-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LSBc72U2kTGZMCE1lIqQspyxKEG/O0P9TAqwhTC1Xk9HCP7Mxu0OsbUsKaacNBHw WFIKdIr3aMHTEvNgDIDyGw== 0000950117-94-000074.txt : 19940328 0000950117-94-000074.hdr.sgml : 19940328 ACCESSION NUMBER: 0000950117-94-000074 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUN & BRADSTREET CORP CENTRAL INDEX KEY: 0000030419 STANDARD INDUSTRIAL CLASSIFICATION: 8700 IRS NUMBER: 132740040 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-07155 FILM NUMBER: 94517945 BUSINESS ADDRESS: STREET 1: 299 PARK AVE 34TH FL CITY: NEW YORK STATE: NY ZIP: 10171 BUSINESS PHONE: 2125936800 FORMER COMPANY: FORMER CONFORMED NAME: DUN & BRADSTREET COMPANIES INC DATE OF NAME CHANGE: 19790429 10-K 1 1993 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1993 OR () TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________ to ____________ Commission file Number 1-7155 ------ THE DUN & BRADSTREET CORPORATION - ------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-2740040 - ---------------------------- ----------------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 200 Nyala Farms, Westport, Connecticut 06880 - ----------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 222-4200 -------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange - ------------------- on which registered --------------------- Common Stock, par value $1 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. _____ As of January 31, 1994, 170,931,741 shares of Common Stock of The Dun & Bradstreet Corporation were outstanding and the aggregate market value of such Common Stock held by nonaffiliates (based upon its closing transaction price on the Composite Tape on such date) was approximately $10,747 million. (Continued) ======================================================================== Documents Incorporated by Reference PART I - ----------- ITEM 1 -Business Performance & Outlook, 1993, Pages 31 and 32, Note 14 Operations by Business Segments and Page 32, Note 15 Operations by Geographic Area, of the 1993 Annual Report. ITEM 3 -Legal Proceedings Page 29, Note 12 Litigation, of the 1993 Annual Report. PART II - ------------ ITEM 5 -Market for the Page 16, Financial Review, of the 1993 Registrant's Annual Report. Common Equity and Related Stockholder Matters ITEM 6 -Selected Financial Pages 34 and 35, Ten-Year Selected Data Financial Data, of the 1993 Annual Report. ITEM 7 -Management's Pages 13 to 16, Financial Review, Discussion and of the 1993 Annual Report. Analysis of Financial Condition and Results of Operations ITEM 8 -Financial Pages 18 to 33 of the 1993 Annual Statements Report. and Supplementary Data PART III - ------------- ITEM 10 -Directors and Pages 2 to 4 and 21 of the Company's Executive Proxy Statement dated March 11, 1994. Officers of the Registrant ITEM 11 -Executive Pages 8 to 19 of the Company's Proxy Compensation Statement dated March 11, 1994. ITEM 12 -Security Pages 19 to 21 of the Company's Proxy Ownership of Statement dated March 11, 1994. Certain Beneficial Owners and Management ITEM 13 -Certain Page 19 to 21 of the Company's Proxy Relationships Statement dated March 11, 1994. and Related Transactions ----------------------------------------------- The Index to Exhibits is located on Pages 26 to 28. PART I As used in this report, except where the context indicates otherwise, the term "Company" means The Dun & Bradstreet Corporation and all subsidiaries consolidated in the financial statements contained herein ITEM 1. BUSINESS (a)(1) The Dun & Bradstreet Corporation was incorporated under the laws of the State of Delaware on February 6, 1973 and became the parent holding company of Dun & Bradstreet, Inc. and its subsidiaries on June 1, 1973. Dun & Bradstreet, Inc. was incorporated under the laws of the State of Delaware in 1930 and is the successor to a business commenced in 1841. (2) Not applicable. (b)(1) The response to this item is incorporated herein by reference to Note 14 Operations by Business Segments on Pages 31 to 32 of the 1993 Annual Report. (2) Not applicable. (c)(1) The Dun & Bradstreet Corporation is a non-operating holding company whose revenue is derived primarily from dividends received from its subsidiaries and interest income on its investments. Reference should be made to EXHIBIT B, List of Active Subsidiaries as of January 31, 1994, which describes the Company's subsidiaries. A descriptive narrative of the Company's business segments follows item (d). The number of employees at December 31, 1993 was approximately 50,400. (d) The response to this item is incorporated herein by reference to Note 15 Operations by Geographic Area on Page 32 of the 1993 Annual Report. The Company is the world's leading marketer of information, software and services for business decision making. Its operations can be divided into five business segments: Marketing Information Services, Risk Management and Business Marketing Information Services, Software Services, Directory Information Services, and Other Business Services. A narrative description of the Company's operations by business segment follows. MARKETING INFORMATION SERVICES IMS International, Inc. IMS International, Inc. (IMS) provides information and decision- support services to the pharmaceutical and health-care industries. IMS' principal services are sales-territory reports, national pharmaceutical- sales audits and national medical audits, as well as a multinational data analysis system. Within each of these product classes, individual country-level reports may differ in one or more important characteristics depending on the circumstances of local pharmaceutical sales and distribution. IMS' reports are provided in printed format, as on-line inquiry-batch processing services and as part of electronic customer-site workstations. IMS provides information services covering over 70 countries and maintains offices in 48 countries on six continents, with 65% of total revenues generated outside the U.S. Sales-territory reports measure the effectiveness of pharmaceutical companies' and their competitors' sales forces, by product and product group within a geographic configuration tailored to each client's needs. IMS sales-territory reports are available in 26 countries and account for approximately 41% of IMS' worldwide revenues. Pharmaceutical audits are syndicated reports which measure sales of pharmaceutical products for an entire national market and are primarily used by pharmaceutical companies to understand market dynamics and plan effective business strategies. Pharmaceutical audits are available in over 65 countries. -1- National medical audits are syndicated reports utilizing data from physician practices to provide information on how pharmaceutical products are used, including patient and doctor details, diagnosis and drug therapy. Medical audits are available in 40 countries. The raw data from which IMS' services are generated is derived either from statistically selected panels of drugstores, hospitals, physicians, etc., or from activities such as warehouse shipments or wholesaler sales data. To protect privacy, no individual patient is identified in any IMS medical database. IMS has generally well- established relationships with the sources required to create its databases and in many cases has historical connections with the trade associations and professional societies involved. All major pharmaceutical companies are customers of IMS and many of the customers subscribe to reports and services in several countries. The scope of IMS' customer base enables it to avoid dependence on any single customer. While the services offered by IMS are in many respects unique in their scope and completeness, there is competition in many countries in which it operates from other market research firms, direct mail and information service firms, as well as from the in-house capabilities of its customers. Competition has traditionally arisen on a country-by- country basis but one company now provides information services to the pharmaceutical industry in a number of countries. However, no competitor has the global presence nor offers the range of services that IMS does. Nielsen Nielsen participates in the global consumer marketing information services market. Nielsen is the world's largest marketing information and services supplier. Nielsen supplies a wide range of services that help consumer-goods manufacturers screen, plan, test and evaluate their individual brands and marketing programs. Comprehensive information is supplied on sales volume, shares, trends, pricing, promotion, distribution and inventory levels. Nielsen is a leader in providing these services to numerous industries including the grocery, beverage and health and beauty care industries. An extensive range of test- marketing services, innovative applications, analytical services and software tools is also provided. Nielsen offers its services to consumer-goods marketers in 34 countries worldwide, with approximately 70% of revenues generated outside the U.S. Nielsen provides a measurement of the consumer response at the actual point of sale -- the final result of the manufacturer's production and marketing efforts. From a national sample of retail stores, Nielsen collects point-of-sale information via electronic means such as scanning of universal product codes (UPC) and store visits by professional auditors. In the U.S. and other countries where electronic point-of-sale data are available, weekly reporting of product sales and related marketing information is the primary product offering along with value-added analysis, such as market-response modeling and promotion effectiveness studies. In the audit environment, store purchases are combined with change-of-stock-on-hand data to produce data on sales to consumers, retail inventories, brand distribution, out-of-stock items, prices and displays. Nielsen has established a unit devoted to Efficient Consumer Response (ECR), an emerging trend in the consumer packaged goods industry to streamline distribution and sales processes, eliminate waste and deliver products to consumers faster and at a lower cost. Nielsen has formed several strategic alliances to enhance its capabilities in ECR and to begin instituting best practices in the industry. Through the addition of Nielsen's household-panel data, information is not only provided on what stores are selling, but also on what cooperating households are buying. Nielsen Household Services provide manufacturers and retailers with detailed consumer-behavior analyses that help identify target audiences and assess advertising and marketing effectiveness. These data, coupled with advertising and promotion stimuli by household, provide a powerful addition to Nielsen's retail- store databases. Household data are available in most countries including the U.S. -2- Through Nielsen's decision-support and software services, customers can retrieve data and analyze information via personal computers and terminals installed in their offices. Customers can access information in a number of ways, including on-line connection to mainframes or downloading data into the customer's personal computer or internal management information systems. Nielsen provides a number of analytic applications that assist customers in a more productive and efficient use of their own and Nielsen's information. The Nielsen Workstation, an innovative Windows-based software system, allows marketing and sales managers to integrate and evaluate information from a wide array of sources. Nielsen Spotlight is an expert system that enables users to access a database to find the most important facts related to volume and share changes for a brand and searches for the key factors that influence these share changes. Opportunity Explorer helps manufacturers' marketing and sales force personnel understand category dynamics and pinpoint opportunities for increasing sales. Promotion Simulator takes the analysis to the next stage by helping the sales force evaluate and plan promotion strategies with the retailers. The SPACEMAN space management family of products offers a hierarchy of integrated solutions for analyzing merchandising variables and producing automated planograms. Nielsen's products and services are subject to direct and indirect competition from rival marketing research and information services companies, marketing research departments of advertisers, advertising agencies and consulting firms, as well as the in-house operations of a number of large manufacturers and publishers. There are six major competitors worldwide, located in the U.S., Europe, Latin America and the Far East, but none has the global depth and breadth of coverage that Nielsen provides. Nielsen Media Nielsen Media measures television audiences and reports these and related data to advertisers, advertising agencies, syndicators, broadcast networks, cable networks, cable operators, television stations and station representatives in order to increase the effectiveness of television advertising and programming. This syndicated-statistical information is offered on a subscription basis. Custom or ad-hoc analyses of the data are also offered. The data are then used by subscribers to buy, sell, plan and price television time and to make programming and scheduling decisions. In 1993, advertisers spent approximately $30 billion on television advertising, including $2 billion on cable television advertising, according to the Television Bureau of Advertising, to bring a variety of programs and advertising messages to approximately 94.2 million U.S. television households. These data underscore the need for television stations, networks, advertisers, advertising agencies and others to obtain reports on how many households and types of people are reached by such programming. Nielsen Media measures television audiences and reports data through six services: Nielsen Television Index, Nielsen Syndication Services, Nielsen Homevideo Index, Nielsen Station Index, Nielsen Hispanic Television Index and Nielsen Hispanic Station Index. Nielsen Television Index provides daily audience measurement and demographic estimates for all national broadcast network-television programs through the use of the Nielsen People Meter. Nielsen Syndication Services provides reports and services on both the local and national level to the program syndication segment of the television industry. Nielsen Homevideo Index provides viewing measurement of cable, pay cable and other newer television technologies. Nielsen Station Index provides television audience measurement information in over 200 local markets and daily information in 30 markets through set meters in the U.S. Nielsen Hispanic Television Index provides viewing measurement of national Hispanic audiences, while Nielsen Hispanic Station Index provides viewing measurement of local Hispanic audiences. Television audience research services based on techniques similar to those described above are also provided in Canada, Japan, Finland, Norway, Sweden, Australia, Columbia, Singapore and Turkey. Nielsen Media has maintained a strong leadership position, facing direct competition during 1993 from Arbitron in the local television measurement arena. Arbitron announced in October of 1993 that it would discontinue its syndicated broadcast and cable television ratings service as of December 31, 1993. Indirectly, on both a national and local basis, competition stems from other marketing research services offering product movement and television audience data and services. During 1993, Nielsen Media Research again expanded its local-market television services and continued to invest to enhance product value, technical competencies and data quality. -3- Nielsen, IMS and Nielsen Media are subject to the usual risks inherent in carrying on business in certain countries outside the U.S., including currency fluctuations, possible nationalization,expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced because its basic service is the delivery of information, rather than the production of products which require manufacturing or the use of natural resources. RISK MANAGEMENT AND BUSINESS MARKETING INFORMATION SERVICES Dun & Bradstreet Information Services Dun & Bradstreet Information Services (DBIS) is the world's leading supplier of business-to-business risk management, credit and marketing information and decision-support services that build customers' profitability and sales. The division maintains operations in 34 countries, a data-collection network spanning nearly 200 nations and a database covering more than 32 million businesses worldwide. Its 1,200 business analysts and 2,000 support people gather information through face-to-face and telephone interviews. More than 200 million trade experiences are added to the Company's file annually. Suits, liens and judgments are also collected from more than 2,500 filing locations. And DBIS updates its information base continually--more than 620,000 times each business day. Its nine-digit D-U-N-S Number, endorsed by the United Nations as a standard business identifier for cross-border electronic data interchange, is a unique tool for establishing corporate family relationships worldwide. DBIS also provides receivables management services worldwide and credit insurance in the U.S. The business generates about 35 percent of its revenue outside the U.S., and is organized into three regions: North America, Europe/Middle East/Africa and Asia/Pacific/Latin America. Dun & Bradstreet Information Services North America Dun & Bradstreet Information Services North America provides business information, marketing information, receivable management and credit insurance services in the U.S. and Canada through U.S. Credit Information Services, Receivable Management Services, Business Marketing Services, American Credit Indemnity Company and Dun & Bradstreet Canada, which are described below. U. S. Credit Information Services U. S. Credit Information Services (Credit Services) provides its customers with access to a database containing information on more than 10 million U.S. businesses. Its core product services include the Business Information Report, the Payment Analysis Report, reference books and customized computer-to-computer risk scoring systems. Value- added solutions are provided through Specialized Industry Services (Credit Advisory System, Dun's Underwriting Guide, Bankers Advisory Service), Business Development Services, Analytical Services and Monitoring Services. Customers can receive information in printed formats, by fax, by telephone via DunsDial access and delivery system, through DunsPrint's on-line service, by touch-tone telephone from DunsVoice (a computer-generated voice system developed by DunsGate), or by being directly linked by computer via the DunsLink access and delivery system. Subscribers to Credit Services (approximately 70,000 customers with more than 82,000 contracts in force throughout the U.S.) use this information in making decisions to extend credit, underwrite insurance, evaluate purchases, and make other financial and risk assessment decisions. Credit Services' largest customers are major manufacturers and wholesalers, insurance companies, banks and other credit and financial institutions. The Business Information Report contains commercial credit information on a specific business. This report includes the D&B Rating and the Paydex score, a numerical score of the company's past payment performance based on information in the Dun & Bradstreet database. This report also includes summary information and payment data, as well as financial, banking, historical and operational data. The Dun & Bradstreet Reference Book of American business published six times a year, contains listings on approximately 3 million businesses in the United States and Puerto Rico. The Dun & Bradstreet Rating, which reflects the credit and financial strength of a business, is included in the Business Information Report and the Dun & Bradstreet Reference Book of American Businesses. The Payment Analysis Report provides information on a company's payment record and includes the Paydex score, historical trends and industry comparisons. The Credit Advisory System consolidates the most important information found in several reports in addition to providing the guidelines to specifically measure risk quality. D&B Express Service, accessible via an 800 -4- number, provides companies that have an occasional need for business information with Business Information Reports and other products on specific companies. Credit Services also markets other specialized reports and business information. Credit Services is believed to be the largest commercial credit reporting agency in the world, but faces competition from in-house operations of businesses and other general and specialized credit reporting services. Receivable Management Services Receivable Management Services (RMS) provides customers with a full range of accounts receivable management services, including third-party collection of accounts, letter demand services and receivable- outstanding programs. These services substitute and enhance the customer's own internal management of accounts receivable. RMS collects delinquent receivables primarily from commercial establishments on behalf of more than 50,000 customers, including commercial and insurance enterprises and government agencies. Collection services are provided throughout the U.S. with charges generally contingent upon collection. RMS also provides receivable control programs, letter demand services and customer training programs on a fixed-fee or contract basis. Certain states require that RMS, or in some instances an individual associate of RMS who is responsible for the conduct of the relevant operations in the respective state's area, be licensed in connection with collection operations. The laws under which such licenses are granted generally provide for annual license renewals, as well as denials, suspensions or revocations for improper actions or other disabilities. RMS is considered to be the leader in the commercial collection industry. RMS faces competition from numerous other commercial collection agencies, attorneys who receive claims directly from clients and companies that conduct commercial collections in-house. In addition, RMS faces potential competition from the expansion of large consumer agencies into the commercial marketplace. Business Marketing Services DBIS provides marketing information services for business-to- business and educational marketers. Services include comprehensive information and related services used to plan, execute and evaluate the results of marketing programs; model, target and reach prospects; and track sales activities. This information is derived from a proprietary database covering more than 10 million businesses in the United States and millions more in over 200 countries. Information is delivered to businesses in print and on diskette, magnetic tape, CD-ROM and on-line formats. DBIS also publishes various business marketing reference directories including The Million Dollar Directory Series, Dun's Million Dollar Disc (on CD-ROM), America's Corporate Families and International Affiliates, Dun's Industrial Guide and the recently expanded Dun's Regional Business Directories, providing information about local businesses in 41 urban areas. Market Data Retrieval offers services that help businesses sell to the education market. The information provided includes course offerings, facilities, teachers and administrators in primary and secondary schools, school districts, preschools, libraries, colleges and universities. DBIS, while a market leader in the marketing information industry, faces competition from other data providers through competitive distribution channels, delivery formats and data quality enhancements. -5- American Credit Indemnity Company American Credit Indemnity Company (ACI) insures manufacturers, wholesalers and other businesses against excessive credit losses from commercial accounts. ACI also provides credit-risk management services for business credit-insurance policyholders. ACI's services are distributed through its own dedicated agency force with offices throughout the U.S. and Canada. ACI's policy terms are generally for twelve months. Coverage with respect to a particular credit risk being insured can be canceled at any time by ACI as to future shipments, upon notice to the policyholder. Any debtor loss in excess of $500,000 up to $50,000,000 per debtor, and any policy loss in excess of $1,000,000 up to $6,000,000 per policy, are reinsured. A business credit insurance specialist since 1893, ACI enjoys a substantial market position with regard to credit insurance policies which are issued in the U.S. and Canada. Competition arises from other providers of business-credit insurance and from providers of other financial services such as factoring. At the same time, however, the potential market for credit insurance is not deeply penetrated by ACI or other credit insurers. Dun & Bradstreet Canada Dun & Bradstreet Canada (D&B Canada) provides business information, marketing information and receivable-management services in Canada. In addition to credit reports on local and international businesses, D&B Canada publishes credit reference books. Dun & Bradstreet Information Services Europe/Middle East/Africa and Dun & Bradstreet Information Services Asia/Pacific/Latin America Dun & Bradstreet Information Services Europe/Middle East/Africa and Asia/Pacific/Latin America (DBIS Europe and Asia/Pacific/Latin America, respectively) opened their first overseas office in 1857 and today conduct operations in offices and branches located throughout Europe, Latin America, Africa, the Middle East, Asia, Japan and the Pacific Rim. DBIS Europe and Asia/Pacific/Latin America provide substantially the same business information, marketing information and receivable management services globally outside the United States and Canada as those provided by Dun & Bradstreet Information Services North America. The Business Information Report contains background and financial information on businesses located throughout the world obtained from D&B offices in the 34 countries where there are full operations and from D&B correspondents in 219 other countries. DBIS US and Asia/Pacific/Latin America's other major products or services include analytical tools to help improve business decisions, local and international credit- reference publications, marketing publications, marketing information systems, consumer-credit information, as well as receivable-management services. Customers can receive information through a direct link to the computer, in printed forms, by fax, on CD-ROM or through third parties. DBIS Europe and Asia/Pacific/Latin America's operations are subject to the usual risks inherent in carrying on business in certain countries outside of the U.S., including currency fluctuations, possible nationalization, expropriation, price controls, changes in the availability of data from public sector sources, or other restrictive government action. Management believes that the risk of nationalization or expropriation is reduced because its basic service is the delivery of information, rather than the production of products which require manufacturing facilities or the use of natural resources. DBIS Europe and Asia/Pacific/Latin America face competition from banks, credit insurance companies, application software developers and in-house operations of businesses as well as direct competition from businesses providing similar services. DBIS Europe is the largest single supplier of credit information services in Europe. The competition is primarily local and there are no competitors offering a comparable range of global services or capabilities as DBIS. -6- Moody's Investors Service, Inc. Moody's Investors Service, Inc. (Moody's) assigns ratings to fixed income securities and publishes a wide variety of business and financial information. Moody's business extends to over 60 countries and its customers include corporations, stockbrokers, governments, municipalities, banks, libraries, institutions and individuals. Moody's assigns ratings to various corporate and governmental obligations, Eurosecurities, structured finance transactions and commercial paper issuers, for which it charges most issuers a fee. At the end of 1993, Moody's had outstanding ratings on approximately 41,000 corporate and 46,000 municipal obligations. Corporate, municipal and government ratings are disseminated to the public through a variety of electronic and print media. A detailed description of both the issue which is rated and of the issuer, along with a summary of the rating rationale for the assignment of the specific rating, also appears in various Moody's publications. In addition to revenues derived from ratings, Moody's provides comprehensive historical and current business, financial, investment and marketing information on over 30,000 major U.S. and non-U.S. entities and on over 20,000 municipalities and governments and their securities. This information is available in eight Manuals and on CD-ROM, tapes and other electronic formats. The manuals are published annually and are supplemented by news reports issued on a weekly or twice-weekly basis. Moody's also publishes a variety of investment guides. Moody's international operations have continued to grow due to the expansion of international debt markets in recent years. Moody's maintains offices in eight countries outside of the U.S. Moody's non- U.S. operations are subject to the usual risks inherent in carrying on business in countries outside the U.S., including currency fluctuations, possible nationalization, expropriation, price controls and/or other restrictive government actions. Management believes that the risks of nationalization or expropriation are negligible. Moody's business is not solely dependent on non-U.S. office operations as these offices are supported by the intensive travel schedule of an internationally focused staff. As one of the two largest ratings agencies in the U.S., Moody's provides opinions on debt instruments and other obligations of both U.S. and non-U.S. issuers. Internationally, a large number of national and international ratings agencies have been created over the last several years as the value of the ratings process has become better understood and utilized abroad. However, Moody's believes that its long-standing reputation for high quality and its pre-eminent position in the marketplace leaves it well positioned to take advantage of the growth in ratable debt. Moody's publishing business is a viable competitor in the large and highly segmented print market for financial information. Moody's intends to maintain this well-established franchise in the print market through enhancements of its databases and by further expansion into the electronic market for financial information as a data provider. Moody's is registered as an investment adviser under the Investment Advisers Act of 1940 and the laws of a number of states. Interactive Data Corporation Interactive Data Corporation's (Interactive) principal business is to provide securities information, including latest pricing and descriptive data, corporate actions and announcements for all types of securities, domestic and international. This information is delivered soon after close-of-market for securities accounting applications, including mutual fund and unit investment trust pricing. Interactive also provides investment analysis software and related computer services to financial organizations. Databases offered by Interactive include price, volume and other data on corporate equities and options, corporate bonds, U.S. Government and agency securities, municipal bonds and other securities, as well as company financial information such as revenues, earnings and assets. Financial data are available on more than 16,000 U.S. and non-U.S. companies, while securities data are available on more than 65,000 North American equity securities, as well as numerous North American government and municipal securities, and over 90,000 securities traded outside North America. Data are updated daily, monthly, quarterly or annually as new information becomes available. A wide range of database management and applications software is also offered to retrieve, manipulate, screen, download and analyze Interactive's and the customer's data. -7- Delivery mechanisms available to suit individual customer's needs include direct mainframe-to-mainframe transmission, on-line telecommunication to a microcomputer or terminal and computer tape delivered to the customer by courier or mail. Services are distributed directly to end-user customers and by direct sales distributors of value-added applications and other data delivery companies. Interactive's services mainly target the banking, brokerage, insurance, mutual fund and money manager customer segments. End users include operations managers, money managers, portfolio managers, research analysts and pension fund sponsors. Interactive receives the data from public sources, under license agreements from other organizations which collect data and creates its own evaluations for delivery to customers. Although certain licenses are important to the business, Interactive believes that it could continue to conduct the business without these licenses, although at a greater expense. Interactive has three or four major competitors in each of its business lines. The principal areas of competition are in quality of service, primarily accuracy, quality of data, coverage, and price, and in the case of software, functionality. SOFTWARE SERVICES Dun & Bradstreet Software Services, Inc. Dun & Bradstreet Software Services, Inc. (D&B Software) is a worldwide leader in the marketplace for client/server and mainframe software for financial, human-resource, distribution and manufacturing applications and decision support. D&B Software products are installed throughout the world on a wide range of computer hardware platforms, including Data General, Digital Equipment Corporation, Fujitsu, Hewlett-Packard, IBM, ICL and SUN. The software is used to manage financial, human-resource, manufacturing, materials management activities and decision support capabilities. D&B Software's products consist of an extensive line of applications software packages for general businesses as well as related implementation and education services. In addition, D&B Software provides application tools which enable users to develop their own applications, link mainframe and microcomputers and perform sophisticated report writing. Revenues are derived primarily from sales of perpetual non-exclusive licenses to use D&B Software's products, annual maintenance fees for such products, and consulting services related to implementation of license products. Most of the license and services revenue is generated by a direct sales force. Maintenance fees and professional services currently comprise approximately 56% and 25% of D&B Software's revenues, respectively. Approximately 27% of total revenue is generated from operations outside of the U.S. In general, customers continue to demonstrate commitment to D&B Software's products by maintaining high levels of maintenance renewals. During 1993, D&B Software continued to enhance its three new product lines. First, Decision Support System (DSS) tools operating within D&B Software's SmartStream client/server environment were upgraded to deliver financial reporting capability and to support additional system environments. These enhanced products are designed to leverage investments in existing information systems by applying emerging technologies to gain better and faster access to information. Second, client/server