counterpart hereof executed on behalf of such Subsidiary Guarantor shall
have been delivered to the Administrative Agent, and a counterpart hereof shall
have been executed on behalf of the Administrative Agent, and thereafter shall
be binding upon such Subsidiary Guarantor and the Administrative Agent and their
respective successors and assigns, and shall inure to the benefit of such
Subsidiary Guarantor, the Administrative Agent and the Lenders, and their
respective permitted successors and assigns, except that no Subsidiary Guarantor
shall have the right to assign its rights or obligations hereunder or any
interest herein (and any such attempted assignment shall be void), except as
expressly contemplated by this Agreement or the other Loan Documents. If all of
the capital stock of a Subsidiary Guarantor is sold, transferred or otherwise
disposed of pursuant to a transaction permitted by the Credit Agreement, such
<PAGE> 121
7
Subsidiary Guarantor shall be released from its obligations under this Agreement
without further action. This Agreement shall be construed as a separate
agreement with respect to each Subsidiary Guarantor and may be amended,
modified, supplemented, waived or released with respect to any Subsidiary
Guarantor without the approval of any other Subsidiary Guarantor and without
affecting the obligations of any other Subsidiary Guarantor hereunder.
SECTION 11. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent
hereunder and of the Lenders under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by any
Subsidiary Guarantor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Subsidiary Guarantors with respect to which such waiver, amendment
or modification relates and the Administrative Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 122
8
SECTION 13. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Subsidiary Guarantor shall be given
to it at its address set forth in Schedule I.
SECTION 14. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Subsidiary Guarantors
herein shall be considered to have been relied upon by the Administrative Agent
and the Lenders and shall survive the making by the Lenders of the Loans
regardless of any investigation made by the Administrative Agent or the Lenders
or on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any other fee or amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid and as long as the Commitments have not been terminated.
(b) 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 shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). 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.
SECTION 15. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
<PAGE> 123
9
SECTION 16. Rules of Interpretation. The rules of interpretation specified
in Section 1.03 of the Credit Agreement shall be applicable to this Agreement.
SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each
Subsidiary Guarantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York County, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Subsidiary Guarantor or its properties in the courts of any jurisdiction.
(b) Each Subsidiary Guarantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 13. Nothing in
this Agreement will
<PAGE> 124
10
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
SECTION 18. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.
SECTION 19. Additional Subsidiary Guarantors. Pursuant to Section 5.10 of
the Credit Agreement, each Subsidiary Loan Party that was not in existence on
the date of the Credit Agreement or that becomes a Subsidiary Loan Party after
such date is required to enter into this Agreement as a Subsidiary Guarantor.
Upon execution and delivery after the date hereof by the Administrative Agent
and such a Subsidiary Loan Party of an instrument in the form of Annex 1 hereto,
such Subsidiary Loan Party shall become a Subsidiary Guarantor hereunder with
effect from and after the date of such execution and delivery. The execution and
delivery of any such instrument shall not require the consent of any other
Subsidiary Guarantor hereunder. The rights and obligations of each Subsidiary
Guarantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Guarantor as a party to this Agreement.
SECTION 20. Right of Setoff. If an Event of Default shall have occurred and
be continuing, each of the Administrative Agent and the Lenders is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final)
<PAGE> 125
11
at any time held and other Indebtedness at any time owing by the Administrative
Agent or such Lender, as the case may be, or any of their respective Affiliates,
to or for the credit or the account of any Subsidiary Guarantor against any or
all the obligations of such Subsidiary Guarantor now or hereafter existing under
this Agreement and the other Loan Documents held by the Administrative Agent or
such Lender, irrespective of whether or not the Administrative Agent or such
Lender shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured. The rights of the
Administrative Agent and each Lender under this Section 20 are in addition to
other rights and remedies (including other rights of setoff) which such Person
may have.
<PAGE> 126
12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
GARTNER GROUP, INC.,
by
-----------------------------
Name:
Title:
COMPUTER AND COMMUNICATION
INFORMATION SERVICES, INC.,
by
-----------------------------
Name:
Title:
DATAQUEST INCORPORATED,
by
-----------------------------
Name:
Title:
DATAQUEST(KOREA)INC.,
by
-----------------------------
Name:
Title:
<PAGE> 127
13
DECISION DRIVERS, INC,
by
-----------------------------
Name:
Title:
GARTNER ENTERPRISES LTD.,
by
-----------------------------
Name:
Title:
GARTNER GROUP LEARNING INC.,
by
-----------------------------
Name:
Title:
G.G. GLOBAL HOLDINGS,
by
-----------------------------
Name:
Title:
G.G. INVESTMENT MANAGEMENT, INC.,
by
-----------------------------
Name:
Title:
<PAGE> 128
14
G.G. CREDIT INC.,
by
-----------------------------
Name:
Title:
G.G. WEST CORPORATION,
by
-----------------------------
Name:
Title:
GRIGGS-ANDERSON, INC.,
by
-----------------------------
Name:
Title:
THE RESEARCH BOARD, INC.,
by
-----------------------------
Name:
Title:
VISION EVENTS INTERNATIONAL, INC.,
by
-----------------------------
Name:
Title:
<PAGE> 129
15
VUE ACQUISITION CORPORATION,
by
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent,
by
-----------------------------
Name:
Title:
<PAGE> 130
16
G.G. CANADA,INC.
by
-----------------------------
Name:
Title:
INTECO CORPORATION,
by
-----------------------------
Name:
Title:
<PAGE> 131
SCHEDULE I TO THE
GUARANTEE AGREEMENT
Subsidiary Guarantor Address
-------------------- -------
<PAGE> 132
Annex 1 to the
Guarantee Agreement
SUPPLEMENT NO. dated as of , to the Guarantee
Agreement dated as of July 16, 1999, among each of the
subsidiaries listed on Schedule I thereto (each such
subsidiary individually, a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors") of GARTNER GROUP,
INC., a Delaware corporation (the "Borrower"), and THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), as
Administrative Agent for the Lenders.
A. Reference is made to the Credit Agreement dated as of July 16, 1999 (as
amended from time to time, the "Credit Agreement"), among the Borrower, the
lenders from time to time party thereto (the "Lenders"), and Chase, as
Administrative Agent for the Lenders. Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
B. The Subsidiary Guarantors have entered into the Guarantee Agreement in
order to induce the Lenders to make Loans. Pursuant to Section 5.10 of the
Credit Agreement, each Subsidiary Loan Party that was not in existence on the
date of the Credit Agreement or that becomes a Subsidiary Loan Party after such
date is required to enter into the Guarantee Agreement as a Subsidiary
Guarantor. Section 19 of the Guarantee Agreement provides that such additional
Subsidiaries of the Borrower may become Subsidiary Guarantors under the
Guarantee Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary of the Borrower (the "New Subsidiary
Guarantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Subsidiary Guarantor under the Guarantee
Agreement in order to induce the Lenders to make additional Loans and as
consideration for Loans previously made.
Accordingly, the Administrative Agent and the New Subsidiary Guarantor
agree as follows:
<PAGE> 133
2
SECTION 1. In accordance with Section 19 of the Guarantee Agreement, the
New Subsidiary Guarantor by its signature below becomes a Subsidiary Guarantor
under the Guarantee Agreement with effect from and after the date of execution
and delivery of this Agreement in accordance with Section 3 hereof and the New
Subsidiary Guarantor hereby (a) agrees to, and assumes and agrees to be bound
by, all the terms and provisions of the Guarantee Agreement applicable to it as
a Subsidiary Guarantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary Guarantor thereunder
are true and correct on and as of the date hereof. Each reference to a
"Subsidiary Guarantor" in the Guarantee Agreement shall be deemed to include the
New Subsidiary Guarantor. The Guarantee Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Administrative Agent and the Lenders that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Administrative Agent shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Subsidiary Guarantor and the
Administrative Agent. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee Agreement
shall remain in full force and effect.
<PAGE> 134
3
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guarantee Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
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.
SECTION 7. All communications and notices hereunder shall be in writing and
given as provided in Section 13 of the Guarantee Agreement. All communications
and notices hereunder to the New Subsidiary Guarantor shall be given to it at
the address set forth under its signature below, with a copy to the Borrower.
SECTION 8. The New Subsidiary Guarantor agrees to reimburse the
Administrative Agent for its reasonable out-of-pocket expenses in connection
with this Supplement, including the fees, disbursements and other charges of
counsel for the Administrative Agent.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Administrative
Agent have duly executed this Supplement to the Guarantee Agreement as of the
day and year first above written.
[Name of New Subsidiary Guarantor],
<PAGE> 135
by
-----------------------------------
Name:
Title:
Address:
----------------------------
------------------------------------
------------------------------------
THE CHASE MANHATTAN BANK,
as Administrative Agent,
by
-----------------------------------
Name:
Title:
<PAGE> 136
EXHIBIT D
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of July 16, 1999, among GARTNER
GROUP, INC., a Delaware corporation (the "Borrower"),
each subsidiary of the Borrower listed on Schedule I
hereto (the "Subsidiary Guarantors") and THE CHASE
MANHATTAN BANK, a New York banking corporation
("Chase"), as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders.
Reference is made to (a) the Credit Agreement dated as of July
16, 1999 (as amended from time to time, the "Credit Agreement"), among the
Borrower, the lenders from time to time party thereto (the "Lenders"), and
Chase, as administrative agent for the Lenders, and (b) the Guarantee Agreement
dated as of July 16, 1999, among the Subsidiary Guarantors and the
Administrative Agent (as amended, supplemented or otherwise modified from time
to time, the "Guarantee Agreement"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Subsidiary Guarantors have agreed to guarantee such Loans
and the other Obligations (as defined in the Guarantee Agreement) of the
Borrower under the Credit Agreement pursuant to the Guarantee Agreement. The
obligations of the Lenders to make Loans are conditioned on, among other things,
the execution and delivery by the Borrower and the Subsidiary Guarantors of an
agreement in the form hereof.
<PAGE> 137
Accordingly, the Borrower, each Subsidiary Guarantor and the
Administrative Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Subsidiary Guarantors may have under
applicable law (but subject to Section 3), the Borrower agrees that in the event
a payment shall be made by any Subsidiary Guarantor under the Guarantee
Agreement, the Borrower shall indemnify such Subsidiary Guarantor for the full
amount of such payment and such Subsidiary Guarantor shall be subrogated to the
rights of the person to whom such payment shall have been made to the extent of
such payment.
SECTION 2. Contribution and Subrogation. Each Subsidiary
Guarantor (a "Contributing Guarantor") agrees (subject to Section 3) that, in
the event a payment shall be made by any other Subsidiary Guarantor under the
Guarantee Agreement and such other Subsidiary Guarantor (the "Claiming
Guarantor") shall not have been fully indemnified by the Borrower as provided in
Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor in
an amount equal to the amount of such payment multiplied by a fraction of which
the numerator shall be the net worth of the Contributing Guarantor, and the
denominator shall be the aggregate net worth of all the Subsidiary Guarantors,
in each case on the date hereof (or, in the case of any Subsidiary Guarantor
becoming a party hereto pursuant to Section 11, the date of the Supplement
hereto executed and delivered by such Subsidiary Guarantor). Any Contributing
Guarantor making any payment to a Claiming Guarantor pursuant to this Section 2
shall be subrogated to the rights of such Claiming Guarantor under Section 1 to
the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations. No failure on the part
of the Borrower or any Subsidiary Guarantor to make the payments required by
Sections 1 and 2 (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of any
Subsidiary Guarantor with respect to its
<PAGE> 138
5
obligations hereunder, and each Subsidiary Guarantor shall remain liable for the
full amount of the obligations of such Subsidiary Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and be in
full force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as any of the Commitments under
the Credit Agreement have not been terminated, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any guaranteed Obligation is rescinded or must otherwise be
restored by the Administrative Agent, any Lender or any Subsidiary Guarantor
upon the bankruptcy or reorganization of the Borrower or any Subsidiary
Guarantor or otherwise.
SECTION 5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the part of
the Administrative Agent or any Subsidiary Guarantor to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Administrative Agent or any Subsidiary Guarantor preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law. None of the Administrative Agent and the Subsidiary
Guarantors shall be deemed to have waived any rights hereunder unless such
waiver shall be in writing and signed by such parties.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrower, the Subsidiary Guarantors and the Administrative Agent,
with the prior written consent of the Required Lenders (except as otherwise
provided in the Credit Agreement).
<PAGE> 139
6
SECTION 7. Notices. All communications and notices hereunder
shall be in writing and given as provided in the Guarantee Agreement and
addressed as specified therein.
SECTION 8. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Except as contemplated herein or in the Credit
Agreement, neither the Borrower nor any Subsidiary Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of each
Lender. Notwithstanding the foregoing, at the time any Subsidiary Guarantor is
released from its obligations under the Guarantee Agreement in accordance with
the Guarantee Agreement and the Credit Agreement, such Subsidiary Guarantor will
cease to have any rights or obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrower and each Subsidiary Guarantor
herein shall be considered to have been relied upon by the Administrative Agent,
the Lenders and each Subsidiary Guarantor and shall survive the making by the
Lenders of the Loans and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loans or any other fee or amount
payable under the Credit Agreement or this Agreement or under any of the other
Loan Documents is outstanding and unpaid and as long as the Commitments have not
been terminated.
(b) In case any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be required to comply with such provision for so long as
such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be
<PAGE> 140
7
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Subsidiary Guarantor when a counterpart bearing the signature of
such Subsidiary Guarantor shall have been delivered to the Administrative Agent.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
<PAGE> 141
8
SECTION 11. Additional Guarantors. Pursuant to Section 5.10 of
the Credit Agreement, each Subsidiary Loan Party that was not in existence on
the date of the Credit Agreement or that becomes a Subsidiary Loan Party after
such date is required to enter into the Guarantee Agreement as a Subsidiary
Guarantor. Upon execution and delivery after the date hereof by the
Administrative Agent and such Subsidiary of an instrument in the form of Annex 1
hereto, such Subsidiary shall become a Subsidiary Guarantor hereunder with
effect from and after the date of such execution and delivery. The execution and
delivery of any such instrument shall not require the consent of any other
Subsidiary Guarantor hereunder. The rights and obligations of each Subsidiary
Guarantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Guarantor as a party to this Agreement.
SECTION 12. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.
<PAGE> 142
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
GARTNER GROUP, INC.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: CFO & VP
COMPUTER AND COMMUNICATION
INFORMATION SERVICES,
INC.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
DATAQUEST INCORPORATED,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
DATAQUEST(KOREA)INC.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
<PAGE> 143
10
DECISION DRIVERS, INC,
by
/s/ Cathy S. Satz
Name: Cathy S. Satz
Title: Secretary
GARTNER ENTERPRISES LTD.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
GARTNER GROUP LEARNING INC.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
G.G. GLOBAL HOLDINGS,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
G.G. INVESTMENT MANAGEMENT, INC.,
by
/s/ Andrea Tarbox
Name: Andrea Tarbox
Title: Treasurer
<PAGE> 144
11
G.G. CREDIT INC.,
by
/s/ Andrea Tarbox
Name: Andrea Tarbox
Title: Treasurer
G.G. WEST CORPORATION,
by
/s/ Brain Callahan
Name: Brian Callahan
Title: President
GRIGGS-ANDERSON, INC.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
THE RESEARCH BOARD, INC.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
VISION EVENTS INTERNATIONAL, INC.,
by
/s/ Michael Fleisher
Name: Michael Fleisher
Title: Vice President
<PAGE> 145
12
VUE ACQUISITION CORPORATION,
by
/s/ Cathy S. Satz
Name: Cathy S. Satz
Title: Secretary
THE CHASE MANHATTAN BANK,
as Administrative Agent,
by
/s/ Ronald Anastasio
Name: Rober Anastasio
Title: Vice President
<PAGE> 146
13
G.G. CANADA,INC.
by
/s/ Cathy S. Satz
Name: Cathy S. Satz
Title: Secretary
INTECO CORPORATION,
by
/s/ Cathy S. Satz
Name: Cathy S. Satz
Title: Secretary
<PAGE> 147
SCHEDULE I
to the Indemnity Subrogation
and Contribution Agreement
Subsidiary Guarantors
Name Address
- ---- -------
<PAGE> 148
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of [ ], to
the Indemnity, Subrogation and Contribution
Agreement dated as of July 16, 1999 (as the same may
be amended, supplemented or otherwise modified from
time to time, the "Indemnity, Subrogation and
Contribution Agreement"), among GARTNER GROUP, INC.,
a Delaware corporation (the "Borrower"), each
subsidiary of the Borrower listed on Schedule I
thereto (the "Subsidiary Guarantors"), and THE CHASE
MANHATTAN BANK, a New York banking corporation
("Chase"), as administrative agent (the
"Administrative Agent"), for the Lenders.
A. Reference is made to (a) the Credit Agreement dated as of
July 16, 1999 (as amended from time to time, the "Credit Agreement"), among the
Borrower, the lenders from time to time party thereto (the "Lenders"), and
Chase, as Administrative Agent, and (b) the Guarantee Agreement dated as of July
16, 1999, among the Subsidiary Guarantors and the Administrative Agent (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
Agreement").
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Indemnity,
Subrogation and Contribution Agreement and the Credit Agreement.
C. The Borrower and the Subsidiary Guarantors have entered
into the Indemnity, Subrogation and Contribution Agreement in order to induce
the Lenders to make Loans. Pursuant to Section 5.10 of the Credit Agreement,
each Subsidiary Loan Party that was not in existence on the date of the Credit
Agreement or that becomes a Subsidiary Loan Party after such date is required to
enter into the Guarantee Agreement as a Subsidiary Guarantor. Section 11 of the
Indemnity, Subrogation and Contribution Agreement provides that such additional
Subsidiaries of the Borrower shall become Subsidiary Guarantors under the
Indemnity, Subrogation and Contribution Agreement by execution and delivery of
an instrument in the
<PAGE> 149
form of this Supplement. The undersigned Subsidiary (the "New Guarantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Subsidiary Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make additional Loans
and as consideration for Loans previously made.
Accordingly, the Administrative Agent and the New Guarantor
agree as follows:
SECTION 1. In accordance with Section 11 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature below
becomes a Subsidiary Guarantor under the Indemnity, Subrogation and Contribution
Agreement with effect from and after the date of execution and delivery of this
Agreement in accordance with Section 3 hereof, and the New Guarantor hereby
agrees to, and assumes and agrees to be bound by, all the terms and provisions
of the Indemnity, Subrogation and Contribution Agreement applicable to it as a
Subsidiary Guarantor thereunder. Each reference to a "Subsidiary Guarantor" in
the Indemnity, Subrogation and Contribution Agreement shall be deemed to include
the New Guarantor. The Indemnity, Subrogation and Contribution Agreement is
hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Administrative Agent and the Lenders that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Administrative
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Administrative Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
<PAGE> 150
3
SECTION 4. Except as expressly supplemented hereby, the
Indemnity, Subrogation and Contribution Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and Contribution Agreement
shall not in any way be affected or impaired. The parties hereto 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.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
<PAGE> 151
4
SECTION 8. The New Guarantor agrees to reimburse the
Administrative Agent for its reasonable out-of-pocket expenses in connection
with this Supplement, including the reasonable fees, other charges and
disbursements of counsel for the Administrative Agent.
IN WITNESS WHEREOF, the New Guarantor and the Administrative
Agent have duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
[Name Of New Guarantor],
by
Name:
Title:
Address:
THE CHASE MANHATTAN BANK,
as Administrative Agent,
by
Name:
Title:
<PAGE> 152
Exhibit E
Form of Pledge Agreement
[to come]
<PAGE> 1
APPENDIX A
DISTRIBUTION AGREEMENT
BETWEEN
IMS HEALTH INCORPORATED
AND
GARTNER GROUP, INC.
DATED AS OF JUNE 17, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS.......................................................... 2
SECTION 1.1 General..................................................... 2
SECTION 1.2 References; Interpretation.................................. 6
ARTICLE II. DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS AND
REPRESENTATIONS AND WARRANTIES...................................... 7
SECTION 2.1 The Distribution and Other Transactions..................... 7
SECTION 2.2 The Cash Dividend and the Stock Repurchase.................. 10
SECTION 2.3 Financing................................................... 12
SECTION 2.4 Certain Limitations on Actions by IMS HEALTH................ 12
SECTION 2.5 Declaration Date; Further Assurances........................ 13
SECTION 2.6 Representations and Warranties.............................. 13
ARTICLE III. INDEMNIFICATION.................................................... 17
SECTION 3.1 Indemnification by Gartner.................................. 17
SECTION 3.2 Indemnification by IMS HEALTH............................... 17
SECTION 3.3 Procedures for Indemnification in Third Party Claims........ 17
SECTION 3.4 Indemnification Payments.................................... 19
ARTICLE IV. COVENANTS........................................................... 19
SECTION 4.1 Access to Information....................................... 19
SECTION 4.2 Confidentiality............................................. 19
SECTION 4.3 Standstill.................................................. 19
SECTION 4.4 Public Announcements........................................ 21
SECTION 4.5 Required Consents........................................... 21
ARTICLE V. DISPUTE RESOLUTION................................................... 21
SECTION 5.1 Negotiation................................................. 21
SECTION 5.2 Arbitration................................................. 21
SECTION 5.3 Continuity of Service and Performance....................... 22
ARTICLE VI. INSURANCE........................................................... 22
SECTION 6.1 Separation of Insurance Coverages........................... 22
SECTION 6.2 Policy Rights............................................... 22
SECTION 6.3 Post-Distribution Date Claims............................... 22
SECTION 6.4 Agreement for Waiver of Conflict and Shared Defense......... 24
SECTION 6.5 Cooperation................................................. 24
ARTICLE VII. MISCELLANEOUS...................................................... 24
SECTION 7.1 Complete Agreement; Construction............................ 24
SECTION 7.2 Counterparts................................................ 24
SECTION 7.3 Survival of Agreements...................................... 24
SECTION 7.4 Expenses.................................................... 24
SECTION 7.5 Notices..................................................... 24
SECTION 7.6 Waivers..................................................... 25
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 7.7 Amendments.................................................. 25
SECTION 7.8 Assignment.................................................. 25
SECTION 7.9 Successors and Assigns...................................... 25
SECTION 7.10 Termination................................................. 25
SECTION 7.11 Subsidiaries................................................ 26
SECTION 7.12 Third Party Beneficiaries................................... 26
SECTION 7.13 Title and Headings.......................................... 26
SECTION 7.14 Exhibits and Schedules...................................... 26
SECTION 7.15 GOVERNING LAW............................................... 26
SECTION 7.16 Consent to Jurisdiction..................................... 26
SECTION 7.17 Severability................................................ 27
</TABLE>
EXHIBITS
Exhibit 2.1(d) Undertaking of Gartner Group, Inc. under 1996 Distribution
Agreement.
Exhibit 2.1(d)(ii) Undertaking of Gartner Group, Inc. under 1998
Distribution Agreement.
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DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of June 17, 1999 (this "Agreement"),
between IMS HEALTH INCORPORATED, a Delaware corporation ("IMS HEALTH"), and
GARTNER GROUP, INC., a Delaware corporation ("Gartner").
WHEREAS, IMS HEALTH owns, directly and indirectly, as of the close of
business on the date hereof, 47,599,105 shares of Class A Common Stock, par
value $.0005 per share ("Class A Common Stock"), of Gartner;
WHEREAS, simultaneously with the execution hereof, Gartner, IMS HEALTH, and
GRGI, INC., a Delaware corporation and a wholly owned subsidiary of IMS HEALTH
("Merger Sub"), are entering into an Agreement and Plan of Merger in the form
attached hereto as Exhibit A-1 (the "Recapitalization Agreement"), pursuant to
which, among other things, Merger Sub will merge with and into Gartner with the
consequent capital stock changes resulting in (i) IMS HEALTH acquiring, in
exchange for 40,689,648 shares of Class A Common Stock held by it 40,689,648
shares of a new Class B Common Stock, par value $.0005 per share ("Class B
Common Stock" and, together with the Class A Common Stock, the "Gartner Common
Stock"), of Gartner, which class of stock shall be entitled to elect 80% of the
members of the board of directors of Gartner and in all other respects shall be
substantially identical to the Class A Common Stock, and (ii) IMS retaining
6,909,457 shares of Class A Common Stock (the "Retained Shares") and the
Warrants (as defined herein) to purchase 599,400 shares of Class A Common Stock,
and all other stockholders of Gartner retaining all their shares of Class A
Common Stock, which class of stock shall be entitled to elect 20% of the members
of the board of directors of Gartner (the "Recapitalization");
WHEREAS, the Board of Directors of IMS HEALTH has determined that it is
appropriate, desirable and in the best interests of IMS HEALTH and its
stockholders to distribute on the Distribution Date (as defined herein) all the
shares of Class B Common Stock that IMS HEALTH will receive in the
Recapitalization, on the terms and subject to the conditions set forth in this
Agreement, to the holders of record of the Common Stock, par value $.01 per
share, of IMS HEALTH ("IMS HEALTH Common Stock"), as of the Distribution Record
Date (as defined herein), on a pro rata basis (the "Distribution");
WHEREAS, the Board of Directors of Gartner has determined that it is
appropriate, desirable and in the best interests of Gartner and its stockholders
that the Distribution be consummated, and the Recapitalization is a necessary
and desirable means to enable the Distribution to occur;
WHEREAS, IMS HEALTH has received a ruling from the Internal Revenue Service
to the effect that the Distribution will be a tax-free distribution within the
meaning of Section 355 of the Code (as defined herein);
WHEREAS, upon the terms and subject to the conditions of this Agreement,
the board of directors of Gartner shall declare the Cash Dividend (as defined
herein), payable on a pro rata basis to holders of record of Gartner Common
Stock as of the date immediately preceding the Distribution Record Date;
WHEREAS, upon the terms and subject to the conditions of this Agreement,
Gartner will commence the Stock Repurchase (as defined herein) after the
Distribution for a number of shares of Class A Common Stock and Class B Common
Stock equal to 19.99% of the total number of outstanding shares of Gartner
Common Stock; and
WHEREAS, each of IMS HEALTH and GARTNER has determined that it is necessary
and desirable to set forth the principal corporate transactions required to
effect the Distribution, the Recapitalization, the Cash Dividend and the Stock
Repurchase and to set forth other agreements that will govern certain other
matters following the Distribution.
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NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 General. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or
other regulatory or administrative agency, body or commission or any
arbitration tribunal.
(b) "Affiliate" shall mean, when used with respect to a specified
person, another person that controls, is controlled by, or is under common
control with the person specified. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of voting securities or other interests, by contract or
otherwise.
(c) "Agreement Disputes" shall have the meaning set forth in Section
5.1.
(d) "Assets" shall mean assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or
other third parties or elsewhere), whether real, personal or mixed,
tangible, intangible or contingent, in each case whether or not recorded or
reflected or required to be recorded or reflected on the books and records
or financial statements of any Person.
(e) "Business Entity" shall mean any corporation, partnership, limited
liability company or other entity which may legally hold title to Assets.
(f) "Cash Dividend" shall have the meaning set forth in Section
2.2(a).
(g) "Cash Dividend Date" shall mean the date immediately preceding the
Distribution Date.
(h) "Cash Dividend Record Date" shall mean the date immediately
preceding the Distribution Record Date.
(i) "Claims Administration" shall mean the processing of claims made
under the Shared Policies, including the reporting of claims to the
insurance carriers and the management of the defense of claims.
(j) "Class A Common Stock" shall have the meaning set forth in the
recitals hereto.
(k) "Class B Common Stock" shall have the meaning set forth in the
recitals hereto.
(l) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the Treasury regulations promulgated thereunder, including any
successor legislation.
(m) "Commission" shall mean the U.S. Securities and Exchange
Commission.
(n) "Dataquest Agreement" shall mean that certain Acquisition
Agreement dated as of November 27, 1995 by and among Gartner Group, Inc.,
Bosa Acquisition Corp., Gartner Group U.K. Ltd., Gartner Group GMBH, The
Dun & Bradstreet Corporation, Dataquest Incorporated, Dataquest Europe
Limited and Dataquest GMBH.
(o) "Declaration Date" shall mean the date, mutually agreed between
IMS HEALTH and Gartner, on which (i) the IMS HEALTH Board of Directors
shall declare the Distribution, (ii) the Gartner Board of Directors shall
declare the Cash Dividend and (iii) the Certificate of Merger effecting the
Recapitalization shall be filed with the Secretary of State of the State of
Delaware.
(p) "DGCL" shall mean the General Corporation Law of the State of
Delaware.
(q) "Distribution" shall have the meaning set forth in the recitals
hereto.
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(r) "Distribution Agent" shall mean the distribution agent selected by
IMS HEALTH to effect the Distribution, which may be Gartner's stock
transfer agent.
(s) "Distribution Date" shall mean the date determined by the Board of
Directors of IMS HEALTH following the consummation of the Recapitalization
for the mailing of certificates of Class B Common Stock to stockholders of
IMS HEALTH in the Distribution. The Distribution Date shall be a date as
soon as practicable following the Declaration Date, but not more than
thirty days after the filing of the Certificate of Merger relating to the
Recapitalization.
(t) "Distribution Record Date" shall mean the date determined by the
Board of Directors of IMS HEALTH as the record date for the determination
of the holders of record of IMS HEALTH Common Stock entitled to receive
shares of Class B Common Stock in the Distribution.
(u) "Effective Time" shall mean immediately prior to the midnight, New
York time, that ends the 24-hour period comprising the Distribution Date.
(v) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
(w) "Financing Commitments" shall have the meaning set forth in
Section 2.3.
(x) "Form 8-A" shall mean a Gartner registration statement on Form 8-A
pursuant to which the Class B Common Stock shall be registered under the
Exchange Act, including all amendments thereto.
(y) "Gartner" shall have the meaning set forth in the heading of this
Agreement.
(z) "Gartner Business" shall mean each and every business conducted at
any time prior to, on or after the Effective Time by Gartner or any
current, former, or future Subsidiary of Gartner or other Business Entity
controlled by Gartner, whether or not such Subsidiary is a Subsidiary of
Gartner or such Business Entity is controlled by Gartner on the date
hereof.
(aa) "Gartner Business Entity" shall mean any Business Entity a
majority of the equity interests of which are owned, directly or
indirectly, by Gartner.
(bb) "Gartner Group" shall mean Gartner and each Person that is a
Subsidiary of Gartner immediately prior to the Effective Time.
(cc) "Gartner Indemnitees" shall mean Gartner, each member of the
Gartner Group, each of their respective present and former directors,
officers, employees and agents and each of the heirs, executors, successors
and assigns of any of the foregoing.
(dd) "Gartner Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise out of, result from or are related to the
operation of the Gartner Business or the ownership of the assets of the
Gartner Business by Gartner, any current, former or future Subsidiary of
Gartner or any Business Entity controlled by Gartner, whether such
Liabilities arise before, on or after the Effective Time and whether known
or unknown, fixed or contingent, and shall include, without limitation:
(i) any and all Liabilities to which IMS HEALTH or its predecessors
and successors may become subject arising from or based upon its status
or alleged status as a "controlling person" (as defined under Section 15
of the Securities Act and Section 20 of the Exchange Act) of Gartner
relating to (a) the Proxy Statement (or any amendment thereto) (except
for liabilities which Gartner incurs solely as a result of written
information relating to IMS HEALTH supplied by IMS HEALTH for inclusion
in the Proxy Statement) or (b) any other report or document filed by
Gartner with the Commission at any time before, on or after the
Effective Time (except for liabilities which Gartner incurs solely as a
result of written information relating to IMS HEALTH or the IMS HEALTH
Business supplied by IMS HEALTH for inclusion in such report or
document);
(ii) any and all Liabilities that are expressly contemplated by
this Agreement or the Recapitalization Agreement (or the Schedules
hereto or thereto) as Liabilities to be assumed by Gartner or any member
of the Gartner Group or to remain with Gartner or any member of the
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Gartner Group and any Liabilities under this Agreement for a breach by
Gartner of any representation, warranty or covenant herein; and
(iii) any and all Liabilities which IMS HEALTH or any of its
Subsidiaries and any Affiliates may be subject to or which may be
asserted against any of them arising from or based upon any sublease by
Gartner or a Subsidiary of Gartner or other Business Entity controlled
by Gartner of office space in Nanterre, France, Paris, France or Tokyo,
Japan where RHD or any of its predecessors or any of their successors or
their respective Affiliates occupy space on the premises, including
pursuant to any sublease agreement or amendment or other agreement
related thereto.
(ee) "Governmental Authority" shall mean any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or
governmental authority.
(ff) "IMS HEALTH Business" shall mean each and every business
conducted at any time by IMS HEALTH or any current, former or future
Subsidiary of IMS HEALTH (other than Gartner and its Subsidiaries) prior to
the Effective Time or other Business Entity controlled by IMS HEALTH (other
than Gartner and its Subsidiaries), whether or not such Subsidiary is a
Subsidiary of IMS HEALTH or such Business Entity is controlled by IMS
HEALTH on the date hereof, except for the Gartner Business.
(gg) "IMS HEALTH Business Entity" shall mean any Business Entity a
majority of the equity interests of which are owned, directly or
indirectly, by IMS HEALTH.
(hh) "IMS HEALTH Common Stock" shall mean the common stock, par value
$.01 per share, of IMS HEALTH.
(ii) "IMS HEALTH Distribution" shall mean the distribution of the
common stock of IMS HEALTH described in Exhibit 2.1(d)(i).
(jj) "IMS HEALTH Group" shall mean IMS HEALTH and each Person (other
than any member of the Gartner Group) that is a Subsidiary of IMS HEALTH
immediately prior to the Effective Time.
(kk) "IMS HEALTH Indemnitees" shall mean IMS HEALTH, each member of
the IMS HEALTH Group, each of their respective present and former
directors, officers, employees and agents and each of the heirs, executors,
successors and assigns of any of the foregoing, except Gartner Indemnitees
who would not otherwise be an IMS HEALTH Indemnitee.
(ll) "IMS HEALTH Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise out of, result from or are related to the
operation of the IMS HEALTH Business or the ownership of the assets of the
IMS HEALTH Business by IMS HEALTH, any predecessor entity of IMS HEALTH
(and all predecessors thereto) or any Subsidiary of or Business Entity
controlled by any such predecessor, any current, former, or future
Subsidiary of IMS HEALTH or any Business Entity controlled by IMS HEALTH
(other than, in each case, Gartner and its Subsidiaries) whether such
Liabilities arise before, on or after the Effective Time and whether known
or unknown, fixed or contingent, and shall include, without limitation:
(i) any and all Liabilities that are expressly contemplated by this
Agreement or the Recapitalization Agreement (or the Schedules hereto or
thereto) as Liabilities to be assumed by IMS HEALTH or any member of the
IMS HEALTH Group or to remain with IMS HEALTH or any member of the IMS
HEALTH Group and any Liabilities under this Agreement for a breach by
IMS HEALTH of any representation, warranty or covenant herein; and
(ii) any and all Liabilities which Gartner incurs solely as a
result of written information relating to IMS HEALTH or the IMS HEALTH
Business supplied by IMS HEALTH for inclusion in the Proxy Statement or
any report or document filed by Gartner with the Commission.
(mm) "Indemnifying Party" shall have the meaning set forth in Section
3.3.
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(nn) "Indemnitee" shall have the meaning set forth in Section 3.3.
(oo) "Insurance Administration" shall mean, with respect to each
Shared Policy, the accounting for premiums, retrospectively-rated premiums,
defense costs, indemnity payments, deductibles and retentions, as
appropriate, under the terms and conditions of each of the Shared Policies,
the reporting to insurance carriers of any losses or claims, and the
distribution of Insurance Proceeds as contemplated by this Agreement.
(pp) "Insurance Proceeds" shall mean those monies (i) received by an
insured from an insurance carrier or (ii) paid by an insurance carrier on
behalf of an insured, in either case net of any applicable premium
adjustment, retrospectively-rated premium, deductible, retention, or cost
of reserve paid or held by or for the benefit of such insured.
(qq) "Insured Claims" shall mean those Liabilities that, individually
or in the aggregate, are covered within the terms and conditions of any of
the Shared Policies, whether or not subject to policy limits, deductibles,
co-insurance, uncollectibility or retrospectively-rated premium
adjustments.
(rr) "IRS" shall mean the Internal Revenue Service.
(ss) "IRS Ruling" shall have the meaning set forth in Section
2.1(b)(i).
(tt) "IRS Supplemental Ruling" shall mean a ruling from the IRS
requested by IMS HEALTH providing, among other things, that neither the
Recapitalization nor the Distribution will be taken into account in
applying Section 355(e)(2)(A)(ii) of the Code.
(uu) "Liabilities" shall mean any and all losses, claims, charges,
debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, bonds,
specialties, indemnities and similar obligations, exonerations, covenants,
contracts, controversies, agreements, promises, doings, omissions,
variances, guarantees, make whole agreements and similar obligations, and
other liabilities, including all contractual obligations, whether absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising
under any law, rule, regulation, Action, threatened or contemplated Action
(including the costs and expenses of demands, assessments, judgments,
settlements and compromises relating thereto and attorneys' fees and any
and all costs and expenses, whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or
threatened or contemplated Actions), order or consent decree of any
governmental or other regulatory or administrative agency, body or
commission or any award of any arbitrator or mediator of any kind, and
those arising under any contract, commitment or undertaking, including
those arising under this Agreement or the Recapitalization Agreement, in
each case, whether or not recorded or reflected or required to be recorded
or reflected on the books and records or financial statements of any
person.
(vv) "1996 Distribution Agreement" shall mean the Distribution
Agreement among Cognizant Corporation, The Dun & Bradstreet Corporation,
which has been renamed the R.H. Donnelley Corporation ("RHD") and ACNielsen
Corporation ("ACNielsen") dated as of October 28, 1996.
(ww) "1998 Distribution Agreement" shall mean the Distribution
Agreement between Cognizant Corporation, which has been renamed 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.
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(aaa) "Policies" shall mean insurance policies and insurance contracts
of any kind (other than life and benefits policies or contracts), including
primary, excess and umbrella policies, comprehensive general liability
policies, director and officer liability, fiduciary liability, automobile,
aircraft, property and casualty, workers' compensation and employee
dishonesty insurance policies, bonds and self-insurance and captive
insurance company arrangements, together with the rights, benefits and
privileges thereunder.
(bbb) "Proxy Statement" shall have the meaning set forth in the
Recapitalization Agreement.
(ccc) "Recapitalization" shall have the meaning set forth in the
recitals hereto.
(ddd) "Recapitalization Agreement" shall have the meaning set forth in
the recitals hereto.
(eee) "Retained Shares" shall have the meaning set forth in the
recitals hereto.
(fff) "Required Consents" shall have the meaning set forth in Section
4.5.
(ggg) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(hhh) "Share Increase" shall have the meaning set forth in the
Recapitalization Agreement.
(iii) "Shared Policies" shall mean all Policies, current or past,
which are owned or maintained by or on behalf of IMS HEALTH or any
Subsidiary of IMS HEALTH immediately prior to the Effective Time which
relate to the Gartner Business and the IMS HEALTH Business.
(jjj) "Stock Repurchase" shall have the meaning set forth in Section
2.2(b).
(kkk) "Subsidiary" shall mean any corporation, partnership or other
entity of which another entity (i) owns, directly or indirectly, ownership
interests sufficient to elect a majority of the Board of Directors (or
persons performing similar functions) (irrespective of whether at the time
any other class or classes of ownership interests of such corporation,
partnership or other entity shall or might have such voting power upon the
occurrence of any contingency) or (ii) is a general partner or an entity
performing similar functions (e.g., a trustee).
(lll) "Third Party Claim" shall have the meaning set forth in Section
3.3.
(mmm) "Transition Services Agreement" shall mean the Amended and
Restated Transition Services Agreement dated as of June 30, 1998, among The
Dun & Bradstreet Corporation, The New Dun & Bradstreet Corporation, NMR,
IMS HEALTH, ACNielsen Corporation and Gartner.
(nnn) "Warrants" shall mean the Warrant dated as of November 1, 1996
and amended as of February 20, 1999 issued by Gartner exercisable for
539,460 shares of Class A Common Stock as of the date hereof and the
Warrant dated as of November 1, 1996 and amended as of February 20, 1999
issued by Gartner exercisable for 59,940 shares of Class A Common Stock as
of the date hereof.
(ooo) "Warrant Shares" shall mean the shares of Class A Common Stock
issuable by Gartner pursuant to the Warrants.
SECTION 1.2 References; Interpretation. References in this Agreement to
any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words "include", "includes"
and "including" when used in this Agreement shall be deemed to be followed by
the phrase "without limitation". Unless the context otherwise requires,
references in this Agreement to Articles, Sections, Exhibits and Schedules shall
be deemed references to Articles and Sections of, and Exhibits and Schedules to,
such Agreement. Unless the context otherwise requires, the words "hereof",
"hereby" and "herein" and words of similar meaning when used in this Agreement
refer to this Agreement in its entirety and not to any particular Article,
Section or provision of this Agreement.
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ARTICLE II.
DISTRIBUTION AND OTHER TRANSACTIONS;
CERTAIN COVENANTS AND REPRESENTATIONS AND WARRANTIES
SECTION 2.1 The Distribution and Other Transactions.