financial applications -- Financial Stream -- were made available in the fourth quarter. The financial applications combine client/server computing and activity management capabilities to enable customers to improve productivity by re-engineering how they conduct business. Finally, in the fourth quarter of 1993, D&B Software announced enhancements of its UNIX financial applications, which were derived from existing products. D&B Software initiated a number of actions during 1993 in order to focus its capabilities on better serving its customers. Among these actions was the establishment of a worldwide customer support operation to significantly increase service levels. This, along with other actions, will yield productivity improvements resulting from the consolidation and transfer of certain activities from Europe and Asia Pacific to the U.S. -8- D&B Software has strategic alliances with MicroSoft, Powersoft, Sybase and Cognos and incorporates software developed by alliance partners in its client/server DSS and application offerings. D&B Software also has strategic alliances with hardware vendors such as Data General, Hewlett-Packard, IBM, ICL, SUN and Digital Equipment Corporation. D&B Software incurs significant costs in enhancing its existing product line as well as developing new client/server applications. As the company continues to invest in and build technologically emerging client/server solutions, D&B Software will face new risks including the ability to build new client/server products and related after-market products, migrate customers to new applications and manage changes in capabilities required to install and support new products and manage strategic alliance relationships. Many customers are indicating that they intend to migrate from their existing mainframe applications to client/server solutions. However, the timing of this transition and the related impact on revenue is somewhat uncertain, influenced, in part, by the economy. D&B Software's non-U.S. operations are subject to the usual risks inherent in carrying on business in certain countries outside of the U.S., including currency fluctuations, possible nationalization, expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced because its products are software and services, rather than the production of products which require manufacturing facilities or the use of natural resources. D&B Software faces numerous existing as well as potential competitors. Most competitors operate as niche players in particular segments of the marketplace. As in the past, D&B Software anticipates that the field of competitors will change dramatically, resulting from technological changes and shifts in customer needs. The management of D&B Software believes the quality of software and related customer support are the determining competitive factors in this industry. Sales Technologies, Inc. Sales Technologies, Inc. (ST), a leader in the field of sales automation solutions, develops, installs and supports networked systems that enable organizations to improve sales-force effectiveness, productivity, communication and customer satisfaction. ST's products focus on managing sales-force opportunities. Designed to improve communication between corporate and field offices, ST products allow multiple personnel access to customer and prospect information--fully supporting the team-selling environment. Through a key feature called 'transactions,' synchronized net changes are communicated between corporate and field databases to ensure each individual is working with up-to-date information. As a market leader, ST provides customers with a unique combination of expertise in vertical industries, training, consulting, selling methodologies, implementation and roll-out. ST's services staff can also integrate many customers' existing applications. ST offers its customers competitive advantage in many areas, due to ST's organizational size, strength, alliances with key data providers and number of years in the sales automation business. In particular, the linkages with other Dun & Bradstreet databases are of increasing value to customers. ST also provides superior implementation, system integration, management consulting, user training, help desk, hardware repair and replacement, database design and facilities management services, resulting in turnkey solutions. Although there are hundreds of other sales automation niche vendors, ST believes its strength lies in working with its customers to provide a total, integrated solution to actual business problems in the pharmaceutical, consumer packaged foods, high-technology manufacturing and financial services industries, as well as other business-to-business markets. -9- Erisco, Inc. Erisco, Inc. (Erisco) develops and markets proprietary software applications and services used primarily in the administration of health care benefits. Its primary markets include managed-care organizations, insurance carriers, third party administrators and self-administered corporations. Erisco has successfully completed the first phase of its new Facets product, which has a targeted market of advanced managed-care organizations requiring client/server technology. Erisco faces competition from a variety of software vendors in both traditional indemnity, as well as the new managed-care markets. The current climate of health-care reform represents both an opportunity and some uncertainty, as the new complexion of health-care reform unfolds. DIRECTORY INFORMATION SERVICES The Reuben H. Donnelley Corporation The Reuben H. Donnelley Corporation (RHD) compiles, publishes or serves as sales and marketing representative of Yellow Pages and other directories for 18 telephone company clients throughout the U.S. RHD provides these services for more than 400 directories in 17 states and the District of Columbia, and is one of the largest marketers of yellow pages in the U.S. RHD serves the Yellow Pages marketing needs of 600,000 business and service organizations who purchase Yellow Pages advertising space in the U.S. Products include consumer and business-to-business Yellow Pages, neighborhood directories and street address directories. RHD Yellow Pages product and marketing enhancements include Talking Yellow Pages, Touch Four audiotex, expanded Community Action Pages, and Restaurant Menu Advertising Units. RHD acts in different capacities, depending upon specific contracts and markets. These capacities include sales agent, partner, proprietary publisher and publisher and/or compiler. Proprietary Operations publishes proprietary Yellow Pages directories in Delaware, Maryland, New Jersey, Pennsylvania, Virginia, the District of Columbia and California. The unit also participates in the management of directory activity of RHD's C-Don partnership with Commonwealth Cellular Telephone Services, Inc. to serve customers in northeastern Pennsylvania, and the directory activity of three joint venture agreements between RHD and North Pittsburgh Telephone Company, Conestoga Telephone and Telegraph, and Denver and Ephrata Telephone and Telegraph Company in Pennsylvania. NYNEX Operations manages the Directory Services Agreement with NYNEX Information Resources Company for customers in New York. Cincinnati Operations manages the Directory Services Agreement with Cincinnati Bell for customers in Ohio and northern Kentucky. Sprint Operations manages the CenDon partnership agreement and contracts with several of Sprint's operating subsidiaries to publish, manufacture and distribute classified telephone directories in Florida, Illinois, Nevada, North Carolina and Virginia. In addition, Sprint Operations manages the UniDon partnership agreement to serve customers and advertisers in central Florida markets. DonTech, a partnership between RHD and Ameritech is responsible for publishing directories throughout Illinois and northwestern Indiana. DonTech also sells and distributes "Money Savers" direct mail advertising coupons, publishes Street Address Directories in Illinois, Michigan and Indiana, and publishes and markets map books in Illinois. DonTech operates a fulfillment center which markets directories primarily throughout Illinois, Indiana, Michigan and Ohio. -10- Thomson Directories, a partnership between Donnelley Directory, Ltd. and T.I.S. (Directories) Limited (The Thomson Corporation), is the largest independent publisher of Yellow Pages directories in the United Kingdom. In 1993, the unit published 141 directories. The units of RHD face increasing competition from other Yellow Pages publishers and other media, including newspapers, radio, direct mail and broadcast and cable television. OTHER BUSINESS SERVICES Dun & Bradstreet Plan Services, Inc. Dun & Bradstreet Plan Services, Inc., through its Plan Services, Inc. (PSI) unit, markets and administers health, dental, life, and disability insurance for individuals and small to medium-sized businesses throughout the U.S. PSI promotes the sale of various insurance plans through seminars, telemarketing, direct mail and personal contact with insurance agents around the country. As a third party administrator, PSI performs a variety of functions on behalf of insurance carriers that bear the insurance risk for the individual and small group products, and for companies that choose to self-insure their insurance programs. PSI's sales and marketing activities include assisting in product design, suggesting pricing strategies, identifying market opportunities, promoting the product, and providing sales assistance to agents that distribute the products. The administrative functions performed by PSI include underwriting and enrolling new cases, paying claims, billing and collecting premiums, and providing customer service. In addition, PSI helps manage claims costs through cost containment activities, including utilization review and medical case management. The market for PSI's products and services is employees of small to medium-sized businesses and individuals that do not receive health insurance benefits through their employers. The market is fragmented among many competitors, none of which has a significant share of the market. Competition in the health insurance market is based largely on price, but also depends on the level of product benefits, financial strength of the carrier and the quality and timeliness of service provided. In addition, the introduction of a government-mandated health care program could have a favorable or unfavorable impact, depending upon the terms of the program. Dun & Bradstreet Plan Services, Inc. also includes Dun & Bradstreet Pension Services, Inc., which provides pension administration and benefit consulting for small to medium-sized businesses, and Erisco, Inc., which is described in the Software Services section. Gartner Group, Inc. Gartner Group, Inc. (Gartner Group) is the leading independent provider of subscription-based research and analysis of the computer hardware and software, communications and related technology industries (IT industry). Gartner Group's target customers are corporate and other large users of information technologies. These client organizations utilize Gartner Group's research and analysis for strategic planning of long-term information technology needs and as a basis for systems purchasing decisions. Gartner Group believes that its products can provide significant benefits to clients through more effective long-term planning, improved productivity, reduced costs and better terms from vendors. These services are also used by vendors of IT systems and products as a source of information on new markets, competitive products, buying trends and evolving market needs. Gartner Group's principal products are annually renewable subscription services, called Continuous Services, which, on an ongoing basis, highlight industry developments, review new products and technologies and analyze industry trends within a particular technology or market sector. There are currently 34 principal Continuous Services products, each of which addresses a specific technology or market sector. Each service is supported by a team of research staff members with substantial experience in the covered segment or topic of the IT industry. Revenues from Continuous Service products account for approximately 86% of annual revenue. -11- Gartner Group's other revenues are derived from consulting, conferences, speaker engagement fees, publications and revenue pursuant to a research sharing agreement. Consulting clients typically consist of Continuous Services clients seeking focused advice on their individual strategic needs with regards to information technology. As of September 30, 1993, Gartner Group had over 11,000 client interfaces, defined as an individual IT professional at a client who receives directly from Gartner Group all printed materials relating to a particular Continuous Service. At such date, Gartner Group had an aggregate of approximately 3,700 client organizations, including 47 of the top 50 1992 Fortune 500 industrial companies. No single client organization accounted for more than 2% of revenues in fiscal 1993. In the United States, Gartner Group's distribution network has added to its direct sales force a network of independent sales representatives. In 25 countries outside of the United States, the market is addressed through a direct sales force, distributors and a joint venture. Sales to customers outside the United States constituted 36% of revenues in 1993. Gartner Group's non-U.S. operations are subject to the risks inherent in carrying on business in certain countries outside the U.S., including currency fluctuations, possible nationalization, expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced because its products are services, rather than production of products which require manufacturing facilities or the use of natural resources. Gartner Group's products and services are subject to direct and indirect competition from other independent providers of similar services, as well as, internal marketing and planning organizations of its customers and other information providers, including electronic and print media companies and consulting firms, many of whom have substantially greater financial, information gathering and marketing resources than Gartner Group. In addition, although Gartner Group believes that it has established a significant market presence, there are few barriers to entry into the market and new competitors could readily seek to compete against Gartner Group in one or more market segments addressed by its Continuous Service products. Increased competition, direct and indirect, could adversely affect Gartner Group's operating results through pricing pressure and loss of market share. NCH Promotional Services NCH Promotional Services (NCH) is a worldwide supplier of coupon processing and promotional-information management. NCH provides a range of promotional services including processing of coupons and coupon- related administration, research and analytical services for manufacturers and retailers both domestically and internationally. Internationally, NCH also provides a promotion service for manufacturer's coupon-and-cash-refund programs. NCH derives approximately 60% of its revenues from U.S. operations. Coupons are distributed throughout the U.S. in various forms of print media, in and on packages and through direct mail. Retailers of varying sizes are offered coupon processing services using laser scanning technology, Smartscan, to consolidate and ship all of their coupons, regardless of type or issuing manufacturer, to NCH where their coupons will be validated, scanned, counted, sorted and reimbursed to them in a single check. Various coupon activity reports are also supplied. Convenience and economy are furnished to the retailer. In turn, NCH consolidates shipments received from many retailers and bills the manufacturers, which reduces the manufacturers' coupon redemption cost and simplifies their coupon handling. Validation of coupon claims, timely payment and redemption activity report services are provided for manufacturers through NCH's Process 2000 System. A wide range of customized marketing reports are available in various data formats, which allows for manufacturers to receive financial and promotional information related to coupons processed in a format suited to their individual requirements. -12- NCH's foreign operations are subject to the usual risks inherent in carrying on business in certain countries outside of the U.S., including currency fluctuations, possible nationalization, expropriation, price controls or other restrictive government actions. Management believes that the risk of nationalization or expropriation is reduced by the fact that its basic products are services and the delivery of information, rather than the production of products which require manufacturing facilities or the use of natural resources. NCH is believed to be the world's largest coupon processor and promotion-information supplier. Numerous rival coupon clearing houses, billing services, manufacturer redemption agents and manufacturers who handle their own redemption services provide competition. Competition in the retailer service business largely focuses on price. The manufacturer business competes on a combination of price and service, namely timeliness, misredemption control and redemption analysis. NCH provides the widest array of value added products in the industry for the analysis of redemption information. Dataquest Incorporated Dataquest Incorporated (Dataquest) is a global market research and consulting company serving the high-technology and heavy-machinery sectors. The company is regionally organized into three business units: North America, Europe and Asia. Its product lines fall into three primary categories: technology information, machinery information and conferences. Dataquest's Technology Information Group provides worldwide market coverage on the computer systems and peripherals, document management, semiconductors, services, software and telecommunications sectors of the information technology industry. Each of these six groups offers a wide range of products and services, including annual-subscription services, consulting and primary research, conferences, reports and newsletters. Dataquest's Machinery Information Group is one of the most complete information resources for a customer's management to gather working data on construction, mining, logging and the material-handling equipment industries. Dataquest's Invitational Computer Conferences Group (ICC) produces regional trade shows covering the areas of computer peripherals and computer connectivity. As a leader in high-technology market research, Dataquest faces direct competition from a few large competitors as well as a number of very small competitors and consultants. In addition, Dataquest faces indirect competition from companies that perform their own in-house market research. D&B HealthCare Information D&B HealthCare Information was formed in 1993 to address new market opportunities in health-care information and decision-support services. In July, D&B HealthCare Information acquired Health Research Network, a provider of clinical information on the incidence and treatment of HIV/AIDS. D&B HealthCare was selected by the U.S. Centers for Disease Control (CDC) to create HIV/AIDS research studies. The studies will create a national database on AIDS-related conditions and trends in prevention and treatment. In January 1994 D&B HealthCare acquired Lexecon Health Service, Inc., the largest non-government supplier of patient outcome studies to U.S. health-care providers. D&B Enterprises, Inc. D&B Enterprises, Inc. invests in emerging and established businesses in the information industry as a limited partner in Information Partners Capital Fund, a venture capital limited partnership. -13- RESOURCE GROUP DunsNet DunsNet, the Company's private telecommunications network, delivers approximately 90% of the on-line services provided by the Company's divisions, among them DBIS North America, IMS International, Nielsen Media Research, Nielsen Marketing Research, Moody's Investors Service, D&B Software and DBIS Europe and Asia/Pacific/Latin America, to customers worldwide. Network service is established in four geographic areas: North America, South America, Europe and the Asia/Pacific encompassing 27 countries and over 300 cities, providing the Company's divisions with a shared, economical resource that facilitates expansion of international on-line services. DunsNet gives the Company direct control over the quality of the transmission of data and reduces associated costs. DunsNet also supports the Company's data-collection activities. Its DunsMail service provides global delivery of business correspondence via electronic mail. (Costs are included in all five business segments.) DunsGate DunsGate is the corporate resource organization that helps the Company's divisions develop and maintain advanced electronic distribution systems that give customers easier, faster and more effective access to the Company's products. In 1993, DunsGate-operated gateways, in the U.S., United Kingdom, Canada and Australia, supported customer access to risk-management and marketing information products through systems that utilize electronic voice response, facsimile and personal computers. (Costs are included in Risk Management and Business Marketing Information Services and Other Business Services.) DunsCenter DunsCenter is a corporate resource unit that provides MVS-based data processing services, particularly for accounting, finance and human resource applications, solely to internal divisions nationwide. DunsCenter provides MVS-based Millennium financial software for General Ledger, Accounts Payable, Accounts Receivable, Fixed Assets, Payroll and Human Resources applications. DunsCenters' information systems staff support all of the Millennium financial products applications currently running on DunsCenter's Amdahl mainframe platform. The names of the Company's products are trademarks or registered trademarks of The Dun & Bradstreet Corporation or one of its subsidiaries. ITEM 2. PROPERTIES[DJV1] The principal properties of the Company, by business segment, are set forth below. The executive offices of The Dun & Bradstreet Corporation are located at 200 Nyala Farms, Westport, Connecticut, and 299 Park Avenue, New York, New York, in leased facilities. Property of the Company is geographically distributed to meet sales and operating requirements worldwide. The properties of the Company are generally considered to be both suitable and adequate to meet current operating requirements and virtually all space is being utilized. Marketing Information Services Owned properties located within the U.S. include nine facilities. Three properties are located in Omaha, Nebraska and one property each in Dunedin, Florida; Fond du Lac, Wisconsin; Northbrook, Illinois; Totowa, New Jersey; Plymouth Meeting and West Norriton, Pennsylvania. Owned properties located outside the U.S. include twelve facilities: two properties in Lisbon, Portugal; and one property each in Toronto, Canada; Oxford, England; Lucerne, Switzerland; Espoo, Finland; Mexico City, Mexico; Buenos Aires, Argentina; Crows Nest and Artarmon, Australia; Innsbruck, Austria; and Pinner, England. -14- The operations of this segment are also conducted from forty-eight leased offices located throughout the U.S. and ninety-four non-U.S. locations. Risk Management and Business Marketing Information Services Owned properties located within the U.S. include two office buildings in Berkeley Heights, New Jersey and one each in Murray Hill and Parsippany, New Jersey and New York, New York. Owned properties located outside the U.S. are located in Curitiba, Rio de Janeiro and Sao Paulo, Brazil; Buenos Aires, Argentina; Mexico City, Mexico; Caracas and Maracaibo, Venezuela; High Wycombe, England; and ten properties throughout Italy. The operations of this segment are also conducted from 142 leased offices located throughout the U.S. and 110 non-U.S. office locations. Software Services Operations are conducted from thirty-eight leased offices located throughout the U.S. and twenty-seven non-U.S. office locations. Directory Information Services Owned property located within the U.S. consists of an office building in Terre Haute, Indiana. Operations are also conducted from forty-five leased offices located throughout the U.S. Other Business Services Owned properties located within the U.S. include three facilities: one each in San Jose, California; Clinton, Iowa; and El Paso, Texas. Owned properties located outside the U.S. include six properties in Mexico and one facility each in Saint John, N.B. , Canada and Corby, England. The operations of this segment are also conducted from thirty-one leased offices located throughout the U.S. and thirty non-U.S. office locations. Resource Group Owned property within the U.S. include one building in Wilton, Connecticut. Operations are also conducted from fourteen leased office locations throughout the U.S. and two non-U.S. office locations. ITEM 3. LEGAL PROCEEDINGS Reference is made to Note 12 of Notes to Consolidated Financial Statements on Page 29 of the 1993 Annual Report, which is incorporated herein by reference. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. -15- EXECUTIVE OFFICERS OF THE REGISTRANT* Officers are elected by the Board of Directors to hold office until their respective successors are chosen and qualified. Listed below are the executive officers of the registrant at March 1, 1994 and brief summaries of their business experience during the past five years. Name Title Age - ---- ----- --- Charles W. Moritz Chairman** 57 Robert E. Weissman President and Chief Executive Officer** 53 Edwin A. Bescherer, Jr. Executive Vice President-Finance 60 and Chief Financial Officer Serge Okun Executive Vice President 47 Volney Taylor Executive Vice President** 54 Michael F. Brewer Senior Vice President- 50 Communications & Government Affairs David Fehr Senior Vice President 58 John J. Fitzpatrick Senior Vice President-Human Resources 54 William G. Jacobi Senior Vice President 50 Robert J Lievense Senior Vice President 48 Charles F. G. Raikes Senior Vice President 63 and General Counsel Dennis G. Sisco Senior Vice President 47 Richard B. Williams Senior Vice President- 48 Corporate Strategy Thomas W. Young Senior Vice President and Controller 55 * Set forth as a separate item pursuant to Items 401(b) and (e) of Regulation S-K. ** Member of the Board of Directors. Mr. Moritz was elected Chairman and Chief Executive Officer of The Dun & Bradstreet Corporation (Dun & Bradstreet), effective January 1, 1985; he relinquished the title of Chief Executive Officer, effective January 1, 1994. Mr. Weissman was elected President and Chief Executive Officer of Dun & Bradstreet, effective January 1, 1994; he had been elected President and Chief Operating Officer, effective January 1, 1985. Mr. Bescherer was elected Executive Vice President-Finance of Dun & Bradstreet, effective June 17, 1987 and, in addition, Chief Financial Officer, effective April 18, 1984. Mr. Okun was elected Executive Vice President of Dun & Bradstreet, effective July 21, 1993; he had been elected Corporate Senior Vice President, effective July 17, 1991. He also serves as President and Chief Executive Officer of A. C. Nielsen Company, to which offices he was elected, effective July 26, 1993, and as President and Chief Executive Officer of I.M.S. International, Inc., to which offices he was elected, effective May 26, 1988. Mr. Taylor was elected Executive Vice President of Dun & Bradstreet, effective February 1, 1982. He also serves as Chairman of Dun & Bradstreet Information Services, to which position he was appointed, effective January 1, 1991, and as President of Dun & Bradstreet, Inc. and President of Dun & Bradstreet International, Ltd., to which offices he was elected, effective January 1, 1991. He had also served through February 4, 1990 as President of The Reuben H. Donnelley Corporation, to which office he was elected, effective January 1, 1988. Mr. Brewer was elected Senior Vice President-Communications & Government Affairs of Dun & Bradstreet, effective March 15, 1993; he had been elected Vice President-Government Affairs, effective January 1, 1987. -16- Mr. Fehr was elected Senior Vice President of Dun & Bradstreet, effective January 1, 1985. Mr. Fitzpatrick was elected Senior Vice President-Human Resources of Dun & Bradstreet, effective July 21, 1993; he had been elected Senior Vice President-Human Resources Administration, effective September 1, 1987. Mr. Jacobi was elected Senior Vice President of Dun & Bradstreet, effective July 21, 1993. Prior thereto, he had served as President & Chief Operating Officer of Nielsen Media Research (January 1, 1991) and as Executive Vice President of Nielsen Media Research (March 1, 1989). He had also served through February 28, 1989 as Senior Vice President- Planning & Acquisitions of Dun & Bradstreet, to which office he was elected, effective June 17, 1987. Mr. Lievense was elected Senior Vice President of Dun & Bradstreet, effective July 21, 1993. He also serves as Chairman of The Reuben H. Donnelley Corporation, to which office he was elected, effective July 26, 1993. Previously he had served through July 20, 1993 as Chairman of Dataquest Incorporated (September 1, 1991) and as President of NCH Promotional Services, Inc. (July 27, 1990). He had also served through December 31, 1990 as President of Nielsen Clearing House Division of A. C. Nielsen Company (June 25, 1989). Prior thereto, he had served as Senior Vice President-Manufacturing & Engineering of the Mrs. Smith's Frozen Foods Division of the Kellogg Company (August, 1987). Mr. Raikes was elected Senior Vice President and General Counsel of Dun & Bradstreet, effective January 21, 1976. Mr. Sisco was elected Senior Vice President of Dun & Bradstreet, effective July 21, 1993. He also serves as President of D&B Enterprises, Inc., to which office he was elected, effective December 18, 1988, and as Chairman of Dataquest Incorporated, to which office he was elected, effective July 26, 1993. Mr. Williams was elected Senior Vice President-Corporate Strategy of Dun & Bradstreet, effective October 1, 1990. Prior thereto, he had served with Unisys Corporation as Vice President-Marketing, U.S. (September 6, 1989) and as Vice President-Corporate Strategy (December 19, 1988). Mr. Young was elected Senior Vice President and Controller of Dun & Bradstreet, effective April 15, 1992; he had been elected Vice President and Controller, effective November 20, 1985. -17- PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Information in response to this Item is set forth under Common Stock Information in the "Financial Review" on Page 16 of the 1993 Annual Report, which information is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA Selected financial data required by this Item is incorporated herein by reference to the information relating to the years 1989 through 1993 set forth in the "Ten-Year Selected Financial Data" on Pages 34 and 35 of the 1993 Annual Report. ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information in response to this Item is set forth in the "Financial Review" on Pages 13 to 16 of the 1993 Annual Report, which information is incorporated herein by reference. ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Index to Financial Statements and Schedules under Item 14 on Page 19. ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information in response to this Item is incorporated herein by reference to the section entitled "Election of Directors" in the Company's proxy statement dated March 11, 1994 filed with the Securities and Exchange Commission, except that "Executive Officers of the Registrant" on Pages 16 and 17 of this report responds to Item 401(b) and (e) of Regulation S-K. ITEM 11. EXECUTIVE COMPENSATION Information in response to this Item is incorporated herein by reference to the section entitled "Compensation of Executive Officers and Directors" in the Company's proxy statement dated March 11, 1994 filed with the Securities and Exchange Commission. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Information in response to this Item is incorporated herein by reference to the section entitled "Security Ownership of Management and Others" in the Company's proxy statement dated March 11, 1994 filed with the Securities and Exchange Commission. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information in response to this Item is incorporated herein by reference to the section entitled "Security Ownership of Management and Others" in the Company's proxy statement dated March 11, 1994 filed with the Securities and Exchange Commission. -18- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) List of documents filed as part of this report. (1) Financial Statements See Index to Financial Statements and Schedules on Page 21. (2) Financial Statement Schedules. See Index to Financial Statements and Schedules on Page 21. (3) Other Financial Information. Performance and Outlook, 1993. Ten Year Selected Financial Data. (4) Exhibits. See Index to Exhibits on Pages 26 to 28, which indicates which Exhibits are management contracts or compensatory plans required to be filed as Exhibits. Only responsive information appearing on Pages 6 to 12 and 24 to 45 to Exhibit D is incorporated herein by reference, and no other information appearing in Exhibit D is or shall be deemed to be filed as part of this Form 10-K. (b) Reports on Form 8-K. None. -19- SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE DUN & BRADSTREET CORPORATION (Registrant) By: CHARLES W. MORITZ ___________________________ (Charles W. Moritz, Chairman of the Board) By: ROBERT E. WEISSMAN ___________________________ (Robert E. Weissman, President and Chief Executive Officer) By: EDWIN A. BESCHERER, JR. ___________________________ (Edwin A. Bescherer,Jr. Executive Vice President-Finance and Chief Financial Officer) By: THOMAS W. YOUNG ___________________________ (Thomas W. Young, Senior Vice President and Controller) Date: March 25, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. HALL ADAMS, JR. JOHN R. MEYER ______________________________ ______________________________ (Hall Adams, Jr., Director) (John R. Meyer, Director) CLIFFORD L. ALEXANDER, JR. CHARLES W. MORITZ ______________________________ ______________________________ (Clifford L. Alexander, Jr., (Charles W. Moritz, Director) Director) KINGMAN DOUGLASS JAMES R. PETERSON ______________________________ ______________________________ (Kingman Douglass, Director) (James R. Peterson, Director) MARY JOHNSTON EVANS MICHAEL R. QUINLAN ______________________________ ______________________________ (Mary Johnston Evans, Director) (Michael R. Quinlan, Director) ROBERT A. HANSON VOLNEY TAYLOR ______________________________ ______________________________ (Robert A. Hanson, Director) (Volney Taylor, Director) ROBERT J. LANIGAN ROBERT E.WEISSMAN ______________________________ ______________________________ (Robert J. Lanigan, Director) (Robert E. Weissman, Director) VERNON R. LOUCKS, JR. ______________________________ (Vernon R. Loucks, Jr., Director) Dated: March 25, 1994 -20- INDEX TO FINANCIAL STATEMENTS AND SCHEDULES FINANCIAL STATEMENTS: The Company's consolidated financial statements, the notes thereto and the related report thereon of Coopers & Lybrand, independent public accountants, for the years ended December 31, 1993, 1992 and 1991, appearing on Pages 17 to 35 of the accompanying 1993 Annual Report, are incorporated by reference into this Annual Report on Form 10-K (see below). The additional financial data indicated below should be read in conjunction with such consolidated financial statements.