(a) The Distribution. Subject to the conditions set forth in Section 2.1(b)
of this Agreement, on the Declaration Date the Board of Directors of IMS HEALTH
shall declare the Distribution upon the terms set forth in this Agreement. To
effect the Distribution, IMS HEALTH shall cause the Distribution Agent to
distribute, on or as soon as practicable following the Distribution Date, on a
pro rata basis and taking into account Section 2.1(c), to the holders of record
of IMS HEALTH Common Stock on the Distribution Record Date, all shares of Class
B Common Stock held by IMS HEALTH on the Distribution Date. During the period
commencing on the date the certificates representing shares of Class B Common
Stock are delivered to the Distribution Agent and ending upon the date(s) on
which certificates evidencing such shares are mailed to holders of record of IMS
HEALTH Common Stock on the Distribution Record Date or on which fractional
shares of Class B Common Stock are sold on behalf of such holders, the
Distribution Agent shall hold the certificates representing shares of Class B
Common Stock on behalf of such holders. IMS HEALTH shall deliver to the Agent
the share certificates representing the shares of Class B Common Stock held by
IMS HEALTH which are to be distributed to the holders of IMS HEALTH Common Stock
in the Distribution. IMS HEALTH agrees to reimburse the Distribution Agent for
its reasonable costs, expenses and fees in connection with the Distribution.
Gartner agrees, if required by IMS HEALTH, to provide all certificates
evidencing shares of Class B Common Stock that IMS HEALTH shall require in order
to effect the Distribution.
(b) Conditions to the Distribution. The IMS HEALTH Board of Directors shall
declare the Distribution on the Declaration Date following the satisfaction or
waiver by IMS HEALTH, as determined by IMS HEALTH in its sole discretion, of the
conditions set forth below:
(i) The private letter ruling received from the IRS providing that,
among other things, the Recapitalization and the Distribution will qualify
as tax-free transactions for federal income tax purposes under Sections 354
and 355 of the Code, respectively (the "IRS Ruling") shall continue in
effect; and IMS HEALTH and Gartner shall have complied with all provisions
set forth in the IRS Ruling, the request for the IRS Supplemental Ruling
and, if granted prior to such time, the IRS Supplemental Ruling, in each
case, that are required to be complied with prior to the Declaration Date;
(ii) Any material governmental approvals and consents necessary to
consummate the Distribution and the other transactions contemplated hereby
and by the Recapitalization Agreement shall have been obtained and shall be
in full force and effect;
(iii) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Distribution and the other transactions
contemplated hereby and by the Recapitalization Agreement shall be in
effect and no other event outside the control of IMS HEALTH shall have
occurred or failed to occur that prevents the lawful consummation of the
Distribution;
(iv) The Recapitalization, the Cash Dividend, the Stock Repurchase and
the Distribution shall be in compliance with applicable federal and state
securities and other applicable laws;
(v) Each of Gartner and IMS HEALTH shall have received all the
Required Consents;
(vi) All conditions to the Recapitalization shall have been satisfied
or waived and no circumstances shall exist that would reasonably be
expected to prevent the consummation of the Recapitalization immediately
following the declaration of the Distribution;
(vii) The Cash Dividend shall be declared by the Board of Directors of
Gartner substantially simultaneously with the declaration of the
Distribution and no circumstances shall exist that would reasonably be
expected to prevent the prompt payment of the Cash Dividend;
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(viii) The Stock Repurchase shall have been authorized and not revoked
by the Board of Directors of Gartner, or shall be so authorized
simultaneously with the declaration of the Distribution and shall be
committed to by Gartner to the satisfaction of IMS HEALTH;
(ix) The Form 8-A shall have been filed with the Commission and there
shall be no impediment to the certification by the NYSE to the Commission
of the listing of the Class B Common Stock;
(x) The Class B Common Stock shall have been approved for listing on
the NYSE, subject to official notice of issuance;
(xi) Each of the representations and warranties of Gartner set forth
in this Agreement shall have been true and correct in all material respects
when made and shall be true and correct in all material respects as of the
Declaration Date; and Gartner shall have performed or complied in all
material respects with all agreements and covenants required to be
performed by it under this Agreement and the Recapitalization Agreement at
or prior to the Declaration Date; and IMS HEALTH shall have received a
certificate of the chief executive officer of Gartner as to the foregoing;
(xii) IMS HEALTH shall have received copies of the Financing
Commitments from Gartner, Gartner shall have complied with Section 2.3
hereof, and IMS HEALTH, acting reasonably, shall be satisfied that funds
available pursuant to such Financing Commitments, together with funds
internally available to Gartner, shall be sufficient to consummate the Cash
Dividend and the Stock Repurchase;
(xiii) All actions and other documents and instruments reasonably
necessary in connection with the transactions contemplated hereby shall
have been taken or executed, as the case may be, in form and substance
reasonably satisfactory to IMS HEALTH; and
The foregoing conditions are for the sole benefit of IMS HEALTH and shall not
give rise to or create any duty on the part of IMS HEALTH to waive or not waive
any such condition.
(c) Sale of Fractional Shares. IMS HEALTH shall appoint the Distribution
Agent as agent for each holder of record of IMS HEALTH Common Stock who would
receive in the Distribution any fractional share of Class B Common Stock. The
Distribution Agent shall aggregate all such fractional shares and sell them in
an orderly manner after the Distribution Date in the open market and, after
completion of such sales, distribute a pro rata portion of the net proceeds from
such sales, based upon the gross selling price of all such fractional shares net
of all selling expenses, to each stockholder of IMS HEALTH who would otherwise
have received a fractional share. IMS HEALTH shall reimburse the Distribution
Agent for its reasonable costs, expenses and fees (other than selling expenses)
in connection with the sale of fractional shares of Class B Common Stock and the
distribution of the proceeds thereof in accordance with this Section 2.1(c).
(d) Undertaking of Gartner. On or prior to the Distribution Date, Gartner
will undertake (i) to each of RHD and ACNielsen to be jointly and severally
liable for all "Cognizant Liabilities" (as defined in the 1996 Distribution
Agreement) under the 1996 Distribution Agreement pursuant to an undertaking
substantially in the form of Exhibit 2.1(d)(i) hereto, and (ii) to 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
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information. Gartner agrees to cooperate with IMS HEALTH in the preparation of,
and provide any information reasonably requested by IMS HEALTH for inclusion in,
such mailing. Gartner shall cause its officers to certify in writing to IMS
HEALTH that all information provided to IMS HEALTH for such mailing is true and
accurate in all material respects. IMS HEALTH and Gartner will prepare, and
Gartner will, to the extent required under applicable law, file with the
Commission any such documentation, including any no action letters or other
requests for interpretive or regulatory assistance, if any, which IMS HEALTH and
Gartner reasonably determine are necessary or desirable to effectuate the
Distribution and the other transactions contemplated hereby and by the
Recapitalization Agreement and IMS HEALTH and Gartner shall each use its
commercially reasonable efforts to obtain all necessary approvals from the
Commission with respect thereto as soon as practicable.
(ii) IMS HEALTH and Gartner shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of the
United States (and any comparable laws under any foreign jurisdiction) in
connection with the Distribution and the other transactions contemplated
hereby and by the Recapitalization Agreement.
(iii) Gartner shall prepare and file, and shall use its commercially
reasonable efforts to have approved, an application for the listing on the
NYSE of the Class B Common Stock to be distributed in the Distribution,
subject to official notice of issuance. IMS HEALTH shall provide, upon
request by Gartner, information reasonably necessary to Gartner for its
preparation and filing of such application.
(iv) Subject to Section 2.1(e)(vii), Gartner shall prepare and file
the Form 8-A (which may include or incorporate by reference information
contained in the Proxy Statement) with the Commission as promptly as
practicable following the execution hereof, and shall use its commercially
reasonable efforts to cause the Form 8-A to become effective under the
Exchange Act immediately following the consummation of the Recapitalization
or as soon thereafter as practicable. IMS HEALTH shall provide, upon
request by Gartner, information reasonably necessary to Gartner for its
preparation and filing of such Form 8-A.
(v) On or prior to the Distribution Date, each of IMS HEALTH and
Gartner shall take those actions and consummate those other transactions in
connection with the Distribution that are contemplated by the IRS Ruling,
the ruling request therefor or any related submissions by IMS HEALTH to the
IRS (which shall have been reviewed by Gartner), including, to the extent
applicable, the IRS Supplemental Ruling and the request therefor.
(vi) In addition to those matters specifically set forth above, IMS
HEALTH and Gartner also shall take all reasonable steps necessary and
appropriate to cause the conditions set forth in Section 2.1(b) to be
satisfied and to effect the Distribution on the Distribution Date.
(vii) Until the Distribution Date, Gartner agrees that prior to filing
with the Commission any report or other document that contains any
disclosure relating to the Distribution, this Agreement, the
Recapitalization Agreement or any of the transactions contemplated hereby
or thereby, it shall give IMS HEALTH and its counsel reasonably appropriate
advance opportunity to review such report or other document and shall
consider in good faith any comments IMS HEALTH may deliver to Gartner with
respect to or for inclusion in such report or document.
(viii) Prior to the Distribution Date, Gartner shall not amend, and
the Gartner Board of Directors shall not approve any amendment to,
Gartner's restated Certificate of Incorporation or By-Laws, other than the
amendments that will take effect upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware in connection
with the Recapitalization in accordance with the terms of the
Recapitalization Agreement.
(ix) IMS HEALTH agrees to be present in person or by proxy at each and
every stockholders meeting of Gartner at which the Recapitalization, the
Governance Provisions and the Share Increase (each as defined in the
Recapitalization Agreement) are submitted to the stockholders of Gartner
for consideration at such meeting, and to vote, or cause to be voted, all
shares of Gartner Class A Common Stock owned directly or indirectly by it
and its Subsidiaries in favor of the Recapitalization, the
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Governance Provisions and the Share Increase; provided that the Governance
Provisions and the Share Increase are to become effective solely upon the
effectiveness of the Merger; and similarly to execute any written consent
submitted to stockholders by Gartner in favor of the Recapitalization, the
Governance Provisions and the Share Increase.
(x) Effective upon the consummation of the Distribution, the
Stockholder's Agreement dated as of March 19, 1993, between Gartner and The
Dun & Bradstreet Corporation and the Amended and Restated Registration
Agreement dated as of March 19, 1993, among Gartner, The Dun & Bradstreet
Corporation, D&B Enterprises, Inc. and 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 2.2 The Cash Dividend and the Stock Repurchase.
(a) The Cash Dividend. Subject to the conditions set forth in Section
2.2(c) of this Agreement, on the Declaration Date the Board of Directors of
Gartner shall declare a pro rata cash dividend to all holders of record of
Gartner Common Stock as of the Cash Dividend Record Date in the aggregate amount
of $125 million (the "Cash Dividend").
(b) Stock Repurchase. Subject to the conditions set forth in Section 2.2(c)
of this Agreement, Gartner shall, as soon as practicable following completion of
the Recapitalization and the Distribution, in compliance with the rules and
regulations of the Commission, including Regulation 13E under the Exchange Act,
commence a "Dutch auction" tender offer (the "Self Tender Offer") for a number
of shares of Class A Common Stock and Class B Common Stock in the aggregate
equal to at least 15% of the total number of shares of Gartner Common Stock
outstanding immediately following the Distribution (the "Minimum Self Tender
Amount"), with such purchases allocated between shares of Class A Common Stock
and Class B Common Stock on a pro rata basis based on the relative numbers of
shares of such classes outstanding immediately following the Distribution ("Pro
Rata"). Subject to the previous sentence, Gartner shall acquire all shares
properly tendered in response to such Self Tender Offer as promptly as
practicable following commencement thereof, subject to reasonable and customary
conditions and other terms and reasonable range of purchase prices based on
recent trading prices of Gartner Class A and Class B Common Stock, which
conditions, terms and ranges shall be determined by the Board of Directors of
Gartner in good faith. Subject to the conditions set forth in Section 2.2(c) of
this Agreement, Gartner shall, as soon as practicable following completion of
the Self Tender Offer, in compliance with the rules and regulations of the
Commission, including Rule 10b-18 under the Exchange Act, purchase through an
open-market stock purchase program an amount of shares of Common Stock equal to
(i) 4.99% of the number of shares of Gartner Common Stock plus or minus (ii) the
amount, if any, by which the Minimum Self Tender Amount is less than or exceeds,
respectively, the number of shares of Gartner Common Stock actually purchased in
the Self Tender Offer (the "Minimum Open Market Amount"), with such purchases
allocated Pro Rata between shares of Class A Common Stock and Class B Common
Stock (the "Open Market Repurchase Program" and, together with the Self Tender
Offer, the "Stock Repurchase"). Gartner shall commence the Open Market
Repurchase Program as promptly as practicable (subject to market conditions)
after the Self Tender Offer and shall in any event complete the Open Market
Repurchase Program in an orderly manner within two years after the Distribution
Date. Gartner agrees that it will not repurchase any shares of Class A Common
Stock or Class B Common Stock in the Self Tender Offer beneficially owned by any
of its directors or officers and will not knowingly repurchase any shares of
Class A Common Stock or Class B Common Stock in the Stock Repurchase
beneficially owned by any of its directors or officers (it being understood that
in the case of the
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Open Market Repurchase Program effected through brokers, Gartner shall be deemed
not to have knowledge of the identity of any seller).
(c) Conditions of the Cash Dividend and Stock Repurchase. The obligation of
the Board of Directors of Gartner to declare the Cash Dividend on the
Declaration Date and consummate the Stock Repurchase following completion of the
Recapitalization and the declaration of the Distribution shall be conditioned
upon the satisfaction or waiver by Gartner, as determined by Gartner in its sole
discretion, of the following conditions:
(i) The IRS Ruling shall continue in effect; and IMS HEALTH shall have
complied with all provisions set forth in the IRS Ruling, the request for
the IRS Supplemental Ruling and, if granted prior to such time, the IRS
Supplemental Ruling that, in each case, are required to be complied with by
it prior to the Declaration Date;
(ii) All conditions to the Recapitalization shall have been satisfied
or waived and no circumstances shall exist that would reasonably be
expected to prevent the consummation of the Recapitalization immediately
following the declaration of the Cash Dividend;
(iii) The Distribution shall be declared by the Board of Directors of
IMS HEALTH substantially simultaneously with the declaration of the Cash
Dividend and no circumstances shall exist that would reasonably be expected
to prevent the prompt consummation of the Distribution;
(iv) Any material governmental approvals and consents necessary to
consummate the Cash Dividend or the Stock Repurchase, as the case may be,
shall have been obtained and shall be in full force and effect;
(v) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition in each case
preventing the consummation of the Cash Dividend, the Stock Repurchase or
the Distribution shall be in effect, and no other event outside the control
of Gartner shall have occurred or failed to occur that prevents the lawful
consummation of the Cash Dividend, the Stock Repurchase or the
Distribution;
(vi) The Recapitalization, the Cash Dividend, the Stock Repurchase and
the Distribution shall be in compliance with applicable federal and state
securities and other applicable laws;
(vii) The Form 8-A shall have been filed with the Commission and there
shall be no impediment to the certification by NYSE to the Commission of
the listing of the Class B Common Stock;
(viii) The Class B Common Stock shall have been approved for listing
on the NYSE, subject to official notice of issuance;
(ix) Each of the representations and warranties of IMS HEALTH set
forth in this Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material respects
as of the Declaration Date; and IMS HEALTH shall have performed or complied
in all material respects with all agreements and covenants required to be
performed by it under this Agreement and the Recapitalization Agreement at
or prior to the Declaration Date; and Gartner shall have received a
certificate of the chief executive officer of IMS HEALTH as to the
foregoing;
(x) All actions and other documents and instruments reasonably
necessary in connection with the transactions contemplated hereby shall
have been taken or executed, as the case may be, in form and substance
reasonably satisfactory to Gartner; and
(xi) Each of Gartner and IMS HEALTH shall have received all the
Required Consents.
The foregoing conditions are for the sole benefit of Gartner and shall not give
rise to or create any duty on the part of Gartner to waive or not waive any such
condition.
(d) Certain Limitations on Expenditures by Gartner. Until such time as the
Cash Dividend is paid to Gartner's stockholders, Gartner shall not, and shall
not permit any of its Subsidiaries to, without the prior written consent of IMS
HEALTH, (i) pay any other cash dividends on any of its capital stock,
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(ii) repurchase any shares of its capital stock, except purchases necessary to
offset (x) exercises of pre-existing employee stock options and (y) stock
issuances under Gartner's Employee Stock Purchase Plan, or (iii) acquire any
Assets or securities or make any capital expenditures which, when aggregated
with any acquisition of Assets or securities or capital expenditures made since
November 12, 1998, utilize more than $120 million in cash in the aggregate,
excluding (1) transfers between Gartner and any direct or indirect wholly-owned
Subsidiary of Gartner or between direct or indirect wholly-owned Subsidiaries of
Gartner, (2) cash payments under Net Share-Settled Forward Purchase Contracts
entered into with DMG Securities as set forth in Schedule 2.2(d) into prior to
November 12, 1998 and not amended subsequent to such date and (3) up to $30
million of capital contributions to investments by the venture fund known as the
SI Fund, of which Gartner is the sole limited partner.
SECTION 2.3 Financing.
(a) Gartner hereby represents and warrants to IMS HEALTH that it has
secured financing commitments which, when added to its available cash and
reasonably anticipated cash flow through the Declaration Date, will permit
payment of the Cash Dividend and the completion of the Stock Repurchase, with
sufficient cash available to meet the needs of Gartner's business, and which are
subject only to customary conditions (the "Financing Commitments") and has
provided copies of such Financing Commitments to IMS HEALTH.
(b) As promptly as practical following the date hereof, Gartner shall
negotiate and execute definitive loan agreements for the financing contemplated
by the Financing Commitments, which agreements shall make the funds to be
borrowed thereunder available to Gartner with only customary conditions. Gartner
shall provide copies of such loan agreements to IMS HEALTH and shall provide
such other documents and information in connection therewith as IMS HEALTH shall
reasonably request.
(c) Gartner shall be responsible for all fees and expenses of the lenders
and other advisors in obtaining the Financing Commitments; provided, however,
that, in the event the Financing Commitments are obtained more than 60 days in
advance of the payment date for the Cash Dividend, IMS HEALTH shall be
responsible for one-half of the amount by which the commitment fee for the
Financing Commitments exceeds the commitment fee that would have been payable
under the Financing Commitments if they were obtained 60 days in advance of the
payment date for the Cash Dividend.
SECTION 2.4 Certain Limitations on Actions by IMS HEALTH. The parties
agree that under the IRS Ruling IMS HEALTH is obligated to dispose of the
Retained Shares and the Warrant Shares as quickly as feasible and in this regard
the parties agree that, subject to representations and undertakings made by IMS
HEALTH after the date hereof in order to obtain the IRS Supplemental Ruling,
(a) IMS HEALTH (i) shall not sell, transfer or otherwise dispose of,
or issue any derivative security with respect to, the Retained Shares or
the Warrant Shares for the period of 90 days following the Distribution
Date and (ii) thereafter will not sell, transfer or otherwise dispose of,
or issue any derivative security with respect to any Retained Shares or
Warrant Shares, except (x) sales on the NYSE of Retained Shares or Warrant
Shares in an amount (collectively) in any day in excess of 25% of the
average daily trading volume of the Gartner Common Stock for the
immediately preceding four weeks as reported on the NYSE composite tape
(excluding shares sold, transferred or otherwise disposed of on the NYSE by
IMS HEALTH or as to which IMS HEALTH issues a derivative security that
trades on the NYSE, in each case, during such four week period), (y) in
transactions which the parties agree in good faith would not reasonably be
expected to have an adverse impact on the trading prices of the Gartner
Common Stock as reported on the NYSE composite tape and (z) sales of shares
to any institutional investor who agrees in writing not to sell, transfer
or otherwise dispose of, or issue any derivative security with respect to,
such shares until the later of 30 days from the date of such sale or the
one year anniversary of the Declaration Date; and
(b) following the Distribution, in all matters requiring a vote of the
holders of Class A Common Stock at any stockholder meeting or by written
consent of the stockholders for such time as IMS
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HEALTH holds the Retained Shares, IMS HEALTH will vote the Retained Shares
and any Warrant Shares in proportion to the votes cast by all other holders
of Class A Common Stock voting.
SECTION 2.5 Declaration Date; Further Assurances. (a) The parties agree
that the Declaration Date shall occur as soon as reasonably practicable
following the satisfaction or waiver of the conditions to the declaration of the
Distribution set forth in Section 2.1(b) (other than the declaration of the Cash
Dividend) and the conditions to the declaration of the Cash Dividend set forth
in Section 2.2(c) (other than the declaration of the Distribution). The parties
shall cause their respective Boards of Directors to meet telephonically or at
the same location on the Declaration Date and each shall take such corporate
action at such meeting as shall be required to effect the transactions
contemplated hereby and by the Recapitalization Agreement. Immediately following
such meetings, Gartner shall take all actions required to consummate the
Recapitalization in accordance with the terms of the Recapitalization Agreement,
including the filing of the Certificate of Merger relating to the
Recapitalization with the Secretary of State of the State of Delaware.