Page __________________________ 10-K 1993 Annual Report _____________ _____________ Report of Independent Public Accountants F-19 17 Statement of Management Responsibility for Financial F-20 18 Statements As of December 31, 1993 and 1992: Consolidated Statement of Financial Position F-22 to F-23 19 For the years ended December 31, 1993, 1992 and 1991: Consolidated Statement of Income F-21 18 Consolidated Statement of Cash Flows F-24 20 Consolidated Statement of Shareowners' Equity F-25 21 Notes to Consolidated Financial Statements F-26 to F-44 22-33 Quarterly Financial Data (Unaudited) for the years ended December 31, 1993 and 1992 F-44 33 Management's Discussion and Analysis of Financial Condition and Results of Operations F-12 to F-18 13-16 Other financial information: Performance and Outlook, 1993 F-1 to F-11 5-12 Ten year selected financial data F-45 34-35 SCHEDULES: Report of Independent Public Accountants 22 17 The Dun & Bradstreet Corporation and Subsidiaries: VIII - Valuation and Qualifying Accounts for the years ended December 31, 1993, 1992 and 1991.................... 23 - IX - Short-term Borrowings for the years ended December 31, 1993, 1992 and 1991.................... 24 - X - Supplementary Income Statement Information for years ended December 31, 1993, 1992 and............. 25 - Schedules other than those listed above are omitted as not required or inapplicable or because the required information is given in the financial statements, including the notes thereto. -21-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareowners and the Board of Directors of The Dun & Bradstreet Corporation: Our report on the consolidated financial statements of The Dun & Bradstreet Corporation as of December 31, 1993 and 1992, and for the years ended December 31, 1993, 1992 and 1991, has been incorporated by reference in this Form 10-K from page 17 of the 1993 Annual Report of The Dun & Bradstreet Corporation. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 21 of this Form 10-K. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND Stamford, Connecticut January 27, 1994 -22- SCHEDULE VIII THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS for the years ended December 31, 1993, 1992, 1991 (In millions)
___________________________________________________________________________________________ COL. A COL. B COL.C COL. D COL. E ___________________________________________________________________________________________ Additions Balance Charged to Balance Beginning Costs and at End Description of Period Expenses Deductions(a) of Period ___________ _________ ___________ _____________ _________ ALLOWANCE FOR DOUBTFUL ACCOUNTS: For the Year Ended December 31, 1993... $ 82.4 $ 42.2 $ 45.4 $ 79.2 ======= ======= ======= ======= For the Year Ended December 31, 1992... $ 69.8 $ 64.5 $ 51.9 $ 82.4 ======= ======= ======= ======= For the Year Ended December 31, 1991... $ 68.8 $ 48.2 $ 47.2 $ 69.8 ======= ======= ======= ======= NOTE: (a) Represents primarily the charge-off of uncollectible accounts for which a reserve was provided. -23-
SCHEDULE IX THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES SCHEDULE IX - SHORT-TERM BORROWINGS for the years ended December 31, 1993, 1992, 1991 (Dollar amounts in millions)
__________________________________________________________________________________________________________ COL. A COL.B COL.C COL.D COL.E COL.F __________________________________________________________________________________________________________ Maximum Average Weighted Weighted Amount Amount Average Balance Balance Outstanding Outstanding Interest Category of Aggregate at End at End During the During the Rate During Short-term Borrowings of Period of Period Period Period the Period _____________________ _________ ___________ _____________ _________ ____________ Year Ended December 31, 1993: Banks(C) $ 6.2 14.75% $ 27.1 $ 9.9 9.82% Commercial Paper(D) $ 82.9 3.22% $ 123.3 $ 61.7 3.37% Year Ended December 31, 1992: Banks(C) $ 10.5 8.86% $ 42.7 $ 17.8 8.15% Commercial Paper(D) $ 117.8 3.33% $ 241.5 $ 112.0 4.81% Year Ended December 31, 1991: Banks(C) $ 13.4 8.14% $ 113.4 $ 52.9 9.41% Commercial Paper(D) $ 172.3 4.79% $ 229.0 $ 120.5 6.06% __________________ (A) The average amounts outstanding were calculated using daily balances for commercial paper and monthly balances for notes payable to banks. (B) The weighted average interest rates were calculated by dividing the interest expense for the year for such borrowings by the average amounts outstanding during the period. (C) Bank obligations consist principally of notes payable to banks in Latin America and Europe. (D) Represents commercial paper supported by short-term borrowing agreements with several U.S. banks. -24-
SCHEDULE X THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION for the years ended December 31, 1993, 1992, 1991 (In millions) ______________________________________________________________________ COL. A COL.B ______________________________________________________________________ Charged to Costs and Expenses for the years ended Item December 31, _________ ________________________________ 1993 1992 1991 _____ _____ _____ Maintenance & Repairs................. $69.7 $76.5 $77.1 ===== ===== ===== All other items are omitted as such amounts are each less than one percent of consolidated operating revenue or have been disclosed in the consolidated financial statements. -25- STATEMENT OF DIFFERENCES The section symbol shall be expressed as SS. INDEX TO EXHIBITS
Regulation S-K Exhibit to Exhibit Number this Report ______________ ____________ (3) Articles of Incorporation and By-laws. (a) Restated Certificate of Incorporation of The Dun & Bradstreet Corporation dated June 15, 1988 (incorporated herein by reference to Exhibit 4(a) to Registrant's Registration No. 33-25774 on Form S-8 filed November 25, 1988). (b)By-laws of Registrant dated December 15, 1993...................... Exhibit E** (4) Instruments Defining the Rights of Security Holders, Including Indentures. Not Applicable. (9) Voting Trust Agreement. Not Applicable. (10) Material Contracts. (All of the following documents, except for items (v) and (w), are management contracts or compensatory plans or arrangements required to be filed pursuant to Item 14(c).) (a) Retirement Plan for Directors of Registrant, as amended December 19, 1990 (incorporated herein by reference to Exhibit E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990, file number 1-7155, filed March 27, 1991). (b) Nonfunded Deferred Compensation Plan for Non-Employee Directors of Registrant, as amended April 21, 1993....................... Exhibit F** (c) Pension Benefit Equalization Plan adopted October 17, 1990 (incorporated herein by reference to Exhibit G to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990, file number 1-7155, filed March 27, 1991). (d) Profit Participation Benefit Equalization Plan adopted October 17, 1990 (incorporated herein by reference to Exhibit H to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990, file number 1-7155, filed March 27, 1991). (e) 1982 Key Employees Stock Option Plan for Registrant and Subsidiaries, as amended July 17, 1991 (incorporated herein by reference to Exhibit E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1991, file number 1-7155, filed March 26, 1992) (f) 1991 Key Employees Stock Option Plan for Registrant and Subsidiaries, adopted April 16, 1991 (incorporated herein by reference to Exhibit 28(a) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (g) Ten-Year Incentive Stock Option Agreement (incorporated herein by reference to Exhibit 28(b) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (h) Ten-Year Non-Qualified Stock Option Agreement (incorporated herein by reference to Exhibit 28(c) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (i) Stock Appreciation Rights Agreement relating to Incentive Stock Options (incorporated herein by reference to Exhibit 28(d) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (j) Stock Appreciation Rights Agreement relating to Non-Qualified Stock Options (incorporated herein by reference to Exhibit 28(e) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). -26-
Regulation S-K Exhibit to Exhibit Number this Report ______________ ____________ (k)Limited Stock Appreciation Rights Agreement relating to Incentive Stock Options (incorporated herein by reference to Exhibit 28(f) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (l)Limited Stock Appreciation Rights Agreement relating to Non-Qualified Stock Options (incorporated herein by reference to Exhibit 28(g) to Registrant's Registration No. 33-44551 on Form S-8, filed December 18, 1991). (m)1982 Key Employees Performance Unit Plan for Registrant and Subsidiaries, as amended December 18, 1991 (incorporated herein by reference to Exhibit F to Registrant's Annual Report on Form 10-K for the year ended December 31, 1991, file number 1-7155, filed March 26, 1992). (n)Corporate Management Incentive Plan, effective January 1, 1990 (incorporated herein by reference to Exhibit J to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990). (o)1989 Key Employees Restricted Stock Plan for Registrant and Subsidiaries, as amended July 19, 1989 (incorporated herein by reference to Exhibit K to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990). (p)Restricted Stock Agreement (incorporated herein by reference to Exhibit L to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990). (q)Performance-Based Restricted Stock Agreement................... Exhibit G** (r)Form of Change-in-Control Severance Agreement, approved July 19, 1989 (incorporated herein by reference to Exhibit M to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989, file number 1-7155, filed March 26, 1990) (s)Supplemental Executive Benefit Plan, as amended October 17, 1990 (incorporated herein by reference to Exhibit J to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990, file number 1-7155, filed March 27, 1991) (t)IMS International, Inc. Executive Pension Plan, dated November 5, 1987 (incorporated herein by reference to Exhibit E to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992, file number 1-7155, filed March 25, 1993) (u)IMS International, Inc. Long-Term Incentive Compensation Plan, as amended April 19, 1991 (incorporated herein by reference to Exhibit F to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992, file number 1-7155, filed March 25, 1993). (v)Agreement of Limited Partnership of D&B Investors L.P., dated as of October 14, 1993................................... Exhibit H** (w)Purchase Agreement and Purchase Agreement Amendment dated October 14, 1993.among D&B Investors L.P., and other parties... Exhibit I** (11) Statement Re Computation of Per Share Earnings. Computation of Earnings Per Share of Common Stock on a Fully Diluted Basis.................................................. Exhibit A** (12) Statement Re Computation of Ratios. Not applicable. (13) Annual Report to Security Holders. 1993 Annual Report............................................. Exhibit D** (18) Letter Re Change in Accounting Principles. Not applicable. (19) Previously Unfiled Documents. Not applicable (21) Subsidiaries of the Registrant. List of Active Subsidiaries as of January 31, 1994............. Exhibit B** (22) Published Report Regarding Matters Submitted to a Vote of Security Holders. Not applicable (23) Consents of Experts and Counsel. Consent of Independent Certified Public Accountants............ Exhibit C** -27-
Regulation S-K Exhibit to Exhibit Number this Report ______________ ____________ (24) Power of Attorney. Not applicable. (28) Information from Reports Furnished to State Insurance Regulatory Authorities. Not applicable. (99) Additional Exhibits. Not applicable. *Not included in this document **Filed electronically -28-
{PAGE \# "'Page: '#' '"|Page: 41 }[DJV1] ALL ENTRIES WHICH HAVE BEEN UPDATED ARE IN BOLD PRINT. EX-11 2 EXHIBIT-A EXHIBIT A THE DUN & BRADSTREET CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK ON A PRIMARY AND FULLY DILUTED BASIS Dollar Amounts in Millions, Except Per Share Data 1993 1992 1991 __________________________________ (Average share data in thousands)
Weighted average number of shares 177,181 178,346 178,556 Dilutive effect of shares issuable as of year-end under stock option plans, stock appreciation rights and restricted stock plan 1,789 1,563 1,669 Adjustment of shares applicable to stock options and stock appreciation rights exercised during the year 88 50 30 _____________________________ Weighted average number of shares on a primary and fully diluted basis 179,058 179,959 180,255 ______________________________ Income Before Cumulative Effect of Changes in Accounting Principles $ 428.7 $ 553.5 $ 506.5 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions, " Net of Income Tax Benefits of $93.7 (140.6) - - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits,Net of Income Tax Benefits of $150.0 (250.0) - - _____________________________ Net Income $ 38.1 $ 553.5 $ 506.5 _____________________________ Earnings per share of common stock on a primary and fully diluted basis: Before Cumulative Effect of Changes in Accounting Principles $ 2.39 $ 3.08 $ 2.81 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (.78) - - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits" (1.39) - - _____________________________ Net Income $ .22 $ 3.08 $ 2.81 _____________________________
A-1 EX-21 3 EXHIBIT-B EXHIBIT B THE DUN & BRADSTREET CORPORATION LIST OF ACTIVE SUBSIDIARIES AS OF JANUARY 31, 1994
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ A. C. NIELSEN COMPANY Delaware Addex, Inc. Delaware Nieuw Willemstad Holdings, Inc. Delaware Nielsen Holding Ges.mbH Austria A. C. Nielsen Company Ges.mbH Austria CMIS Coordinierte Management InformationsSysteme, Ges.mbh Austria Nielsen Marketing Research Kft. Hungary A. C. Nielsen Company (Belgium) S.A. Belgium The Dun & Bradstreet Corporation & Co. SNC Belgium Palmetto Assurance Ltd. Bermuda A. C. Nielsen Chile Limitada Chile A. C. Nielsen Chile S.A. Chile 51.0 A. C. Nielsen de Colombia S.A. Colombia 87.2 A. C. Nielsen (Argentina) S.A. Delaware Teollisuuden Tielopalvelu Industrial Intelligence Ltd. Oy Finland A.C. Nielsen Finland Oy Finland Finnpanel Oy Finland 50.0 Kulutustutkimus Oy: Marketing Radar Ltd. Finland 50.0 Soliditet OY Finland Dun & Bradstreet Canada Holding, Ltd. Ontario, Canada The D&B Companies of Canada Ltd. Ontario, Canada Dun & Bradstreet Finance Inc. Ontario, Canada Dun & Bradstreet Software Services Canada L.P. Delaware Nielsen Korea Limited Korea Interactive Data Canada Inc. Ontario, Canada NCH Promotional Services, Inc. Delaware Nielsen Holdings, Inc. Delaware Nielsen Leasing Corporation Delaware A. C. Nielsen S.A. France Dun & Bradstreet-France S.A. France Dun & Bradstreet Software Services (France) S.A. France Moody's France S.A. France Nielsen A.E.M. Snc France Panel de Gestion SARL France 61.0 A. C. Nielsen Hellas Ltd. Greece A. C. Nielsen of Ireland Limited Ireland D & B Group Limited Ireland D&B Marketing Information Services Italia S.p.A Italy C.R.A. S.r.l. Italy 60.0 C.R.A. Sistemi S.r.l. Italy SITA, Societa per gli Indici Tessile e Abbigliamento-S.r.l. Italy 60.0
B-1 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ______________________________________________________________________________ A. C. NIELSEN COMPANY (Continued) Nielsen Japan K.K. Japan A. C. Nielsen Company de Mexico, S.A. de C.V. Mexico Inmobiliaria Zeta, S.A. de C.V. Mexico A. C. Nielsen (N.Z.) Limited New Zealand Nielsen Norge A/S Norway 65.0 Soliditet AS Norway Dun & Bradstreet Holdings Spain B.V. The Netherlands Dun & Bradstreet S.A Spain A. C. Nielsen Company S.A. Spain Nedro-Nielsen/ESEO-Estudios de Mercado Lda. Portugal 81.0 A. C. Nielsen P.R. Inc. Puerto Rico A. C. Nielsen Singapore Pte. Ltd. Singapore A. C. Nielsen Management Services S.A. Switzerland A. C. Nielsen S.A. Switzerland SEN Superstudies AG Switzerland 50.0 Nielsen Medya Arastirma Hizmetleri Limited Sirketi Turkey Dataquest Incorporated California Dataquest Europe S.A. France DATAQUEST Japan Limited Japan AMERICAN CREDIT INDEMNITY COMPANY New York 95.0 CORINTHIAN HOLDINGS, INC. Delaware D&B CORPORATION JAPAN K.K. Japan D & B ENTERPRISES, INC. Delaware D&B (R.I.C.) LTD. Delaware Dun & Bradstreet East-Vent Ltd. Delaware Dun & Bradstreet C.I.S. Russia Dun & Bradstreet India Private Limited India Dun & Bradstreet Satyam Software Limited India D&B TRANSPORTATION SERVICES COMPANY, INC. Delaware DNB-PA HOLDINGS CORPORATION Nevada DUN & BRADSTREET COMPUTER LEASING, INC. Delaware Fillupar Leasing Partnership Delaware 98.0 DUN & BRADSTREET DIVESTITURE, INC. Delaware
B-2 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ DUN & BRADSTREET HEALTHCARE INFORMATION, INC. Delaware Lexecon Health Service Inc. Illinois DUN & BRADSTREET, INC. Delaware Dun & Bradstreet Life Insurance Company Arizona Duns Holding, Inc. Delaware D&B Acquisition Corp. Delaware Duns Licensing Associates, L.P. Delaware 82.5 Corinthian Leasing Corporation Delaware Mergex, Inc. Delaware DUN & BRADSTREET INTERNATIONAL, LTD. Delaware Arrebnac Pty. Ltd. Australia Dun & Bradstreet Pension Plan Pty. Ltd. Australia A. C. Nielsen (Holdings) Pty. Limited Australia A. C. Nielsen (Trading) Pty. Limited Australia A. C. Nielsen (Operations) Pty. Limited Australia A. C. Nielsen Australia Pty. Limited Australia College Mercantile Pty. Ltd. Australia Dun & Bradstreet (Australia) Pty. Limited Australia Dun & Bradstreet (Nominees) Pty. Ltd. Australia Dun & Bradstreet Unit Trust Australia Dun & Bradstreet Software Services Australia Pty. Limited Australia Moody's Investors Service Pty. Limited Australia Nandette Pty. Limited Australia Australian Independent Media Data Pty. Ltd. Australia 50.0 Dun & Bradstreet S.A. Argentina Dun & Bradstreet Holding (Belgium) S.A. Belgium N.V. Dun & Bradstreet-Eurinform S.A. Belgium Dun & Bradstreet do Brasil Ltda. Brazil Dun & Bradstreet Ltda. Chile Dun & Bradstreet Holdings-France, Inc. Delaware Kosmos Business Information Limited England D & B Group, Ltd. Delaware A. C. Nielsen (Holdings) Limited England A. C. Nielsen Company Limited England Dun & Bradstreet Software Services Limited England Dun & Bradstreet Software Services Medium Systems Limited England Advance-Peterholm Group Ltd. England D & B Telephone Company Ltd. England
B-3 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ DUN & BRADSTREET INTERNATIONAL, LTD. (Continued) D&B Group, Ltd. (Continued) D & B Europe Limited England Dun & Bradstreet Limited England Dataquest Europe Limited England Dun & Bradstreet Finance Ltd. England Dun & Bradstreet Limited Ireland Dun & Bradstreet Pension Trustees Limited England Donnelley Directory, Ltd. Delaware Thomson Directories [Partnership] England 50.0 Dun & Bradstreet (U.K.) Ltd. England DunsGate Limited England Interactive Data Ltd. England IMS Holdings (U.K.) Limited England Intercontinental Medical Statistics Ltd. England Imsworld Publications Ltd. England PMS International Limited England The Medical Direct Mail Organisation Ltd. England Medical Market Studies Limited England Moody's Investors Service Limited England ST Europe plc England DunsNet Limited England S.T. S.A.R.L. France Dun & Bradstreet Credit Control, Ltd. Delaware Dun & Bradstreet (HK) Limited Hong Kong Dun & Bradstreet (Israel) Ltd. Israel Dunbrad, Inc. Delaware Dun & Bradstreet Credit Reporting (Israel) Israel Wiri Beleggingen B.V. The Netherlands Dun & Bradstreet Kosmos S.p.A. Italy Argus Situazioni Aziendali S.r.l. Italy Dun & Bradstreet Business Information Services (Japan) K.K. Japan D&B Information Services (M) Sdn. Bhd. Malaysia Dun & Bradstreet S.A. de C.V. Mexico Dun & Bradstreet Nederland Holding B.V. The Netherlands A. C. Nielsen (Nederland) B.V. The Netherlands Nederlands Centrum voor Marketing Analyses B.V. The Netherlands 70.0 Nielsen Marketing Research, spol s r.o. Czech Republic Dun & Bradstreet Danmark Holding A/S Denmark AIM Research A/S Denmark AIM Farmstat ApS Denmark 66.67 D & B International A/S Denmark A/S H. Hyldahl Denmark Dahl Jensen Kuvertering ApS Denmark
B-4 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ DUN & BRADSTREET INTERNATIONAL, LTD. (Continued) Dun & Bradstreet Nederland Holding B.V. (Continued) Dun & Bradstreet (C & EE) Holding B.V. The Netherlands Dun & Bradstreet Hungaria Informacio Szolgaltato Korlatolt Hungary 51.0 Felelosegu Tarsasag [d/b/a Dun & Bradstreet Hungaria Kft.] Dun & Bradstreet spol s r.o. Czech Republic Dun & Bradstreet Software Services (Nederland) B.V. The Netherlands Dun & Bradstreet B.V. The Netherlands IMS Services Nederland B.V. The Netherlands Nielsen Marketing Research SP.z.o.o. Poland Soliditet Norden AB Sweden A. C. Nielsen Company A.B. Sweden Soliditet AB Sweden Dun & Bradstreet (New Zealand) Limited New Zealand Dun & Bradstreet S.A. Peru Dun & Bradstreet Poland sp. z o.o. Poland Dun & Bradstreet Portugal, Lda. Portugal Dun & Bradstreet (Singapore) Pte. Ltd. Singapore Dun & Bradstreet A.G. Switzerland Bichet Auskunfte A.G. Switzerland Ifico-Burgel A.G. Switzerland Novinform AG Switzerland Renseignements Fell SA Switzerland 70.0 Dun & Bradstreet C.A. Venezuela Dun & Bradstreet Zimbabwe (Private) Limited Zimbabwe DUN & BRADSTREET INVESTMENTS CANADA INC. Ontario, Canada DUN & BRADSTREET LEASING INC. Canada DUN & BRADSTREET PLAN SERVICES, INC. Delaware Dun & Bradstreet Pension Services, Inc. Delaware Erisco, Inc. New York Plan Services, Inc. Florida Guy, Murray & Smith, Inc. Delaware DUN & BRADSTREET SOFTWARE HOLDINGS, INC. Delaware DBC Holding Corp. Delaware Dun & Bradstreet Software Services, Inc. Georgia DBS-Dun & Bradstreet Software Services do Brasil Ltda. Brazil D&BS Services (M) Sdn. Bhd. Malaysia Dun & Bradstreet Software Services Hong Kong Limited Hong Kong Dun & Bradstreet Software Services New Zealand Limited New Zealand Dun & Bradstreet Software Services (S) PTE Ltd. Singapore
B-5 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ DUN & BRADSTREET SOFTWARE HOLDINGS, INC. (Continued) DBC Holding Corp. (Continued) Dun & Bradstreet Software Services Inc. (Continued) Dun & Bradstreet Software Services International, Inc. Georgia Dun & Bradstreet Software Services Deutschland Germany Beteiligungs GmbH & Co. Dun & Bradstreet Software Services Germany Deutschland OHG Dun & Bradstreet Software Services (Canada) No. 2 Limited Ontario,Canada Dun & Bradstreet Software Services Holdings S.A. France Dun & Bradstreet Software Services Australia Australia Holdings Pty. Ltd. K.K. Dun & Bradstreet Software Japan DUN-DONNELLEY PUBLISHING CORPORATION Delaware DUNSNET S.A.R.L. France 550 COCHITUATE ROAD INVESTMENT CORPORATION Delaware GARTNER GROUP, INC. Delaware 52.0 Gartner Group Asia, Inc. Delaware Gartner Group Europe, Inc. Delaware Gartner Group Sales, Inc. Delaware GG Hong Kong, Inc. Delaware New Science Associates Inc. Delaware Real Decisions, Inc. Connecticut Gartner Group FSC, Inc. Virgin Islands Gartner Group Scandinavia, A/S Denmark Gartner Group UK Ltd. England GG France S.A.R.L. France Gartner Group, GMBH Germany Gartner Group Italia S.R.L. Italy Gartner Group Benelux The Netherlands Gartner Group Norge, A/S Norway Gartner Group Sverige, AB Sweden I.M.S. INTERNATIONAL, INC. Delaware I.M.S. Financial, Inc. Delaware IMS Pharminform Holding AG Switzerland Informations Medicales Et Statistiques S.A. Belgium Informations Medicales & Statistiques S.A.R.L. Morocco Information Medical Statistics Norge A/S Norway IMS AG Switzerland IMS Medinform A.S. Czech Republic
B-6 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ I.M.S. INTERNATIONAL, INC. (Continued) I.M.S. Financial, Inc. (Continued) IMS Pharminform Holding A.G. (Continued) IMS Information Medical Statistics AG Switzerland IMS Poland Limited Poland IMS Medinform Hungaria Ltd. Hungary IMSMARQ AG Switzerland IMS Servicos Ltda. Brazil IMS Tunisia Tunisia Interdata S.A. de C.V. Mexico RCI Research Consultants AG Switzerland Marketing Y Datos Limitada [k/a Markdata Ltda.] Chile Interstatistik AG Switzerland I M S Ges.m.b.H. Austria Datec Industria e Comercio, Distribuidora Grafica Brazil e Mala Direta Ltda. Interdata Dominicana, S.A. Dominican Republic Intercomunicaciones Y Servicio de Datos S.A. Colombia [k/a Interdata S.A.] Pharma Data Paraguaya S.R.L. Paraguay Pharma Data Uruguaya S.A. Uruguay Data Coordination AG Switzerland PMA Sociedad Anonima Argentina Datandina S.A. Peru Peru Institute for Medical Statistics Oy Finland I.M.S. (Nederland) B.V. The Netherlands Datandina Ecuador S.A. Ecuador Asserta Centroamerica Medicion de Mercados, S.A. Guatemala PMV De Venezuela, C.A. Venezuela Pharmadat Marktforschungs- Gesellschaft m.b.H. Austria Pharmacall Statistik Ges. m.b.H. Austria Medidat Marktforschungs- Gesellschaft m.b.H. Austria 50.0 Intercontinental Marketing Services Iberica, S.A. Spain Pharmatest Medical Market Studies, S.A. Spain Mercados Y Analisis, S.A. [k/a M.A.S.A.] Spain IMS Turkiye Ltd. Turkey IMS Software Services, Ltd. Delaware Dun & Bradstreet Germany Holding, Ltd. Delaware ACN Marketing Research Holding GmbH Germany A. C. Nielsen GmbH Germany A. C. Nielsen Werbeforschung S&P GmbH Germany Dataquest GmbH Germany DunsNet Datenkommunikation GmbH Germany ST Europe GmbH Germany
B-7 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ I.M.S. INTERNATIONAL, INC. (Continued) I.M.S. Financial, Inc. (Continued) Dun & Bradstreet Germany Holding, Ltd. (Continued) D & B Schimmelpfeng GmbH Germany D&B Unterstutzungskasse GmbH Germany IMS Holding Deutschland GmbH Germany IFNS Marktforschung GmbH Germany IMS GmbH Institut fur medizinische Statistik Germany I.M.S. Hellas Ltd. Greece IMS Data GmbH Germany INFO-MED Gesellschaft fur Regional- Germany marketing MBH Midoc Medizinische Informations- und Dokumentations- Germany Gesellschaft m.b.H. Schimmelpfeng Ges.mbH Austria D&B-Schimmelpfeng Ges.mbH Austria IMS Japan Ltd. (KK) Japan Pharmamedia AG Switzerland 51.0 I.M.S. Portugal-Consultores Internacionais de Marketung Farmaceutico, Lda. Portugal IMS (NZ) Limited New Zealand IMS Investments (NZ) Limited New Zealand Riddell Information Services Pty. Ltd. N.S.W., Australia IMS Australia Pty. Ltd. N.S.W., Australia Permail Pty. Limited N.S.W., Australia IMS Pacific Limited Hong Kong IMS HK Investments Ltd. Hong Kong IMS of Canada, Ltd. Canada Informations Medicales Et Statistiques SarL France Intercontinental Medical Statistics International, Ltd. New York Market Research International, Ltd. Delaware Nippon Computer Services, Inc. Japan IMS Asia (1989) Pte. Ltd. Singapore Clark-O'Neill, Inc. New Jersey IMS America, Ltd. New Jersey Coordinated Management Systems, Inc. Delaware INTERACTIVE DATA CORPORATION Delaware MOODY'S INVESTORS SERVICE, INC. Delaware Moody's Canada Inc. Canada Moody's Deutschland GmbH Germany Moody's Hong Kong Limited Hong Kong Moody's Japan Kabushiki Kaisha Japan Moody's Investors Service Espana, S.A. Spain
B-8 EXHIBIT B - (Continued)
State or Other % Ownership Jurisdiction of 100% except Name Incorporation as noted ___________________________________________________________________________ OAK INVESTMENTS LTD. Bermuda SALES TECHNOLOGIES, INC. Georgia THE REUBEN H. DONNELLEY CORPORATION Delaware D&B Investors L.P. Delaware 99.0 Am-Don Partnership [d/b/a DonTech] Illinois 50.0 CenDon Partnership Illinois 50.0 Uni-Don Partnership Florida 50.0 January 31, 1994
B-9 EX-23 4 EXHIBIT-C EXHIBIT C CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the registration statements of The Dun & Bradstreet Corporation on Form S-3 (File No. 33-10462) and on Forms S-8 (File Nos. 2-53006, 33-21719, 33-25774, 33-27144, 33-44551, 33-49060 and 33-51005) of our reports dated January 27, 1994, on our audits of the consolidated financial statements and financial statement schedules of The Dun & Bradstreet Corporation as of December 31, 1993 and 1992 and for the years ended December 31, 1993, 1992 and 1991, which reports are incorporated by reference or included in this Form 10-K. COOPERS & LYBRAND Stamford, Connecticut March 25, 1994 C-1 EX-13 5 EXHIBIT-D EXHIBIT D PERFORMANCE & OUTLOOK Marketing Information Services IMS International IMS International is the world's leading provider of marketing, sales- management and medical information and decision-support services for the pharmaceutical industry. Customers use IMS' services to monitor and evaluate performance, forecast industry developments, reduce operating costs, make strategic business decisions and respond to demand for health-care cost management. IMS provides services in more than 70 countries and generates about 65 percent of its revenue outside the U.S. ______________________________________________________________________ On the strength of Xponent, IMS America gained new business and won the vast majority of competitive reviews for prescriber information services. _______________________________________________________________________ 1993 Performance Revenue was $613.9 million, up 4.7 percent on a reported basis, and up about 10 percent excluding the stronger dollar. Operating income* growth was substantial, reflecting solid revenue growth and productivity improvements. Operating Highlights IMS America has enjoyed substantial success in adding new subscribers since it introduced Xponent, a unique prescriber- level information service, more than a year ahead of schedule. One of the most powerful sources of pharmaceutical sales and marketing information ever produced in the U.S., the Xponent service permits customers to measure sales performance more accurately, evaluate promotions and create customized micro-marketing programs. On the strength of the new service, IMS won the vast majority of supplier reviews by pharmaceutical manufacturers for sales-management and targeting information services in 1993, including a significant number of clients who had been using competitive services. IMS also introduced PlanTrak, a managed-care information service, and began the phased launch of Xponent PlanTrak, a combined sales- management and micro-marketing service focused on information related to health-care reform. IMS International introduced IDRAC, a CD-ROM system that delivers information and administrative services designed to help customers increase efficiency during the European Community regulatory approval process. IDRAC will be expanded in 1994 with national modules and multimedia capabilities. IMS released MediPlus in Germany, the U.K. and France, an enhanced service that draws prescription and treatment data from physicians' personal computers and includes a graphical user interface, multiple language capabilities and faster response times. IMS' medical databases do not identify individual patients to protect privacy. IMS America's health-care division agreed with the Health Industry Business Communications Council to develop a common category database that will substantially reduce industry-wide administrative costs by providing standard classifications for 240,000 medical and surgical products. _______________________________________________________________________ *Operating income comments throughout the Performance & Outlook section are before restructuring income/expense net. F-1 1994 Outlook IMS anticipates strong double-digit underlying revenue growth, driven in part by new products. Operating income will be up somewhat less than revenue growth, however, because of new-product investment spending. The long-term goal for IMS continues to be for growth above the corporate average. A.C. Nielsen A.C. Nielsen is the world's leading provider of marketing, media and television-audience research information and decision-support systems. Nielsen Marketing Research Nielsen Marketing Research provides consumer packaged goods manufacturers and retailers with retail, promotion, media, household and consumer information services and decision-support tools. Operating in 36 countries, the division generates about 70 percent of its revenue outside the U.S. 1993 Performance Nielsen Marketing Research reported worldwide revenue of $1.05 billion, down 6.4 percent on a reported basis from a year ago, but up about 3 percent excluding the impact of a stronger dollar and the divestiture of Donnelley Marketing Information Services. Excluding these factors, Nielsen generated a modest increase in operating income. Operating Highlights Nielsen outsourced its U.S. mainframe computing and systems software operations to Electronic Data Systems (EDS) in 1993, a move that increased processing power and reduced by one-half the time required to deliver information to customers. It allows the company to focus its resources on rapid development of value-added services. Nielsen Solution System, a total reengineering of how Nielsen North America manages and delivers information to customers, will go into production during 1994. The first large, open-architecture, client/server information-management system in the marketing research industry, Nielsen Solution System will allow customers to make fact- based business decisions using current marketplace information. It will deliver faster desktop access to complex marketing research information and provide customers with new capabilities to integrate external and internal data and create new databases responsive to changing conditions. With Efficient Consumer Response (ECR) emerging as a major opportunity for manufacturers, distributors and retailers to reengineer distribution and promotion practices and eliminate waste in the supply chain, Nielsen became the first marketing research company to establish a unit devoted to ECR and other retail-oriented services. Nielsen acquired interests in NON-STOP Logistics, a provider of warehousing and distribution services, and in Scanner Applications, a promotion measurement company, and formed a Solutions Partners program that also includes NCH Promotional Services, Strategic Mapping and EDS. __________________________________________________________________ IMS International and A.C. Nielsen, the world's largest marketing research businesses, formed closer links during 1993 to leverage their global capabilities, their decision-support services, and their complementary positions in over-the-counter (OTC) health-care information services. ____________________________________________________________________ F-2 Nielsen North America launched Opportunity Explorer and Promotion Simulator expert-system software that analyzes historical actions that affect product sales and simulates the impact of future promotion strategies. These products run on Nielsen Workstation PC software, the world's leading marketing and sales-management decision-support system, which is being enhanced for 1994. Nielsen has installed this Windows- based software on more than 10,000 personal computers at 2,000 customer sites. In the highly competitive U.S. market, Nielsen won new contracts in 1993 with Continental Baking and Eastman Kodak. It also retained contracts with companies, including Coca-Cola Foods, Colgate-Palmolive, Pfizer, Philip Morris, Bausch & Lomb and Pillsbury. In early 1994, Nielsen gained a major contract with Bristol-Myers Squibb, winning back this customer's business from Information Resources, Inc. (IRI). Nielsen also reached a new agreement that expands its relationship with Johnson & Johnson, including recovering the McNeil division of J&J from IRI. _________________________________________________________________________________ Marketing Information Services
Dollar amounts in millions 1993 1992 % Change 1991 1990 1989 _________________________________________________________________________________ Operating Revenue $1,868.3 $1,893.9 -1.4 $1,832 $1,938 $1,715 Operating Income Before Restructuring Income/Expense - Net $ 296.5 $302.7 -2.0 $286 $332 $312 Operating Margin % Before Restructuring Income/Expense - Net +15.9 +16.0 -.6 ___________________________________________________________________________________ Excluding the impact of the stronger dollar and the divestiture of Donnelley Marketing Information Services, revenue growth was about 6% and operating income was up about 7%.
Nielsen International, which encompasses Asia-Pacific and Latin American operations as well as those in Europe, widened its lead against its competitors as it continued to reengineer and streamline operations to improve responsiveness to customers and accelerate product development. The unit began to roll out advanced scanning-based information services in the United Kingdom and France and will extend scanning capabilities to eight northern European countries in 1994. Nielsen International also will introduce a major new release of The Nielsen Inf*Act Workstation, a Retailer Workstation and a variety of additional decision-support applications. Nielsen signed a five-year European partnership agreement with Procter & Gamble covering 32 product categories. Under a global agreement with Coca-Cola, Nielsen will provide marketing information on its beverage and foods categories in 27 nations. Nielsen International established operations in Poland. It also acquired a majority interest in Cadem S.A., the leading marketing research firm in Chile, and acquired STARS, Puerto Rico's only store-audit service. In Turkey, Nielsen acquired an interest in Zet-Nielsen Business Information A.S., a marketing information provider, and established television- audience measurement services. Nielsen also introduced national People Meter television audience- measurement services in Sweden and Singapore. F-3 1994 Outlook Nielsen Marketing Research anticipates worldwide underlying revenue growth above the 3 percent growth achieved in 1993, with 1994 operating margins consistent with last year due to new-product investment spending. The long-term goal for Nielsen is growth at the corporate average. Nielsen Media Research Nielsen Media Research reported solid growth in revenue and operating income, as its annual revenue exceeded $200 million for the first time. Nielsen Media's customers include national and local television broadcasters, cable networks and systems, syndicators, advertisers and advertising agencies. Nielsen Media introduced metered local audience-measurement service in the Orlando-Daytona Beach-Melbourne market in Florida during 1993. In February 1994, Nielsen entered the West Palm Beach-Ft. Pierce market, bringing the total number of Nielsen metered markets to 30, with Cleveland and Detroit to follow later in the year. The Arbitron Co. announced in 1993 that it was discontinuing syndicated local market television and cable ratings service. _______________________________________________________________________ Nielsen built competitive momentum, winning numerous contracts with major clients and, in early 1994, capturing the Bristol-Myers Squibb account from IRI. _______________________________________________________________________ Nielsen Media launched the first phase of a new national delivery system that, when completed, will provide online delivery and cross-media analysis of broadcast, cable and syndication data. The division's Personal NAD Facility, also introduced in 1993, became the first system using CD-ROM technology to deliver demographic breakdowns of viewership for selected market areas for all national TV programming sources. In 1994, Nielsen Media Research is expecting strong double-digit growth in revenue and operating income. Risk Management and Business Marketing Information Services Dun & Bradstreet Information Services Dun & Bradstreet Information Services (DBIS) is the world's leading supplier of business-to-business risk management, credit and marketing information and decision-support services that build customers' profitability and sales. The division maintains operations in 34 countries, a data-collection network spanning nearly 200 nations and a database covering more than 32 million businesses worldwide. Its nine- digit D-U-N-S Number, endorsed by the United Nations as a standard business identifier for cross-border electronic data interchange, is a unique tool for establishing corporate family relationships worldwide. DBIS also provides receivables-management services worldwide and credit insurance in the U.S. The business generates about 35 percent of its revenue outside the U.S. 1993 Performance Worldwide DBIS revenue was $1.20 billion, up about 1 percent from 1992 on a reported basis, and up about 3 percent excluding the impact of the stronger dollar and the acquisition of Soliditet. The division reported solid growth in operating income for the year, with higher operating margins resulting from continuing productivity improvements. F-4 DBIS North America reported a slight increase in revenue from a year ago. Revenue from U.S. credit services increased 3 percent to $559 million, with a small increase in sales for the year. DBIS Europe had a modest decrease in revenue on a reported basis, but posted a slight increase excluding the acquisition of Soliditet and the unfavorable impact of a stronger dollar. Operating Highlights DBIS took a number of actions to introduce integrated business information services and to enhance its traditional information products. The division introduced portfolio-analysis services in the U.S. and the U.K., and database-marketing services in the U.S., that allow customers to integrate their own information with DBIS' data and perform analyses that highlight risk and identify marketing opportunities. These services generated significant new revenue in their initial release. In North America, DBIS enhanced the Business Information Report. New features of the report include the D&B Paydex Score and an explanation of the score, which rates a company's past payment performance. _______________________________________________________________________ DBIS continued its aggressive global expansion by acquiring Soliditet, the leading provider of business information in Sweden, Norway and Finland. ________________________________________________________________________ DBIS North America formed an alliance with Equifax, a consumer credit reporting company, to develop new information-driven solutions for customers, including credit scores on virtually all small businesses in the U.S. by the end of 1994. DBIS also increased the number of businesses on which it provides credit scores from 4.5 million to 10 million. In Europe, DBIS acquired Soliditet in May and moved quickly to integrate the company. Soliditet is the leading provider of commercial credit information in Sweden, Norway and Finland. DBIS formed a joint venture with the European Bank for Reconstruction and Development to accelerate the development of business information services in Central and Eastern Europe. With sanctions lifted, DBIS began supplying customers worldwide with information on South African companies through an arrangement with ITC, the company D&B divested in 1986. DBIS rolled out D&B Access PC software to eight European countries, where it accounted for as much as 65 percent of online inquiries by year-end. D&B Access provides fast, flexible delivery of business information to customers and a wider range of information options. DBIS began providing global online access to information on firms in Mexico in August, meeting customer needs driven in part by the North American Free Trade Agreement and the fast-growing Mexican economy. D&B's database on Mexican companies was increased from 75,000 to 300,000 files by year-end. DBIS' APLAN network technology, which supports developments in Mexico, was also expanded in Venezuela, Japan and Taiwan, providing customers with domestic, regional and global business information delivered in those countries' languages. Argentina, Chile, Peru and Brazil will be added to the network in 1994. 1994 Outlook Worldwide DBIS underlying revenue growth is expected to be in the mid-single digits. Strong growth in operating income is expected in 1994, with further improvements in productivity. The long-term goal for DBIS is growth at the corporate average. F-5 Moody's Investors Service Moody's Investors Service issues ratings on corporate and government obligations and issuers of commercial paper in the U.S., Canada, Europe and Asia/Pacific, and publishes business and financial information. 1993 Performance Moody's reported strong revenue growth and a substantial increase in operating income for the third consecutive year, reflecting continuing favorable bond-market conditions. Operating Highlights Moody's continued to extend its international capabilities while maintaining its strong leadership position in the U.S. Moody's geographic expansion, including the official opening of its Madrid office, continues as capital flows become increasingly global. Moody's also maintains offices in London, Paris, Frankfurt, Sydney and Tokyo. During the year, Moody's Corporate Department issued first-time ratings on six companies that specialize in derivative products and developed a capability to deliver opinions and ratings electronically to clients. Moody's also established a Global Credit Research Client Service Desk to facilitate communication with analysts and serve the needs of strategic corporate fixed-income investors worldwide; increased the number of non- U.S. investor briefings on global credit topics; initiated teleconferences that allow investors to discuss timely credit issues with Moody's analysts; and established a calling program that has built stronger relationships between Moody's analysts and strategic investors. _________________________________________________________________________________ Risk Management and Business Marketing Information Services
Dollar amounts in millions 1993 1992 % Change 1991 1990 1989 _________________________________________________________________________________ Operating Revenue $1,564.2 $1,520.6 +2.9 $1,397 $1,351 $1,330 Operating Income Before Restructuring Income/Expense - Net $ 404.6 $379.6 +6.6 $285 $253 $374 Operating Margin % Before Restructuring Income/Expense - Net +25.9 +25.0 +3.6 ___________________________________________________________________________________ Excluding the impact of the stronger dollar and the acquisition of Soliditet, revenue growth was up about 5% and operating income was up about 11%.
________________________________________________________________________ Favorable bond-market conditions led to another record performance at Moody's in 1993. ________________________________________________________________________ Moody's Public Finance assigned a record 13,500 ratings in 1993 as U.S. municipal volume totaled $290 billion, the highest ever recorded. Facing this volume, Public Finance expanded its analytical focus on the revenue sectors of the markets, strengthening its market position, by creating revenue specialty groups. Public Finance also established a full capacity rating desk in its Western Regional Office and launched a new product devoted exclusively to refunded bonds that includes new weekly, biweekly and quarterly updates. Refunding volume accounted for close to 65 percent of market volume in 1993. F-6 In the U.S., where Moody's Financial Information Services (FIS) installed its 1,000th CD-ROM customer, the department placed sales personnel in San Francisco and Dallas to build market share for Moody's products. FIS also signed a letter of intent with Toyo Keizai, Japan's largest business information company, to produce an English-language CD- ROM product containing data on Japanese public companies. 1994 Outlook The anticipated slowdown in the volume of refinancings and new debt issues did not occur in 1993 and is now expected to occur in 1994, even though the market continues to exhibit strong volume. Consequently, Moody's is not anticipating growth in 1994 and may experience a decline in revenue and operating income. Long-term, Moody's is expected to achieve growth at the corporate average, with some variability due to changing bond-market conditions. ________________________________________________________________________ Interactive Data provides securities-related information and software to the investment community in North America, Europe and Asia/Pacific. Interactive Data's revenue and operating income increased in 1993. Software Services Dun & Bradstreet Software D&B Software, with revenue of more than $400 million, is a worldwide leader in the marketplace for client/server and mainframe software for financial, human-resources, distribution and manufacturing applications and decision-support. 1993 Performance Excluding the impact of the divestiture of Information Associates and the stronger dollar, D&B Software reported a modest decline in revenue. Excellent growth in client/server revenue, which exceeded expectations by nearly 200 percent, was offset by an anticipated decline in mainframe software revenue. However, D&B Software achieved an excellent increase in operating income, reflecting the positive impact of a workforce reduction, the consolidation of certain activities and the closing of two facilities. __________________________________________________________________________________ Software Services
Dollar amounts in millions 1993 1992 % Change 1991 1990 1989 _________________________________________________________________________________ Operating Revenue $ 475.6 $533.5 -10.9 $ 557 $558 $ 230 Operating Income Before Restructuring Income/Expense - Net $ 43.7 $ 18.7 +133.7 $ 43 $ 57 $ 33 Operating Margin % Before Restructuring Income/Expense - Net +9.2 +3.5 +162.9 ___________________________________________________________________________________ Excluding the impact of the stronger dollar and the divestiture of Information Associates, revenue declined about 7%, and operating income was up about 113%.
F-7 Operating Highlights Sales of SmartStream client/server software contributed to D&B Software's improved operating income performance in 1993. The division released FinancialStream, the first SmartStream applications package in September, and an enhanced version of SmartStream Decision Support in July. By year-end, D&B Software recognized revenue from client/server sales representing approximately 300 customer sites. ________________________________________________________________________ Customers responded enthusiastically to D&B Software's initial client/server offerings, as revenues exceeded expectations by nearly 200 percent. ________________________________________________________________________ SmartStream provides companies with enhanced workflow and information- distribution capabilities. Faster, easier access to business information through Windows-based desktop workstations allows more business processes to be automated. Global functionality will permit the software to be easily adapted and used in international operations. The remaining elements of the enterprise-wide SmartStream architecture, covering human resources and manufacturing & distribution applications, are scheduled for release during 1994. Early SmartStream results included several sales to customers who will use the software's full capabilities for reengineering business processes for greater productivity and profitability. Other customers focused on targeted applications and business functions as they began to make the transition from mainframe to client/server-based computer architectures. D&B Software continued to provide customers with flexible approaches to converting to client/server computing. The division also delivered a number of enhancements to its mainframe software during the year and improved the maintenance and support services it provides to mainframe software customers. D&B Software has established third-party development and/or marketing relationships with a number of organizations, including Microsoft, Data General, Hewlett-Packard, IBM, Sybase, Andersen Consulting and Price Waterhouse. D&B Software established direct operations in Malaysia to serve a growing client base in that country. 1994 Outlook Nineteen-ninety-four is expected to be an exciting year for D&B Software, with substantial growth in client/server revenue. However, given the anticipated continuing decline in mainframe software revenue, D&B Software's total revenue may not increase and could be down slightly. Nonetheless, with the anticipated growth in client/server revenue and further productivity improvements, operating income is expected to be up substantially. Long-term, D&B Software is expected to achieve growth above the corporate average. ________________________________________________________________________ Sales Technologies is the largest U.S. supplier of sales automation solutions, with operations also in Canada, Germany, the U.K. and France. The division reported a decline in revenue and an operating loss. F-8 ________________________________________________________________________ Erisco, which provides software and services for health-care administration, reported a significant increase in operating income, but a modest decrease in revenue due to the discontinuation of its Defined Contribution Services product line. Directory Information Services Reuben H. Donnelley Reuben H. Donnelley compiles, publishes or serves as sales and marketing representative for more than 400 yellow pages directories in 17 states and the District of Columbia. Donnelley serves markets in various regions of the U.S. in association with NYNEX, Cincinnati Bell and Sprint, and is a proprietary publisher in the mid-Atlantic area and southern California. DonTech, a partnership with Ameritech Advertising Services, Inc., serves Illinois and northwestern Indiana. Thomson Directories Ltd., a partnership with The Thomson Corporation, serves markets in the United Kingdom through 155 directories. 1993 Performance Directory Information Services' reported revenue increased 7.5 percent to $450.7 million, primarily as a result of timing factors. Excluding the impact of timing factors, revenue was essentially unchanged. Underlying sales of yellow pages directories also were essentially unchanged. Operating income rose 14.8 percent to $185.2 million. Excluding the impact of timing factors, segment operating income was up about 3 percent. _________________________________________________________________________________ Directory Information Services
Dollar amounts in millions 1993 1992 % Change 1991 1990 1989 _________________________________________________________________________________ Operating Revenue $ 450.7 $419.4 +7.5 $ 463 $450 $ 437 Operating Income Before Restructuring Income/Expense - Net $ 185.2 $161.3 +14.8 $209 $184 $162 Operating Margin % Before Restructuring Income/Expense - Net +41.1 +38.5 +6.8 ___________________________________________________________________________________ Excluding the impact of timing factors, revenue was essentially unchanged and operating income was up about 3%.
Operating Highlights Donnelley conducted a major reengineering of its operations that will reduce its costs, increase productivity and support the development of new advertising products for emerging electronic media. These steps included shortening the production phase for many directories, which increases the time available for sales campaigns and improves advertising quality. ________________________________________________________________________ Donnelley's major reengineering has created a new platform for building sales growth and developing new products. ________________________________________________________________________ F-9 In addition, Donnelley introduced workstation-based account-planning and territory-management software that helps sales representatives analyze their assignments, segment key industry sectors, calculate customers' return on investment and apply D&B Information Services' marketing and business information. The planned increase in the use of laptop computers will further improve customer service and satisfaction, automate additional publishing and administrative functions, and contribute to the development of an easily adaptable, digitized database of advertising information. 1994 Outlook Directory Information Services expects a modest increase in underlying revenue and a strong increase in underlying operating income as a result of productivity actions initiated in 1993. While long-term growth is expected to be below the corporate average, Donnelley remains a high-margin business with a strong cash flow. Other Business Services Dun & Bradstreet Plan Services provides group-health-insurance marketing and administration services to insurance companies, agents and businesses. Dun & Bradstreet Pension Services supplies pension and profit-sharing services. Dun & Bradstreet Plan Services reported declines in revenue and operating income. NCH Promotional Services provides cents-off coupon redemption, promotion, processing and management services to retailers and manufacturers. The division reported declines in revenue and operating income, due in part to actions taken to improve cash flow and overall profitability. Dataquest provides global market research, analysis and consulting services for information technology, hardware, software, communications and services companies, and for the heavy-machinery industry. The division posted a slight increase in revenue and significantly reduced its operating loss during the year. Gartner Group, with offices in 25 countries, is a leading provider of research, analysis and advisory services to users and suppliers of information technology systems and software. In April, The Dun & Bradstreet Corporation acquired a majority interest in Gartner Group from Information Partners Capital Fund L.P. Following a public offering of Gartner stock, D&B retained 52 percent ownership. Gartner posted substantial growth in revenue and operating income. The unit continued to expand its range of information-technology research services by acquiring New Science Associates, Inc., a provider of complementary subscription-based services. In January 1994, it acquired Real Decisions Corp., which provides asset and resource management services and corporate information technology benchmarking. _______________________________________________________________________ Gartner Group posted revenue growth of more than 20 percent, with even higher growth in profits and expanding margins. ________________________________________________________________________ D&B Health Care Information was formed in 1993 to address new market opportunities in health-care information and decision-support services. In July, the division acquired Health Research Network, a provider of clinical information on the incidence and treatment of HIV/AIDS. F-10 The division was selected by the U.S. Centers for Disease Control to track HIV/AIDS. The study will create a national database on AIDS- related conditions and trends in prevention and treatment. D&B HealthCare acquired Lexecon Health Service, Inc., in January 1994, the largest non-government supplier of patient outcome studies to U.S. health-care providers. ________________________________________________________________________________ Other Business Services
Dollar amounts in millions 1993 1992 % Change 1991 1990 1989 _________________________________________________________________________________ Operating Revenue $ 351.6 $383.3 -8.3 $ 402 $540 $ 607 Operating Income Before Restructuring Income/Expense - Net $ 28.0 $ 50.4 -44.4 $ 37 $ 63 $ 82 Operating Margin % Before Restructuring Income/Expense - Net +8.0 +13.1 -38.9 ___________________________________________________________________________________ Adjusted for the timing effect of the acquisition of Gartner Group and the divestiture of Datastream, and the impact of the stronger dollar, revenue was essentially unchanged and operating income was up about 11%.
Corporate Resources DunsNet is the company's worldwide telecommunications network that supports the delivery of online products of D&B operating units to customers in North America, Europe and Asia/Pacific. (Costs are allocated across all business segments.) DunsGate develops and maintains advanced electronic information products and distribution systems that give customers faster, easier and more effective access to D&B data and services through their telephones, personal computers and facsimile machines. (Costs are allocated across Risk Management and Business Marketing Services and Other Business Services.) ________________________________________________________________________ This discussion mentions several products and company names that are trademarks of other companies. It is not our intention to claim these names or trademarks as our own. ________________________________________________________________________ F-11 FINANCIAL REVIEW The Company reported earnings per share in 1993 of $3.36, up 8.4% from $3.10 a year ago, excluding the adoption of Financial Accounting Standards (FASB) Statements of Financial Accounting Standards (SFAS) No. 112 and No. 106 and a net restructuring charge of $166.7 million after- tax. (See Notes 2 and 5 to the Consolidated Financial Statements.) Full-year earnings per share were reduced by $.05 per share as a result of the increase in the U.S. corporate income tax rate. Including the effect of these factors, the Company reported 1993 earnings per share of $.23 and net income of $38.1 million. Operating revenue in 1993 was down .8% to $4,710.4 million from $4,750.7 million a year ago. Excluding the effects of divestitures and acquisitions, the adverse impact of the stronger dollar and certain timing factors, 1993 revenue for D&B's current portfolio of businesses was up about 3.5%. In 1993 the Company sold Donnelley Marketing Information Services (DMIS), redeemed preferred shares and notes related to the sales of Donnelley Marketing and Datastream and resolved certain contingencies related to other divestitures. As a result of the above transactions, a $40.0 million gain was recognized. In 1993, the Company also recognized a $21.0 million non-operating gain related to the initial public offering of Gartner Group, Inc. (Gartner Group) in which the Company holds a majority interest. In connection with the above operating and non-operating gains, the Company recorded $61.0 million of restructuring expense related to work-force reductions (non-severance costs) and restructuring of certain operations and businesses. Additional restructuring actions initiated in 1993 totaling $256.5 million represented an acceleration of ongoing efforts to achieve long- term productivity improvements and to leverage the Company's global synergies. A significant portion of the charge was for downsizing the number of data-processing centers, reducing worldwide real estate costs, and reengineering back-office accounting functions. The ongoing pre-tax savings from these synergy actions, which are expected to grow in the next few years to approximately $100 million annually, will be used principally for initiatives to accelerate revenue growth. (See Note 5 to the Consolidated Financial Statements.) Operating income before restructuring expense-net in 1993 increased 5.6% to $830.0 million from $785.9 million in 1992. Excluding the effects of divestitures and acquisitions, the stronger dollar, certain timing factors and restructuring expense-net, 1993 operating income was up about 13%. Operating income after restructuring expense-net decreased to $552.5 million. For the Company's current portfolio of businesses, operating expenses excluding restructuring expense-net and the effect of the stronger dollar increased 1.7% in 1993 compared with 1992, reflecting productivity improvements. In 1993, the Company adopted the provisions of SFAS No. 112, "Employers' Accounting for Postemployment Benefits," and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." The adoption of SFAS No. 112 and SFAS No. 106 resulted in one-time, non- cash, after-tax charges of $250 million and $140 million, respectively, in the first quarter. (See Note 2 to the Consolidated Financial Statements.) Interest income-net 1993 was $26.9 million, compared with interest income-net of $11.3 million a year ago, reflecting lower interest expense due in part to a lower level of short-term borrowings, a larger portfolio of marketable securities and interest income on notes related to the sale of Datastream. In effect, a portion of the increase in interest income-net represented an offset to the absence of operating income from divested businesses. Non-operating income-net in 1993 included a $21.0 million gain from the initial public offering of Gartner Group. Other expense-net of $12.4 million in 1993 compared with other expense-net of $2.0 million a year ago reflected the minority interests' share of income/loss of majority-owned subsidiaries and various partnerships. The Company's effective tax rates were 27.1%, 30.4% and 31.3% in 1993, 1992 and 1991, respectively. The lower rate in 1993 primarily reflected the favorable tax effects of the fourth- F-12 quarter restructuring charge. Excluding the effects of the charge, the full-year tax rate would have been 29.5%, reflecting the continuing favorable effects of global tax-planning actions, partially offset by the increase in the U.S. corporate income tax rate. Return on average shareowners' equity (excluding restructuring expense-net of $277.5 million, a $21.0 million gain from Gartner Group's sale of stock and the cumulative effect of accounting changes in 1993) was 34.6%, 26.1% and 25.2% in 1993, 1992 and 1991, respectively. Return on average shareowner's equity was 24.9% in 1993, before cumulative effect of accounting changes. Shareowners' Equity totaled $1,111.3 million at December 31, 1993, compared with $2,156.0 million at December 31, 1992. The decline was principally attributed to the repurchase of the Company's common stock that was authorized by the Company's Board of Directors after considering a number of factors, including the favorable long-term growth prospects of the Company, its continuing strong cash flow and cash position, and the attractive financial implications of a share repurchase for the Company, resulting in part from low interest rates and the Company's high dividend yield. The decline also reflected the after-tax effects of adopting SFAS No. 112 and SFAS No. 106 and the after-tax effect of restructuring expense. The Company believes that because of its strong cash flow characteristics (described in the Liquidity Section below) the lower level of shareowners' equity will not have a material effect on the Company's ability to obtain appropriate financing to meet the growth needs of the Company. Regarding 1994, the Company is anticipating growth in earnings per share somewhat above the 8.4% growth in 1993 earnings per share to $3.36, which excludes the $256.5 million net restructuring charge and the impact of the required accounting changes. The Company also believes it will achieve underlying revenue growth in 1994 above its 1993 underlying revenue growth of about 3.5%, despite the expected continuing weak growth in the global economy in 1994. Marketing Information Services reported a 1.4% decrease in revenue in 1993 to $1,868.3 million from $1,893.9 million in 1992 as a result of the impact of the stronger dollar and the divestiture of Donnelley Marketing Information Services (DMIS). Excluding these factors, full- year revenue growth for the segment was about 6%. IMS International's 1993 revenue was $613.9 million, up 4.7% on a reported basis, and up about 10% excluding the impact of the stronger dollar. Nielsen Marketing Research reported worldwide revenue of $1.05 billion, down 6.4% on a reported basis from a year ago but up about 3% excluding the impact of the stronger dollar and the divestiture of DMIS. Nielsen Media reported a solid increase in revenue for 1993. Reported operating income for the segment, excluding restructuring expense-net, decreased 2% to $296.5 million from $302.7 million a year ago. Adjusted for the divestiture of DMIS and the impact of the stronger dollar, operating income was up about 7%, reflecting productivity improvements at IMS International and Nielsen Marketing Research International, partially offset by higher costs at Nielsen Marketing Research in the United States. Risk Management and Business Marketing Information Services' revenue in 1993 was up 2.9% to $1,564.2 million from $1,520.6 million in 1992. Excluding the impact of the stronger dollar and the acquisition of Soliditet, full-year revenue was up about 5%. Dun & Bradstreet Information Services (DBIS) North America reported a slight increase in revenue from a year ago. U.S. credit services' 1993 revenue was up 3% to $559 million. U.S. credit services posted a small increase in sales for the full year. DBIS Europe had a modest decrease in revenue in 1993 on a reported basis, but posted a slight increase excluding the acquisition of Soliditet and the unfavorable impact of the stronger dollar. Moody's Investors Service reported a strong increase in revenue for the year, reflecting favorable bond market conditions. Reported operating income for the segment, excluding restructuring expense-net, increased by 6.6% in 1993 to $404.6 million from $379.6 million in 1992. Excluding the impact of the stronger dollar, the acquisition of Soliditet and restructuring expense-net, operating income was up 11%, as a result of the 5% growth in underlying revenue and significant productivity improvements. F-13 Software Services reported a 10.9% decrease in revenue in 1993 to $475.6 million from $533.5 million. Excluding the impact of the stronger dollar and divestiture of Information Associates, 1993 segment revenue decreased about 7% and D&B Software had a modest decline. Operating income for the segment, excluding restructuring expense-net, increased by 133.7% to $43.7 million in 1993 from $18.7 million in 1992, reflecting the positive impact of a work-force reduction, the consolidation of certain activities and the closing of two facilities at D&B Software. Excluding the impact of the stronger dollar, the divestiture of Information Associates and restructuring expense-net, operating income was up about 113%, reflecting the above actions to improve productivity. Directory Information Services' reported revenue increased 7.5% to $450.7 million from $419.4 million, primarily as a result of timing factors. Excluding the impact of timing factors, segment revenue was essentially unchanged. Underlyling sales of yellow pages directories were essentially unchanged compared with last year. Operating income for the segment, excluding restructuring expense-net, increased 14.8% to $185.2 million in 1993 from $161.3 million in 1992. Excluding the impact of timing factors and restructuring expense-net, operating income for the segment was up about 3%. Other Business Services reported an 8.3% decrease in revenue in 1993 to $351.6 million from $383.3 million in 1992. Adjusted for the timing effect of the acquisition of Gartner Group and the divestiture of Datastream, and the impact of the stronger dollar, segment revenue was essentially unchanged. Gartner Group posted a substantial increase in revenue. NCH Promotional Services reported a decrease in revenue, due in part to actions taken to improve profitability and cash flow. Dun & Bradstreet Plan Services also reported a decrease in 1993 revenue. Operating income for the segment, excluding restructuring expense-net, decreased 44.4% to $28.0 million in 1993 from $50.4 million in 1992. Adjusted for the timing effect of the acquisition of Gartner Group and the divestiture of Datastream, the stronger dollar and restructuring expense-net, operating income was up about 11%, due principally to a strong contribution from Gartner Group. In 1992, the Company reported earnings per share of $3.10, up 9.2% from $2.84 per share in 1991. Net income for 1992 increased 9.3% to $553.5 million from $506.5 million in 1991. Operating revenue in 1992 increased $99.7 million, or 2.1% to $4,750.7 million from $4,651.0 million in 1991. Revenue growth in 1992 was held down by the effects of four divestitures--Donnelley Marketing in February 1991, the communications unit of IMS International in July 1991, Information Associates in June 1992 and Datastream International in September 1992--as well as by the impact of changes in contractual arrangements at Reuben H. Donnelley in 1991. Excluding these factors, and the impact of a slightly weaker dollar, revenue growth for D&B's current portfolio of businesses was about 5%, which was held down by the negative impact of economic and industry conditions on Directory Information Services and Dun & Bradstreet Software. Operating income in 1992 increased by 5.6% to $785.9 million from $744.3 million in 1991. Excluding the effects of divestitures, the 1991 changes in the Donnelley contracts, 1991 restructuring expense and the impact of a slightly weaker dollar, operating income increased by about 9%. Operating expenses excluding the effect of acquisitions and divestitures, restructuring expense-net and the impact of a weaker dollar, increased 4% in 1992 compared with 1991. Interest income-net in 1992 was $11.3 million, compared with interest expense-net of $10.1 million in 1991, reflecting a larger portfolio of marketable securities and a lower level of short-term borrowings, due to a significant increase in cash flow from operations and proceeds from the sales of Datastream International and Information Associates. In effect, a portion of the increase in interest income-net represented an offset to the absence of operating income from divested businesses. Other expense-net in 1992 was $2.0 million compared with other income-net of $3.1 million in 1991. Other expense-net in 1992 included a $3.4 million gain on foreign-currency put options, compared with an $11.2 million gain in 1991. In 1991, the Company reported earnings per share of $2.84, up 1.8% from $2.79 per share in 1990. Net income was essentially unchanged at F-14 $506.5 million, compared with $506.7 million in 1990. Earnings per share increased, while net income was flat, because of the impact of share repurchases in 1990. Operating revenue in 1991 decreased by $186.3 million or 3.9% to $4,651.0 million from $4,837.3 million in 1990. The decrease in operating revenue was attributable to the divestitures of Zytron, Neodata Services and Petroleum Information in 1990, Donnelley Marketing in February 1991 and the communications unit of IMS in July 1991. Adjusted for these divestitures, revenue growth for the Company approximated 5% in 