(b) In case at any time after the date hereof any further action is
reasonably necessary or desirable to carry out the Recapitalization, Cash
Dividend, Distribution or Stock Repurchase or any other purpose of this
Agreement or the Recapitalization Agreement, the proper officers of each party
to this Agreement shall take all such necessary action. Without limiting the
foregoing, IMS HEALTH and Gartner shall use their commercially reasonable
efforts promptly to obtain all consents and approvals, to enter into all
amendatory agreements and to make all filings and applications that may be
required for the consummation of the transactions contemplated by this Agreement
and the Recapitalization Agreement, including all applicable governmental and
regulatory filings.
SECTION 2.6 Representations and Warranties. (a) Gartner hereby represents
and warrants to IMS HEALTH as follows:
(i) Organization; Good Standing. Gartner is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate power required to consummate the
transactions contemplated hereby and by the Recapitalization Agreement.
(ii) Authorization. The execution, delivery and performance by Gartner
of this Agreement and the Recapitalization Agreement and the consummation
by Gartner of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Gartner,
other than the formal declaration of the Cash Dividend, formal initiation
of the Stock Repurchase and the approval of the Recapitalization by the
stockholders of Gartner. Each of this Agreement and the Recapitalization
Agreement constitutes, and each other agreement or instrument executed and
delivered or to be executed and delivered by Gartner pursuant to this
Agreement or the Recapitalization Agreement will, upon such execution and
delivery, constitute, a legal, valid and binding obligation of Gartner,
enforceable against Gartner in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(iii) Consents and Filings. Except (w) for the NYSE Listing
Application, (x) the IRS Ruling, (y) as required under the
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
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accelerate any obligation or indebtedness under, any mortgage, lease,
franchise, license, permit, agreement, instrument, law, order, arbitration
award, judgment or decree to which Gartner or any of its Subsidiaries is a
party or by which any of them are bound.
(v) Litigation. There are no actions or suits against Gartner pending,
or to the knowledge of Gartner, threatened which seek to, and Gartner is
not subject to any judgments, decrees or orders which, enjoin or rescind
the transactions contemplated by this Agreement or the Recapitalization
Agreement or otherwise prevent Gartner from complying with the terms and
provisions of this Agreement or the Recapitalization Agreement.
(vi) Change of Control Adjustments. None of the Recapitalization, Cash
Dividend, Stock Repurchase or Distribution or any of the other transactions
contemplated hereby or by the Recapitalization Agreement will constitute a
"change of control" or otherwise result in the increase or acceleration of
any benefits, including to employees of Gartner, under any agreement to
which Gartner or any of its Subsidiaries is a party or by which it or any
of its Subsidiaries is bound.
(vii) Surplus and Solvency. Gartner has on the date hereof, and at the
Declaration Date and the Cash Dividend Date will have, surplus (as defined
in and computed in accordance with Sections 154 and 244 of the DGCL) in
excess of the amounts of cash required to effect the Cash Dividend and
Stock Repurchase. Gartner is on the date hereof, and immediately after the
payment of the Cash Dividend will be, and at all times during the period it
is effecting the Stock Repurchase will be, Solvent. For purposes of this
Section 2.7(a)(vii), "Solvent" means, at any date of determination, (x) the
fair saleable value of Gartner's consolidated assets will exceed Gartner's
consolidated liabilities as of such date, (y) Gartner will not have as of
such date an unreasonably small amount of capital with which to conduct its
business and (z) Gartner will be able to pay its debts as they mature.
(viii) Certain Transactions. Except for transactions or other actions
that occurred prior to July 1, 1997 or that are described in Schedule
2.6(a), neither Gartner nor any other member of the Gartner Group has
engaged in any transaction or taken any other action through the date
hereof involving or relating to the stock of Gartner or options, warrants
or other rights to acquire stock of Gartner. None of the transactions and
other actions described in Schedule 2.6(a) which occurred prior to October
1, 1998 (the "Proposal Date") were undertaken by Gartner in contemplation
of the Distribution or are related to the Distribution (the parties agree
that the concept of the Distribution was solely conceived by IMS HEALTH and
first communicated to Gartner on the Proposal Date), and all transactions
and actions by Gartner described in Schedule 2.6(a) which occurred between
the Proposal Date and the date hereof were undertaken in the ordinary
course of business, and if other than compensatory stock plan issuances,
were pursuant to a letter of intent which was executed by Gartner prior to
the Proposal Date.
(b) IMS HEALTH hereby represents and warrants to Gartner as follows:
(i) Organization; Good Standing. IMS HEALTH is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate power required to consummate the
transactions contemplated hereby and by the Recapitalization Agreement.
(ii) Authorization. The execution, delivery and performance by IMS
HEALTH of this Agreement and the Recapitalization Agreement and the
consummation by IMS HEALTH of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of IMS HEALTH, other than the formal declaration of the Distribution.
Each of this Agreement and the Recapitalization Agreement constitutes, and
each other agreement or instrument executed and delivered or to be executed
and delivered by IMS HEALTH pursuant to this Agreement will, upon such
execution and delivery, constitute, a legal, valid and binding obligation
of IMS HEALTH, enforceable against IMS HEALTH in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
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(iii) Consents and Filings. Except (x) for the IRS Ruling, and (y) as
required under the HSR Act and any other reports or documents required to
be filed under the Exchange Act, no material consent of, or filing with,
any Governmental Entity which has not been obtained or made is required to
be obtained or made by IMS HEALTH for or in connection with the execution
and delivery of this Agreement or the Recapitalization Agreement by IMS
HEALTH, and the consummation by IMS HEALTH of the transactions contemplated
hereby or thereby.
(iv) Noncontravention. The execution, delivery and performance of this
Agreement and the Recapitalization Agreement by IMS HEALTH does not, and
the consummation by IMS HEALTH of the transactions contemplated hereby and
thereby will not, (x) violate any applicable federal, state or local
statute, law, rule or regulation, (y) violate any provision of the
Certificate of Incorporation or By-Laws of IMS HEALTH or (z) violate any
provision of, or result in the termination or acceleration of, or entitle
any party to accelerate any obligation or indebtedness under, any mortgage,
lease, franchise, license, permit, agreement, instrument, law, order,
arbitration award, judgment or decree to which IMS HEALTH or any of its
Subsidiaries is a party or by which any of them are bound.
(v) Litigation. There are no actions or suits against IMS HEALTH
pending, or to the knowledge of IMS HEALTH, threatened which seek to, and
IMS HEALTH is not subject to any judgments, decrees or orders which, enjoin
or rescind the transactions contemplated by this Agreement or the
Recapitalization Agreement or otherwise prevent IMS HEALTH from complying
with the terms and provisions of this Agreement or the Recapitalization
Agreement.
SECTION 2.7. Certain Post-Distribution Transactions. (a)(i) Gartner and
IMS HEALTH shall each comply and shall cause its Subsidiaries to comply with and
otherwise not take action inconsistent with each representation made by such
respective party to the IRS in connection with the requests by IMS HEALTH for
the IRS Ruling and the IRS Supplemental Ruling, if any, and (ii) until two years
after the Distribution Date, Gartner will maintain its status as a company
engaged in the active conduct of a trade or business, as defined in Section
355(b) of the Code.
(b) If Gartner (or any of its Subsidiaries) fails to comply with any of its
obligations under Section 2.7(a) above or takes any action or fails to take any
required action, and such failure to comply, action or omission contributes to a
determination that the Distribution fails to qualify under Section 355(a) of the
Code or that the Gartner shares fail to qualify as qualified property for
purposes of Section 355(c)(2) of the Code by reason of Section 355(e) of the
Code, then Gartner shall indemnify and hold harmless IMS HEALTH and each member
of the consolidated group of which IMS HEALTH is a member and the shareholders
of IMS HEALTH from and against any and all federal, state and local taxes,
including any interest, penalties or additions to tax, imposed upon or incurred
by IMS HEALTH, any member of its group or any stockholder of IMS HEALTH as a
result of the failure of the Distribution to qualify under Section 355(a) of the
Code or the application of Section 355(e) (any such tax, interest, penalty or
addition to tax, an "IMS HEALTH Tax Liability"); provided however that,
notwithstanding any other provision of this Agreement, Gartner shall not be
required to indemnify and hold harmless, and shall have no liability to, IMS
HEALTH or any member of the consolidated group of which IMS HEALTH is a member
or any stockholder of IMS Health for any such IMS HEALTH Tax Liability imposed
or incurred (or that would have been imposed or incurred) solely as a result of
(i) the Recapitalization and the Distribution,
(ii) sales or other dispositions of Gartner Common Stock or warrants
to purchase Gartner Common Stock by IMS HEALTH or any affiliate or IMS
HEALTH after the Distribution Date,
(iii) repurchases by Gartner pursuant to and in compliance with
Section 2.2(b) of this Agreement or the repurchases that are set forth in
the IRS Ruling, or the request for the IRS Supplemental Ruling or, if
granted at such time, the IRS Supplemental Ruling or any other IRS ruling
that may be obtained by IMS HEALTH substantially similar to the requested
IRS Supplemental Ruling,
(iv) issuances by Gartner after the date hereof through the second
anniversary of the Distribution Date of stock options and other stock
awards under compensatory stock programs, in the ordinary course
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of business and consistent with past practice, to acquire an amount of
Class A Common Stock equal to or less than 4% of the outstanding Gartner
Common Stock on the date hereof,
(v) issuances by Gartner after the second anniversary of the
Distribution Date of stock options and other stock awards under
compensatory stock programs, unless, in the case of any such issuance, such
issuance was pursuant to a plan, undertaking or understanding adopted or
entered into during such two-year period and not exempt under clause (iv)
hereof,
(vi) issuances by Gartner of Class A Common Stock after the date
hereof pursuant to the exercise of outstanding stock options and other
rights under compensatory stock programs existing at the date hereof,
(vii) issuances by Gartner of Class A Common Stock after the date
hereof pursuant to the exercise of stock options and other rights referred
to in clauses (iv) or (v) hereof,
(viii) issuances by Gartner of Class A Common Stock after the date
hereof and within two years following the Distribution Date (other than
issuances excluded under clauses (vi) or (vii)) that, in the aggregate,
amount to 1% or less of the outstanding Gartner Common Stock on the date
hereof,
(ix) issuances by Gartner of Class A Common Stock after the second
anniversary of the Distribution Date, unless, in the case of any such
issuance, such issuance was pursuant to a plan, undertaking or
understanding adopted or entered into during such two-year period and not
exempt under clause (viii) hereof,
(x) transactions prior to the date hereof that are described in
Schedule 2.6(a),
(xi) transactions or any series of related transactions in Gartner
Common Stock before or after the Distribution Date by any person or group
(as defined under the Exchange Act) unless such transactions result in such
person or group acquiring holdings of Gartner capital stock sufficient to
allow such person or group to elect a majority of the Board of Directors of
Gartner,
(xii) issuances of Gartner Common Stock upon any exercise or exercises
of the Warrants,
(xiii) dispositions of shares of Gartner Common Stock by the holders
thereof, or
(xiv) any combination of the transactions described in clauses (i)
through (xiii) of this Section 2.7(b).
Notwithstanding the foregoing, Gartner shall not indemnify IMS HEALTH for
any IMS HEALTH Tax Liability that results from any inaccuracy or incompleteness
in any representation made by IMS HEALTH to the IRS in connection with the
requests for the IRS Ruling or the IRS Supplemental Ruling or failure by IMS
HEALTH to comply with any representation or undertaking by IMS HEALTH to the IRS
in connection with the IRS Ruling, the IRS Supplemental Ruling or any requests
therefor.
(c) In the event the IRS Supplemental Ruling is issued providing that
grants and exercises of stock options and other stock rights under compensatory
benefit plans of Gartner will not be taken into account in applying Section
355(e)(2)(A)(ii) (the "Stock Award Relief"), then (i) the limitation of Section
2.7(b)(iv) shall be expanded to permit the unlimited grant of stock options and
other stock awards after the date hereof in the ordinary course of business and
(ii) the limitation on issuances of Class A Common Stock in Section 2.7(b)(viii)
shall be expanded from 1% or less to 3.5% or less of the outstanding Gartner
Common Stock on the Distribution Date. Gartner agrees not to seek any private
letter ruling seeking the relief sought in the IRS Supplemental Ruling request
other than a private letter ruling (i) seeking the Stock Award Relief or (ii)
providing that section (b)(4)(B) of the certificate of incorporation of Gartner
to be effective upon consummation of the Recapitalization, which relates to the
voting ability of any person or group beneficially owning 15% of more of the
outstanding shares of the Class B Common Stock, will not have any adverse effect
on the IRS Ruling and any other private letter ruling issued by the IRS to IMS
HEALTH or any predecessor or former parent of IMS HEALTH. Subject to the last
sentence of this Section 2.7(c), in the event a private letter ruling is issued
by the IRS to Gartner providing the Stock Award Relief and such ruling is in
form and substance satisfactory to IMS HEALTH in its good faith judgment, then
(i) the limitation of
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Section 2.7(b)(iv) shall be expanded to permit the unlimited grant of stock
options and other stock awards after the date hereof in the ordinary course of
business and (ii) the limitation on issuances of Class A Common Stock in Section
2.7(b)(viii) shall be expanded from 1% or less to 3.5% or less of the
outstanding Gartner Common Stock on the date hereof. In no event shall Gartner
file with, or otherwise make to, the IRS a request for a private letter ruling
providing for the Stock Award Relief prior to the Distribution Date.
ARTICLE III.
INDEMNIFICATION
SECTION 3.1 Indemnification by Gartner. (a) Gartner shall indemnify,
defend and hold harmless the IMS HEALTH Indemnitees from and against any and all
Gartner Liabilities or third party allegations of Gartner Liabilities.
(b) Gartner shall indemnify, defend and hold harmless the IMS HEALTH
Indemnitees and the shareholders of IMS HEALTH from and against any liability of
any member of the IMS HEALTH Group or any shareholder of IMS HEALTH arising from
any inaccuracy in, or failure by Gartner to comply with, any representation made
by Gartner to the IRS in connection with the requests by IMS HEALTH for the IRS
Ruling and the IRS Supplemental Ruling; provided, however, that, notwithstanding
the foregoing, Gartner shall not indemnify IMS HEALTH, any IMS HEALTH Indemnitee
or any shareholder of IMS HEALTH for any liability that results from any
inaccuracy or incompleteness in any representation made by IMS HEALTH to the IRS
in connection with requests for the IRS Ruling or the IRS Supplemental Ruling or
failure by IMS HEALTH to comply with any representation made by IMS HEALTH to
the IRS in connection with the requests for the IRS Ruling or the IRS
Supplemental Ruling.
SECTION 3.2 Indemnification by IMS HEALTH. (a) Except as otherwise
specifically set forth in any provision of this Agreement, IMS HEALTH shall
indemnify, defend and hold harmless the Gartner Indemnitees from and against any
and all IMS HEALTH Liabilities or third party allegations of IMS HEALTH
Liabilities.
(b) IMS HEALTH shall indemnify, defend and hold harmless the Gartner
Indemnitees from and against (i) any and all federal, state and local taxes,
including any interest, penalties or additions to tax, that result solely from
the Recapitalization or from the application of Treasury Regulation Section
1.1502-6 or any similar provision of state, local or other tax law and (ii) any
liability of any member of the Gartner Group arising solely from any inaccuracy
in, or failure by IMS Health to comply with, any representation made by IMS
Health to the IRS in connection with the requests by IMS Health for the IRS
Ruling and the IRS Supplemental Ruling; provided, however, that, notwithstanding
the foregoing, IMS HEALTH shall not indemnify Gartner or any Gartner Indemnitee
for any liability that results from any inaccuracy or incompleteness in any
representation made by Gartner to the IRS in connection with requests for the
IRS Ruling or the IRS Supplemental Ruling or failure by Gartner to comply with
any representation made by Gartner to the IRS in connection with the requests
for the IRS Ruling or the IRS Supplemental Ruling.
SECTION 3.3 Procedures for Indemnification in Third Party Claims.
(a) Third Party Claims. If a claim or demand is made against a Gartner
Indemnitee or an IMS HEALTH Indemnitee (each, an "Indemnitee") by any person who
is not a party to this Agreement (a "Third Party Claim") as to which such
Indemnitee is entitled to indemnification pursuant to this Agreement, such
Indemnitee shall notify the party which is or may be required pursuant to the
terms hereof to make such indemnification (the "Indemnifying Party") in writing,
and in reasonable detail, of the Third Party Claim promptly (and in any event
within 15 business days) after receipt by such Indemnitee of written notice of
the Third Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnitee failed to give such notice).
Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly
(and in any event within five business days) after the Indemnitee's receipt
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thereof, copies of all notices and documents (including court papers) received
by the Indemnitee relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnitee with respect to which
a claim for indemnification is made pursuant to Section 3.1 or Section 3.2
hereof, the Indemnifying Party shall be entitled to participate in the defense
thereof and, if it so chooses and acknowledges in writing its obligation to
indemnify the Indemnitee therefor, to assume the defense thereof with counsel
selected by the Indemnifying Party; provided that such counsel is not reasonably
objected to by the Indemnitee. Should the Indemnifying Party so elect to assume
the defense of a Third Party Claim, the Indemnifying Party shall, within 30 days
(or sooner if the nature of the Third Party Claim so requires), notify the
Indemnitee of its intent to do so, and the Indemnifying Party shall thereafter
not be liable to the Indemnitee for legal or other expenses subsequently
incurred by the Indemnitee in connection with the defense thereof; provided,
that such Indemnitee shall have the right to employ counsel to represent such
Indemnitee if, in such Indemnitee's reasonable judgment, a conflict of interest
between such Indemnitee and such Indemnifying Party exists in respect of such
claim which would make representation of both such parties by one counsel
inappropriate, and in such event the fees and expenses of such separate counsel
shall be paid by such Indemnifying Party. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, subject to the proviso of the preceding sentence,
at its own expense, separate from the counsel employed by the Indemnifying
Party, it being understood that the Indemnifying Party shall control such
defense. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof (other than during the period
prior to the time the Indemnitee shall have given notice of the Third Party
Claim as provided above). If the Indemnifying Party so elects to assume the
defense of any Third Party Claim, all of the Indemnitees shall cooperate with
the Indemnifying Party in the defense or prosecution thereof, including by
providing or causing to be provided, Records and witnesses as soon as reasonably
practicable after receiving any request therefor from or on behalf of the
Indemnifying Party.
In no event will the Indemnitee admit any liability with respect to, or
settle, compromise or discharge, any Third Party Claim without the Indemnifying
Party's prior written consent (which will not be unreasonably withheld);
provided, however, that the Indemnitee shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for a Third Party Claim (as between the Indemnifying Party and the
Indemnitee), the Indemnitee will agree to any settlement, compromise or
discharge of a Third Party Claim that the Indemnifying Party may recommend and
that by its terms obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and releases the Indemnitee
completely in connection with such Third Party Claim and that would not
otherwise adversely affect the Indemnitee; provided, however, that the
Indemnitee may refuse to agree to any such settlement, compromise or discharge
if the Indemnitee agrees that the Indemnifying Party's indemnification
obligation with respect to such Third Party Claim shall not exceed the amount
that would be required to be paid by or on behalf of the Indemnifying Party in
connection with such settlement, compromise or discharge. If an Indemnifying
Party elects not to assume the defense of a Third Party Claim, or fails to
notify an Indemnitee of its election to do so as provided herein, such
Indemnitee may compromise, settle or defend such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the fees
and expenses of counsel incurred by the Indemnitee in defending such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than money damages against the Indemnitee which the
Indemnitee reasonably determines, after conferring with its counsel, cannot be
separated from any related claim for money damages. If such equitable relief or
other relief portion of the Third Party Claim can be so separated from that for
money damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages.
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(b) Subrogation. In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right
or claim relating to such Third-Party Claim against any claimant or plaintiff
asserting such Third-Party Claim. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or claim.
(c) Remedies Not Exclusive. The remedies provided in this Article III shall
be cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party.
SECTION 3.4 Indemnification Payments. Indemnification required by this
Article III shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
ARTICLE IV.
COVENANTS
SECTION 4.1 Access to Information. (a) Other than in circumstances in
which indemnification is sought pursuant to Article III (in which event the
provisions of such Article will govern), from and after the Distribution Date,
each of Gartner and IMS HEALTH shall afford to the other and its authorized
accountants, counsel and other designated representatives reasonable access
during normal business hours, subject to appropriate restrictions for
classified, privileged or confidential information, to the personnel,
properties, books and records of such party and its Subsidiaries insofar as such
access is reasonably required by the other party and relates to such other
party's performance of its obligations under this Agreement or the
Recapitalization Agreement or such party's financial, tax and other reporting
obligations.
(b) A party providing information or access to information to the other
party under this Article IV shall be entitled to receive from the recipient,
upon the presentation of invoices therefor, payments for such amounts, relating
to supplies, disbursements and other out-of-pocket expenses, as may be
reasonably incurred in providing such information or access to information.