1991, despite recessionary conditions. Operating income in 1991 decreased 5.4% to $744.3 million from $786.9 million in 1990, as a result of divestitures. The positive effect of changes in contractual arrangements between Reuben H. Donnelley and several telephone companies was offset by net restructuring expense of $15 million. Excluding the effects of divestitures, the changes in Reuben H. Donnelley contracts and restructuring expense-net, operating income increased by about 4%. Operating expenses excluding restructuring expense-net in 1991 decreased 3.9% compared with 1990. The decrease in operating expenses was due to the absence of expenses from divested units. Interest expense-net in 1991 was $10.1 million compared with interest income-net of $1.5 million in 1990, reflecting a lower portfolio of marketable securities that resulted from a number of factors, including the use of funds for restructuring payments and 1990 share repurchases. Other income-net in 1991 was $3.1 million, compared with other expense-net of $20.6 million in 1990, and included an $11.2 million gain on foreign-currency put options. In line with its often stated strategy of sharpening its focus on key markets for information services, during 1991, Donnelley Marketing and the communications unit of IMS were sold in the first and third quarters, respectively. In 1992, the Information Associates unit of Dun & Bradstreet Software and Datastream International were sold during the second and third quarters, respectively. Restructuring actions initiated in 1992 included the reorganization of European operations at Nielsen Marketing Research, and work-force reductions and actions to consolidate operations at Dun & Bradstreet Software and Reuben H. Donnelley. The pre-tax costs of these actions essentially offset a pre-tax gain of $107 million on the sales of Datastream International and Information Associates (See Note 5 to the Consolidated Financial Statements.) Restructuring actions initiated by the Company in 1991 included the consolidation of regional operations, management realignments and the restructuring of certain operations at Reuben H. Donnelley, as well as work-force reductions at Nielsen Marketing Research, Dun & Bradstreet Software and Dun & Bradstreet Information Services. The pre-tax costs of these actions totaled $113 million and were largely offset by a pre- tax net gain of $98 million on divestitures. (See Note 5 to the Consolidated Financial Statements.) The resulting net restructuring expense of $15 million was largely offset by benefits from changes in Reuben H. Donnelley contracts. In 1993, 1992 and 1991, certain restructuring actions initiated in 1992, 1991 and 1990 were completed at a lower cost than originally estimated and other actions required more costs to implement than originally expected. In addition, costs to complete certain actions being implemented changed based on revised estimates and experience to date. In a number of instances, new restructuring actions were initiated to complement or enhance original actions and certain actions were expanded, contracted or discontinued based on changed circumstances. While the total costs of all restructuring actions remained unchanged, the changes in estimates and other changes did impact operating income by business segment. (See Notes 5 and 14 to the Consolidated Financial Statements.) Restructuring actions significantly affect year-to-year comparisons of operating income by segment. Accordingly, Marketing Information Services reported operating income of $243.5 million in 1993 compared with operating income of $257.2 million and $362.5 million in 1992 and 1991, respectively. Risk Management and Business Marketing Information Services F-15 reported operating income in 1993 of $307.6 million, compared with operating income of $371.0 million and $250.4 million in 1992 and 1991, respectively. Software Services' operating loss for 1993 totaled $24.6 million, compared with an operating loss of $19.2 million and operating income of $29.2 million in 1992 and 1991, respectively. Directory Information Services operating income in 1993 totaled $170.3 million, compared with $154.0 million and $175.6 million in 1992 and 1991, respectively. Other Business Services' operating income in 1993 totaled $24.8 million, compared with $149.8 million and $36.1 million in 1992 and 1991, respectively. Non-U.S. Operations and Monetary Assets-The Company has operations in more than 60 countries. Approximately 38% of the Company's revenues in 1993 were from non-U.S. operations, including approximately 27% from European operations. The percentage of the Company's revenue from non- U.S. (particularly European) opeations declined in 1993 compared with 1992 because of the effect of divestitures in 1992 and the strengthening of the U.S. dollar in 1993. Non-U.S. operations accounted for approximately 33% of the Company's operating income in 1993, including European operations, which accounted for approximately 22%. Changes in the value of non-U.S. currencies relative to the U.S. dollar cause fluctuations in U.S. dollar operating results. In 1993, foreign currency translation decreased U.S. dollar revenue and operating income growth by approximately 4%. Since 1989, the Company has used various financial instruments, which have provided partial protection against foreign currency exposures versus annual plan; however, this practice did not avoid year- to-year fluctuations in U.S. dollar operating results resulting from foreign currency translation. For 1994, the Company does not plan to continue this practice; however, the cost/benefit of this practice will be re-evaluated periodically and might be used in the future. Non-U.S. monetary assets are maintained in European currencies, principally in Germany, Switzerland, the Netherlands, Italy, the United Kingdom and Spain. Changes in the value of these currencies relative to the U.S. dollar are charged or credited to shareowners' equity. The effect of exchange rate changes during 1993 reduced the U.S. dollar amount of cash and cash equivalents by approximately $40 million. F-16 Liquidity and Financial Position - The Company's financial condition continues to be very strong. At December 31, 1993, cash, cash equivalents and current marketable securities totaled $669 million and short-term debt totaled $258 million, including $166 million of Alaska Native Corporation obligations. In 1993, the Company continued to be a strong generator of cash from operating activities. Cash generated from operating activities less cash outlays for capital expenditures and computer software and other intangibles additions totaled $493 million, which exceeded dividend payments of $423 million. In 1994, the Company expects to continue this strong performance before the effect of two abnormally large cash outlays for restructuring expenses and postemploymenet benefits. In 1994, the Company anticipates cash outlays in the range of $170 million for restructuring actions, primarily associated with restructuring actions initiated in 1993, and cash outlays in the range of $200 million for postemployment benefits, primarily severance pay. In 1994, after the effect of the above two abnormally large expenditures, the Company expects to be a moderate user of cash. Net cash provided by operating activities totaled $932.2 million for 1993, compared with $1,002.3 million and $663.2 million for 1992 and 1991, respectively. The decrease of $70.1 million in net cash provided by operating activities primarily reflected a smaller reduction of other working capital in 1993 by NCH Promotional Services, compared with the reduction in 1992 that resulted from changes in payment terms to retailers. Net cash used in investing activities totaled $382.2 million for 1993 compared with $298.9 million and $201.8 million in 1992 and 1991, respectively. The increase in cash usage in 1993 reflected increased payments for acquisitions ($118.3 million), lower proceeds from sale of businesses ($67.0 million) and increased other investments and notes receivable ($30.6 million), partially offset by the sale of marketable securities ($172.9 million). Capital expenditures were $235.7 million, $196.9 million and $226.2 million in 1993, 1992 and 1991, respectively. Cash received ($107.5 million) during 1993 from the redemption of preferred shares and notes related to the sales of Donnelley Marketing, Datastream International, and the sale of DMIS was added to the general funds of the Corporation. The Company anticipates that these funds will be used to fund certain restructuring actions. Net cash used in financing activities totaled $353.8 million in 1993, compared with $481.3 million in 1992, and $477.7 million in 1991. The decrease in cash usage in 1993 reflected the proceeds ($54.0 million) from Gartner Group's initial public offering and third-parties investments in partnerships ($625.0 million), which was used in part to purchase the Company's common stock, partially offset by increased ($563.9 million) purchases of treasury shares. In late 1996, third-parties special investors interests ($500 million) in the investment partnership (See Note 4 to the Consolidated Financial Statements) will be exchanged for cash, Company stock, a debt instrument issued by the Company, or a combination thereof at the Company's discretion. Additionally, the limited partners in the database licensing partnership described in Note 4 will have the right to have their limited partnership interests ($125 million) liquidated after 1996. Management believes that short and medium-term financing alternatives available to the Company, in addition to the Company's large portfolio of cash, cash equivalents and marketable securities, as well as cash generated from operations, will be more than sufficient to meet the Company's cash requirements including capital expenditures, severance payments, restructuring expenses, payments for acquisitions and those that might result from liquidation of partnership minority interests. Dividends - The regular quarterly dividend was increased to $.61 from $.57 per share on April 21, 1993. The increase brought dividends per share in 1993 to $2.40, an increase of 6.7% over the $2.25 paid in 1992. On an annualized basis, the dividend rate of $2.44 was up 7.0% from the previous rate. F-17 Common Stock Information - The Company's common stock (symbol DNB) is listed on the New York, London, Tokyo, Zurich, Geneva and Basel stock exchanges. During 1993 and 1992, 69.4 million shares and 56.6 million shares, respectively, were traded, representing 39.2% and 31.8% of the average number of shares outstanding in the respective years. The number of shareowners of record declined to 15,458 at January 31, 1994 from 16,076 at January 31, 1993. The following summarizes price and dividend-per-share information for Dun & Bradstreet common stock as reported in the periods shown: Price Per Share ($) Dividends Paid ------------------------------- -------------- 1993 1992 Per Share ($) -------------- --------------- -------------- High Low High Low 1993 1992 _____________________________________________________________________________ First Quarter 61 3/4 55 3/4 58 52 3/4 .57 .54 Second Quarter 60 3/4 57 3/8 56 7/8 50 5/8 .61 .57 Third Quarter 64 7/8 57 1/2 59 1/8 54 1/4 .61 .57 Fourth Quarter 68 1/2 60 5/8 58 3/4 55 5/8 .61 .57 ___________________________________________________________________ Year 68 1/2 55 3/4 59 1/8 50 5/8 2.40 2.25 ___________________________________________________________________ F-18 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareowners and the Board of Directors of The Dun & Bradstreet Corporation: We have audited the accompanying consolidated statement of financial position of The Dun & Bradstreet Corporation and Subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, shareowners' equity and cash flows for the years ended December 31, 1993, 1992 and 1991. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Dun & Bradstreet Corporation and Subsidiaries as of December 31, 1993 and 1992, and the consolidated results of their operations and their cash flows for the years ended December 31, 1993, 1992 and 1991, in conformity with generally accepted accounting principles. As discussed in Note 2 to the consolidated financial statements, in 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits". Coopers & Lybrand ______________________ Stamford, Connecticut January 27, 1994 F-19 Statement of Management Responsibility for Financial Statements To the Shareowners of The Dun & Bradstreet Corporation: Management has prepared and is responsible for the consolidated financial statements and related information that appear on pages 13 to 35. The consolidated financial statements, which include amounts based on judgments of management, have been prepared in conformity with generally accepted accounting principles. Other financial information in the annual report is consistent with that in the consolidated financial statements. Management believes that the Company's internal control systems provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing financial statements and maintaining accountability for assets. These systems are augmented by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified financial people and a program of internal audits. The independent accountants are engaged to conduct an audit of and render an opinion on the financial statements in accordance with generally accepted auditing standards. These standards include an assessment of the systems of internal controls and tests of transactions to the extent considered necessary by them to support their opinion. The Board of Directors, through its Audit Committee consisting solely of outside directors of the Company, is responsible for reviewing and monitoring the Company's financial reporting and accounting practices. Coopers & Lybrand and the internal auditors each have full and free access to the Audit Committee and meet with it regularly, with and without management. Robert E. Weissman ________________________ Robert E. Weissman President and Chief Executive Officer Edwin A. Bescherer, Jr. __________________________________ Edwin A. Bescherer, Jr. Executive Vice President - Finance and Chief Financial Officer F-20 The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Income Years Ended December 31,
Dollar amounts in millions, except per share data 1993 1992 1991 ___________ ___________ __________ Operating Revenue $4,710.4 $4,750.7 $4,651.0 Operating Costs, Selling and Administrative Expenses 3,506.7 3,585.9 3,540.8 Depreciation and Amortization 373.7 378.9 350.9 Restructuring Expense - Net 277.5 0 15.0 ___________ ___________ __________ Operating Income 552.5 785.9 744.3 ___________ ___________ __________ Interest Income 51.6 44.1 30.8 Interest Expense (24.7) (32.8) (40.9) Gain on Sale of Gartner Group Stock 21.0 0 0 Other (Expense) Income - Net (12.4) (2.0) 3.1 ___________ ___________ __________ Non-Operating Income(Expense) - Net 35.5 9.3 (7.0) ___________ ___________ __________ Income Before Provision for Income Taxes and Cumulative Effect of Changes in Accounting Principles 588.0 795.2 737.3 Provision for Income Taxes 159.3 241.7 230.8 ___________ ___________ __________ Income Before Cumulative Effect of Changes in Accounting Principles 428.7 553.5 506.5 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," Net of Income Tax Benefits of $93.7 (140.6) - - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits," Net of Income Tax Benefits of $150.0 (250.0) - - ___________ ___________ __________ Net Income $ 38.1 $ 553.5 $ 506.5 _______________________________________________________________ ___________ __________ Earnings Per Share of Common Stock: Before Cumulative Effect of Changes in Accounting Principles $ 2.42 $ 3.10 $ 2.84 Cumulative Effect to January 1, 1993, of Changes in Accounting Principles: -SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," (0.79) - - -SFAS No. 112, "Employers' Accounting for Postemployment Benefits" (1.40) - - _______________________________________________________________ ___________ __________ Net Earnings Per Share of Common Stock $ .23 $ 3.10 $ 2.84 ___________ ___________ ___________ Average Number of Shares Outstanding 177,181,000 178,346,000 178,556,000 _______________________________________________________________ ___________ ___________ The accompanying notes are an integral part of the consolidated financial statements F-21
The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Financial Position December 31,
Dollar amounts in millions, except per share data 1993 1992 __________ __________ Assets Current Assets Cash and Cash Equivalents $ 650.9 $ 494.5 Marketable Securities 17.7 45.0 Accounts Receivable - Net 1,078.9 1,110.2 Other Current Assets 374.9 280.7 __________ __________ Total Current Assets 2,122.4 1,930.4 ______________________________________________________________ __________ Investments Marketable Securities, interest-bearing, at cost which approximates market 106.2 140.4 Other Investments and Notes Receivable 310.6 387.9 __________ __________ Total Investments 416.8 528.3 ______________________________________________________________ __________ Property, Plant and Equipment - Net 861.1 864.8 ______________________________________________________________ __________ Other Assets-Net Deferred Charges 318.5 283.1 Computer Software 294.5 246.8 Other Intangibles 214.7 228.1 Goodwill 942.4 833.4 __________ __________ Total Other Assets - Net 1,770.1 1,591.4 ______________________________________________________________ __________ Total Assets $5,170.4 $4,914.9 ___________________________________________________________________________ ___________________________________________________________________________ The accompanying notes are an integral part of the consolidated financial statements F-22 The Dun & Bradstreet Corporation and Subsidiaries ___________________________________________________________________________ Liabilities and Shareowners' Equity Current Liabilities Accounts and Notes Payable $ 371.8 $ 473.7 Accrued and Other Current Liabilities 1,561.5 980.5 Accrued Income Taxes 110.8 190.4 __________ __________ Total Current Liabilities 2,044.1 1,644.6 ______________________________________________________________ __________ Unearned Subscription Income 263.7 262.5 Postretirement and Postemployment Benefits 545.7 131.8 Deferred Income Taxes 85.9 151.7 Other Liabilities and Minority Interests 1,119.7 568.3 ______________________________________________________________ __________ Total Liabilities $4,059.1 $2,758.9 ______________________________________________________________ __________ Shareowners' Equity Preferred Stock, par value $1 per share, authorized - 10,000,000 shares; outstanding - none Common Stock, par value $1 per share, authorized - 400,000,000 shares; issued-188,406,813 and 188,401,399 shares for 1993 and 1992, respectively $ 188.4 $ 188.4 Capital in Excess of Par Value 64.2 59.4 Retained Earnings 2,135.7 2,520.6 Treasury Stock, at cost, 18,124,514 and 10,166,186 shares for 1993 and 1992, respectively (1,036.5) (472.0) Cumulative Translation Adjustment (240.5) (140.4) ______________________________________________________________ __________ Total Shareowners' Equity $1,111.3 $2,156.0 ______________________________________________________________ __________ Total Liabilities and Shareowners' Equity $5,170.4 $4,914.9 ______________________________________________________________ __________ F-23
The Dun & Bradstreet Corporation and Subsidiaries Consolidated Statement of Cash Flows Years Ended December 31,
Dollar amounts in millions, except per share data 1993 1992 1991 ___________ ___________ __________ Cash Flows from Operating Activities: Net Income $ 38.1 $ 553.5 $ 506.5 Reconciliation of Net Income to Net Cash Provided by Operating Activities: Cumulative Effect of Changes in Accounting Principles: Postretirement Benefits Other than Pensions 140.6 0 0 Postemployment Benefits 250.0 0 0 Depreciation and Amortization 373.7 378.9 350.9 Gains from Sale of Businesses and Gartner Group Stock (61.0) (106.9) (98.1) Restructuring Provisions 317.5 106.9 113.1 Restructuring Payments (95.1) (93.6) (137.5) Postemployment Benefit Payments (44.3) 0 0 Net Decrease (Increase) in Accounts Receivable 36.8 12.0 (107.5) Deferred Income Taxes 18.2 (24.7) 63.2 Net (Increase) Decrease in Other Working Capital Items (42.3) 176.2 (27.4) ___________ ___________ ___________ Net Cash Provided by Operating Activities 932.2 1,002.3 663.2 _______________________________________________________________ ___________ ___________ Cash Flows from Investing Activities: Proceeds from (Payments for) Marketable Securities - Net 83.9 (89.0) (7.1) Proceeds from Sale of Businesses 107.5 174.5 228.1 Payments for Acquisition of Businesses (excluding cash and cash equivalents acquired of $12.8 in 1993) (120.1) (1.8) (19.7) Capital Expenditures (235.7) (196.9) (226.2) Computer Software & Other Intangibles Additions (202.9) (160.6) (154.0) (Increase)Decrease in Other Investments and Notes Receivable (29.8) .8 (64.3) Other 14.9 (25.9) 41.4 ___________ ___________ ___________ Net Cash Used in Investing Activities (382.2) (298.9) (201.8) _______________________________________________________________ ___________ ___________ Cash Flows from Financing Activities: Payment of Dividends (423.0) (401.3) (383.9) Payments for Purchase of Treasury Shares (612.2) (48.3) (25.8) Net Proceeds from Exercise of Stock Options 43.1 23.6 11.5 Decrease in Domestic Short-term Borrowings (34.9) (54.5) (36.5) Third Parties' Investments in Partnerships 625.0 0 0 Other 48.2 (.8) (43.0) ___________ ___________ ___________ Net Cash Used in Financing Activities (353.8) (481.3) (477.7) _______________________________________________________________ ___________ ___________ Effect of Exchange Rate Changes on Cash and Cash Equivalents (39.8) (12.7) (12.8) _______________________________________________________________ ___________ ___________ Increase(Decrease) in Cash and Cash Equivalents 156.4 209.4 (29.1) Cash and Cash Equivalents, Beginning of Year 494.5 285.1 314.2 _______________________________________________________________ ___________ ___________ Cash and Cash Equivalents, End of Year $ 650.9 $ 494.5 $ 285.1 _______________________________________________________________ ___________ ___________ The accompanying notes are an integral part of the consolidated financial statements F-24
The Dun & Bradstreet Corporation and Subsidiaries CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY
Dollar amounts in millions, except per share data __________________________________________________________________________________________________________________ Common Capital in Cumulative Three Years Ended Stock Excess of Retained Treasury Translation December 31, 1993 ($1 Par Value) Par Value Earnings Stock Adjustment Total ____________________________________________ ____________ ___________ ___________ ______________ _______ Balance, January 1, 1991 $188.4 $55.3 $2,245.8 $(439.6) $(5.8) $2,044.1 Net Income 506.5 506.5 Cash Dividends ($2.15 per share) (383.9) (383.9) Treasury shares reissued under stock options and deferred compensation plans (341,477) 1.2 11.5 12.7 Treasury shares reissued under restricted stock plan (40,096) 1.8 1.8 Less unearned portion (1.8) (1.8) Plus earned portion of grants 3.4 3.4 Treasury shares acquired (553,383) (25.8) (25.8) Change in cumulative translation adjustment (33.9) (33.9) ____________________________________________ ____________ ___________ ___________ ______________ _______ Balance, December 31, 1991 188.4 56.5 2,368.4 (450.5) (39.7) 2,123.1 Net Income 553.5 553.5 Cash Dividends ($2.25 per share) (401.3) (401.3) Treasury shares reissued under stock options and deferred compensation plans (577,296) 2.9 23.6 26.5 Treasury shares reissued under restricted stock plan (71,884) 4.0 4.0 Less unearned portion (4.0) (4.0) Plus earned portion of grants 3.2 3.2 Treasury shares acquired (864,108) (48.3) (48.3) Change in cumulative translation adjustment (100.7) (100.7) ____________________________________________ ____________ ___________ ___________ ______________ _______ Balance, December 31, 1992 188.4 59.4 2,520.6 (472.0) (140.4) 2,156.0 Net Income 38.1 38.1 Cash Dividends ($2.40 per share) (423.0) (423.0) Treasury shares reissued under stock options and deferred compensation plans (958,011) 4.8 43.1 47.9 Treasury shares reissued under restricted stock plan (93,888) 5.4 5.4 Less unearned portion (5.4) (5.4) Plus earned portion of grants 4.6 4.6 Treasury shares acquired (9,010,227) (612.2) (612.2) Change in cumulative translation adjustment (100.1) (100.1) ____________________________________________ ____________ ___________ ___________ ______________ _______ Balance, December 31, 1993 $188.4 $64.2 $2,135.7 $(1,036.5) $(240.5) $1,111.3 ____________________________________________ ____________ ___________ ___________ ______________ _______ The accompanying notes are an integral part of the consolidated financial statements F-25
The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies Principles of Consolidation. The consolidated financial statements include those of the Company, its subsidiaries and partnerships in which the Company has a controlling interest. Investments in companies over which the Company has influence but not a controlling interest are carried at equity. The effects of all significant intercompany transactions have been eliminated. The financial statements of IMS International, Inc. (IMS), Dun & Bradstreet Software, Gartner Group, Inc. (Gartner Group) and subsidiaries outside the United States and Canada reflect a fiscal year ending November 30 to facilitate timely reporting of the Company's consolidated financial results. Cash Equivalents. Marketable securities that mature within 90 days of purchase date are considered cash equivalents. Unbilled Expenditures. These expenditures, which are included in other current assets, represent costs to be expensed upon contract completion and the cost of coupons purchased in connection with clearing house activities, which are rebilled to customers. Property, Plant and Equipment. Buildings and machinery and equipment are depreciated over their estimated useful lives using principally the straight-line method. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement. Investments. Other investments and notes receivable are carried at cost, which approximates market, except for investments accounted for under the equity method. Other Assets. Deferred charges include prepaid pension costs and assets of grantor trusts established to pay benefits for U.S. supplemental pension plans. Certain computer software costs are capitalized in accordance with Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed," and are reported at the lower of unamortized cost or net realizable value. Other intangibles result from acquisitions and database development. Computer software and other intangibles are being amortized, using principally the straight-line method, over three to five years and five to 15 years, respectively. Goodwill represents the excess purchase price over the fair value of identifiable net assets of businesses acquired and is amortized on a straight-line basis over 10 to 40 years. At each balance sheet date, the Company reviews the recoverability of goodwill based on estimated undiscounted future cash flows from operating activities compared with the carrying value of goodwill. Unearned Subscription Income. Amounts billed for service and subscriptions are credited to unearned subscription income and reflected in operating revenue over the subscription term, which is generally one year. Earnings Per Share of Common Stock. Earnings per share are based on the weighted average number of shares of common stock outstanding during the year. The inclusion of shares issuable under stock options in the calculation of earnings per share would not result in material dilution. Reclassifications. Certain prior-year amounts have been reclassified to conform with the 1993 presentation. F-26 Note 2. Accounting Changes During the first quarter of 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 106 (SFAS No. 106), "Employers' Accounting for Postretirement Benefits Other than Pensions." The Statement requires the accrual of the projected future cost of providing postretirement benefits during the period that associates render the services necessary to be eligible for such benefits. In prior years, this expense was recognized as claims were paid. The Company elected to immediately recognize the accumulated postretirement benefit obligation ("APBO"). Measured as of January 1, 1993, the effect of adopting SFAS No. 106 was a one-time, non-cash, after-tax charge of $140.6 million ($.79 per share). During the third quarter of 1993, the Company adopted, retroactive to January 1, 1993, Statement of Financial Accounting Standards No. 112 (SFAS No. 112), "Employers' Accounting for Postemployment Benefits" and restated its first quarter results to reflect the change. SFAS No. 112 requires that employers expense the costs of postemployment benefits paid before retirement, principally severance benefits, over the service lives of employees if certain conditions are met, and must be adopted by all companies by 1994. Under the Company's previous accounting policy, the total cost of such benefits was expensed when the event occurred. The initial effect of adopting SFAS No. 112 was a one-time, after-tax charge of $250 million ($1.40 per share). There was no immediate impact on cash as a result of this accounting change. As in the past, the cash impact of such postemployment benefits will occur as payments are made. Ongoing operating expenses increased marginally as a result of adopting SFAS No. 106 and SFAS No. 112. F-27 Note 3. Acquisitions In 1993, 1992 and 1991, the Company acquired various companies in separate transactions that were accounted for as purchases. The aggregate purchase price of such acquisitions totaled approximately $120 million in 1993. The largest acquisitions were Soliditet, a provider of commercial-credit information in Scandinavia, and Gartner Group, a provider of research, analysis and advisory services to users and suppliers of information technology systems and software. The aggregate purchase price for acquisitions totaled approximately $2 million and $20 million in 1992 and 1991, respectively. The results of operations of all purchases are included in the Consolidated Statement of Income from dates of acquisition. Had the acquisitions made in 1991, 1992 and 1993 been consummated on January 1 of the year preceding the year of acquisition, the results of these acquired operations would not have had a significant impact on the Company's consolidated results of operations for any of the years presented. F-28 Note 4. Investment Partnerships During 1993, three of the Company's subsidiaries contributed assets and third-party investors contributed cash ($125 million) to a limited partnership. One of the Company's subsidiaries serves as general partner. All the other partners, including the third-party investors, hold limited partner interests. The partnership, which is a separate and distinct legal entity, is in the business of licensing database assets and computer software. In addition, during 1993, the Company participated in the formation of a limited partnership to invest in various securities including those of the Company. One of the Company's subsidiaries serves as managing general partner. Third-party investors hold limited partner and special investors interests totaling $500 million. The special investors are entitled to a specified return on their investments. Funds raised by the partnership provided a source of the financing for the Company's repurchase of 8.3 million shares of its common stock. For financial reporting purposes, the assets, liabilities, results of operations and cash flows of the partnerships described above are included in the Company's consolidated financial statements. The third-parties investments in these partnerships at December 31, 1993 totaled approximately $625 million and are reflected in other liabilities and minority interests. Third-parties share of partnerships results of operations, including specified returns, is reflected in other income and expense-net. F-29 Note 5. Restructuring In 1993, the Company recorded a $317.5 million restructuring charge that was partially offset by one-time operating gains of $40.0 million, thereby resulting in a $277.5 million net restructuring expense. 1993 results also included a $21.0 million non-operating gain related to the initial public offering of the Gartner Group, which reduced the impact of the restructuring charges to $256.5 million before-tax ($166.7 million after-tax). This charge, represented an acceleration of the Company's ongoing efforts to achieve long-term productivity improvements. The $40.0 million operating gains related to the divestiture of Donnelley Marketing Information Services, the redemption of preferred shares received from the 1991 sale of Donnelley Marketing, the redemption of notes related to the 1992 sale of Datastream and the resolution of contingencies related to other divestitures. The Company received $107.5 million in cash and notes with a fair market value of $2.8 million related to the above transactions. The $21.0 million gain in non-operating income-net related to the initial public offering of Gartner Group, in which the Company holds a majority interest. Restructuring expense ($317.5 million) consisted of the costs to consolidate the Company's data centers ($54.0 million), reduce worldwide real estate costs ($117.2 million), consolidate back-office accounting functions ($19.1 million), discontinue certain production and data collection systems and products ($66.2 million) and initiate work-force reductions (non-severance costs) and other actions ($61.0 million). During 1992, the Company sold Datastream International and Information Associates, a unit of Dun & Bradstreet Software and initiated other actions to restructure certain operations and businesses and to reduce costs and increase operating efficiencies. The pre-tax costs associated with these actions essentially offset a pre-tax gain of $106.9 million on the sales. During 1991, the Company sold Donnelley Marketing and the communications unit of IMS and initiated other actions to restructure certain operations and businesses and to reduce costs and increase operating efficiencies. The pre-tax costs associated with these actions totaled $113 million and were largely offset by a pre-tax net gain of $98 million on the divestitures. In 1993, 1992 and 1991, certain restructuring actions initiated in 1992, 1991 and 1990 were completed at a lower cost than originally estimated, and other actions required more costs to implement than originally expected. In addition, costs to complete certain actions being implemented changed based on revised estimates and experience to date. In a number of instances, new restructuring actions were initiated to complement or enhance original actions and certain actions were expanded, contracted or discontinued based on changed circumstances. While the total cost of all restructuring actions remained unchanged, the changes in estimates and other changes did impact operating income by business segment. (See Note 14 to the Consolidated Financial Statements.) F-30 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Dollar amounts in millions Note 6. Postretirement Benefit Plans The Company has defined benefit pension plans covering substantially all associates in the United States. The benefits to be paid to associates under these plans are based on years of credited service and average final compensation. Pension costs are determined actuarially and funded to the extent allowable under the Internal Revenue Code. Supplemental plans in the United States are maintained to provide retirement benefits in excess of levels allowed by ERISA. The Company's non-U.S. subsidiaries provide retirement benefits for associates consistent with local practices, primarily using defined benefit or termination indemnity plans. The components of net periodic pension cost are summarized as follows: 1993 1992 1991 ___________________________________________________ Service Cost $42.2 $42.7 $37.8 Interest Cost 88.8 85.8 78.5 Actual Return on Plan Assets (126.3) (80.1) (202.3) Net Amortization and Deferral 14.2 (30.5) 98.5 ___________________________________________________ Net Periodic Pension Cost $18.9 $17.9 $12.5 ___________________________________________________ The status of defined benefit pension plans at December 31, 1993 and 1992, is as follows:
Funded Unfunded _______________ ________________________________ U.S.(1) Non-U.S. _______________ ______________ 1993 1992 1993 1992 1993 1992 _____________________________________________________________________________________________ Fair Value of Plan Assets $1,223.3 $1,157.6 Actuarial Present Value of Benefit Obligations: Vested Benefits $858.0 $750.7 $71.0 $49.8 $68.1 $65.1 Non-Vested Benefits 33.0 27.2 7.3 4.3 .6 1.1 ______________________________________________________________________________________________ Accumulated Benefit Obligations 891.0 777.9 78.3 54.1 68.7 66.2 Effect of Projected Future Salary Increases 153.7 114.6 37.4 33.4 .2 .2 ______________________________________________________________________________________________ Projected Benefit Obligations 1,044.7 892.5 115.7 87.5 68.9 66.4 ______________________________________________________________________________________________ Plan Assets in Excess of (Less than) Projected Benefit Obligations 178.6 265.1 (115.7) (87.5) (68.9) (66.4) Unrecognized Net (Gain) Loss 49.2 (33.3) 38.7 21.9 (.4) (.7) Unrecognized Prior Service Cost 26.7 21.1 19.0 19.3 .8 1.0 Unrecognized Net Transition (Asset) Obligation (108.2) (124.4) 2.9 3.3 -- -- Adjustment to Recognize Minimum Liability -- -- (23.2) (11.1) (.2) (.1) _______________________________________________________________________________________________ Prepaid (Accrued) Pension Cost $146.3 $128.5 $(78.3) $(54.1) $(68.7) (66.2) 1)Represents supplemental plans for which grantor trusts (with assets of $60 and $49 million at December 31, 1993 and 1992, respectively) have been established to pay plan benefits.