SECTION 4.2 Confidentiality. Each of Gartner and its Subsidiaries and IMS
HEALTH and its Subsidiaries shall keep, and shall cause its employees,
consultants, advisors and agents to keep, confidential all information
concerning the other parties in its possession, its custody or under its control
(except to the extent that (A) such information is then in the public domain
through no fault of such party or (B) such information has been lawfully
acquired from other sources by such party or (C) this Agreement or the
Recapitalization Agreement or any other agreement entered into pursuant hereto
or thereto permits the use or disclosure of such information) to the extent such
information (i) relates to or was acquired during the period up to the Effective
Time or pursuant to Section 4.1, or (ii) is based upon or is derived from
information described in the preceding clause (i), and each party shall not
(without the prior written consent of the other) otherwise release or disclose
such information to any other person, except such party's auditors and
attorneys, unless compelled to disclose such information by judicial or
administrative process or unless such disclosure is required by law and such
party has used commercially reasonable efforts to consult with the other
affected party or parties prior to such disclosure.
SECTION 4.3 Standstill. (a) Subject to Sections 4.3(b) and 4.3(c), each of
IMS HEALTH and Gartner agree not to solicit, initiate or encourage the
commencement of negotiations or continue any current negotiations regarding any
proposal for the acquisition by any third party of any shares of capital stock
of Gartner (other than issuances of common stock by Gartner pursuant to employee
stock plans in the ordinary course of business) or the acquisition of Gartner
through any other means including a merger or purchase of assets (an
"Acquisition Proposal") until the earlier to occur of the termination of this
Agreement or the time at which the Distribution is consummated; provided,
however, that IMS HEALTH may respond to any unsolicited inquiries or proposals
solely to indicate that it is bound by this Section 4.3.
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(b) IMS HEALTH shall be relieved of its obligations under Section 4.3(a) if
any of the following occur:
(i) Gartner fails to comply with its obligations with respect to the
Financing Commitments set forth in Section 2.3 hereof in a manner that
would reasonably be expected to permit consummation of the Distribution (A)
on or prior to July 31, 1999 or (B) if, without violation of the foregoing,
the Distribution is not consummated by such date, as promptly as possible
thereafter;
(ii) Gartner fails to comply with Section 2.2(d) herein;
(iii) Gartner fails to use commercially reasonable efforts to obtain
the approval for listing of the Class B Common Stock on the NYSE in a
manner that would reasonably be expected to permit consummation of the
Distribution (A) on or prior to July 31, 1999 or (B) if, without violation
of the foregoing, the Distribution is not consummated by such date, as
promptly as possible thereafter;
(iv) Gartner fails to use commercially reasonable efforts to obtain
clearance from the SEC to mail the Proxy Statement as promptly as
practicable after the date hereof;
(v) Gartner fails to use commercially reasonable efforts to call a
special meeting of stockholders to seek approval of the Recapitalization
and the Governance Proposals to be held on or prior to July 16, 1999,
except that the meeting so noticed may be adjourned solely to the extent
necessary to obtain sufficient votes for approval;
(vi) Pursuant to Section 4.3(c)(ii), Gartner takes any action that
would otherwise be prohibited by Section 4.3(a); provided, however, if
Gartner takes any action permitted under Section 4.3(c)(ii) to evaluate any
Acquisition Proposal and Gartner promptly provides to IMS HEALTH (A) copies
of any correspondence and other documents received from the person making
such Acquisition Proposal (including the identity of such person, but
excluding confidential business information of such person provided for due
diligence unless IMS HEALTH executes an appropriate nondisclosure agreement
acceptable to such person making the Acquisition Proposal), (B) copies of
analyses, advice and other information provided in writing to the Board of
Directors of Gartner in connection with such Acquisition Proposal, (C)
copies of analyses, advice and other information provided in writing to
management of Gartner by financial advisors to Gartner in connection with
such Acquisition Proposal, (D) any advice regarding any revised proposal
provided to Gartner by the person making such Acquisition Proposal (other
than changes in terms or structure that are not material), and (E) any
determination made by the Board of Directors of Gartner in response to such
proposal, then IMS HEALTH shall not be relieved of its obligations under
Section 4.3(a) until the earliest of (x) any public disclosure by the
Gartner Board of Directors' approval or recommendation of any Acquisition
Proposal, (y) any public disclosure by the Gartner Board of Directors of
the withdrawal of its approval or recommendation of any of the transactions
contemplated hereby or by the Recapitalization Agreement or (z) ten
business days from receipt by Gartner of the Acquisition Proposal; provided
further that IMS HEALTH shall not be relieved of its obligations under
Section 4.3(a) if, prior to the expiration of such 10-business day period,
Gartner shall have ceased to evaluate, discuss or negotiate or take any
other action with respect to such Acquisition Proposal and delivers to IMS
HEALTH a certificate executed by an executive officer of Gartner to the
foregoing effect;
(vii) Gartner fails (x) to take any affirmative action or consummate
any affirmative transaction specified by the terms of the IRS Ruling, the
request for the IRS Supplemental Ruling or, if granted prior to such time,
the IRS Supplemental Ruling or (y) takes any action or pursues any
transaction (other than any action or transaction contemplated by this
Agreement) or fails to take any actions or consummate any transaction which
would reasonably be expected to adversely affect the IRS Ruling, the
request for the IRS Supplemental Ruling or, if granted prior to such time,
the IRS Supplemental Ruling;
(viii) Gartner fails to use commercial reasonable efforts to obtain
the approval of its stockholders of the Recapitalization or takes any
action or makes any public statement inconsistent with the foregoing; or
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(ix) Gartner breaches or fails to comply with any of its material
obligations set forth in this Agreement or the Recapitalization Agreement
and fails to cure such breach or failure within 15 days following notice
from IMS HEALTH.
(c) Gartner shall be relieved of its obligations under Section 4.3(a) if:
(i) IMS HEALTH breaches or fails to comply with any of its material
obligations set forth in this Agreement or the Recapitalization Agreement
and fails to cure such breach or failure within 15 days following notice
from Gartner; or
(ii) After receipt of a bona fide written Acquisition Proposal, the
Board of Directors of Gartner in good faith determines, based upon the
advice of its outside counsel regarding the Board's duties, that the Board
will breach its fiduciary duties to stockholders of Gartner if it does not
commence discussions or negotiations with the person making such
Acquisition Proposal.
SECTION 4.4 Public Announcements. Each of IMS HEALTH and Gartner agrees
that no public release or announcement concerning the Recapitalization, Cash
Dividend, or Stock Repurchase shall be issued by either party without the prior
written consent of the other (which shall not be unreasonably withheld), except
as such release or announcement may be required by law or the rules or
regulations of any United States securities exchange, in which case the party
required to make the release or announcement shall use its commercially
reasonable efforts to allow each other party reasonable time to comment on each
release or announcement in advance of such issuance.
SECTION 4.5 Required Consents. Each of IMS HEALTH and Gartner shall use
commercially reasonable efforts to obtain all of the consents, waivers or
authorizations required in connection with the completion of the
Recapitalization and the Distribution as are listed on Schedule 4.5 (the
"Required Consents").
ARTICLE V.
DISPUTE RESOLUTION
SECTION 5.1 Negotiation. In the event of a controversy, dispute or claim
arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Agreement or the
Recapitalization Agreement or otherwise arising out of, or in any way related to
this Agreement or the Recapitalization Agreement or the transactions
contemplated hereby and thereby, including any claim based on contract, tort,
statute or constitution (but excluding any controversy, dispute or claim between
a party hereto and a third-party beneficiary hereof) (collectively, "Agreement
Disputes"), the general counsels of the parties shall negotiate in good faith
for a reasonable period of time to settle such Agreement Dispute, provided such
reasonable period shall not, unless otherwise agreed by the parties in writing,
exceed 30 days from the time the parties began such negotiations; provided
further that in the event of any arbitration in accordance with Section 5.2
hereof, the parties shall not assert the defenses of statute of limitations and
laches arising for the period beginning after the date the parties began
negotiations hereunder, and any contractual time period or deadline under this
Agreement or the Recapitalization Agreement to which such Agreement Dispute
relates shall not be deemed to have passed until such Agreement Dispute has been
resolved.
SECTION 5.2 Arbitration. If after such reasonable period such general
counsels are unable to settle such Agreement Dispute (and in any event, unless
otherwise agreed in writing by the parties, after 60 days have elapsed from the
time the parties began such negotiations), such Agreement Dispute shall be
determined, at the request of any party, by arbitration conducted in New York
City, before and in accordance with the then-existing International Arbitration
Rules of the American Arbitration Association (the "Rules"). In any dispute
between the parties hereto, the number of arbitrators shall be one. Any judgment
or award rendered by the arbitrator shall be final, binding and nonappealable
(except upon grounds specified in 9 U.S.C. sec.10(a) as in effect on the date
hereof). If the parties are unable to agree on the arbitrator, the arbitrator
shall be selected in accordance with the Rules; provided that the arbitrator
shall be a U.S. national. Any controversy concerning whether an Agreement
Dispute is an arbitrable Agreement Dispute, whether
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arbitration has been waived, whether an assignee of this Agreement is bound to
arbitrate, or as to the interpretation of enforceability of this Article V shall
be determined by the arbitrator. In resolving any dispute, the parties intend
that the arbitrator apply the substantive laws of the State of New York, without
regard to the choice of law principles thereof. The parties intend that the
provisions to arbitrate set forth herein be valid, enforceable and irrevocable.
The parties agree to comply with any award made in any such arbitration
proceeding that has become final in accordance with the Rules and agree to
enforcement of or entry of judgment upon such award, by any court of competent
jurisdiction, including (a) the Supreme Court of the State of New York, New York
County, or (b) the United States District Court for the Southern District of New
York, in accordance with Section 6.17 hereof. The arbitrator shall be entitled,
if appropriate, to award any remedy in such proceedings, including monetary
damages, specific performance and all other forms of legal and equitable relief;
provided, however, the arbitrator shall not be entitled to award punitive
damages. Without limiting the provisions of the Rules, unless otherwise agreed
in writing by or among the parties or permitted by this Agreement, the parties
shall keep confidential all matters relating to the arbitration or the award,
provided such matters may be disclosed (i) to the extent reasonably necessary in
any proceeding brought to enforce the award or for entry of a judgment upon the
award and (ii) to the extent otherwise required by law. Notwithstanding Article
32 of the Rules, the party other than the prevailing party in the arbitration
shall be responsible for all of the costs of the arbitration, including legal
fees and other costs specified by such Article 32. Nothing contained herein is
intended to or shall be construed to prevent any party, in accordance with
Article 22(3) of the Rules or otherwise, from applying to any court of competent
jurisdiction for interim measures or other provisional relief in connection with
the subject matter of any Agreement Disputes.
SECTION 5.3 Continuity of Service and Performance. Unless otherwise agreed
in writing, the parties will continue to provide service and honor all other
commitments under this Agreement, the Transition Services Agreement, and the
Recapitalization Agreement during the course of dispute resolution pursuant to
the provisions of this Article V with respect to all matters not subject to such
dispute, controversy or claim.
ARTICLE VI.
INSURANCE
SECTION 6.1 Separation of Insurance Coverages. Gartner shall take all
reasonable steps necessary and appropriate to have in effect, on or prior to the
Distribution Date or as soon thereafter as reasonably practicable, separate
Policies in respect of Gartner Liabilities (including without limitation
Liabilities which exist on the date of this Agreement or which arise prior to
the Effective Time) to replace any insurance coverage provided to Gartner and
its Subsidiaries under the Shared Policies.
SECTION 6.2 Policy Rights. Each of IMS HEALTH and Gartner shall retain
any and all rights of an insured party under each of the remaining Shared
Policies, subject to the terms of such Shared Policies and any limitations or
obligations contemplated by this Article VI, specifically including rights of
indemnity and the right to be defended by or at the expense of the insurer, with
respect to all claims, suits, actions, proceedings, injuries, losses,
liabilities, damages and expenses incurred or claimed to have been incurred on
or prior to the Distribution Date, and which claims, suits, actions,
proceedings, injuries, losses, liabilities, damages and expenses may arise out
of an insured or insurable occurrence under one or more of such Shared Policies.
SECTION 6.3 Post-Distribution Date Claims. (a) Administration. After the
Distribution Date, IMS HEALTH shall be responsible for (i) Insurance
Administration of the Shared Policies and (ii) Claims Administration under such
Shared Policies with respect to Gartner Liabilities and IMS HEALTH Liabilities;
provided that the assumption of such responsibilities by IMS HEALTH is in no way
intended to limit, inhibit or preclude any right to insurance coverage for any
Insured Claim of a named insured under such Policies as contemplated by the
terms of this Agreement; provided further that IMS HEALTH's assumption of the
administrative responsibilities for the Shared Policies shall not relieve the
party submitting any Insured Claim of the primary responsibility for reporting
such Insured Claim accurately, completely and in a timely manner or of such
party's authority to settle any such Insured Claim within any period permitted
or required by the
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relevant Policy; and provided further that all direct or indirect communication
with insurers relating to the Shared Policies shall be conducted by IMS HEALTH.
IMS HEALTH may discharge its administrative responsibilities under this Section
6.3 by contracting for the provision of services by independent parties. Each of
the parties hereto shall administer and pay any costs relating to defending its
respective Insured Claims under Shared Policies to the extent such defense costs
are not covered under such Policies and shall be responsible for obtaining or
reviewing the appropriateness of releases upon settlement of its respective
Insured Claims under Shared Policies. The disbursements, out-of-pocket expenses
and direct and indirect costs of employees or agents of IMS HEALTH relating to
Claims Administration and Insurance Administration contemplated by this Section
6.3(a) shall be treated in accordance with the terms of the Transition Services
Agreement, if still in effect with respect to insurance and risk management, or,
if the Transition Services Agreement shall no longer be in effect with respect
to insurance and risk management, then each of Gartner and IMS HEALTH shall be
responsible for its own Claims Administration and Insurance Administration.
(b) Exceeding Policy Limits. Gartner and IMS HEALTH shall not be liable to
one another for claims not reimbursed by insurers for any reason not within the
control of Gartner or IMS HEALTH, as the case may be, including coinsurance
provisions, deductibles, quota share deductibles, self-insured retentions,
bankruptcy or insolvency of an insurance carrier, Shared Policy limitations or
restrictions, any coverage disputes, any failure to timely claim by Gartner or
IMS HEALTH or any defect in such claim or its processing.
(c) Allocation of Insurance Proceeds. Insurance Proceeds received with
respect to claims, costs and expenses under the remaining Shared Policies shall
be paid to IMS HEALTH, which shall thereafter administer such Policies by paying
the Insurance Proceeds to Gartner with respect to Gartner Liabilities and by
retaining the Insurance Proceeds with respect to IMS HEALTH Liabilities. Payment
of the allocable portions of Insurance Proceeds resulting from such Policies
will be made by IMS HEALTH to Gartner as appropriate upon receipt from the
insurance carrier (except as provided below in subclause (B) of clause (ii) of
this Section 6.3(c)) and following consultation with Gartner. In the event that
the aggregate limits on any Shared Policies are exceeded by the aggregate of
outstanding Insured Claims by both of the parties hereto, the parties agree: (i)
to allocate the first $150 million (or, to the extent the aggregate limits on
such Shared Policies are reinstated, $150 million plus such amount reinstated)
of Insurance Proceeds received based upon the respective percentage of the total
of their premiums paid for Shared Policies, except that in no event shall a
party be entitled to Insurance Proceeds in excess of its Insured Claims and any
amount recovered by such party in excess of such Insured Claims shall be
available to the other party to the extent of its Insured Claims; and (ii) that
all Insurance Proceeds in excess of $150 million (or, to the extent the
aggregate limits on such Shared Policies are reinstated, $150 million plus such
amount reinstated) shall be payable to and retained by IMS HEALTH: (A) first, to
the full extent of any Insured Claims of IMS HEALTH not satisfied by the first
$150 million (or, to the extent the aggregate limits on such Shared Policies are
reinstated, $150 million plus such amount reinstated) of Insurance Proceeds; and
(B) second, to the full extent of any Insured Claims of Gartner, to be paid to
Gartner only when and to the extent that (1) the aggregate Insurance Proceeds
received by IMS Health in excess of $150 million (or, to the extent the
aggregate limits on such Shared Policies are reinstated, $150 million plus such
amount reinstated) exceed the sum of (A) the aggregate amount of such proceeds
that have been paid to IMS Health in respect of Insured Claims of IMS Health
(not Gartner) and (B) the aggregate amount of Insured Claims of IMS Health (not
Gartner) that (x) IMS Health has previously submitted to the insurance carrier
or carriers, (y) have not yet been paid to IMS Health, and (z) IMS Health
continues to claim a right to receive payment on; and (2) it would be impossible
for IMS Health to submit additional Insured Claims under the Shared Policies.
Any party who has received Insurance Proceeds in excess of such party's
allocable portion of Insurance Proceeds shall pay to the other party the
appropriate amount so that each party will have received its allocable portion
of Insurance Proceeds pursuant hereto. Each of the parties agrees to use
commercially reasonable efforts to maximize available coverage under those
Shared Policies applicable to it, and to take all commercially reasonable steps
to recover from all other responsible parties in respect of an Insured Claim to
the extent coverage limits under a Shared Policy have been exceeded or would be
exceeded as a result of such Insured Claim.
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<PAGE> 27
(d) Allocation of Deductibles. In the event that both parties have bona
fide claims under any Shared Policy for which an aggregate deductible is
reached, the parties agree that the aggregate amount of the deductible paid
shall be borne by the parties in the same proportion which the Insurance
Proceeds received by any such party (without giving effect to any deductible)
bears to the total Insurance Proceeds received under the applicable Shared
Policy, and any party who has paid more than such share of the deductible shall
be entitled to receive from the other party an appropriate amount so that each
party has borne its allocable share of the deductible pursuant hereto.
SECTION 6.4 Agreement for Waiver of Conflict and Shared Defense. In the
event that Insured Claims of both of the parties hereto exist relating to the
same occurrence, the parties shall jointly defend and waive any conflict of
interest necessary to the conduct of the joint defense. Nothing in this Article
VI shall be construed to limit or otherwise alter in any way the obligations of
the parties to this Agreement, including those created by this Agreement, by
operation of law or otherwise.
SECTION 6.5 Cooperation. The parties agree to use their commercially
reasonable efforts to cooperate with respect to the various insurance matters
contemplated by this Agreement.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1 Complete Agreement; Construction. This Agreement and the
Recapitalization Agreement, including the Exhibits and Schedules hereto and
thereto, shall constitute the entire agreement between the parties with respect
to the subject matter hereof and thereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
SECTION 7.2 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 7.3 Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants, representations, warranties and agreements of the
parties contained in this Agreement shall survive the Distribution Date.
SECTION 7.4 Expenses. Except as set forth on Schedule 7.4 or as otherwise
set forth in this Agreement or in the Recapitalization Agreement, all costs and
expenses incurred in connection with the preparation, execution, delivery and
implementation of this Agreement and the Recapitalization Agreement, and the
Distribution and the other transactions contemplated hereby and thereby shall be
charged to and paid by the party incurring such costs and expenses.
SECTION 7.5 Notices. All notices and other communications hereunder shall
be in writing, shall be effective when received, and shall in any event be
deemed to have been received (i) upon hand delivery, (ii) three (3) days after
deposit in U.S. mail, postage prepaid, for first class delivery, (iii) one (1)
business day following the business day of timely deposit with Federal Express
or similar carrier, freight prepaid, for next business day delivery, and (iv)
one (1) business day after the date of the transmission if sent by facsimile,
provided that confirmation of transmission and receipt is confirmed and copy is
promptly sent by first class mail, postage prepaid, and shall be sent to each
party at the following respective address (or at such other address for a party
as shall be specified by like notice):
To IMS HEALTH:
IMS Health Incorporated
200 Nyala Farms
Westport, CT 06880
Telecopy: (203) 222-4313
Attn: General Counsel
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<PAGE> 28
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
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 7.6 Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
SECTION 7.7 Amendments. Subject to the terms of Section 7.10 hereof, this
Agreement may not be modified or amended except by an agreement in writing
signed by each of the parties hereto.
SECTION 7.8 Assignment. (a) This Agreement shall not be assignable, in
whole or in part, directly or indirectly, by any party hereto without the prior
written consent of the other party hereto, and any attempt to assign any rights
or obligations arising under this Agreement without such consent shall be void.
(b) Gartner will not distribute to its stockholders any material interest
in any material Gartner Business Entity, by way of a spin-off distribution,
split-off or exchange of interests in a Gartner Business Entity for any interest
in Gartner held by Gartner stockholders, or any similar transaction or
transactions, unless the distributed Gartner Business Entity undertakes to IMS
HEALTH to be jointly and severally liable for all Gartner Liabilities hereunder.
(c) IMS HEALTH will not distribute to its stockholders any material
interest in any material IMS HEALTH Business Entity (other than Cognizant
Technology Solutions Corporation), by way of a spin-off distribution, split-off
or exchange of interests in an IMS HEALTH Business Entity (other than Cognizant
Technology Solutions Corporation) for any interest in IMS HEALTH held by IMS
HEALTH stockholders, or any similar transaction or transactions, unless the
distributed IMS HEALTH Business Entity undertakes to Gartner to be jointly and
severally liable for all IMS HEALTH Liabilities hereunder.
SECTION 7.9 Successors and Assigns. The provisions to this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns.
SECTION 7.10 Termination. (a) Prior to the filing of the Certificate of
Merger, this Agreement may be terminated
(i) by IMS HEALTH and Gartner by mutual consent;
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<PAGE> 29
(ii) by IMS HEALTH or Gartner if the other party is materially in
breach of any of its obligations or warranties herein or under the
Recapitalization Agreement, and following notice from the other party fails
to substantially correct such breach within 15 days;
(iii) by Gartner if, following receipt of an Acquisition Proposal, the
Board of Directors of Gartner in good faith determines, based upon the
advice of its outside counsel regarding the Board's duties (which advice
may be oral and later confirmed in writing), that the Board will breach its
fiduciary duties to stockholders of Gartner if this Agreement is not
terminated; provided that in such event Gartner shall pay the reasonable
out-of-pocket fees and expenses of counsel to IMS HEALTH incurred in
connection with this Agreement, the Recapitalization Agreement and the
transactions contemplated hereby and thereby;
(iv) by IMS HEALTH if the Board of Directors of Gartner shall or shall
resolve to (i) not recommend, or withdraw its approval or recommendation
of, the Recapitalization, the Recapitalization Agreement, this Agreement or
any of the transactions contemplated thereby or hereby, (ii) modify any
such approval or recommendation in a manner adverse to IMS HEALTH or (iii)
approve, recommend or enter into an agreement for any Acquisition Proposal;
provided that in such event Gartner shall pay the reasonable out-of-pocket
fees and expenses of counsel to IMS HEALTH incurred in connection with this
Agreement, the Recapitalization Agreement and the transactions contemplated
hereby or thereby;
(v) by IMS HEALTH if IMS HEALTH is relieved of its obligations under
Section 4.3(a) pursuant to Section 4.3(b)(vi);
(vi) by IMS HEALTH if IMS HEALTH in good faith believes that the IRS
Supplemental Ruling in form and content substantially identical to the
rulings requested in the request for the IRS Supplemental Ruling submitted
to the IRS will not be forthcoming prior to the Declaration Date; or
(vii) by IMS HEALTH or Gartner if the Recapitalization is not
consummated by July 31, 1999.
(b) Except (x) as set forth in paragraphs (a)(iii) or (a)(iv) above or (y)
for any liability in respect of any breach of this Agreement by either party, no
party shall have any liability of any kind to any other party or any other
person as a result of the termination of this Agreement under paragraphs (a)(i),
(a)(iii), (a)(iv), (a)(v) or (a)(vi) above. After the filing of the Certificate
of Merger relating to the Recapitalization, this Agreement may not be terminated
except by an agreement in writing signed by both parties.
SECTION 7.11 Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party or
by any entity that is contemplated to be a Subsidiary of such party on or after
the Distribution Date, except that, for purposes of this Section 7.11, Gartner
shall not be considered a Subsidiary of IMS HEALTH.
SECTION 7.12 Third Party Beneficiaries. Except as provided in Article III
relating to Indemnitees, this Agreement is solely for the benefit of the parties
hereto and their respective Subsidiaries and Affiliates and should not be deemed
to confer upon third parties any remedy, claim, liability, reimbursement, claim
of action or other right in excess of those existing without reference to this
Agreement.
SECTION 7.13 Title and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
SECTION 7.14 Exhibits and Schedules. The Exhibits and Schedules shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
SECTION 7.15 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
SECTION 7.16 Consent to Jurisdiction. Without limiting the provisions of
Article VI hereof, each of the parties irrevocably submits to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of
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<PAGE> 30
New York, for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby. Each of the parties
agrees to commence any action, suit or proceeding relating hereto either in the
United States District Court for the Southern District of New York or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New York
County. Each of the parties further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 7.16. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 7.17 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby; provided, however, that the consummation of the
Recapitalization, Cash Dividend and Stock Purchase are conditioned upon and are
not severable from the Distribution, and that the Distribution is not severable
from the Recapitalization, Cash Dividend and Stock Repurchase. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
IMS HEALTH INCORPORATED
By:
--------------------------------------
Name:
Title:
GARTNER GROUP, INC.
By:
--------------------------------------
Name:
Title:
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<PAGE> 32
EXHIBIT 2.1(d)(i)
Gartner Group, Inc.
P.O. Box 10212
56 Top Gallant Road
Stamford, CT 06904
July , 1999
R.H. Donnelley Corporation
One Manhattanville Road
Purchase, NY 10577
ACNielsen Corporation
177 Broad Street
Stamford, CT 06901
Dear Sirs:
Reference is made to (i) the Distribution Agreement (the "1996 Distribution
Agreement"), dated as of October 28, 1996, among Cognizant Corporation, which
has been renamed Nielsen Media Research, Inc. ("NMR"), The Dun & Bradstreet
Corporation, which has been renamed the R.H. Donnelley Corporation ("RHD") and
ACNielsen Corporation ("ACNielsen") and (ii) the letter of undertaking dated
June 29, 1998 from IMS Health Incorporated ("IMS HEALTH") to RHD and ACNielsen.
In June 1998, NMR distributed to its stockholders all of the outstanding shares
of common stock of IMS HEALTH (the "IMS HEALTH Distribution"). IMS HEALTH has
announced its intention to distribute (the "Gartner Distribution") to its
stockholders all of the shares of the Class B Common Stock of Gartner Group,
Inc. ("Gartner") that IMS HEALTH will hold following the recapitalization of
Gartner contemplated by the Merger Agreement dated June 17, 1999, between
Gartner and GRGI, INC. In connection with the IMS HEALTH Distribution, IMS
HEALTH undertook (the "IMS HEALTH Undertaking") to both RHD and ACNielsen to be
jointly and severally liable for all Cognizant Liabilities (as defined in the
1996 Distribution Agreement). Under Section 8.9(c) of the 1996 Distribution
Agreement, as applicable to IMS HEALTH pursuant to the IMS HEALTH Undertaking,
IMS HEALTH may not make a distribution such as the Gartner Distribution unless
it causes the distributed entity to undertake to both RHD and ACNielsen to be
jointly and severally liable for all Cognizant Liabilities under the 1996
Distribution Agreement. Therefore, in accordance with Section 8.9(c) of the 1996
Distribution Agreement and intending to be legally bound hereby, from and after
the effective time of the Gartner Distribution, Gartner undertakes to each of
RHD and ACNielsen to be jointly and severally liable for all Cognizant
Liabilities under the 1996 Distribution Agreement.
Very truly yours,
GARTNER GROUP, INC.
By:
--------------------------------------
Name:
Title:
<PAGE> 33
EXHIBIT 2.1(d)(ii)
Gartner Group, Inc.
P.O. Box 10212
56 Top Gallant Road
Stamford, CT 06904
July , 1999
Nielsen Media Research, Inc.
299 Park Avenue
New York, New York 10171
Dear Sirs:
Reference is made to the Distribution Agreement (the "1998 Distribution
Agreement"), dated as of June 30, 1998, among Cognizant Corporation, which has
been renamed Nielsen Media Research, Inc. ("NMR"), and IMS Health Incorporation
("IMS HEALTH"). In June 1998, NMR distributed to its stockholders all of the
outstanding shares of common stock of IMS HEALTH. IMS HEALTH has announced its
intention to distribute (the "Gartner Distribution") to its stockholders all of
the shares of the Class B Common Stock of Gartner Group, Inc. ("Gartner") that
IMS HEALTH will hold following the recapitalization of Gartner contemplated by
the Merger Agreement dated June 17, 1999 between Gartner and GRGI, INC. In
Section 8.9(c) of the 1998 Distribution Agreement, IMS HEALTH agreed not to make
a distribution such as the Gartner Distribution unless it causes the distributed
entity to undertake to NMR to be jointly and severally liable for all IMS HEALTH
Liabilities under the 1998 Distribution Agreement. Therefore, in accordance with
Section 8.9(c) of the 1998 Distribution Agreement and intending to be legally
bound hereby, from and after the effective time of the Gartner Distribution,
Gartner undertakes to NMR to be jointly and severally liable for all IMS HEALTH
Liabilities under the 1998 Distribution Agreement.
Very truly yours,
GARTNER GROUP, INC.
By:
--------------------------------------
Name:
Title:
<PAGE> 34
EXHIBIT A-1
AGREEMENT AND PLAN OF MERGER dated as of June 17, 1999 (this "Agreement"),
among GARTNER GROUP, INC., a Delaware corporation (the "Company"), IMS HEALTH
INCORPORATED ("IMS HEALTH"), a Delaware corporation and GRGI, INC. ("Merger
Sub"), a Delaware corporation and a wholly owned subsidiary of IMS HEALTH.
WHEREAS, IMS HEALTH owns all of the issued and outstanding shares of Common
Stock, par value $.01 per share ("Merger Sub Common Stock"), of Merger Sub and
47,599,105 shares (approximately 46% of the total number of issued and
outstanding shares) of Class A Common Stock, par value $.0005 per share ("Class
A Common Stock"), of the Company;
WHEREAS, prior to the effectiveness of the Merger (as defined below), IMS
HEALTH plans to contribute to Merger Sub 40,689,648 shares (approximately 39% of
the total number of issued and outstanding shares) of Class A Common Stock (the
"Contributed Shares") and retain (x) 6,909,457 shares (approximately 7% of the
total number of issued and outstanding shares) of Class A Common Stock (the
"Retained Shares") and (y) warrants to purchase an aggregate of 599,400 shares
of Class A Common Stock;
WHEREAS, the Company and IMS HEALTH desire that Merger Sub merge with and
into the Company (the "Merger") upon the terms and subject to the conditions set
forth in this Agreement in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), pursuant to which all the issued and outstanding
shares of Merger Sub Common Stock shall be converted into shares of a new Class
B Common Stock, par value $.0005 per share ("Class B Common Stock"), of the
Company and all the issued and outstanding shares of Class A Common Stock (other
than the Contributed Shares held by Merger Sub, which shall be canceled with no
securities or other consideration issued in exchange therefor) shall remain
issued and outstanding;
WHEREAS, IMS HEALTH has agreed, subject to certain conditions, to
distribute all the shares of Class B Common Stock, on a pro rata basis, to the
holders of the common stock of IMS HEALTH promptly following consummation of the
Merger (the "Distribution") pursuant to the terms and conditions of a
Distribution Agreement entered into between the Company and IMS HEALTH dated as
of the date hereof (the "Distribution Agreement"), which provides for the
Distribution and certain other matters;
WHEREAS, the Boards of Directors of the Company and Merger Sub by
resolutions duly adopted have approved the terms of this Agreement and of the
Merger, and have declared the advisability of this Agreement and of the Merger;
Merger Sub has obtained the approval of its sole shareholder; and the Company
has directed the submission of this Agreement to its shareholders for approval;
and
WHEREAS, the Merger is intended to constitute a reorganization within the
meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE in consideration of the premises and the mutual agreements
and provisions herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. (a) Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined below), Merger Sub shall be
merged with and into the Company in accordance with the DGCL, whereupon the
separate corporate existence of Merger Sub shall cease, and the Company shall be
the surviving corporation (the "Surviving Corporation").
(b) Following satisfaction or waiver of all conditions to the Merger, the
Company and Merger Sub shall file a Certificate of Merger with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by the DGCL in connection with the Merger. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware or at such later time as is specified in the
Certificate of Merger (the "Effective Time").
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(c) At and after the Effective Time, the Merger shall have the effects set
forth in the DGCL. Without limiting the foregoing and subject thereto, from and
after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities and duties of the Company and Merger Sub, all as
provided under the DGCL.
SECTION 1.2. Effect on Capital Stock. At the Effective Time:
(a) All of the shares of Merger Sub Common Stock outstanding immediately
prior to the Effective Time shall be converted in the aggregate into and become
40,689,648 fully paid and non-assessable shares of Class B Common Stock of the
Surviving Corporation, and shall have the rights and privileges as set forth in
the Surviving Corporation Certificate of Incorporation, as amended hereby;
(b) each of the Contributed Shares shall automatically be canceled and
retired and shall cease to exist, and no stock of the Surviving Corporation or
other consideration shall be delivered in exchange therefor;
(c) each share of Class A Common Stock (other than shares to be canceled in
accordance with Section 1.2(b)) shall remain issued and outstanding and not be
affected by the Merger, except that all shares of Class A Common Stock remaining
outstanding at the Effective Time shall have the rights and privileges as set
forth in the Surviving Corporation Certificate of Incorporation, as amended
hereby; and
(d) each share of Class A Common Stock that is held in the treasury of the
Company shall remain in the treasury of the Company and not be affected by the
Merger, except that all shares of Class A Common Stock held in the treasury of
the Company at the Effective Time shall have the rights and privileges as set
forth in the Surviving Corporation Certificate of Incorporation, as amended
hereby.
SECTION 1.3. Share Certificates. (a) As soon as practicable after the
Effective Time,
(i) the Surviving Corporation shall deliver, or cause to be delivered,
to IMS HEALTH a number of certificates issued in the names of such persons,
in each case, as IMS HEALTH shall direct, representing in the aggregate
40,689,648 shares of Class B Common Stock which IMS HEALTH has the right to
receive upon conversion of shares of Merger Sub Common Stock pursuant to
the provisions of Section 1.2 (a) hereof;
(ii) the Surviving Corporation shall cancel the share certificate or
certificates representing the shares of Class A Common Stock owned directly
by Merger Sub; and
(iii) the share certificates representing shares of Class A Common
Stock that remain issued and outstanding under Section 1.2(c) hereof or
that remain treasury shares under Section 1.2(d) hereof shall not be
exchanged and shall continue to represent an equal number of shares of
Class A Common Stock of the Surviving Corporation without physical
substitution of share certificates of the Surviving Corporation for
existing share certificates of the Company.
(b) Any dividend or other distribution declared or made with respect to any
shares of capital stock of the Company, whether the record date for such
dividend or distribution is before or after the Effective Time, shall be paid to
the holder of record of such shares of capital stock on such record date,
regardless of whether such holder has surrendered its certificates representing
Class A Common Stock or received certificates representing Class B Common Stock
pursuant to Section 1.3(a)(i).
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1. Certificate of Incorporation. (a) In the event the adoption of
the Governance Provisions (as defined below) is approved by the stockholders of
the Company at the Stockholders Meeting (as defined below), at the Effective
Time, the Certificate of Incorporation of the Company as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, except that such Certificate of Incorporation shall be
amended as set forth in Exhibit A-1(a) hereto.
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(b) In the event the adoption of the Governance Provisions is not approved
by the stockholders of the Company at the Stockholders Meeting, at the Effective
Time, the Certificate of Incorporation of the Company as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, except that such Certificate of Incorporation shall be
amended as set forth in Exhibit A-1(b) hereto.
(c) The Certificate of Incorporation of the Surviving Corporation that
becomes effective pursuant to either Section 2.1(a) or 2.1(b) hereof is herein
referred to as the "Surviving Corporation Certificate of Incorporation."
SECTION 2.2. By-laws. (a) In the event the adoption of the Governance
Provisions is approved by the stockholders of the Company at the Stockholders
Meeting, at the Effective Time, the By-laws of the Company as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation, except that such By-laws shall be amended as set forth in Exhibit
A-1(c) hereto.
(b) In the event the adoption of the Governance Provisions is not approved
by the stockholders of the Company at the Stockholders Meeting at the Effective
Time, the By-laws of the Company as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation, except that such By-laws
shall be amended as set forth in Exhibit A-1(d) hereto.
(c) The By-laws of the Surviving Corporation as amended pursuant to either
Section 2.2(a) or 2.2(b) hereof are herein referred to as the "Surviving
Corporation By-laws".
SECTION 2.3. Directors and Officers. (a) The Surviving Corporation's board
of directors initially shall consist of ten members. From and after the
Effective Time, until the earlier of their removal or resignation or until their
successors are duly elected or appointed and qualified in accordance with
applicable law, the directors of the Surviving Corporation shall consist of the
directors of the Company in office at the Effective Time, except for Robert E.
Weissman, whose resignation shall become effective as of the Effective Time,
plus certain other persons as specified in Exhibit A-1(e) hereto and each such
director shall be designated to serve as a Class A Director or a Class B
Director (each as defined in the Surviving Corporation By-laws) as specified in
Exhibit A-1(e) hereto; provided, however, that John P. Imlay may be a director
of the Company following the Merger only if, prior to the Effective Time, IMS
HEALTH receives an opinion of counsel from Wilson Sonsini Goodrich & Rosati or
such other counsel acceptable to IMS HEALTH to the effect that, following the
consummation of the Merger and the Distribution, IMS HEALTH will not be an
affiliate of the Company for purposes of the disposition by IMS HEALTH of shares
of Class A Common Stock under the federal securities laws. The Company shall use
its best efforts to obtain the written resignation of any member of its Board of
Directors necessary to give effect to the foregoing.
(b) In the event the adoption of the Governance Provisions is approved by
the stockholders of the Company at the Stockholders Meeting, then at the
Effective Time the directors of the Surviving Corporation shall be divided into
three classes pursuant to the Surviving Corporation Certificate of Incorporation
as amended pursuant to Section 2.1(a) hereof, and each such director shall be
designated to serve as a Class I Director, Class II Director or Class III
Director (each as defined in the Surviving Corporation By-laws), as specified in
Exhibit C hereto.
(c) From and after the Effective Time, until the earlier of their removal
or resignation or until their successors are duly appointed and qualified in
accordance with applicable law and the Surviving Corporation By-laws, the
officers of the Company shall be the officers of the Surviving Corporation.
ARTICLE III
COVENANTS AND REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Stockholders Meeting. The Company shall, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold, a meeting of its stockholders (the "Stockholders Meeting") for
the purpose of considering, as three separate proposals, (i) the approval of the
Merger and this Agreement which, subject to the Distribution Agreement, will
commit the Directors of the Company to
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authorize the Cash Dividend (as defined in the Distribution Agreement) and Stock
Repurchase (as defined in the Distribution Agreement); (ii) the approval of
amendments to the Company's Certificate of Incorporation providing for the
proposed classified board, director removal and replacement and related
provisions in Articles IV and V of the Certificate of Incorporation of the
Company as set forth in Exhibit A-1(a) hereto to become effective solely upon
effectiveness of the Merger (the "Governance Provisions"); and (iii) the
approval of amendments to the Company's Certificate of Incorporation providing
for the increase of authorized stock which the Company may issue as set forth in
Exhibits A-1(a) and A-1(b) hereto to become effective solely upon the
effectiveness of the Merger (the "Share Increase"). The Company shall, through
its Board of Directors, continue to recommend to its stockholders approval of
the Merger and this Agreement and shall not withdraw such recommendation;
provided, however, that the Company's Board of Directors may withdraw such
recommendation if it determines in good faith, based upon the advice of outside
counsel, that the Board will violate its fiduciary duties to the stockholders of
the Company if such recommendation is not withdrawn.
SECTION 3.2. Filings; Other Actions. (a) Subject to the provisions of this
Agreement and the Distribution Agreement, the Company shall prepare and file
with the Securities and Exchange Commission (the "SEC") a proxy statement for
the solicitation of proxies in favor of (i) the approval and adoption of this
Agreement and the Merger, (ii) the approval of the Governance Provisions as
amendments to the Company's Certificate of Incorporation to become effective
solely upon the effectiveness of the Merger, and (iii) the approval of the Share
Increase as amendments to the Company's Certificate of Incorporation to become
effective solely upon the effectiveness of the Merger (the "Proxy Statement").
The Company shall not propose to its stockholders the adoption of the Governance
Provisions or the Share Increase as independent amendments to the Company's
Certificate of Incorporation, but only as amendments to become effective solely
upon the effectiveness of the Merger. The Company shall use all reasonable
efforts to have the Proxy Statement cleared by the SEC for mailing in definitive
form as promptly as practicable after such filing. The Company and IMS HEALTH
shall cooperate with each other in the preparation of the Proxy Statement and
any amendment or supplement thereto, and the Company shall notify IMS HEALTH of
the receipt of any comments of the SEC with respect to the Proxy Statement and
of any requests by the SEC for any amendment or supplement thereto or for
additional information, and shall provide to IMS HEALTH promptly copies of all
correspondence between the SEC and the Company or any of its advisors with
respect to the Proxy Statement. The Company shall give IMS HEALTH and its
counsel appropriate advance opportunity to review the Proxy Statement and all
responses to requests for additional information by and replies to comments of
the SEC, and shall incorporate therein any reasonable comments IMS HEALTH may
deliver to the Company with respect thereto, before such Proxy Statement,
response or reply is filed with or sent to the SEC. The Company agrees to use
commercially reasonable efforts, after consultation with IMS HEALTH and its
advisors, to respond promptly to all such comments of, and requests by, the SEC
and to cause the Proxy Statement to be mailed to the holders of the Company's
common stock entitled to vote at the Stockholders Meeting as soon as reasonably
possible following the execution hereof. IMS HEALTH shall provide the Company
such information concerning the business and affairs of IMS HEALTH and Merger
Sub as is reasonably required for inclusion in the Proxy Statement.