The weighted average expected long-term rate of return on pension plan assets was 9.75% for 1993, 1992 and 1991. At December 31, 1993 and 1992, the projected benefit obligations were determined using weighted average discount rates of 7.37% (7.25% for U.S. plans) and 8.59%, respectively, and weighted average rates of increase in future compensation levels of 5.7% and 6.0%, respectively. Plan assets are invested in diversified portfolios that consist primarily of equity and debt securities. In the third quarter of 1993, the Company recognized a curtailment event resulting from an announced work-force reduction. At the same time, the Company remeasured its projected benefit obligation, reducing the discount rate. As a result, net curtailment gains of approximately $2 million were recognized in 1993. In addition to providing pension benefits, the Company provides various health-care and life-insurance benefits for retired associates. Substantially all of the Company's associates in the United States become eligible for these benefits if they reach normal retirement age while working for the Company. Certain of the Company's subsidiaries outside the United States have postretirement benefit plans, although most participants are covered by government-sponsored or -administered programs. The cost of company-sponsored postretirement benefit plans outside the U.S. is not significant. F-31 Note 6. Postretirement Benefit Plans (Cont'd.) The components of net periodic postretirement benefit cost other than pensions are summarized as follows: 1993 ___________________________________ Service Cost $ 6.0 Interest Cost 18.3 Net Amortization and Deferral (1.0) _____ Net Periodic Postretirement Benefit Cost $23.3 _____ In 1992 and 1991, the costs of providing these postretirement benefits were expensed as paid and were not material to the Company's results of operations in those years. The status of postretirement benefit plans other than pensions at December 31, 1993 is as follows: 1993 ______________________________________________________ Actuarial Present Value of Benefit Obligation: Retirees and Dependents $(150.8) Active Associates - Eligible (31.8) Active Associates - Not Yet Eligible (45.5) _______________________________________________________ Accumulated Postretirement Benefit Obligation (228.1) Unrecognized Net (Gain) Loss 30.0 Unrecognized Prior Service Cost (Credit) (45.0) _______________________________________________________ Accrued Postretirement Benefit Obligation $(243.1) Benefits are paid as incurred from general corporate assets. The accumulated postretirement benefit obligation at December 31, 1993 was determined using a discount rate of 7.25%. The assumed rate of future increases in per capita cost of covered health-care benefits was 12% for 1993, and is 11.3% in 1994, decreasing gradually to 6.0% for the year 2021 and remaining constant thereafter. Increasing the assumed health-care cost trend rate by one percentage point in each year would increase the accumulated postretirement benefit obligation by $28.5 million and would increase annual aggregate service and interest costs by $3.4 million. In the third quarter of 1993, the Company recognized a curtailment event resulting from an announced work-force reduction. At the same time, the Company remeasured its accumulated postretirement benefit obligation, reducing the discount rate from 8.5% to 7.25%. In the fourth quarter of 1993, the Company amended its postretirement benefit plan, reflecting increased retiree cost-sharing provisions and providing limits on the Company's future obligation to absorb health- care cost inflation. The aggregate effect of these items was to reduce 1993 net periodic postretirement benefit cost by approximately $2.3 million. F-32 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Dollar amounts in millions, except per share data
Note 7. Employee Stock Plans The Company has granted options to certain associates, under its Key Employees Stock Option Plans, to purchase shares of its common stock at the market price on the date of the grant. Options outstanding at December 31, 1993 were granted during the years 1984 through 1993 and are exercisable over periods ending not later than 2003. At December 31, 1993, 1992 and 1991, options for 3,556,944, 3,285,149 and 2,878,564 shares of common stock were exercisable and 3,467,164, 5,097,281 and 6,731,003 shares were available for future grants under the plans. Changes in stock options for the three years ended December 31, 1993 are summarized as follows: Option Price Shares Per Share ($) Total Options outstanding, January 1, 1991 4,948,698 7.57 to 67.00 $216.7 Granted 1,621,173 44.63 to 50.63 81.9 Exercised (358,064) 7.57 to 55.38 (11.8) Surrendered or Expired (261,441) 32.38 to 62.50 (12.4) _______________________________________________________________________________ Options outstanding, December 31, 1991 5,950,366 11.16 to 67.00 274.4 Granted 1,646,652 51.88 to 57.75 95.1 Exercised (575,960) 11.16 to 55.38 (23.5) Surrendered or Expired (172,859) 41.50 to 67.00 (8.6) _______________________________________________________________________________ Options outstanding, December 31, 1992 6,848,199 11.16 to 62.50 337.4 Granted 1,757,578 56.75 to 62.25 109.0 Exercised (951,936) 11.16 to 57.75 (42.7) Surrendered or Expired (209,675) 41.50 to 62.50 (11.2) ______________________________________________________________________________ Options outstanding, December 31, 1993 7,444,166 11.16 to 62.50 $392.5 ______________________________________________________________________________ Options which became exercisable during: 1991 814,462 41.50 to 67.00 $ 37.6 1992 1,047,869 41.50 to 58.38 $ 49.2 1993 1,231,406 41.50 to 58.38 $ 61.0 ______________________________________________________________________________
All proceeds from options exercised are credited to treasury stock. Any tax benefit to the Company resulting from the exercise of options is credited to capital in excess of par value. There have been no charges to income with respect to any stock options. The plans also provide for the granting of stock appreciation rights and limited stock appreciation rights in tandem with stock options, to certain key associates. At December 31, 1993, there were no stock appreciation rights attached to stock options; however, 1,456,595 limited stock appreciation rights were outstanding, which are exercisable only if, and to the extent that, the related option is exercisable and only upon the occurrence of specified contingent events. In 1991, Dun & Bradstreet Software (DBS), a wholly owned subsidiary of the Company, adopted a stock option plan which granted options for 5% of the authorized shares of DBS to its key associates. The options are exercisable at the fair market value of DBS common stock at the date of grant, and may be exercised only on the fourth anniversary of the grant. Under the 1989 Key Employees Restricted Stock Plan, key associates may be granted restricted shares of the Company's stock. The plan provides for the granting of up to 1,800,000 shares of the Company's common stock prior to December 31, 1998. During 1993, 1992 and 1991, 102,540, 72,713 and 51,300 restricted shares, respectively, were awarded under the plan. Forfeitures in 1993, 1992 and 1991 totaled 8,652, 829 and 11,204, respectively. The restrictions on the majority of such shares lapse over a period of three years from the date of the grant and compensation expense is charged to operations over a service period of six years. F-33 Dollar amounts in millions Note 8. Income Taxes Income before provision for income taxes consisted of: 1993 1992 1991 ________________________________________ U.S. $367.6 $548.1 $511.0 Non-U.S. 220.4 247.1 226.3 ________________________________________ $588.0 $795.2 $737.3 The provision (benefit) for income taxes consisted of: 1993 1992 1991 _____________________________________________________________ Current tax provision: U.S. Federal $208.9 $138.4 $38.9 State and Local 73.8 50.2 49.7 Non-U.S. 101.0 78.2 82.4 ______________________________________________________________ 383.7 266.8 171.0 Deferred tax (benefit) provision: U.S. Federal (179.4) 18.2 52.0 State and Local (16.5) 4.8 15.9 Non-U.S. (28.5) (48.1) (8.1) _______________________________________________________________ (224.4) (25.1) 59.8 _______________________________________________________________ $159.3 $241.7 $230.8 _______________________________________________________________ The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company's effective tax rate for financial statement purposes. 1993 1992 1991 ______________________________________________________________________ Statutory tax rate 35.0% 34.0% 34.0% State and Local income taxes, net of U.S. Federal tax benefit 6.4 4.6 5.9 Non-U.S. taxes (.9) (6.8) (.9) Recognition of capital loss (15.2) (1.8) (1.9) Other 1.8 .4 (5.8) _______________________________________________________________________ Effective tax rate 27.1% 30.4% 31.3% _______________________________________________________________________ Income taxes paid were approximately $236 million, $223 million and $212 million in 1993, 1992 and 1991, respectively. Income taxes refunded were approximately $10 million, $16 million and $117 million in 1993, 1992 and 1991, respectively. Deferred tax assets (liabilities) are comprised of the following at December 31: 1993 1992 ____________________________________________________________________ Deferred Tax Assets: Postemployment Benefits $133.9 $ 0 Restructuring Costs 126.9 52.4 Postretirement Benefits 99.9 0 Tax Benefit of Operating Losses 75.6 81.0 Bad Debts 31.2 20.0 Intangibles 24.7 55.8 Other 11.7 9.7 ____________________________________________________________________ 503.9 218.9 Valuation Allowance (73.1) (72.7) ____________________________________________________________________ 430.8 146.2 ____________________________________________________________________ Deferred Tax Liabilities: Intangibles (182.9) (159.4) Depreciation (72.8) (40.1) Revenue Recognition (62.9) (38.8) Other (1.7) (5.6) _____________________________________________________________________ (320.3) (243.9) _____________________________________________________________________ Net Deferred Tax Asset (Liability) $110.5 $(97.7) _____________________________________________________________________ Undistributed earnings of non-U.S. subsidiaries aggregated approximately $732 million at December 31, 1993. Deferred tax liabilities have not been recognized for these undistributed earnings because it is management's intention to reinvest such undistributed earnings outside the U.S. If all undistributed earnings were remitted to the U.S., the amount of U.S. Federal income taxes payable would not be material; however, withholding taxes, imposed by certain non-U.S. countries, would total approximately $50 million. During 1987 and 1988, the Company entered into tax-sharing agreements with an Alaska Native Corporation (ANC), under which the Company acquired income tax benefits related to certain net operating losses (NOLs) of the ANC. The Company has included in accrued and other current liabilities the estimated liabilities ($166.4 million) related to the ANC transactions. The ANC obligation accrues interest, and has been collateralized by a $131.4 million letter of credit. During the three-year period ended December 31, 1983, the Company invested $305 million in tax-leasing transactions, varying in length from 4.5 to 25 years. These leases provided the Company with significant benefits from tax deductions in excess of taxable income for Federal income tax purposes. F-34 Note 8. Income Taxes (Continued) At December 31, 1993 and 1992, tax-leasing benefits received to date exceeded the original investment by $91 million and $106 million, respectively. These amounts are included in other liabilities and minority interests. In future years, taxable income will exceed deductions, which will result in a decline in the balance in other liabilities and minority interests. F-35 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Dollar amounts in millions Note 9. Notes Payable Notes payable consisted of the following at December 31: 1993 1992 ______________________________________________ Commercial Paper $82.9 $117.8 Bank Notes 6.2 10.5 Other 2.9 7.8 ______________________________________________ $92.0 $136.1 ______________________________________________ The Company has short-term borrowing agreements with several banks to provide up to $500 million of borrowings, all of which support a commercial paper program. At December 31, 1993, $417 million was available to the Company under these agreements. The Company also had other unused lines of credit of $79 million at December 31, 1993, all of which were in the form of non-U.S. credit facilities. None of these arrangements had material commitment fees or compensating balance requirements. F-36 Note 10. Lease Commitments Certain of the Company's operations are conducted from leased facilities, which are under operating leases that expire over the next two to 10 years. Rental expense under real estate operating leases for the years 1993, 1992 and 1991 was $168.9 million, $176.6 million, and $171.5 million, respectively. The approximate minimum annual rental expense for real estate operating leases that have remaining noncancelable lease terms in excess of one year, net of sublease rentals, at December 31, 1993, was (in millions): 1994 - $146.4; 1995 - $121.1; 1996 - $96.6; 1997 - $73.0; 1998 - $63.6; and an aggregate of $174.6 million thereafter. The Company also leases certain computer and other equipment under operating leases that expire over the next three to five years. These leases are frequently renegotiated or otherwise changed as advancements in computer technology produce opportunities to lower costs and improve performance. Rental expense under computer and other equipment leases was $96.8 million, $91.1 million and $88.2 million for 1993, 1992 and 1991, respectively. At December 31, 1993, the approximate minimum annual rental expense for computer and other equipment under operating leases and related agreements that have remaining noncancelable lease terms in excess of one year was (in millions): 1994 - $69.5; 1995 - $43.8; 1996 - $27.0; 1997 - $11.5; 1998- $4.9. In connection with the Company's acceleration of its ongoing efforts to achieve long-term productivity improvements, the Company intends to terminate a significant number of computer equipment and real estate leases (See Note 5 to the Consolidated Financial Statements). The estimated costs to terminate such leases have been included in accrued restructuring costs. F-37 Note 11. Capital Stock In October 1993, the Board of Directors authorized the Company to purchase up to 10 million shares of its common stock. During 1993, 8.3 million shares were repurchased under this share-repurchase program. In October 1988, the Company adopted a Shareowners' Rights Plan. The plan is intended to protect the shareowners' interests in the event of an unsolicited attempt to acquire the Company. The plan is not intended to prevent a takeover of the Company on terms that are favorable and fair to all shareowners and will not interfere with a merger approved by the Board of Directors. Under the plan, each share of the Company's common stock has a right which trades with the stock until the right becomes exercisable. Each right entitles the shareowners to buy 1/100 of a share of Series A participating preferred stock at a purchase price of $230, subject to adjustment. The rights will not be exercisable until a person or group (Acquiring Person) acquires beneficial ownership of, or commences a tender offer for, 20% or more of the Company's outstanding common stock. In the event the Company is acquired in a merger or other business combination, or subject to other transactions, as described in the Shareowners' Rights Plan, each right will entitle its holder (other than the Acquiring Person) to receive upon exercise, stock with a value of two times the exercise price in the form of the Company's common stock or where appropriate, the Acquiring Person's common stock. The Company may redeem the rights, which expire in October 1998, for $.01 per right, under certain circumstances. The shareowners have authorized the issuance of 10 million shares of $1 par value preferred stock. The preferred stock can be issued with varying terms, as determined by the Board of Directors. Under certain circumstances, the Company may not issue voting stock or securities convertible into voting stock of the Company without shareowner approval. F-38 Note 12. Litigation The Company and its subsidiaries are involved in legal proceedings, claims and litigation arising in the ordinary course of business. In addition, in March and April 1989, five purported class actions were commenced by certain shareowners (the "Shareowner Class Actions")against the Company and up to three members of its Board of Directors (two of whom are also officers) in various United States District Courts, each alleging violations of the federal securities laws and seeking unspecified damages arising out of an asserted failure to make public disclosure of information relating to allegedly improper practices (the "alleged practices") of the Company's wholly owned subsidiary, Dun & Bradstreet, Inc., in connection with the selling of commercial-credit information services. The Shareowner Class Actions were later consolidated in the United States District Court for the Southern District of New York. In February 1990, an amended consolidated Shareowner Class Action complaint was served on the defendants, alleging additional violations of the securities laws arising out of an asserted failure to make public disclosure of the effect that the alleged practices would have on the Company's future sales and income, and in September 1992, the District Judge granted a motion to permit this Action to be maintained as a class action. On April 16, 1993, attorneys for the defendants and attorneys for the plaintiffs entered into a memorandum of intent to settle the Shareowner Class Action for an amount between $15 million and $20 million. On January 14, 1994, a judgment was entered by the Court approving the proposed settlement. The exact amount of the settlement will depend on the monetary amount of claims filed by shareowners who are part of the class. As a result of contribution to the settlement by the Company's insurance carrier and provisions previously recorded by the Company, the amount of the settlement did not materially affect the Company's earnings. On June 9, 1993, American Credit Indemnity ("ACI"), a company of which the Company owns 95 percent of the outstanding common stock, received a summons and a consolidated amended class action complaint (the "Amended Complaint") in a purported class action pending in the United States District Court for the Southern District of New York captioned "In re Towers Financial Corporation Noteholders Litigation." The Amended Complaint names 17 defendants, including Towers Financial Corporation ("Towers") and various subsidiaries and controlling persons of Towers, as well as ACI, in addition to a "Broker-Dealer Defendant Class," alleged to consist of more than 75 members. The Amended Complaint is brought by an alleged class of persons who bought promissory notes issued by Towers between February 15, 1989 and February 9, 1993. It alleges that Towers, now operating under Chapter 11 of the Bankruptcy Code, sold nearly $215 million of such notes to more than 2,800 investors and seeks damages from all the defendants in at least that amount, as well as punitive damages. The claims against ACI assert negligent misrepresentation, negligence and fraud under common law and violations of Section 10(b) (and Rule 10b-5 thereunder) of the Securities Exchange Act of 1934. The Amended Complaint alleges that offering documents for the notes mischaracterized insurance policies issued by ACI to Towers with respect to accounts receivable securing or backing the notes. It further alleges that ACI issued policies with limited scope of coverage and for exorbitant premiums with knowledge that they would be used by Towers to fraudulently market the notes. ACI has denied the material allegations of the Amended Complaint and intends to defend vigorously against it. In the opinion of management, the outcome of all current proceedings, claims and litigation could have a material effect on quarterly or annual operating results when resolved in a future period. However, in the opinion of management, these matters will not materially affect the Company's consolidated financial position. F-39 The Dun & Bradstreet Corporation and Subsidiaries Notes to Consolidated Financial Statements continued Dollar amounts in millions Note 13. Supplemental Financial Data Accounts Receivable - Net: 1993 1992 ________________________________________________ Trade $1,090.4 $1,105.2 Less: allowance for doubtful accounts (79.2) (82.4) ________________________________________________ 1,011.2 1,022.8 Other 67.7 87.4 ________________________________________________ $1,078.9 $1,110.2 ________________________________________________ Other Current Assets: 1993 1992 _____________________________________________ Unbilled expenditures $ 61.9 $117.8 Deferred taxes 196.4 54.0 Prepaid expenses 97.7 90.1 Inventories 18.9 18.8 _____________________________________________ $374.9 $280.7 _____________________________________________ Property, Plant and Equipment - Net, carried at cost,less accumulated depreciation and amortization: 1993 1992 _____________________________________________ Buildings $409.4 $394.4 Machinery and Equipment 1,266.7 1,240.7 _____________________________________________ 1,676.1 1,635.1 Less: accumulated depreciation 923.8 884.1 _____________________________________________ 752.3 751.0 Leasehold improvements, less: accumulated amortization of $100.9 and $88.8 60.1 64.7 Land 48.7 49.1 _____________________________________________ $861.1 $864.8 _____________________________________________ Computer Software, Other Intangibles and Goodwill: Computer Other Goodwill Software Intangibles _______________________________________________________ January 1,1992 $263.2 $183.2 $961.2 Additions at cost 91.2 69.4 0 Amortization (90.1) (24.4) (37.6) Other deductions and reclassifications (17.5) (.1) (90.2) _____________________________________________________ December 31,1992 $246.8 $228.1 $833.4 Additions at cost 149.4 53.5 198.4 Amortization (92.2) (25.5) (38.8) Other deductions and reclassifications (9.5) (41.4) (50.6) ______________________________________________________ December 31,1993 $294.5 $214.7 942.4 ______________________________________________________ Accounts and Notes Payable: 1993 1992 ____________________________________________ Trade $77.1 $78.7 Customer advances 138.1 196.7 Taxes other than income taxes 34.9 32.6 Notes 92.0 136.1 Other 29.7 29.6 ____________________________________________ $371.8 $473.7 ____________________________________________ Accrued and Other Current Liabilities: 1993 1992 ____________________________________________ Salaries, wages, bonuses and other compensation $237.2 $214.7 Profit-sharing 31.4 36.0 Deferred revenues on uncompleted contracts 252.2 193.4 Postemployment benefits 200.0 0 Restructuring costs 187.1 127.0 Other 653.6 409.4 _____________________________________________ $1,561.5 $980.5 _____________________________________________ F-40 Dollar amounts in millions Note 14. Operations by Business Segments Financial information for each of the Company's five segments is set forth below:
Risk Management(2) and Business Marketing(1) Marketing Directory Other Information Information Software Information Business Services Services Services Services Services Total __________________________________________________________________________________________________________ Year Ended December 31, 1993 Operating Revenue $1,868.3 $1,564.2 $ 475.6 $ 450.7 $ 351.6 $4,710.4 Restructuring (Expense) Income - Net(3) $ (53.0) $ (97.0) $ (68.3) $ (14.9) $ (3.2) $ (236.4)(4) Segment Operating Income (Loss) $ 243.5 $ 307.6 $ (24.6) $ 170.3 $ 24.8 $ 721.6 General Corporate Expenses (169.1)(4) Non-Operating Income - Net 35.5 __________________________________________________________________________________________________________________ Income Before Provision for Income Taxes and Accounting Changes $ 588.0 Segment Depreciation and Amortization(5) $ 153.3 $ 87.6 $ 76.7 $ 15.8 $ 29.2 $ 362.6 Segment Capital Expenditures $ 109.6 $ 60.3 $ 33.5 $ 9.6 $ 13.1 $ 226.1 Identifiable Assets at December 31, 1993 $1,641.1 $1,393.5 $ 629.9 $ 500.6 $ 426.9 $4,592.0 __________________________________________________________________________________________________________________ Year Ended December 31, 1992 Operating Revenue $1,893.9 $1,520.6 $ 533.5 $ 419.4 $ 383.3 $4,750.7 Restructuring (Expense) Income - Net(3) $ (45.5) $ (8.6) $ (37.9) $ (7.3) $ 99.4 $ .1(4) Segment Operating Income (Loss) $ 257.2 $ 371.0 $ (19.2) $ 154.0 $ 149.8 $ 912.8 General Corporate Expenses (126.9)(4) Non-Operating Income - Net 9.3 __________________________________________________________________________________________________________________ Income Before Provision for Income Taxes $ 795.2 Segment Depreciation and Amortization(5) $ 150.6 $ 87.0 $ 81.2 $ 15.0 $ 33.3 $ 367.1 Segment Capital Expenditures $ 96.1 $ 49.4 $ 21.2 $ 6.4 $ 19.6 $ 192.7 Identifiable Assets at December 31, 1992 $1,580.1 $1,159.2 $ 702.0 $ 473.6 $ 415.5 $4,330.4 __________________________________________________________________________________________________________________ Year Ended December 31, 1991 Operating Revenue $1,831.7 $1,397.2 $ 556.9 $ 463.1 $ 402.1 $4,651.0 Restructuring Income (Expense) - Net(3) $ 77.0 $ (34.5) $ (13.6) $ (33.3) $ (.7) $ (5.1)(4) Segment Operating Income $ 362.5 $ 250.4 $ 29.2 $ 175.6 $ 36.1 $ 853.8 General Corporate Expenses (109.5)(4) Non-Operating Expense - Net (7.0) Income Before Provision for Income Taxes $ 737.3 Segment Depreciation and Amortization(5) $ 135.4 $ 81.0 $ 78.4 $ 13.2 $ 34.2 $ 342.2 Segment Capital Expenditures $ 78.7 $ 82.0 $ 25.7 $ 9.2 $ 25.1 $ 220.7 Identifiable Assets at December 31, 1991 $1,399.5 $1,196.6 $ 784.0 $ 502.1 $ 562.3 $4,444.5 __________________________________________________________________________________________________________________ (1) Nielsen Marketing Research's operating revenue was $1,051.8 in 1993, $1,123.8 in 1992 and $1,025.7 in 1991. (2) Operating revenue from worldwide credit services was $907.5 in 1993, $853.9 in 1992 and $795.9 in 1991. (3) See Note 5 to the Consolidated Financial Statements. (4) General Corporate Expenses include $41.1, $.1 and $9.9 of restructuring expense in 1993, 1992 and 1991, respectively. (5) Includes depreciation and amortization of Property, Plant and Equipment, Computer Software, Other Intangibles and Goodwill. F-41
The Dun & Bradstreet Corporation and Subsidiaries Note 14 continued Note 14. Operations by Business Segments (continued) Directory Information Services' operating revenue includes $110.2 million, $119.3 million and $133.1 million in 1993, 1992 and 1991, respectively, relating to the Company's share of earnings of DonTech, a partnership with Ameritech Advertising Services, Inc. As of December 31, 1993, DonTech assets and liabilities were as follows: current assets, $174.9 million; other assets, $32.8 million; current liabilities, $13.7 million. DonTech's December 31, 1992 assets and liabilities were as follows: current assets, $173.6 million; other assets, $22.5 million; current liabilities, $10.6 million; other liabilities, $8.9 million. In 1993, DonTech's revenues totaled $382.8 million compared to $387.9 million and $394.6 million in 1992 and 1991, respectively. Pre-tax income was $175.0 million, $192.3 million and $208.4 million in 1993, 1992 and 1991, respectively. At December 31, 1993 and 1992, the Company's investment in DonTech was $194.0 million and $176.6 million, respectively. Non-operating assets of $578.4 million, $584.5 million and $384.2 million at December 31, 1993, 1992 and 1991, respectively, included primarily cash and cash equivalents, marketable securities, other investments and deferred income taxes. These assets are not identified with business segments and represent the reconciling item between the identifiable assets shown and the Company's total assets. F-42 Dollar amounts in millions Note 15. Operations by Geographic Area Financial information by geographic area is summarized as follows. Inter-area sales were not significant.
Other United States Europe Non-U.S. Total 1993 Operating Revenue $2,938.9 $1,267.7 $503.8 $4,710.4 Restructuring Income (Expense) - Net(1) $ (215.8) $ (45.7) $(16.0) $ (277.5) Operating Income $ 368.0 $ 120.0 $ 64.5 $ 552.5 Identifiable Assets $2,754.9 $1,448.6 $388.5 $4,592.0 _______________________________________________________________________________ 1992 Operating Revenue $2,845.8 $1,418.6 $486.3 $4,750.7 Restructuring Income (Expense) - Net(1) $ 31.7 $ (29.2) $ (2.5) $ 0 Operating Income $ 560.4 $ 159.5 $ 66.0 $ 785.9 Identifiable Assets $2,691.8 $1,291.1 $347.5 $4,330.4 _________________________________________________________________________________ 1991 Operating Revenue $2,806.8 $1,363.0 $481.2 $4,651.0 Restructuring Income (Expense) - Net(1) $ 6.1 $ (17.6) $ (3.5) $ (15.0) Operating Income $ 541.8 $ 140.7 $ 61.8 $ 744.3 Identifiable Assets $2,802.8 $1,266.0 $375.7 $4,444.5 _________________________________________________________________________________ (1) See Note 5 to the Consolidated Financial Statements.