(b) Each of the Company and IMS HEALTH shall promptly, and in any event
within five business days after the execution and delivery of this Agreement,
make all filings or submissions as are required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any other
applicable law.
(c) Each of the Company and IMS HEALTH agrees promptly to furnish to the
other all copies of written communications (and summaries of the substance of
all oral communications) received by it, or any of its affiliates or
representatives from, or delivered by any of the foregoing to, any federal,
state or local or international court, commission, governmental body, agency,
authority, tribunal, board or other governmental entity (each a "Governmental
Entity") in respect of the transactions contemplated hereby.
(d) At the stockholders' meeting, IMS HEALTH agrees to vote, or cause to be
voted, all shares of Class A Common Stock of the Company owned by it and any of
its subsidiaries or affiliates in favor of the
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Merger, the other transactions contemplated by this Agreement, the Governance
Provisions and the Share Increase.
SECTION 3.3. Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties hereto agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to obtain the approval and
adoption of this Agreement by the stockholders of Gartner as contemplated by
Section 4.1(a) and Section 4.2(a) and to consummate, as soon as practicable
following such approval, the Merger and the other transactions contemplated by
this Agreement and the Distribution Agreement, including, but not limited to (i)
the obtaining of all necessary actions or non-actions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity
(including those in connection with the HSR Act), (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity with respect to the Merger or
this Agreement vacated or reversed, (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement and (v) causing all conditions to the parties' obligations to
consummate the Merger set forth in Article IV (other than those set forth in
Section 4.1(i)) to be satisfied. The Company and IMS HEALTH, upon the other's
request, shall provide all such reasonably necessary information concerning the
party's business and affairs to the other party.
SECTION 3.4. Representations and Warranties of the Company. The Company
hereby represents and warrants to IMS HEALTH and Merger Sub that:
(a) the Company's Board of Directors has approved and declared
advisable the Merger and this Agreement, has determined that the Merger and
the other transactions contemplated by the Distribution Agreement are fair
to the stockholders of the Company, and has recommended that the
stockholders of the Company vote in favor of the approval of the Merger and
this Agreement;
(b) the Company's Proxy Statement, the form of proxy and any other
solicitation material used in connection therewith and any oral
solicitations of proxies made by the Company shall not contain any
statement which, at the time and in the light of the circumstances under
which it is made, is false or misleading with respect to any material fact,
or which omits to state any material fact necessary in order to make the
statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to any solicitation of
a proxy for any of the matters to be voted upon at the Stockholders Meeting
which has become false or misleading, except that no representation or
warranty as made by the Company with respect to written information
relating to IMS HEALTH or IMS HEALTH Business for inclusion in the Proxy
Statement or any such proxy material or oral solicitation;
(c) this Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding agreement of the Company, enforceable
in accordance with its terms; and
(d) subject to the changes in the Company's capitalization
contemplated by this Agreement, the capitalization of the Company is as
follows:
(i) 200,000,000 authorized shares of Class A Common Stock of which
103,856,296 shares were outstanding at the close of business on May 31,
1999;
(ii) 1,600,000 authorized shares of Class B Common Stock of which
zero (0) shares are outstanding on the date of this Agreement;
(iii) 2,500,000 authorized shares of preferred stock of which zero
(0) shares are outstanding on the date of this Agreement; and
(iv) no shares of any other class or series of capital stock are
authorized, issued or outstanding.
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SECTION 3.5. Representations and Warranties of IMS HEALTH and Merger
Sub. Each of IMS HEALTH and Merger Sub jointly and severally represent and
warrant to the Company that:
(a) the Distribution Agreement and this Agreement have been duly
approved by the Board of Directors of each of IMS HEALTH and Merger Sub;
IMS HEALTH, as sole stockholder of Merger Sub, has approved the Merger and
this Agreement; and no stockholder approval or other further corporate
action is required on the part of IMS HEALTH or Merger Sub;
(b) this Agreement has been duly executed and delivered by IMS HEALTH
and Merger Sub and constitutes the valid and binding agreement of each such
corporation, enforceable in accordance with its terms;
(c) IMS HEALTH owns all outstanding equity securities of Merger Sub
free and clear of any claims, liens or encumbrances and no other person
holds any equity securities of Merger Sub nor has any right to acquire any
equity interest in Merger Sub;
(d) as of immediately prior to the Effective Time, all of the
Contributed Shares shall be owned beneficially and of record by Merger Sub,
free and clear of any claims, liens or encumbrances, and upon consummation
of the Merger the Contributed Shares shall automatically be canceled and
retired and shall cease to exist, and no stock of the surviving corporation
or other consideration shall be delivered or be required to be delivered in
exchange therefor, as provided in Section 1.2(b) hereof; and
(e) Merger Sub was formed by IMS HEALTH solely for the purposes of
effectuating the Merger upon the terms and subject to the conditions of
this Agreement; Merger Sub has no employees, will have no assets other than
the Contributed Shares, has not entered into any contract, agreement or
other commitments with any person except for customary corporate
organizational matters or as specifically set forth in this Agreement, and
has no liabilities, commitments or obligations of any kind (known or
unknown, fixed or contingent) except only for those obligations
specifically set forth in this Agreement.
ARTICLE IV
CONDITIONS TO THE MERGER
SECTION 4.1. Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction (or
waiver by the Company, except that the condition set forth in Section 4.1(a) may
not be waived) of the following conditions:
(a) a proposal to adopt this Agreement has been approved by the
holders of (i) a majority of the Class A Common Stock outstanding and
entitled to vote thereon and (ii) a majority of the shares of Class A
Common Stock (other than shares held of record or beneficially owned by IMS
HEALTH) present in person or by proxy at the Stockholders Meeting and
voting on such proposal;
(b) the waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated;
(c) no court, arbitrator or governmental body, agency or official
shall have issued any order, and there shall not be any statute, rule or
regulation, restraining or prohibiting the consummation of the Merger or
the Distribution and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter, prevent or
materially delay the Merger or the Distribution shall have been instituted
by any Governmental Entity before any court, arbitrator or governmental
body, agency or official and be pending;
(d) the private letter ruling from the Internal Revenue Service,
providing that, among other things, the Recapitalization and the
Distribution will qualify as tax-free transactions for federal income tax
purposes under Sections 354 and 355 of the Code, respectively (the "IRS
Ruling"), shall continue in effect and IMS HEALTH and Gartner shall have
complied with all provisions set forth in (i) the IRS Ruling, (ii) the
request for a supplemental ruling from the Internal Revenue Service
(providing, among other things, that neither the Recapitalization nor the
Distribution will be taken into account in applying
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<PAGE> 40
Section 355(e)(2)(A)(ii) of the Code (the "IRS Supplemental Ruling")) and
(iii) if granted prior to such time, the IRS Supplemental Ruling, that in
each case are required to be complied with prior to the Declaration Date
(as defined in the Distribution Agreement);
(e) all actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained, except those that would not reasonably be expected to have a
material adverse affect on any party's ability to consummate the
transactions contemplated by this Agreement;
(f) the Distribution Agreement shall remain in full force and effect;
(g) all representations and warranties of IMS HEALTH set forth in the
Distribution Agreement and all representations and warranties of IMS HEALTH
and Merger Sub set forth in this Agreement shall have been true and correct
in all material respects when made, and shall remain true and correct in
all material respects as of immediately prior to the Effective Time and the
Company shall have received a certificate executed by the chief executive
officer of IMS HEALTH to such effect;
(h) all covenants to have been performed prior to the Effective Time
by IMS HEALTH and Merger Sub pursuant to this Agreement and all covenants
to have been performed prior to the Effective Time by IMS HEALTH pursuant
to the Distribution Agreement shall have been performed by IMS HEALTH and
Merger Sub in all material respects to the reasonable satisfaction of the
Company and the Company shall have received a certificate executed by the
chief executive officer of IMS HEALTH to such effect; and
(i) the Board of Directors of IMS HEALTH shall have declared, or
simultaneously shall be declaring, the Distribution.
SECTION 4.2. Conditions to the Obligations of IMS HEALTH and Merger
Sub. The obligations of IMS HEALTH and Merger Sub to consummate the Merger are
subject to the satisfaction (or waiver by IMS HEALTH and Merger Sub, except that
the condition set forth in Section 4.2(a) may not be waived) of the following
conditions:
(a) a proposal to adopt this Agreement has been approved by the
holders of (i) a majority of the Class A Common Stock outstanding and
entitled to vote thereon and (ii) a majority of the shares of Class A
Common Stock (other than shares held of record or beneficially owned by IMS
HEALTH) present in person or by proxy at the Stockholders Meeting and
voting on such proposal;
(b) the waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated;
(c) the IRS Ruling shall continue in effect and IMS HEALTH and Gartner
shall have complied with all provisions set forth in (i) the IRS Ruling,
(ii) the request for the IRS Supplemental Ruling and (iii) if granted prior
to such time, the IRS Supplemental Ruling, that in each case are required
to be complied with prior to the Declaration Date;
(d) no court, arbitrator or Governmental Entity shall have issued any
order, and there shall not be any statute, rule or regulation, restraining
or prohibiting the consummation of the Merger or the Distribution and no
proceeding challenging this Agreement or the transactions contemplated
hereby or seeking to prohibit, alter, prevent or materially delay the
Merger or the Distribution shall have been instituted by any Governmental
Entity before any court, arbitrator or governmental body, agency or
official and be pending;
(e) all actions by or in respect of or filings with any governmental
body, agency, official, or authority required to permit the consummation of
the Merger and the Distribution shall have been obtained, except those that
would not reasonably be expected to have a material adverse affect on any
party's ability to consummate the transactions contemplated by this
Agreement;
(f) the Distribution Agreement shall remain in full force and effect;
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<PAGE> 41
(g) all representations and warranties of the Company set forth in the
Distribution Agreement and this Agreement shall have been true and correct
in all material respects when made, and shall remain true and correct in
all material respects as of immediately prior to the Effective Time and IMS
HEALTH shall have received a certificate executed by the chief executive
officer of the Company to such effect; and
(h) all covenants to have been performed prior to the Effective Time
by the Company pursuant to this Agreement or the Distribution Agreement
shall have been performed by the Company in all material respects to the
reasonable satisfaction of IMS Health and Merger Sub and IMS HEALTH shall
have received a certificate executed by the chief executive officer of the
Company to such effect.
ARTICLE V
TERMINATION
SECTION 5.1. Termination. (a) This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and IMS HEALTH;
(ii) by either the Company or IMS HEALTH, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining the
Company or Merger Sub from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and nonappealable;
(iii) by IMS HEALTH, if there shall be any law or regulation that
makes consummation of the Distribution illegal or otherwise prohibited or
if any judgment, injunction, order or decree enjoining IMS HEALTH from
consummating the Distribution is entered; or
(iv) by IMS HEALTH or the Company in the event the Distribution
Agreement is terminated.
(b) This Agreement shall terminate automatically without any action on the
part of the Company, IMS HEALTH or Merger Sub if:
(i) after a vote on the matter by the Company's stockholders at the
Stockholders Meeting, the condition set forth in Sections 4.1(a) and 4.2(a)
is not satisfied; or
(ii) the Merger is not consummated by July 31, 1999.
SECTION 5.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 5.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Notices. All notices and other communications hereunder shall
be in writing, shall be effective when received and shall in any event be deemed
to have been received (i) upon hand delivery, (ii) three (3) days after deposit
in U.S. Mail, postage prepaid, for first class delivery, (iii) one (1) business
day following the business day of timely deposit with Federal Express or similar
carrier, freight prepaid, for next business day delivery, and (iv) one (1)
business day after the date of transmission if sent by facsimile, provided that
confirmation of transmission and receipt is confirmed and copy is promptly sent
by first class mail, postage prepaid, and shall be sent to each party at the
following address (or at such other address for a party as shall be specified by
like notice):
To IMS HEALTH:
IMS Health Incorporated
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 Merger Sub:
GRGI, INC.
c/o 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 the Company:
Gartner Group, Inc.
P.O. Box 10212
56 Top Gallant Road
Stamford, CT 06904
Telecopy: (203) 316-6488
Attn: Michael Fleisher
Chief Financial Officer
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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 6.2. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto.
SECTION 6.3. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as to
those matters herein which are controlled by the DGCL, and such matters shall be
construed in accordance with and governed by the laws of the State of Delaware.
SECTION 6.4. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by the other party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GARTNER GROUP, INC.
By
------------------------------------
Name:
Title:
IMS HEALTH, INCORPORATED
By
------------------------------------
Name:
Title:
GRGI, INC.
By
------------------------------------
Name:
Title:
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<PAGE> 45
EXHIBIT A-1(a)
CERTIFICATE OF INCORPORATION AMENDMENTS
(WITH GOVERNANCE PROVISIONS)
The Certificate of Incorporation of the Company in effect immediately prior
to the Effective Time (the "Existing Certificate of Incorporation") shall be
amended by deleting in its entirety Article IV thereof and replacing it with the
following:(1)
"ARTICLE IV
(a) Authorized Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "common stock" and
"preferred stock." The total number of shares which this corporation is
authorized to issue is two hundred four million, one hundred thousand
(204,100,000) shares [two hundred fifty-five million (255,000,000)
shares]*. Two hundred one million, six hundred thousand (201,600,000) [Two
hundred fifty million (250,000,000)]* shares shall be designated common
stock (the "Common Stock"), of which one hundred twenty million, nine
hundred sixty thousand (120,960,000) [one hundred sixty-six million
(166,000,000)]* shares shall be designated Class A Common Stock (the "Class
A Common Stock") and eighty million, six hundred forty thousand
(80,640,000) [eighty-four million (84,000,000)]* shares shall be designated
Class B Common Stock (the "Class B Common Stock"). Two million, five
hundred thousand (2,500,000) [Five million (5,000,000)]* shares shall be
designated preferred stock (the "Preferred Stock"), all of which are
presently undesignated as to series. Each share of Preferred Stock shall
have a par value of $0.01 and each share of Common Stock shall have a par
value of $0.0005.
(b) Common Stock. The Class A Common Stock and the Class B Common
Stock shall be identical in all respects, except as otherwise expressly
provided herein, and the relative powers, preferences, rights,
qualifications, limitations and restrictions of the shares of Class A
Common Stock and Class B Common Stock shall be as follows:
(1) Cash or Property Dividends. Subject to the rights and
preferences of the Preferred Stock as set forth in any resolution or
resolutions of the Board of Directors providing for the issuance of such
stock pursuant to this Article IV, and except as otherwise provided for
herein, the holders of Class A Common Stock and Class B Common Stock are
entitled to receive dividends out of assets legally available therefor
at such times and in such per share amounts as the Board of Directors
may from time to time determine; provided that whenever a cash dividend
is paid, the same amount shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(2) Stock Dividends. If at any time a dividend is to be paid in
shares of Class A Common Stock or shares of Class B Common Stock (a
"stock dividend"), such stock dividend may be declared and paid only as
follows: only Class A Common Stock may be paid to holders of Class A
Common Stock and only Class B Common Stock may be paid to holders of
Class B Common Stock, and whenever a stock dividend is paid, the same
rate or ratio of shares shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(3) Stock Subdivisions and Combinations. The Corporation shall not
subdivide, reclassify or combine stock of either class of Common Stock
without at the same time making a proportionate subdivision or
combination of the other class.
- ---------------
(1) The amount of shares designated by an asterisk ("*") in Section (a) of
Article IV will be in effect in lieu of the number of shares appearing
immediately prior to such bracketed number bearing an asterisk if the Share
Increase is approved in accordance with the terms of the Agreement and Plan
of Merger.
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(4) Voting. Voting power shall be divided between the classes and
series of stock as follows:
(A) With respect to the election of directors, holders of Class
A Common Stock and holders of Voting Preferred Stock (as defined
below), voting together, shall be entitled to elect that number of
directors which constitutes 20% of the authorized number of members
of the Board of Directors (or, if such 20% is not a whole number,
then the nearest lower whole number of directors that is closest to
20% of such membership) (the "Class A Directors"). Each share of
Class A Common Stock shall have one vote in the election of the Class
A Directors and each share of Voting Preferred Stock shall have a
number of votes in the election of the Class A Directors as specified
in the resolution of the Board of Directors authorizing such Voting
Preferred Stock. Holders of Class B Common Stock shall be entitled to
elect the remaining directors (the "Class B Directors"). Each share
of Class B Common Stock shall have one vote in the election of such
directors. For purposes of this Section (b)(4) and Section (b)(5) of
this Article IV, references to the authorized number of members of
the Board of Directors (or the remaining directors) shall not include
any directors which the holders of any shares of Preferred Stock may
have the right to elect upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a
specified period of time. For purposes of this Section (b)(4),
"Special Voting Rights" means the different voting rights of the
holders of Class A Common Stock, holders of Class B Common Stock and
holders of Voting Preferred Stock with respect to the election of the
applicable percentage of the authorized number of members of the
Board of Directors as described in this Section (b)(4)(A). "Voting
Preferred Stock" means shares of each series of Preferred Stock upon
which the right to vote for directors has been conferred in
accordance with Section (c) of this Article IV, except for any right
to elect directors which may be provided upon the failure of the
Corporation to pay regular dividends on such Preferred Stock as and
when due for a specified period of time.
(B) Subject to the last sentence of this Section (b)(4)(B),
notwithstanding anything to the contrary contained in Section
(a)(4)(A) of this Article IV, for so long as any person or entity or
group of persons or entities acting in concert beneficially own 15%
or more of the outstanding shares of Class B Common Stock, then in
any election of directors or other exercise of voting rights with
respect to the election or removal of directors, such person, entity
or group shall only be entitled to vote (or otherwise exercise voting
rights with respect to) a number of shares of Class B Common Stock
that constitutes a percentage of the total number of shares of Class
B Common Stock then outstanding which is less than or equal to such
person, entity or group's Entitled Voting Percentage. For the
purposes hereof, a person, entity or group's "Entitled Voting
Percentage" at any time shall mean the percentage of the then
outstanding shares of Class A Common Stock beneficially owned by such
person, entity or group at such time. For purposes of this Section
(b)(4)(B), a "beneficial owner" of Common Stock includes any person
or entity or group of persons or entities who, directly or
indirectly, including through any contract, arrangement,
understanding, relationship or otherwise, written or oral, formal or
informal, control the voting power (which includes the power to vote
or to direct the voting) of such Common Stock. The provisions of this
Section (b)(4)(B) shall be effective only following (i) the
distribution by IMS Health Incorporated ("IMS HEALTH") to its
stockholders of all of the Class B Common Stock owned by it, (ii) the
receipt of a private letter ruling from the Internal Revenue Service
(the "IRS") to the effect that the terms of this Section (b)(4)(B)
will not have any adverse effect on the private letter ruling issued
by the IRS to IMS HEALTH on April 14, 1999 and any other private
letter ruling issued by the IRS to IMS HEALTH or any predecessor or
former parent of IMS HEALTH and (iii) the approval of the terms of
this Section (b)(4)(B) by the New York Stock Exchange, Inc. or any
other national securities exchange or automated quotation service on
which the Common Stock is then listed or admitted for trading.
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(C) Any Class A Director may be removed only for cause, by a
vote of a majority of the votes held by the holders of Class A Common
Stock and holders of Voting Preferred Stock, voting together as a
class. Any Class B Director may be removed only for cause, by a vote
of a majority of the votes held by the holders of Class B Common
Stock, voting separately as a class.
(D) Except as otherwise specified herein, the holders of Class A
Common Stock and holders of Class B Common Stock (i) shall in all
matters not otherwise specified in this Section (b)(4) of this
Article IV vote together (including, without limitation, with respect
to increases or decreases in the authorized number of shares of any
class of Common Stock), with each share of Class A Common Stock and
Class B Common Stock having one vote, and (ii) shall be entitled to
vote as separate classes only when required by law to do so under
mandatory statutory provisions that may not be excluded or overridden
by a provision in the Certificate of Incorporation or as provided
herein.
(E) Except as set forth in this Section (b)(4) of this Article
IV, the holders of Class A Common Stock shall have exclusive voting
power (except for any voting powers of any Preferred Stock) on all
matters at any time when no Class B Common Stock is issued and
outstanding, and the holders of Class B Common Stock shall have
exclusive voting power (except for any voting powers of any Preferred
Stock) on all matters at any time when no Class A Common Stock is
issued and outstanding.