F-43 Dollar amounts in millions, except per share data Note 16. Quarterly Financial Data (Unaudited)
Three Months Ended _______________________________________________________ March 31 June 30 September 30 December 31 Year ___________________________________________________________________________________________ 1993 Operating Revenue $1,071.4 $1,161.6 $1,158.0 $1,319.4 $4,710.4 Restructuring Expense - Net $ - $ - $ - $(277.5) $ (277.5) Operating Income (Loss) $ 140.5 $ 191.6 $ 228.7 $ (8.3) $ 552.5 Income Before Cumulative Effect of Accounting Changes, Net of Income Taxes $ 105.2 $ 138.8 $ 158.5 $ 26.2 $ 428.7 Net (Loss) Income $ (285.4) $ 138.8 $ 158.5 $ 26.2 $ 38.1 Earnings Per Share Before Cumulative Effect of Accounting Changes (1) $.59 $.78 $.89 $.15 $2.42(2) _____________________________________________________________________________________________ 1992 Operating Revenue $1,108.4 $1,163.7 $1,190.4 $1,288.2 $4,750.7 Operating Income $ 143.4 $ 184.9 $ 216.0 $ 241.6 $ 785.9 Net Income $ 98.2 $ 128.8 $ 150.0 $ 176.5 $ 553.5 Earnings Per Share $.55 $.72 $.84 $.99 $3.10 (1) The sum of the quarterly earnings per share amounts in 1993 is not equal to the full year because the computations of the weighted average number of shares outstanding for each quarter and for the full year are made independently. (2) Includes $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7 million after-tax) which reduced earnings per share by $.94. F-44
The Dun & Bradstreet Corporation and Subsidiaries Ten-Year Selected Financial Data
All amounts except per share data, average number of shares outstanding and percentages are shown in millions of dollars 1993 1992 1991 1990 1989 _________________________________________________________ _______ _______ _______ _______ Continuing Operations: Operating Revenue 4,710.4 4,750.7 4,651.0 4,837.3 4,318.9 Costs and Expenses(1) 4,157.9 3,964.8 3,906.7 4,050.4 3,455.8 _________________________________________________________ _______ _______ _______ _______ Operating Income 552.5 785.9 744.3 786.9 863.1 Non-Operating Income(Expense) - Net 35.5 9.3 (7.0) (19.1) 49.0 _________________________________________________________ _______ _______ _______ _______ Income from Continuing Operations Before Provision for Income Taxes 588.0 795.2 737.3 767.8 912.1 Provision for Income Taxes 159.3 241.7 230.8 261.1 327.9 _________________________________________________________ _______ _______ _______ _______ Income from Continuing Operations 428.7 553.5 506.5 506.7 584.2 Income from Discontinued Operations, Net of Income Taxes 0 0 0 0 0 _________________________________________________________ _______ _______ _______ _______ Income from Operations, Net of Income Taxes(2) 428.7 553.5 506.5 506.7 584.2 _________________________________________________________ _______ _______ _______ _______ Cumulative Effect of Accounting Changes(3) (390.6) 0 0 0 (31.9) _________________________________________________________ _______ _______ _______ _______ Net Income 38.1 553.5 506.5 506.7 552.3 _________________________________________________________ _______ _______ _______ _______ Dividends 423.0 401.3 383.9 379.1 361.9 _________________________________________________________ _______ _______ _______ _______ Earnings Per Share of Common Stock: Continuing Operations 2.42(4) 3.10 2.84 2.79 3.13 Discontinued Operations .00 .00 .00 .00 .00 _________________________________________________________ _______ _______ _______ _______ Income from Operations(2) 2.42(4) 3.10 2.84 2.79 3.13 _________________________________________________________ _______ _______ _______ _______ Cumulative Effect of Accounting Changes(3) (2.19) .00 .00 .00 (.17) _________________________________________________________ _______ _______ _______ _______ Total .23 3.10 2.84 2.79 2.96 _________________________________________________________ _______ _______ _______ _______ Dividends Per Share 2.40 2.25 2.15 2.09 1.935 _________________________________________________________ _______ _______ _______ _______ Average Number of Shares Outstanding(in millions) 177.2 178.3 178.6 181.6 186.9 _________________________________________________________ _______ _______ _______ _______ As a Percentage of Operating Revenue: Operating Income 17.6(5) 16.5 16.0(1) 16.3 20.0 Income from Operations, Net of Income Taxes 12.6(6) 11.7 10.9 10.5 13.5 _________________________________________________________ _______ _______ _______ _______ Return on Average Shareowners' Equity % 34.6(6) 26.1 25.2(1) 24.7 28.1 _________________________________________________________ _______ _______ _______ _______ Shareowners' Equity 1,111.3 2,156.0 2,123.1 2,044.1 2,150.6 _________________________________________________________ _______ _______ _______ _______ Total Assets 5,170.4 4,914.9 4,828.7 4,810.3 5,264.5 _________________________________________________________ _______ _______ _______ _______ (1)Includes impact of $277.5, $15.0, $32.1, $35.3 and $50.7 million of restructuring expense - net in 1993, 1991, 1988, 1987 and 1986 respectively. (2)Excludes net gains (losses) from disposals of discontinued operations and the redeployment program of $12.5, ($.6), and $265.7 million, or $.07, $.00 and $1.43 per share, in 1987, 1986 and 1984, respectively. (3)Includes impact of $250.0 million or $1.40 per share for the adoption of SFAS No. 112 and $140.6 million or $.79 per share for the adoption of SFAS No. 106 in 1993. (See Note 2 to the Consolidated Financial Statements.) (4)$3.36 excluding $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sales of stock (totaling $256.5 million pre-tax and $166.7 million after-tax). (5)Excludes net restructuring expense of $277.5 million described in Note 5. (6)Excludes $277.5 million restructuring expense and $21.0 million gain from Gartner Group's sale of stock (totaling $256.5 million pre-tax and $166.7 million after-tax) described in Note 5 and the impact of the cumulative effect of the accounting changes described in Note 2. Including net restructuring expense of $166.7 million after-tax, Return on Average Shareowner's Equity is 24.9%. F-45
Ten-Year Selected Financial Data (CONTINUED)
All amounts except per share data, average number of shares outstanding and percentages are shown in millions of dollars 1988 1987 1986 1985 1984 _________________________________________________________ _______ _______ _______ _______ Continuing Operations: Operating Revenue 4,267.4 3,788.5 3,463.2 3,022.0 2,624.6 Costs and Expenses(1) 3,497.7 3,098.6 2,859.8 2,483.7 2,181.8 _________________________________________________________ _______ _______ _______ _______ Operating Income 769.7 689.9 603.4 538.3 442.8 Non-Operating Income(Expense) - Net 21.0 43.9 43.5 42.3 44.2 _________________________________________________________ _______ _______ _______ _______ Income from Continuing Operations Before Provision for Income Taxes 790.7 733.8 646.9 580.6 487.0 Provision for Income Taxes 291.7 295.4 270.0 257.3 210.5 _________________________________________________________ _______ _______ _______ _______ Income from Continuing Operations 499.0 438.4 376.9 323.3 276.5 Income from Discontinued Operations, Net of Income Taxes 0 .6 2.3 1.5 4.1 _________________________________________________________ _______ _______ _______ _______ Income from Operations, Net of Income Taxes(2) 499.0 439.0 379.2 324.8 280.6 _________________________________________________________ _______ _______ _______ _______ Cumulative Effect of Accounting Changes(3) 0 0 0 0 0 _________________________________________________________ _______ _______ _______ _______ Net Income 499.0 439.0 379.2 324.8 280.6 _________________________________________________________ _______ _______ _______ _______ Dividends 288.1 226.8 193.2 164.5 126.1 _________________________________________________________ _______ _______ _______ _______ Earnings Per Share of Common Stock: Continuing Operations 2.67 2.36 2.03 1.74 1.49 Discontinued Operations .00 .00 .01 .01 .02 _________________________________________________________ _______ _______ _______ _______ Income from Operations(2) 2.67 2.36 2.04 1.75 1.51 _________________________________________________________ _______ _______ _______ _______ Cumulative Effect of Accounting Changes(3) .00 .00 .00 .00 .00 _________________________________________________________ _______ _______ _______ _______ Total 2.67 2.36 2.04 1.75 1.51 _________________________________________________________ _______ _______ _______ _______ Dividends Per Share 1.68 1.445 1.235 1.06 .905 _________________________________________________________ _______ _______ _______ _______ Average Number of Shares Outstanding(in millions) 187.1 186.1 185.9 185.7 185.5 _________________________________________________________ _______ _______ _______ _______ As a Percentage of Operating Revenue: Operating Income 18.0(1) 18.2(1) 17.4(1) 17.8 16.9 Income from Operations, Net of Income Taxes 11.7 11.6 10.9 10.7 10.7 _________________________________________________________ _______ _______ _______ _______ Return on Average Shareowners' Equity % 25.2(1) 25.0(1) 24.4(1) 23.6 23.0 _________________________________________________________ _______ _______ _______ _______ Shareowners' Equity 2,093.2 1,899.3 1,650.9 1,474.0 1,311.8 _________________________________________________________ _______ _______ _______ _______ Total Assets 5,023.8 3,753.7 3,484.0 2,949.5 2,486.8 _________________________________________________________ _______ _______ _______ _______ F-45
EX-3 6 EXHIBIT-E EXHIBIT E BY-LAWS OF THE DUN & BRADSTREET CORPORATION December 15, 1993 THE DUN & BRADSTREET CORPORATION BY-LAWS ARTICLE I. STOCKHOLDERS. Section 1. The annual meeting of the stockholders of the corporation for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting shall be held on such date, and at such time and place within or without the State of Delaware as may be designated from time to time by the Board of Directors. Section 2. Special meetings of the stockholders may be held upon call of the Board of Directors, the Chairman of the Board or the President (and shall be called by the Chairman of the Board or the President at the request in writing of stockholders owning a majority of the outstanding shares of the corporation entitled to vote at the meeting) at such time and at such place within or without the State of Delaware, as may be fixed by the Board of Directors, the Chairman of the Board or the President or by the stockholders owning a majority of the outstanding shares of the corporation so entitled to vote, as the case may be, and as may be stated in the notice setting forth such call. Section 3. Except as otherwise provided by law, notice of the time, place and purpose or purposes of every meeting of stockholders shall be delivered personally or mailed not earlier than sixty, nor less than ten days previous thereto, to each stockholder of record entitled to vote at the meeting at such address as appears on the records of the corporation. Notice of any meeting of stockholders need not be given to any stockholder who shall waive notice thereof, before or after such meeting, in writing, or to any stockholder who shall attend such meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Section 4. A majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders. If there be no such quorum present in person or by proxy, the holders of a majority of such shares so present or represented may adjourn the meeting from time to time. Section 5. Meetings of the stockholders shall be presided over by the Chairman of the Board or, if such officer is not present, by the President or a Vice President or, if no such officer is present, by a chairman to be chosen at the meeting. The Secretary of the corporation or, in such officer's absence, an Assistant Secretary shall act as secretary of the meeting. If neither the Secretary nor an Assistant Secretary is present, the chairman shall appoint a secretary. Section 6. Each stockholder entitled to vote at any meeting may vote in person or by proxy for each share of stock held by such stockholder which has voting power upon the matter in question at the time but no proxy shall be voted on after one year from its date. Section 7. All elections of directors shall be by written ballot and shall be determined by a plurality of the voting power present in person or represented by proxy and entitled to vote. All other voting need not be by written ballot, except upon demand therefor by the Board of Directors or the officer of the corporation presiding at the meeting of stockholders where the vote is to be taken. Except as otherwise provided by law, in all matters other than the election of directors, the affirmative vote of the majority of the voting power present in person or represented by proxy and entitled to vote shall be the act of the stockholders. The chairman of each meeting at which directors are to be elected shall appoint two inspectors of election, unless such appointment shall be unanimously waived by those stockholders present or represented by proxy at the meeting and entitled to vote at the election of directors. No director or candidate for the office of director shall be appointed as such inspector. The inspectors shall first take and subscribe an oath or affirmation faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of their ability, and shall take charge of the polls and after the balloting shall make a certificate of the result of the vote taken. Section 8. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall be not more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If for any reason the Board of Directors shall not have fixed a record date for any such purpose, the record date for such purpose shall be determined as provided by law. Only those stockholders of record on the date so fixed or determined shall be entitled to any of the foregoing rights, notwithstanding the transfer of any such stock on the books of the corporation after any such record date so fixed or determined. ARTICLE II. BOARD OF DIRECTORS. Section 1. The Board of Directors of the corporation shall consist of such number of directors, not less than three, as shall from time to time be fixed by resolution of the Board of Directors. The directors shall be divided into three classes in the manner set forth in the Certificate of Incorporation of the corporation, each class to be elected for the term set forth therein. A majority of the total number of directors shall constitute a quorum for the transaction of business and, except as otherwise provided by law or by the corporation's Certificate of Incorporation, the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. Directors need not be stockholders. Section 2. Vacancies in the Board of Directors shall be filled by a majority of the remaining directors, though less than a quorum; and in case of an increase in the number of directors, the additional directors shall be elected by a majority of the directors in office at the time of increase, though less than a quorum; and the directors so chosen shall hold office for a term as set forth in the Certificate of Incorporation of the corporation. Section 3. Meetings of the Board of Directors shall be held at such place within or without the State of Delaware as may from time to time be fixed by resolution of the Board or as may be specified in the notice of call of any meeting. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board and special meetings may be held at any time upon the call of the Chairman of the Board or the President, by oral, telegraphic or written notice, duly served on or sent or mailed to each director not less than one day before the meeting. The notice of any meeting need not specify the purposes thereof. A meeting of the Board may be held without notice immediately after the annual meeting of stockholders at the same place at which such meeting is held. Notice need not be given of regular meetings of the Board held at times fixed by resolution of the Board. Notice of any meeting need not be given to any director who shall attend such meeting in person or who shall waive notice thereof, before or after such meeting, in writing. Section 4. The Board of Directors may, by resolution or resolutions, passed by a majority of the whole Board, designate one or more committees, each committee to consist of three or more of the Directors of the corporation which, to the extent provided in said resolution or resolutions, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. A majority of the members of a committee shall constitute a quorum for the transaction of its business. In the absence or disqualification of any member of any such committee or committees, but not in the case of a vacancy therein, the member or members thereof present at any meeting and not disqualified from voting, whether or not the member or members constitute a quorum, may unanimously appoint another member of the Board of Directors, who is not an officer of the corporation or any of its subsidiaries, to act at the meeting for all purposes in the place of any such absent or disqualified member. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. ARTICLE III. OFFICERS. Section 1. The Board of Directors, as soon as may be after each annual meeting of the stockholders, shall elect officers of the corporation, including a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors may also from time to time appoint such other officers (including one or more Assistant Vice Presidents, and one or more Assistant Secretaries and one or more Assistant Treasurers) as it may deem proper or may delegate to any elected officer of the corporation the power so to appoint and remove any such other officers and to prescribe their respective terms of office, authorities and duties. Any Vice President may be designated Executive, Senior or Corporate, or may be given such other designation or combination of designations as the Board of Directors may determine. Any two offices may be held by the same person. The Chairman of the Board and the President shall be chosen from among the Directors. Section 2. All officers of the corporation elected or appointed by the Board of Directors shall hold office until their respective successors are chosen and qualified. Any officer may be removed from office at any time either with or without cause by the affirmative vote of a majority of the members of the Board then in office, or, in the case of appointed officers, by any elected officer upon whom such power of removal shall have been conferred by the Board of Directors. Section 3. Each of the officers of the corporation elected or appointed by the Board of Directors shall have the powers and duties prescribed by law, by the By-Laws or by the Board of Directors and, unless otherwise prescribed by the By-Laws or by the Board of Directors, shall have such further powers and duties as ordinarily pertain to that office. The Chairman of the Board or the President, as determined by the Board of Directors, shall be the Chief Executive Officer and shall have the general direction of the affairs of the corporation. Any officer, agent, or employee of the corporation may be required to give bond for the faithful discharge of such person's duties in such sum and with such surety or sureties as the Board of Directors may from time to time prescribe. Section 4. There shall be a Controller who shall exercise general supervision of and be responsible for the efficient operation of the Accounting Department of the corporation. The Controller shall be consulted in the preparation of the annual budget of the corporation and shall render to the Chief Executive Officer from time to time and to the Board of Directors at each of the regular meetings of the Board statements necessary to keep them informed of the earnings, expenses and condition of the corporation, and shall bring to their notice any and all matters which the Controller may deem desirable to submit to their attention for the successful conduct of the business. ARTICLE IV. CERTIFICATES OF STOCK. Section 1. The interest of each stockholder of the corporation shall be evidenced by a certificate or certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The shares in the stock of the corporation shall be transferable on the books of the corporation by the holder thereof in person or by such holder's attorney, upon surrender for cancellation of a certificate or certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the corporation or its agents may reasonably require. Section 2. The certificates of stock shall be signed by such officer or officers as may be permitted by law to sign (except that where any such certificate is countersigned by a transfer agent other than the corporation or its employee, or by a registrar other than the corporation or its employee, the signatures of any such officer or officers may be facsimilies), and shall be countersigned and registered in such manner, all as the Board of Directors may by resolution prescribe. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been issued by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer or officers of the corporation. Section 3. No certificate for shares of stock in the corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of such loss, theft or destruction and upon delivery to the corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors in its discretion may require. Section 4. As used in these By-Laws, the word "alien" shall be construed to include the following or their representatives: any individual not a citizen of the United States of America; a partnership unless a majority of the partners are citizens of the United States of America and have a majority interest in the partnership profits; a foreign government, a corporation, joint stock company or association organized under the laws of a foreign country; and any other corporation, joint stock company or association controlled directly or indirectly by one or more of the above. Not more than one-fourth of the aggregate number of shares of stock of the corporation outstanding shall at any time be owned of record or voted by or for the account of aliens. If the corporation is at any time controlled directly or indirectly by any other corporation of which any officer or more than one-fourth of the directors are aliens, or of which more than one-fourth of the capital stock is owned of record or voted by or for the account of aliens, then such other corporation shall, so long as such condition continues to exist, have no voting, dividend, or other rights with respect to the shares of this corporation which it owns, except the right to transfer such shares in such manner that such condition will cease to exist. The ownership of record of shares of stock by or for the account of aliens, and the citizenship of transferees, thereof, shall be determined in conformity with regulations prescribed by the Board of Directors. There shall be maintained separate stock records, a domestic record covering citizen stockholders and a foreign record covering alien stockholders. Every certificate representing stock issued or transferred to an alien shall be marked "Foreign Share Certificate," but under no circumstances shall certificates representing more than one-fourth of the aggregate number of shares outstanding at any one time be so marked, nor shall the total amount of stock represented by Foreign Share Certificates, plus the amount of stock owned by or for the account of aliens and represented by certificates not so marked, exceed one-fourth of the aggregate number of shares outstanding. Every certificate issued not marked "Foreign Share Certificate" shall be marked "Domestic Share Certificate." All stock represented by Foreign Share Certificates may be transferred to aliens or to citizens. If, and so long as, the stock records of the corporation shall disclose one-fourth alien stock ownership, no transfers of shares of domestic record to aliens shall be made. If, and so long as, the stock records of the corporation shall disclose one-fourth alien stock ownership and shall be found by the corporation that stock of domestic record is, in fact, held by or for the account of an alien, the holder of such stock shall not be entitled to vote, to receive dividends, or to any other rights, except the right to transfer such stock to a citizen of the United States of America. The directors shall be authorized at any time and from time to time to adopt such other provisions as the directors may deem necessary or desirable to avoid violation of the provisions of Section 310(a) of the Federal Communications Act as now in effect or as it may hereafter from time to time be amended, and to carry out the provisions of this Article IV, Section 4, and of Article Fifth of the Certificate of Incorporation of the corporation. ARTICLE V. CORPORATE BOOKS. The books of the corporation may be kept outside of the State of Delaware at such place or places as the Board of Directors may from time to time determine. ARTICLE VI. CHECKS, NOTES, PROXIES, ETC. All checks and drafts on the corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers or agent or agents as shall be thereunto authorized from time to time by the Board of Directors. Proxies to vote and consents with respect to securities of other corporations owned by or standing in the name of the corporation may be executed and delivered from time to time on behalf of the corporation by the Chairman of the Board, the President, or by such officers as the Board of Directors may from time to time determine. ARTICLE VII. FISCAL YEAR. The fiscal year of the corporation shall begin on the first day of January in each year and shall end on the thirty-first day of December following. ARTICLE VIII. CORPORATE SEAL. The corporate seal shall have inscribed thereon the name of the corporation. In lieu of the corporate seal, when so authorized by the Board of Directors or a duly empowered committee thereof, a facsimile thereof may be impressed or affixed or reproduced. ARTICLE IX. OFFICES. The corporation and the stockholders and the directors may have offices outside of the State of Delaware at such places as shall be determined from time to time by the Board of Directors. ARTICLE X. AMENDMENTS. Subject to any limitations that may be imposed by the stockholders, the Board of Directors may make by-laws and from time to time may alter, amend or repeal any by-laws, but any by-laws made by the Board of Directors or the stockholders may be altered, amended or repealed by the stockholders at any annual meeting or at any special meeting, provided that notice of such proposed alteration, amendment or repeal is included in the notice of such meeting. E-1 EX-10 7 EXHIBIT-F EXHIBIT F THE DUN & BRADSTREET CORPORATION NONFUNDED DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (As Amended on April 21, 1993) _______________________________ 1. Directors who are not employees of The Dun & Bradstreet Corporation (the "Company") or any of its subsidiaries may elect on or before December 31 of any year to have payment of all or a specified part of all fees payable to them for their services as Directors (including fees payable to them for services as members of a committee of the Board) during the calendar year following such election and succeeding calendar years deferred until they cease to be Directors of the Company. Any person, not an employee, who shall become a Director during any calendar year, and who was not a Director of the Company on the preceding December 31, may elect, before the term as a Director begins, to have payment of all or a specified part of such fees for the remainder of such calendar year and for succeeding calendar years so deferred. Any such election shall be made by written notice delivered to the Secretary of the Company. 2. All deferred fees shall be held in the general funds of the Company, shall be credited to the Director's account and shall bear interest from the date the deferred fee would otherwise have been paid to the Director until it is actually paid at a rate for each quarter equal to the higher of (a) the effective annual rate of interest being earned, as of January 1 of each year, in the Special Fixed Income Fund (C) of the Investment Plan Addendum to the Company's Profit Participation Plan, or (b) the average rate during such quarter for the U.S. Government Securities Fund (D) of such Investment Plan Addendum, such interest to be credited to the Director's account and compounded at the end of each calendar quarter. 3. The aggregate amount of deferred fees, together with interest accrued thereon, credited to theaccount of any Director shall be paid to the Director in five or ten annual installments or in a lump sum, as the Director shall elect in the notice referred to in paragraph 1 above. The first installment (or lump sum payment if the Director so elects) shall be paid on the tenth day of the calendar year immediately following the calendar year in which the Director ceases to be a Director of the Company, and subsequent installments shall be made on the tenth day of each succeeding calendar year until the entire amount credited to the Director's account shall have been paid. The amount of each installment shall be determined by multiplying the balance credited to the Director's account as of the December 31 immediately preceding the installment payment date by a fraction, the numerator of which shall be one and the denominator of which shall be the number of installment payments over which payment of such amount is to be made, less the number of installments theretofore made. Thus, if payment is to be made in ten installments, the fraction for the first installment shall be 1/10th, for the second installment 1/9th, and so on. 4. If a Director should die before full payment of all amounts credited to the Director's account, the full amount credited to the account as of December 31 of the year of the Director's death shall be paid on the tenth day of the calendar year following the year of death to the Director's estate or to such beneficiary or beneficiaries as previously designated by the Director in a written notice delivered to the Secretary of the Company. 5. A Director's election to defer compensation shall continue until a Director ceases to be a Director or until the Director changes or terminates such election by written notice delivered to the Secretary of the Company. Any such notice of change or termination shall become effective as of the end of the calendar year in which such notice is given. Amounts credited to the account of a Director prior to the effective date of such change or termination shall not be affected thereby and shall be paid to the Director only in accordance with paragraph 3 (or paragraph 4 in the event of death) above. 6. The right of a Director to any deferred fees and/or the interest thereon shall not be subject to assignment by the Director. If a Director does make an assignment of any deferred fees and/or the interest thereon, the Company may disregard such assignment and discharge its obligation hereunder by making payment as though no such assignment had been made. 7. If there is a "Change in Control" of the Company,as defined in paragraph 8: a) The total amount to the credit of each Director's account under the Plan shall be paid to the Director in a lump sum within 30 days from the date of such Change in Control; provided, however, if such payment is not made within such 30-day period, the amount to the credit of the Director's account shall be credited with interest from the date of such Change in Control until the actual payment date at an annual rate equal to the yield on 90-day U.S. Treasury Bills plus one percentage point. For this purpose the yield on U.S. Treasury Bills shall be the rate published in The Wall Street Journal on the first business day of the calendar month in which the Change in Control occurred. b)The total amount credited to each Director's account under the Plan from the date of the Change in Control until the date the Director ceases to be a Director shall be paid to the Director in a lump sum within 30 days from the date the Director ceases to be a Director. c)If a Director elects to change or terminate an election with respect to the deferral of fees by written notice delivered to the Secretary of the Company, and such notice is given during the calendar year in which a Change in Control occurs and on or before the date of the Change in Control, the change or termination of election shall become effective as of the date of the Change in Control. If such notice is given subsequent to the date of the Change in Control, it shall become effective as of the end of the calendar year in which the notice is given. 8. A "Change in Control" of the Company shall mean the occurrence of any of the following events: (a)Any "person," as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; (b)during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new Director (other than a Director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) of this Section) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then still in office who either were Directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute at least a majority thereof; (c) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (1) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of the Company's then outstanding securities; (d) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. 9. Notwithstanding any provision herein to the contrary, amounts payable under this Plan shall not be funded and shall be made out of the general funds of the Company; provided, however, that the Company reserves the right to establish one or more trusts to provide alternate sources of benefit payments under this Plan, provided, further, however, that upon the occurrence of a "Potential Change in Control" of the Company, as defined below, the appropriate officers of the Company are authorized to make transfers to such a trust fund, established as an alternate source of benefits payable under the Plan, as are necessary to fund the lump sum payments to Directors required pursuant to Paragraph 7 of this Plan in the event of a Change in Control of the Company; provided, further, however, that if payments are made from such trust fund, such payments will satisfy the Company's obligations under this Plan to the extent made from such trust fund. For the purposes of this Plan, "Potential Change in Control" means: (a)the Company enters into an agreement, theconsummation of which would result in the occurrence of a Change in Control of the Company; (b)any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control of the Company; (c)any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company (or a company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), who is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company's then outstanding securities, increases such person's beneficial ownership of such securities by 5% or more over the percentage so owned by such person; or (d)the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Plan, a Potential Change in Control of the Company has occurred. 10. The Executive Compensation and Stock Option Committee of the Board (the "Committee") shall be responsible for the administration of the Plan and may delegate to any management committee, employee, Director or agent its responsibility to perform any act hereunder, including without limitation those matters involving the exercise of discretion, provided that such delegation shall be subject to revocation at any time at its discretion. The Committee shall have full authority to interpret the provisions of the Plan and construe all of its terms, to adopt, amend, and rescind rules and regulations for the administration of the Plan, and generally to conduct and administer the Plan and to make all determinations in connection with the Plan as may be necessary or advisable, other than those determinations delegated to management employees or independent third parties by the Board. All of its rules, interpretations and decisions shall be applied in a uniform manner to all Directors similarly situated and decisions of the Committee shall be conclusive and binding on all persons. 11. The Plan may be modified, amended or revoked at any time by the Board of Directors of the Company. Adopted by Executive Committee: December 23, 1975 Amended by Board of Directors effective: January 1, 1977 January 1, 1982 September 20, 1989 December 19, 1990 April 21, 1993 F-1 EX-10 8 EXHIBIT-G EXHIBIT G RESTRICTED STOCK AGREEMENT UNDER THE 1989 PLAN This Agreement confirms the restricted stock award made by THE DUN & BRADSTREET CORPORATION (the "Company") to: ________________________ (the "Employee") of _____ shares of its Common Stock, par value $1 per share ("Restricted Shares"). These Restricted Shares are awarded in accordance with and are subject to all the terms and conditions of the 1989 Key Employees Restricted Stock Plan for The Dun & Bradstreet Corporation and Subsidiaries (the "1989 Plan"). Certificates issued in respect of the Restricted Shares shall be registered in the name of the Employee and shall bear the following legend, or any other similar legend as may be required by the Company: "The transferability of this certificate and the shares of stock represented hereby is subject to the terms and conditions (including forfeiture) of the 1989 Key Employees Restricted Stock Plan for The Dun & Bradstreet Corporation and Subsidiaries and an Agreement entered into between the registered owner and The Dun & Bradstreet Corporation. Copies of such Plan and the Agreement are on file in the offices of The Dun & Bradstreet Corporation, 299 Park Avenue, New York, New York 10171." Except as otherwise provided in this Agreement and the 1989 Plan, the Employee shall have all the rights of a shareowner of the Company with respect to the Restricted Shares, including the right to vote the shares and receive dividends and other distributions. However, until the Restricted Shares are released to the Employee as set forth below, the Employee may not sell, transfer, pledge or otherwise dispose of the Restricted Shares. The stock certificates evidencing the Restricted Shares shall be held in custody by a bank or other institution, or by the Company itself, until such shares are forfeited in accordance with the 1989 Plan, or until the restrictions thereon shall have lapsed as set forth below. The Employee hereby agrees as a condition to the award of the Restricted Shares to deliver to the Company, together with this Agreement, a stock power endorsed in blank relating to the Restricted Shares covered by this award, so that, in the event of a forfeiture of the award, the Restricted Shares will be transferred to the Company. Subject to earlier forfeiture of the Restricted Shares as provided in the 1989 Plan, a maximum of _____ such shares will be released to the Employee free of all restrictions, and delivered to the Employee on __________, 1996 based on achievement of previously set performance measures as outlined in the transmittal letter accompanying this Agreement. Subject to certain exceptions in the 1989 Plan, the Restricted Shares will be forfeited upon the Employee's termination of employment prior to release of the Restricted Shares to the Employee. Any Restricted Shares not released to the Employee as provided above also will be forfeited. The Employee hereby agrees to pay to the Company promptly upon request an amount equal to any taxes the Company determines it is required to withhold in respect of the grant of the Restricted Shares, and any dividend payments or the lapse of the restrictions on the Restricted Shares, and/or to authorize the Company to withhold shares having a value equal to the amount of such taxes from any shares deliverable to the Employee following the lapse of the restrictions. IN WITNESS WHEREOF, The Dun & Bradstreet Corporation has caused this Agreement to be executed in duplicate by its officer thereunto duly authorized. THE DUN & BRADSTREET CORPORATION By ___________________________________ Assistant Treasurer The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Agreement and acknowledges receipt of a copy of the 1989 Key Employees Restricted Stock Plan for The Dun & Bradstreet Corporation and Subsidiaries. _______________________________________________________ Date Employee G-1 EX-10 9 EXHIBIT-H AGREEMENT OF LIMITED PARTNERSHIP OF D&B INVESTORS L.P., A DELAWARE LIMITED PARTNERSHIP This AGREEMENT OF LIMITED PARTNERSHIP is entered into and shall be effective as of the 14th day of October, 1993, by and among The Reuben H. Donnelley Corporation ('RHDC'), a Delaware corporation, Dun & Bradstreet, Inc. ('DBI'), a Delaware corporation, and IMS America, Ltd. ('IMS'), a New Jersey corporation, as the General Partners (with RHDC as the Managing General Partner), and RBDB, LLC ('RBDB'), a Delaware limited liability company, as the Limited Partner, pursuant to the provisions of the Delaware Revised Uniform Limited Partnership Act, on the following terms and conditions: THE PARTNERSHIP 1.1 Formation. The Partners hereby agree to form the Partnership as a limited partnership pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. 