(5) Vacancies; Increase or Decreases in Size of the Board of
Directors. Any vacancy in the office of a director created by the death,
resignation or removal of a director elected by (or appointed on behalf
of) the holders of the Class B Common Stock or the holders of the Class
A Common Stock and Voting Preferred Stock voting together as a class, as
the case may be, may be filled by the vote of the majority of the
directors (or the sole remaining director) elected by (or appointed on
behalf of) such holders of Class B Common Stock or Class A Common Stock
and Voting Preferred Stock (or on behalf of whom that director was
appointed), as the case may be, whose death, resignation or removal
created the vacancy, unless there are no such directors, in which case
such vacancy may be filled by the vote of the majority of the directors
or by the sole remaining director, regardless, in each instance, of any
quorum requirements set out in the By-laws. Any director elected by some
or all of the directors to fill a vacancy shall hold office for the
remainder of the full term of the director whose vacancy is being filled
and until such director's successor shall have been elected and
qualified unless removed and replaced pursuant to Section (b)(4)(C) of
this Article IV and this Section (b)(5). All newly-created directorships
resulting from an increase in the authorized number of directors shall
be allocated between Class A Directors and Class B Directors such that
at all times the number of directorships reserved for Class A Directors
shall be 20% of the authorized number of members of the Board of
Directors (or, if such 20% is not a whole number, then the nearest lower
whole number of directors that is closest to 20% of such membership) and
the remaining directorships are reserved for Class B Directors. No
decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director. If the number of
directors is changed, any increase or decrease shall be apportioned
among the classes of directors established pursuant to Article V so that
the number of directors in each class is as nearly equal as possible.
(6) Merger or Consolidation. In case of any consolidation of the
Corporation with one or more other corporations or a merger of the
Corporation with another corporation, each holder of a share of Class A
Common Stock shall be entitled to receive with respect to such share the
same kind and amount of shares of stock and other securities and
property (including cash) receivable upon such consolidation or merger
by a holder of a share of Class B Common Stock, and each holder of a
share of Class B Common Stock shall be entitled to receive with respect
to such share the same kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
consolidation or merger by a holder of a share of Class A Common Stock;
provided that, in any such transaction, the holders of shares of Class A
Common Stock and the holders of shares of Class B Common Stock may
receive different kinds of shares of stock if the only difference in
such shares is the inclusion of voting rights which continue the Special
Voting Rights.
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<PAGE> 48
(7) Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, the holders of the Class A Common Stock
and Class B Common Stock shall participate equally per share in any
distribution to stockholders, without distinction between classes.
(c) Preferred Stock. Any Preferred Stock not previously designated as
to series may be issued from time to time in one or more series pursuant to
a resolution or resolutions providing for such issue duly adopted by the
Board of Directors (authority to do so being hereby expressly vested in the
Board), and such resolution or resolutions shall also set forth the voting
powers, full or limited or none, of each such series of Preferred Stock and
shall fix the designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of each such series of Preferred Stock; provided that, except
for any right to elect directors upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a specified
period of time, no series of Preferred Stock shall be entitled to vote
generally in the election of any directors of the Corporation other than
Class A Directors or to vote separately to elect one or more directors of
the Corporation. The Board of Directors is authorized to alter the
designation, rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the
Board of Directors originally fixing the number of shares constituting any
series of Preferred Stock, to increase or decrease (but not below the
number of shares of any such series than outstanding) the number of shares
of any such subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if reacquired
by the Corporation (whether by redemption, repurchase, conversion to Common
Stock or other means), shall upon such reacquisition resume the status of
authorized and unissued shares of Preferred Stock, undesignated as to
series and available for designation and issuance by the Corporation in
accordance with the immediately preceding paragraph."
The Existing Certificate of Incorporation shall be amended by deleting in
its entirety Article V thereof and replacing it with the following:
"ARTICLE V
The directors, other than those who may be elected solely by the
holders of any class or series of Preferred Stock, if any, shall be
classified, with respect to the time for which they severally hold office,
into three classes, as nearly equal in number as possible, as determined by
the Board of Directors, one class ("Class I") to hold office initially for
a term expiring at the first annual meeting of stockholders to be held
after the date this Article V becomes effective (the "Classified Board
Effective Date"), another class ("Class II") to hold office initially for a
term expiring at the second annual meeting of stockholders to be held after
the Classified Board Effective Date, and another class ("Class III") to
hold office initially for a term expiring at the third annual meeting of
stockholders to be held after the Classified Board Effective Date, with the
members of each class to hold office until their successors are elected and
qualified. Directors elected by a class or series of stock, or if
applicable, classes or series of stock voting together, shall be divided as
evenly as possible, and shall be allocated by the Board of Directors, among
Class I, Class II and Class III. At each annual meeting of stockholders,
the successors of the class of directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of their
election."
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<PAGE> 49
EXHIBIT A-1(b)
CERTIFICATE OF INCORPORATION AMENDMENTS
(WITHOUT GOVERNANCE PROVISIONS)
The Certificate of Incorporation of the Company in effect immediately prior
to the Effective Time (the "Existing Certificate of Incorporation") shall be
amended by deleting in its entirety Article IV thereof and replacing it with the
following(1):
"ARTICLE IV
(a) Authorized Stock. The Corporation is authorized to issue two
classes of stock to be designated, respectively, "common stock" and
"preferred stock." The total number of shares which this corporation is
authorized to issue is two hundred four million, one hundred thousand
(204,100,000) shares [two hundred fifty-five million (255,000,000)
shares]*. Two hundred one million, six hundred thousand (201,600,000) [Two
hundred fifty million (250,000,000)]* shares shall be designated common
stock (the "Common Stock"), of which one hundred twenty million, nine
hundred sixty thousand (120,960,000) [one hundred, sixty six million
(166,000,000)]* shares shall be designated Class A Common Stock (the "Class
A Common Stock") and eighty million, six hundred forty thousand
(80,640,000) [eighty-four million (84,000,000)]* shares shall be designated
Class B Common Stock (the "Class B Common Stock"). Two million, five
hundred thousand (2,500,000) [Five million (5,000,000)]* shares shall be
designated preferred stock (the "Preferred Stock"), all of which are
presently undesignated as to series. Each share of Preferred Stock shall
have a par value of $0.01 and each share of Common Stock shall have a par
value of $0.0005.
(b) Common Stock. The Class A Common Stock and the Class B Common
Stock shall be identical in all respects, except as otherwise expressly
provided herein, and the relative powers, preferences, rights,
qualifications, limitations and restrictions of the shares of Class A
Common Stock and Class B Common Stock shall be as follows:
(1) Cash or Property Dividends. Subject to the rights and
preferences of the Preferred Stock as set forth in any resolution or
resolutions of the Board of Directors providing for the issuance of such
stock pursuant to this Article IV, and except as otherwise provided for
herein, the holders of Class A Common Stock and Class B Common Stock are
entitled to receive dividends out of assets legally available therefor
at such times and in such per share amounts as the Board of Directors
may from time to time determine; provided that whenever a cash dividend
is paid, the same amount shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(2) Stock Dividends. If at any time a dividend is to be paid in
shares of Class A Common Stock or shares of Class B Common Stock (a
"stock dividend"), such stock dividend may be declared and paid only as
follows: only Class A Common Stock may be paid to holders of Class A
Common Stock and only Class B Common Stock may be paid to holders of
Class B Common Stock, and whenever a stock dividend is paid, the same
rate or ratio of shares shall be paid in respect of each outstanding
share of Class A Common Stock and Class B Common Stock.
(3) Stock Subdivisions and Combinations. The corporation shall not
subdivide, reclassify or combine stock of either class of Common Stock
without at the same time making a proportionate subdivision or
combination of the other class.
- ---------------
(1)The amount of shares designated by an asterisk ("*") in Section (a) of
Article IV will be in effect in lieu of the number of shares appearing
immediately prior to such bracketed number bearing an asterisk if the Share
Increase is approved in accordance with the terms of the Agreement and Plan of
Merger.
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<PAGE> 50
(4) Voting. Voting power shall be divided between the classes and
series of stock as follows:
(A) With respect to the election of directors, holders of Class
A Common Stock and holders of Voting Preferred Stock (as defined
below), voting together, shall be entitled to elect that number of
directors which constitutes 20% of the authorized number of members
of the Board of Directors (or, if such 20% is not a whole number,
then the nearest lower whole number of directors that is closest to
20% of such membership) (the "Class A Directors"). Each share of
Class A Common Stock shall have one vote in the election of the Class
A Directors and each share of Voting Preferred Stock shall have a
number of votes in the election of the Class A Directors as specified
in the resolution of the Board of Directors authorizing such Voting
Preferred Stock. Holders of Class B Common Stock shall be entitled to
elect the remaining directors (the "Class B Directors"). Each share
of Class B Common Stock shall have one vote in the election of such
directors. For purposes of this Section (b)(4) and Section (b)(5) of
this Article IV, references to the authorized number of members of
the Board of Directors (or the remaining directors) shall not include
any directors which the holders of any shares of Preferred Stock may
have the right to elect upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a
specified period of time. For purposes of this Section (b)(4),
"Special Voting Rights" means the different voting rights of the
holders of Class A Common Stock, holders of Class B Common Stock and
holders of Voting Preferred Stock with respect to the election of the
applicable percentage of the authorized number of members of the
Board of Directors as described in this Section (b)(4)(A). "Voting
Preferred Stock" means shares of each series of Preferred Stock upon
which the right to vote for directors has been conferred in
accordance with Section (c) of this Article IV, except for any right
to elect directors which may be provided upon the failure of the
Corporation to pay regular dividends on such Preferred Stock as and
when due for a specified period of time.
(B) Subject to the last sentence of this Section (b)(4)(B),
notwithstanding anything to the contrary contained in Section
(a)(4)(A) of this Article IV, for so long as any person or entity or
group of persons or entities acting in concert beneficially own 15%
or more of the outstanding shares of Class B Common Stock, then in
any election of directors or other exercise of voting rights with
respect to the election or removal of directors, such person, entity
or group shall only be entitled to vote (or otherwise exercise voting
rights with respect to) a number of shares of Class B Common Stock
that constitutes a percentage of the total number of shares of Class
B Common Stock then outstanding which is less than or equal to such
person, entity or group's Entitled Voting Percentage. For the
purposes hereof, a person, entity or group's "Entitled Voting
Percentage" at any time shall mean the percentage of the then
outstanding shares of Class A Common Stock beneficially owned by such
person, entity or group at such time. For purposes of this Section
(b)(4)(B), a "beneficial owner" of Common Stock includes any person
or entity or group of persons or entities who, directly or
indirectly, including through any contract, arrangement,
understanding, relationship or otherwise, written or oral, formal or
informal, control the voting power (which includes the power to vote
or to direct the voting) of such Common Stock. The provisions of this
Section (b)(4)(B) shall be effective only following (i) the
distribution by IMS Health Incorporated ("IMS HEALTH") to its
stockholders of all of the Class B Common Stock owned by it, (ii) the
receipt of a private letter ruling from the Internal Revenue Service
(the "IRS") to the effect that the terms of this Section (b)(4)(B)
will not have any adverse effect on the private letter ruling issued
by the IRS to IMS HEALTH on April 14, 1999 and any other private
letter ruling issued by the IRS to IMS HEALTH or any predecessor or
former parent of IMS HEALTH and (iii) the approval of the terms of
this Section (b)(4)(B) by the New York Stock Exchange, Inc. or any
other national securities exchange or automated quotation service on
which the Common Stock is then listed or admitted for trading.
2
<PAGE> 51
(C) Any Class A Director may be removed, with or without cause,
by a vote of a majority of the votes held by the holders of Class A
Common Stock and holders of Voting Preferred Stock, voting together
as a class. Any Class B Director may be removed, with or without
cause, by a vote of a majority of the votes held by the holders of
Class B Common Stock, voting separately as a class.
(D) Except as otherwise specified herein, the holders of Class A
Common Stock and holders of Class B Common Stock (i) shall in all
matters not otherwise specified in this Section (b)(4) of this
Article IV vote together (including, without limitation, with respect
to increases or decreases in the authorized number of shares of any
class of Common Stock), with each share of Class A Common Stock and
Class B Common Stock having one vote, and (ii) shall be entitled to
vote as separate classes only when required by law to do so under
mandatory statutory provisions that may not be excluded or overridden
by a provision in the Certificate of Incorporation or as provided
herein.
(E) Except as set forth in this Section (b)(4) of this Article
IV, the holders of Class A Common Stock shall have exclusive voting
power (except for any voting powers of any Preferred Stock) on all
matters at any time when no Class B Common Stock is issued and
outstanding, and the holders of Class B Common Stock shall have
exclusive voting power (except for any voting powers of any Preferred
Stock) on all matters at any time when no Class A Common Stock is
issued and outstanding.
(5) Increase or Decreases in Size of the Board of Directors. All
newly-created directorships resulting from an increase in the authorized
number of directors shall be allocated between Class A Directors and
Class B Directors such that at all times the number of directorships
reserved for Class A Directors shall be 20% of the authorized number of
members of the Board of Directors (or, if such 20% is not a whole
number, then the nearest lower whole number of directors that is closest
to 20% of such membership) and the remaining directorships are reserved
for Class B Directors. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any
incumbent director.
(6) Merger or Consolidation. In case of any consolidation of the
Corporation with one or more other corporations or a merger of the
Corporation with another corporation, each holder of a share of Class A
Common Stock shall be entitled to receive with respect to such share the
same kind and amount of shares of stock and other securities and
property (including cash) receivable upon such consolidation or merger
by a holder of a share of Class B Common Stock, and each holder of a
share of Class B Common Stock shall be entitled to receive with respect
to such share the same kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
consolidation or merger by a holder of a share of Class A Common Stock;
provided that, in any such transaction, the holders of shares of Class A
Common Stock and the holders of shares of Class B Common Stock may
receive different kinds of shares of stock if the only difference in
such shares is the inclusion of voting rights which continue the Special
Voting Rights.
(7) Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, the holders of the Class A Common Stock
and Class B Common Stock shall participate equally per share in any
distribution to stockholders, without distinction between classes.
(c) Preferred Stock. Any Preferred Stock not previously designated as
to series may be issued from time to time in one or more series pursuant to
a resolution or resolutions providing for such issue duly adopted by the
Board of Directors (authority to do so being hereby expressly vested in the
Board), and such resolution or resolutions shall also set forth the voting
powers, full or limited or none, of each such series of Preferred Stock and
shall fix the designations, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of each such series of Preferred Stock; provided that, except
for any right to elect directors upon the failure of the Corporation to pay
regular dividends on such Preferred Stock as and when due for a specified
period of time, no series of Preferred Stock shall be entitled to vote
generally in the election of any directors of the Corporation other than
3
<PAGE> 52
Class A Directors or to vote separately to elect one or more directors of
the Corporation. The Board of Directors is authorized to alter the
designation, rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and, within the
limits and restrictions stated in any resolution or resolutions of the
Board of Directors originally fixing the number of shares constituting any
series of Preferred Stock, to increase or decrease (but not below the
number of shares of any such series than outstanding) the number of shares
of any such subsequent to the issue of shares of that series.
Each share of Preferred Stock issued by the Corporation, if reacquired
by the Corporation (whether by redemption, repurchase, conversion to Common
Stock or other means), shall upon such reacquisition resume the status of
authorized and unissued shares of Preferred Stock, undesignated as to
series and available for designation and issuance by the Corporation in
accordance with the immediately preceding paragraph."
The Existing Certificate of Incorporation shall be amended by deleting in
its entirety Article V thereof and renumbering Articles VI, VII, VIII and IX
thereof as Articles V, VI, VII and VIII, respectively.
The Existing Certificate of Incorporation shall be amended by deleting the
reference to Article VIII in Article VIII thereof and replacing it with "Article
VII".
4
<PAGE> 53
EXHIBIT A-1(c)
BY-LAW AMENDMENTS
(WITH GOVERNANCE PROVISIONS)
The By-laws of the Corporation in effect at the Effective Time (the
"Existing By-laws") shall be amended by adding the phrase "class and"
immediately preceding the phrase "number of shares" in the first sentence of
Section 5 of Article II thereof.
The Existing By-laws shall be amended by deleting in its entirety Section 2
of Article III thereof and replacing it with the following:
"The number of directors which shall constitute the board of directors
shall be ten (10). The number of directors may be changed from time to
time by resolution of the board of directors or the stockholders,
although in no event shall the number of directors be less than five (5)
for so long as the Special Voting Rights (as defined in Article IV,
Section (b)(4)(A) of the Certificate of Incorporation) shall be in
effect. Each director shall be elected by a plurality of the votes of
the shares of one or more class or classes or series of stock (as
provided in the Certificate of Incorporation), as the case may be,
entitled to vote for such director that are present in person or
represented by proxy at the annual meeting of stockholders. At each
annual meeting of the stockholders, the stockholders shall elect the
successors of the class of directors whose terms expire at such meeting,
to hold office until their successors are duly elected and qualified at
the third annual meeting of stockholders following the year of their
election or until their earlier death, resignation or removal as herein
or in the Certificate of Incorporation provided. The directors shall be
elected in this manner, except as provided in Section 4 of this Article
III and the Certificate of Incorporation."
The Existing By-laws shall be amended by deleting the first sentence of
Section 4 of Article III thereof and replacing it with the following:
"Vacancies resulting from newly created directorships resulting from an
increase in the authorized number of directors and vacancies resulting
from the death, resignation or removal of a director elected by (or
appointed on behalf of) the holders of one or more class or classes or
series of stock (as provided in the Certificate of Incorporation),
voting together as a class, as the case may be, shall be filled by the
vote of the majority of the directors (or the sole remaining director)
elected by (or appointed on behalf of) such holders of one or more class
or classes or series of stock (as provided in the Certificate of
Incorporation) (or on whose behalf the director was appointed), as the
case may be, whose death, resignation or removal created the vacancy, or
to which the newly-created directorship has been allocated."
The Existing By-laws shall be amended by deleting the phrase "each
newly-elected board of directors" in Section 5 of Article III thereof and
replacing it with the phrase "the board of directors."
1
<PAGE> 54
EXHIBIT A-1(d)
BY-LAW AMENDMENTS
(WITHOUT GOVERNANCE PROVISIONS)
The By-laws of the Corporation in effect at the Effective Time (the
"Existing By-laws") shall be amended by adding the phrase "class and"
immediately preceding the phrase "number of shares" in the first sentence of
Section 5 of Article II thereof.
The Existing By-laws shall be amended by deleting in its entirety Section 2
of Article III thereof and replacing it with the following:
"The number of directors which shall constitute the board of directors
shall be ten (10). The number of directors may be changed from time to
time by resolution of the board of directors or the stockholders,
although in no event shall the number of directors be less than five (5)
for so long as the Special Voting Rights (as defined in Article IV,
Section (b)(4)(A) of the Certificate of Incorporation) shall be in
effect. Each director shall be elected by a plurality of the votes of
the shares of one or more class or classes or series of stock (as
provided in the Certificate of Incorporation), as the case may be,
entitled to vote for such director that are present in person or
represented by proxy at the annual meeting of stockholders. Each
director elected shall hold office until a successor is duly elected and
qualified or until his earlier death, resignation or removal as herein
and in the Certificate of Incorporation provided. The directors shall be
elected in this manner, except as provided in Section 4 of this Article
III and the Certificate of Incorporation."
The Existing By-laws shall be amended by deleting the first sentence of
Section 4 of Article III thereof and replacing it with the following:
"Vacancies resulting from newly created directorships resulting from an
increase in the authorized number of directors and vacancies resulting
from the death, resignation or removal of a director elected by (or
appointed on behalf of) the holders of one or more class or classes or
series of stock (as provided in the Certificate of Incorporation),
voting together as a class, as the case may be, shall be filled by the
vote of the majority of the directors (or the sole remaining director)
elected by (or appointed on behalf of) such holders of one or more class
or classes or series of stock (as provided in the Certificate of
Incorporation) (or on whose behalf the director was appointed), as the
case may be, whose death, resignation or removal created the vacancy, or
to which the newly-created directorship has been allocated."
The Existing By-laws shall be amended by deleting the phrase "each
newly-elected board of directors" in Section 5 of Article III thereof and
replacing it with the phrase "the board of directors."
1
<PAGE> 55
EXHIBIT A-1(e)
DIRECTORS AT THE EFFECTIVE TIME
<TABLE>
<CAPTION>
(IF GOVERNANCE
DIRECTORS DESIGNATED AS PROVISIONS APPROVED)
NAME OF DIRECTOR CLASS A OR CLASS B DIRECTOR CLASS
- ---------------- ----------------------- --------------------
<S> <C> <C>
John P. Imlay....................................... Class B Term Expiring 2000
Stephen G. Pagliuca................................. Class B Term Expiring 2000
Charles B. McQuade.................................. Class B Term Expiring 2000
Manuel A. Fernandez................................. Class A Term Expiring 2001
Dennis G. Sisco..................................... Class B Term Expiring 2001
Anne Sutherland Fuchs............................... Class B Term Expiring 2001
William O. Grabe.................................... Class A Term Expiring 2002
Max D. Hopper....................................... Class B Term Expiring 2002
Kenneth Roman....................................... Class B Term Expiring 2002
William T. Clifford................................. Class B Term Expiring 2002
</TABLE>
1