1.2 Name. The name of the Partnership shall be D&B Investors L.P., a Delaware limited partnership, and all business of the Partnership shall be conducted in such name. 1.3 Purpose. The purpose of the Partnership is to acquire, subject to the terms of this Agreement, certain stocks, bonds, notes, debentures, puts, calls, options, warrants and other financial instruments or securities as further described and limited in this Agreement, and to manage, protect, and conserve the assets of the Partnership, and to engage in any and all activities related or incidental thereto. 1.4 Principal Place of Business. The principal place of business of the Partnership shall be c/o the Managing General Partner. The General Partners may change the principal place of business of the Partnership upon ten (10) Business Days' notice to the Limited Partner. 1.5 Term. The term of the Partnership shall commence on the date the certificate of limited partnership described in Section 201 of the Act (the 'Certificate') is filed in the office of the Secretary of State of Delaware in accordance with the Act and shall continue until the winding up and liquidation of the Partnership and its business is completed following a Liquidating Event, as provided in Section 12 hereof. 1.6 Filings; Agent for Service of Process. (a) The Managing General Partner shall execute and cause to be filed the Certificate in the office of the Secretary of State of Delaware in accordance with the provisions of the Act. The Managing General Partner shall take any and all other actions reasonably necessary to perfect and maintain the status of the Partnership as a limited partnership under the laws of Delaware, including executing and filing amendments to the Certificate to be filed whenever required by the Act. (b) The Managing General Partner shall execute and cause to be filed original or amended Certificates and shall take any and all other actions as may be reasonably necessary to perfect and maintain the status of the Partnership as a limited partnership or similar type of entity under the laws of any other states or jurisdictions in which the Partnership engages in business. (c) The registered agent for service of process on the Partnership shall be CT Corporation System or any successor as appointed by the Managing General Partner in accordance with the Act. The registered office of the Partnership in the state of Delaware is located at 1209 Orange Street, City of Wilmington, Delaware 19801. (d) Upon the dissolution of the Partnership, the Managing General Partner or any other General Partner (or, in the event there is no remaining General Partner, any Person elected pursuant to Section 12.2 hereof) shall promptly execute and cause to be filed certificates of dissolution in accordance with the Act and the laws of any other states or jurisdictions in which the Partnership has filed certificates. 1.7 Independent Activities; Transactions with Affiliates; Title to Property. (a) The Managing General Partner and any of its Affiliates shall be required to devote only such time to the affairs of the Partnership as the Managing General Partner determines in its sole discretion may be necessary to manage and operate the Partnership, and each such Person, to the extent not otherwise directed by the Managing General Partner, shall be free to serve any other Person or enterprise in any capacity that it may deem appropriate. (b) To the extent permitted by applicable law and except as otherwise provided in this Agreement, the General Partners (each acting on its own behalf) and the Limited Partner (acting on its own behalf) and each of their Affiliates may engage in whatever activities they choose, whether the same are competitive with the Partnership or otherwise, without having or incurring any obligation to offer any interest in such activities to the Partnership or any Partner, and neither this Agreement nor any activity undertaken pursuant hereto shall prevent any Partner or its Affiliates from engaging in such activities, or require any Partner to permit the Partnership or any Partner or its Affiliates to participate in any such activities, and as a material part of the consideration for the execution of this Agreement by each Partner, each Partner hereby waives, relinquishes, and renounces any such right or claim of participation. (c) Except as otherwise provided in this Agreement, the Managing General Partner, when acting on behalf of the Partnership, is hereby authorized to purchase property from, sell property to, or otherwise deal with any Partner, acting on its own behalf, or any Affiliate of any Partner, provided that any such purchase, sale or other transaction shall be made on terms and conditions which are no less favorable to the Partnership than if the sale, purchase or other transaction had been entered into with an independent third party. (d) All property owned by the Partnership shall be held in the name of the Partnership. 1.8 Definitions. Capitalized words and phrases used in this Agreement have the following meanings: 'Act' means the Delaware Revised Uniform Limited Partnership Act, as set forth in Del. Code Ann. tit. 6, SS SS 17-101 to 17-1109 (1990), as amended from time to time (or any corresponding provisions of succeeding law). 'Adjusted Capital Account Deficit' means, with respect to any Partner, the deficit balance, if any, in such Partner's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (i) Credit to such Capital Account any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement; and (ii) Debit to such Capital Account the items described in Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be applied in a manner consistent with such intent. 'Affiliate' means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any Person owning or controlling 10% or more of the outstanding voting interests of such Person, (iii) any officer, director or general partner of such Person, or (iv) any Person who is an officer, director, general partner, trustee, or holder of 10% or more of the voting interests of any Person described in clauses (i) through (iii) of this sentence. For purposes of this definition, the term 'control,' (including, with correlative meanings, the terms 'controlling,' 'controlled by' or 'under common control with') means the possession, direct or 2 indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 'Bankruptcy' means, with respect to any Person, a 'Voluntary Bankruptcy' or an 'Involuntary Bankruptcy.' A 'Voluntary Bankruptcy' means, with respect to any Person, the inability of such Person generally to pay its debts as such debts become due, or an admission in writing by such Person of its inability to pay its debts generally or a general assignment by such Person for the benefit of creditors; the filing of any petition or answer by such Person seeking to adjudicate it a bankrupt or insolvent, or seeking for itself any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of such Person or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking, consenting to, or acquiescing in the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for such Person or for any substantial part of its property; or partnership or corporate action taken by such Person to authorize any of the actions set forth above. An 'Involuntary Bankruptcy' means, with respect to any Person, without the consent or acquiescence of such Person, the entering of an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation, or the filing of any such petition against such Person which petition shall not be dismissed within thirty (30) days, or, without the consent or acquiescence of such Person, the entering of an order appointing a trustee, custodian, receiver or liquidator of such Person or of all or any substantial part of the property of such Person which order shall not be dismissed within thirty (30) days. 'Business Day' means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. 'Capital Account' means, with respect to any Partner, the Capital Account maintained for such Partner in accordance with the rules of Section 1.704-1(b)(2)(iv) of the Regulations. Subject thereto: (i) To each Partner's Capital Account there shall be credited such Partner's Capital Contributions (net of liabilities which the Partnership is considered to assume or to take subject to under Code Section 752) and such Partner's distributive share of Profits and any items in the nature of income or gain which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof. (ii) To each Partner's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Property distributed to such Partner pursuant to any provision of this Agreement (net of liabilities which such Partner is considered to assume or to take subject to under Code Section 752) and such Partner's distributive share of Losses and any items in the nature of expenses or losses which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof. (iii) In the event all or a portion of an Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Interest. The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 1.704-1(b) of the Regulations, and they shall be interpreted and applied in a manner consistent with such Regulations. 'Capital Contribution' means, with respect to any Partner, the amount of money and the initial Gross Asset Value of any property (other than money) contributed to the Partnership with respect to the Interest held by such Partner. 'Certificate' has the meaning set forth in Section 1.5 hereof. 'Code' means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). 'Currency Agreement' means, with respect to any Person, any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in currency values. 'Debt' means, with respect to any Person, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including 3 reimbursement obligations with respect thereto), (iv) all obligations of such Person to pay the deferred purchase price of property or services, (v) all obligations of such Person arising from any short sales, the writing of options, forward contracts or similar transactions, (vi) all obligations of such Person as lessee which would be capitalized in accordance with GAAP, (vii) all obligations secured by any mortgage, pledge, security interest, encumbrance, lien or charge of any kind on any asset of such Person, whether or not any such obligation is otherwise an obligation of such Person, (viii) to the extent not otherwise included in the definition, obligations under Currency Agreements and Interest Rate Agreements, and (ix) all obligations of others, of a type described in (i) through (viii) above, that are directly or indirectly guaranteed (whether contingently or otherwise) by such Person; provided that Debt shall not include any indebtedness of such Person to a Parent incurred in the ordinary course of business consistent with past practice resulting from the cash management system maintained by such Parent. 'Fair Market Value' means as to any date (i) if a security is registered under the Securities Exchange Act of 1934, as amended (or any corresponding provisions of succeeding law) and listed on a national securities exchange or included on the NASDAQ National Market Issues List ('NASDAQ'), the closing sales price on such date (or in the event such date is not a Business Day, the Business Day immediately preceding such date), and (ii) if a security is not traded on a national securities exchange or listed on NASDAQ or the value otherwise cannot be determined under clause (i), the average of the firm prices bid for such date quoted by Morgan Stanley & Co. Incorporated, Salomon Brothers Inc. and The First Boston Corporation, in each case for the full amount of the specific security for which the Fair Market Value is being determined. 'Fiscal Quarter' means (i) the period commencing on the effective date of this Agreement and ending on December 31, 1993, (ii) any subsequent three-month period commencing on each of January 1, April 1, July 1, or October 1 and (iii) any portion of a period described in clause (ii) that ends on the date the Partnership is liquidated. 'Fiscal Year' means (i) the period commencing on the effective date of this Agreement and ending on December 31, 1993, (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31 or (iii) any portion of a period described in clause (ii) that is considered a short taxable year of the Partnership under the Code and the Regulations. 'GAAP' means United States generally accepted accounting principles as in effect from time to time, applied on a consistent basis. 'General Partner' means any Person who (i) is referred to as such in the first paragraph of this Agreement or has become a General Partner pursuant to the terms of this Agreement, and (ii) has not, at any given time, ceased to be a General Partner pursuant to the terms of this Agreement. All references in this Agreement to a majority or a specified percentage of the General Partners shall mean General Partners holding more than fifty percent (50%) or holding such specified percentage, respectively, of the then Percentage Interests of all General Partners. 'Gross Asset Value' means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined by the contributing Partner and the Managing General Partner, provided that, if the contributing Partner is the Managing General Partner, the determination of the fair market value of any contributed asset shall require the consent of the Limited Partner; (ii) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the Managing General Partner in accordance with Section 10.8(b)(ii) hereof, as of the following times: (A) the acquisition of an additional Interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Partnership to a Partner of more than a de minimis amount of Property as consideration for an Interest; and (C) the liquidation of the Partnership within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations; 4 (iii) The Gross Asset Value of any Partnership asset distributed to any Partner shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined in accordance with Section 10.8(b)(ii) hereof; and (iv) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 732(d), Code Section 734(b) or Code Section 743(b), but only to the extent that (x) such adjustments are taken into account in determining Capital Accounts pursuant to subparagraph (vi) of the definition of 'Profits' or 'Losses' or Section 3.3(c) hereof and (y) an adjustment pursuant to subparagraph (ii) is not required in connection with the transaction. 'Insolvent' means, with respect to any Person at any time, the fair market value of the assets and properties of such Person at such time being less than the liabilities of such Person at such time. 'Interest' means an ownership interest in the Partnership, including any and all rights that such Partner possesses under this Agreement, together with all obligations of such Partner to comply with the terms of this Agreement. In the event all or any portion of an Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Interest of the transferor to the extent it relates to the transferred Interest. 'Interest Rate Agreement' means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in interest rates. 'Investment Principal' has the meaning set forth in Section 1 of the Purchase Agreement. 'Investment Return' has the meaning set forth in Section 2.02(a) of the Purchase Agreement. 'Limited Partner' means any Person who (i) is referred to as a Limited Partner in the first paragraph of this Agreement or who has become a Limited Partner pursuant to the terms of this Agreement, and (ii) has not ceased to be a Limited Partner pursuant to the terms of this Agreement. 'Liquidating Event' has the meaning set forth in Section 12.1 hereof. 'Mandatory Retirement Event' has the meaning set forth in Section 6.01(a) of the Purchase Agreement. 'Net Cash Flow' means the gross cash proceeds of the Partnership less the portion thereof used to pay or establish reserves for all Partnership expenses, debt payments, capital investments, replacements, and contingencies, all as determined by the Managing General Partner in its sole discretion. 'Net Cash Flow' shall not be reduced by depreciation, amortization, cost recovery deductions, or similar allowances, but shall be increased by any reductions of reserves previously established pursuant to the first sentence of this definition. 'Parent' means in the case of RHDC, DBI and IMS, The Dun & Bradstreet Corporation, and in the case of RBDB, the entity or entities that own the outstanding equity interests therein. 'Partners' means all General Partners and the Limited Partner, where no distinction is required by the context in which the term is used herein. All references in this Agreement to a majority or a specified percentage of the Partners shall mean Partners holding more than fifty percent (50%) or holding such specified percentage, respectively, of the then Percentage Interests. 'Percentage Interest' means, with respect to any Partner, as of any date, the ratio (expressed as a percentage) of such Partner's cumulative Capital Contributions as of such date to the cumulative Capital Contributions of all Partners on such date, such Capital Contributions to be determined after giving effect to all contributions and all repayments of such contributions for all periods ending on or prior to such date. The initial Percentage Interest of each Partner is set forth in Sections 2.1 and 2.2 hereof. In the event all or any portion of an Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Percentage Interest of the transferor to the extent it relates to the transferred Interest. 'Permitted Investments' means (i) cash; (ii) direct obligations of the United States of America for the payment of which its full faith and credit is pledged; (iii) Federal Home Loan Mortgage Corporation 5 participation certificates; (iv) Federal National Mortgage Association mortgage pass-through certificates; (v) Government National Mortgage Association mortgage pass-through certificates; (vi) short-term commercial paper issued by any corporation organized under the laws of the United States of America or any state thereof, rated at least 'A-1' by S&P, provided that the aggregate Fair Market Value of all commercial paper issued by any Person shall not exceed 10% of the aggregate Fair Market Value of all property (other than cash) owned by the Partnership; (vii) indebtedness of any Person organized under the laws of the United States of America or any state thereof that is not an Affiliate of the Parent of the General Partners, rated at least 'AA' by S&P, provided, that the aggregate Fair Market Value of all such indebtedness issued by any Person shall not exceed 10% of the aggregate Fair Market Value of all property (other than cash) owned by the Partnership; (viii) unsubordinated debt issued by the Parent of the General Partners or unsubordinated debt issued by an Affiliate of such Parent if (and only if) such debt is unconditionally guaranteed by such Parent on an unsubordinated basis, provided that such Parent has agreed to register such debt under the Securities Act of 1933, as amended (or any corresponding provisions of succeeding law) upon the request of the holder of such debt and such agreement inures to the benefit of any subsequent holder of such debt; (ix) common stock or preferred stock issued by the Parent of the General Partners, provided that (A) the ownership of such stock (when taken together with any other securities owned by the Partnership) would not require the Partnership to file a Schedule 13D under the Securities Exchange Act of 1934, as amended (or any corresponding provisions of succeeding law) and (B) such Parent has agreed to register such stock under the Securities Act of 1933, as amended (or any corresponding provisions of succeeding law) upon the request of the holder of such stock and such agreement inures to the benefit of any subsequent holder of such stock; or (x) puts, calls, options or warrants to purchase or sell common stock of the Parent of the General Partners, provided that (A) such puts, calls, options or warrants do not, in the aggregate, at the time of their acquisition, exceed 10% of the Fair Market Value of all property then held by the Partnership and (B) the ownership of such puts, calls, options or warrants (when taken together with any other securities owned by the Partnership) would not require the Partnership to file a Schedule 13D under the Securities Exchange Act of 1934, as amended (or any corresponding provisions of succeeding law). 'Permitted Transfer' has the meaning set forth in Section 10.2 hereof. 'Person' means any individual, partnership, corporation, trust, limited liability company, association or other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. 'Portfolio Certificate' means a written certificate of the Managing General Partner signed by the chief financial officer of the Managing General Partner familiar with the financial affairs of the Partnership delivered in accordance with Section 8.2(d) hereof, following the close of each Fiscal Quarter commencing with the Fiscal Quarter ending December 31, 1993 that (x) certifies the aggregate Fair Market Value of all property held by the Partnership as of the last day of such Fiscal Quarter and (y) notifies whether additional capital contributions are required to be made by the General Partners pursuant to Section 2.3 hereof and, if so, the amount thereof. In the event that a Triggering Event occurs and is continuing, following the close of each calendar month commencing after such Triggering Event, the Managing General Partner shall provide a Portfolio Certificate as of the last day of each calendar month which is consistent with the requirements set forth in the preceding sentence. 'Profits' and 'Losses' means, for each Fiscal Year, an amount equal to the Partnership's taxable income or loss as reported on the Partnership's U.S. Partnership Return of Income (Form 1065) for such Fiscal Year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (i) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition of 'Profits' and 'Losses' shall be added to such taxable income or loss; (ii) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Regulations, 6 and not otherwise taken into account in computing Profits or Losses shall be subtracted from such taxable income or loss; (iii) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (iv) Gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; (v) The depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss shall be taken into account for such Fiscal Year in accordance with Section 1.704-1(b)(2)(iv)(g) of the Regulations; (vi) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) is required, pursuant to Section 1.704-1(b)(2)(iv)(m)(4) of the Regulations, to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner's Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses; and (vii) Notwithstanding any other provision of this definition, any items which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof shall not be taken into account in computing Profits or Losses. The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Sections 3.3 and 3.4 hereof shall be determined by applying rules analogous to those set forth in subparagraphs (i) through (vi) above. 'Purchase Agreement' means the Purchase Agreement among the Partnership, the General Partners, and the Purchaser attached hereto as Exhibit A and incorporated herein by this reference. 'Purchaser' has the meaning specified in the preamble to the Purchase Agreement and includes such Purchaser's successors and assigns. 'Rating Category' means (i) with respect to short-term ratings, A-1+, A-1, A-2, A-3, B, C and D (or equivalent successor categories) or (ii) with respect to long-term ratings, AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories). 'Regulations' means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time (including any corresponding provisions of succeeding regulations). 'Retirement Date' has the meaning set forth in Section 10.8(a) hereof. 'Retirement Notice' has the meaning set forth in Section 10.8(a) hereof. 'Retirement Percentage' has the meaning set forth in Section 10.8 hereof. 'S&P' means Standard & Poor's Corporation and its successors. 'Transfer' means, as a noun, any voluntary or involuntary transfer, sale, pledge, hypothecation, withdrawal or other disposition and, as a verb, voluntarily or involuntarily to transfer, sell, pledge, hypothecate, withdraw or otherwise dispose of. 'Triggering Event' means either (i) the occurrence of a decrease of the short-term rating of the Parent of the General Partners by S&P by one or more rating gradations; provided, that, in the event such Parent shall at any time not have a short-term rating, Triggering Event shall mean the occurrence of a decrease of the long-term rating of the Parent by S&P by one or more rating gradations or (ii) such Parent's not at any time having either a short-term or a long-term rating. In determining whether the rating has decreased by one or more gradations, gradations within Rating Categories (e.g., + and - for S&P long-term ratings) shall be taken into account (e.g., a decline in a rating from AA+ to AA, as well as from AA- to A+, will constitute a decrease of one gradation). 7 'Wholly Owned Affiliate' of any Person means (i) an Affiliate of such Person, 100% of the voting stock or beneficial ownership of which is owned directly by such Person, or by any other Person who, directly or indirectly, owns 100% of the voting stock or beneficial ownership of such Person, (ii) an Affiliate of such Person who, directly or indirectly, owns 100% of the voting stock or beneficial ownership of such Person, and (iii) any Wholly Owned Affiliate of any Affiliate described in clauses (i) or (ii) of this definition. SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS 2.1 General Partners. The name, address, original Capital Contribution and initial Percentage Interest of each of the General Partners is as follows:
ORIGINAL CAPITAL PERCENTAGE NAME AND ADDRESS CONTRIBUTION INTEREST - ---------------------------------------------------------------------------- ------------ ---------- RHDC $47,500,000 95% 287 Bowman Avenue Purchase, New York 10577 DBI $ 1,000,000 2% One Diamond Hill Road Murray Hill, New Jersey 07974 IMS $ 1,000,000 2% 100 Campus Road Totowa, New Jersey 07512
2.2 Limited Partner. The name, address, original Capital Contribution, and initial Percentage Interest of the Limited Partner is as follows:
ORIGINAL CAPITAL PERCENTAGE NAME AND ADDRESS CONTRIBUTION INTEREST - ----------------------------------------------------------------------------- ------------ ---------- RBDB $500,000 1% 245 Park Avenue, 36th Floor New York, New York 10167
2.3 Additional Mandatory Capital Contributions. If the Fair Market Value of property held by the Partnership as reflected in a Portfolio Certificate is less than either (I) if there is no Triggering Event, the sum of (i) the then outstanding Investment Principal and (ii) any accrued but unpaid Investment Return, or (II) after the occurrence of Triggering Event which is continuing, the sum of (i) the then outstanding Investment Principal, (ii) any accrued but unpaid Investment Return, and (iii) $50,000,000, then the General Partners shall contribute to the capital of the Partnership in cash in immediately available funds within five (5) Business Days after the date such Portfolio Certificate is required to be delivered pursuant to Section 8.2 hereof an amount at least equal to such deficit under (I) or (II) above, whichever is applicable. The obligation of the General Partners to contribute additional capital pursuant to this Section 2.3 shall be joint and several. A General Partner's obligation to contribute to the capital of the Partnership pursuant to this Section 2.3 shall be subordinate in right of payment to the unsecured claims of the general creditors of such General Partner, and a General Partner shall not be required to contribute funds to the Partnership pursuant to this Section 2.3 to the extent that, after giving effect to such contribution, such General Partner would be Insolvent. 2.4 Other Matters. (a) The original Capital Contributions shall be made to the Partnership in cash in immediately available funds within three (3) days following the commencement of the Partnership term. 8 (b) The Limited Partner shall not be liable for the debts, liabilities, contracts or any other obligations of the Partnership. The Limited Partner shall be liable only to make the original Capital Contributions set forth in Section 2.2 hereof and shall not be required to lend any funds to the Partnership or, after its original Capital Contributions have been made, to make any further Capital Contributions to the Partnership. (c) No General Partner shall have any personal liability for the repayment of any Capital Contributions of the Limited Partner. (d) Except as otherwise provided in this Agreement, no Partner shall demand or receive a return of its Capital Contributions or withdraw from the Partnership without the consent of all Partners. Under circumstances requiring a return of any Capital Contributions, no Partner shall have the right to receive property other than cash except as may be specifically provided herein. (e) Except as otherwise provided in this Agreement, no Partner shall receive any interest, salary or drawing with respect to its Capital Contributions or its Capital Account, for services rendered on behalf of the Partnership, or otherwise in its capacity as a Partner. SECTION 3. ALLOCATIONS 3.1 Profits. After giving effect to the special allocations set forth in Sections 3.3 and 3.4 hereof, Profits for any Fiscal Year shall be allocated in the following order and priority: (a) First, 100% to the General Partners, in proportion to and to the extent of an amount equal to the excess, if any, of (i) the cumulative Losses allocated to each such General Partner pursuant to Section 3.2(c) hereof for all prior Fiscal Years, over (ii) the cumulative Profits allocated to such General Partner pursuant to this Section 3.1(a) for all prior Fiscal Years; (b) Second, to the Partners, in proportion to and to the extent of an amount equal to the excess, if any, of (i) the cumulative Losses allocated to each such Partner pursuant to Section 3.2(b) hereof for all prior Fiscal Years, over (ii) the cumulative Profits allocated to such Partner pursuant to this Section 3.1(b) for all prior Fiscal Years; and (c) The balance, if any, to the Partners, in proportion to their Percentage Interests. 3.2 Losses. After giving effect to the special allocations set forth in Sections 3.3 and 3.4 hereof, Losses for any Fiscal Year shall be allocated in the following order and priority: (a) First, to the Partners, in proportion to and to the extent of an amount equal to the excess, if any, of (i) the cumulative Profits allocated to each such Partner pursuant to Section 3.1(c) hereof for all prior Fiscal Years, over (ii) the cumulative Losses allocated to such Partner pursuant to this Section 3.2(a) for all prior Fiscal Years, subject to Section 3.5 hereof; (b) Second, to the Partners, in proportion to their Percentage Interests, in an amount equal to the excess, if any, of (i) the cumulative Profits allocated to the Partners pursuant to Section 3.1(b) hereof for all prior Fiscal Years, over (ii) the cumulative Losses allocated to the Partners pursuant to this Section 3.2(b) for all prior Fiscal Years, subject to Section 3.5 hereof; and (c) The balance, if any, 100% to the General Partners, in proportion to their Percentage Interests. 3.3 Special Allocations. The following special allocations shall be made in the following order: (a) Qualified Income Offset. In the event any Partner unexpectedly receives any adjustments, allocations, or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5) or 1.704-l(b)(2)(ii)(d)(6) of the Regulations, items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit, if any, of such Partner as quickly as possible, provided that an allocation pursuant to this Section 3.3(a) shall be made only if and to the extent that 9 such Partner would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 3 have been tentatively made as if this Section 3.3(a) were not in the Agreement. (b) Gross Income Allocation. In the event the Limited Partner has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum of (i) the amount the Limited Partner is obligated to restore pursuant to any provision of this Agreement, and (ii) the amount the Limited Partner is deemed to be obligated to restore pursuant to Section 1.704-1(b)(2)(ii)(c) of the Regulations, the Limited Partner shall be specially allocated items of partnership income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 3.3(b) shall be made only if and to the extent that the Limited Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Section 3 have been made as if Section 3.3(a) hereof and this Section 3.3(b) were not in the Agreement. (c) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Partnership asset is required pursuant to Code Section 732(d), Code Section 734(b) or Code Section 743(b), the Capital Accounts of the Partners shall be adjusted pursuant to Section l.704-1(b)(2)(iv)(m) of the Regulations. 3.4 Curative Allocations. The allocations set forth in Sections 3.3 and 3.5 hereof (the 'Regulatory Allocations') are intended to comply with certain requirements of the Regulations. It is the intent of the Partners that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Partnership income, gain, loss or deduction pursuant to this Section 3.4. Therefore, notwithstanding any other provision of this Section 3 (other than the Regulatory Allocations), the Managing General Partner shall make such offsetting special allocations of Partnership income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Partner's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Partner would have had if the Regulatory Allocations were not part of the Agreement and all Partnership items were allocated pursuant to Sections 3.1 and 3.2. 3.5 Loss Limitation. The Losses allocated pursuant to Section 3.2(a) and (b) hereof shall not exceed the maximum amount of Losses that can be so allocated without causing the Limited Partner to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. All Losses in excess of the limitations set forth in this Section 3.5 shall be allocated to the General Partners in proportion to their Percentage Interests, as provided for in Section 3.2(c) hereof. 3.6 Tax Allocations: Code Section 704(c). In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take account of any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of Gross Asset Value in Section 1.8). In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (iv) of the definition of Gross Asset Value in Section 1.8, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the Regulations thereunder. Any elections or other decisions relating to such allocations (including, if proposed Section 1.704-3 of the Treasury regulations is finalized, which method or methods under such proposed Treasury regulation to apply) shall be made by the Managing General Partner in any manner that reasonably reflects the purpose and intention of this Agreement. SECTION 4. DISTRIBUTIONS 4.1 Net Cash Flow. 10 Except as otherwise provided in Sections 10.8, 10.9, 11.2 and 12.2 hereof, Net Cash Flow, if any, shall be distributed annually to the Partners in proportion to and to the extent of an amount equal to the excess, if any, of (i) the cumulative Profits allocated to the Partners for all prior Fiscal Years, over (ii) the sum of (A) the cumulative Losses allocated to the Partners for all prior Fiscal Years plus (B) the Net Cash Flow previously distributed to the Partners pursuant to this Section 4.1; provided, however, that the Partnership shall not make any distribution prior to the repayment of the Investment Principal, any accrued but unpaid Investment Return and any payment required by Section 6.02 of the Purchase Agreement, except to the extent permitted under the Purchase Agreement. 4.2 Amounts Withheld. All amounts withheld pursuant to the Code or any provision of any state, local or foreign tax law with respect to any payment, distribution or allocation to the Partnership or the Partners shall be treated as amounts distributed to the Partners pursuant to this Section 4 for all purposes under this Agreement. The Managing General Partner is authorized to withhold from distributions, or with respect to allocations of Profits, Losses, or other items of income, gain, loss or deduction, made to the Partners and to pay over to any federal, state, local or foreign government any amounts required to be so withheld pursuant to the Code or any provisions of any other federal, state, local or foreign law, and shall allocate any such amounts to the Partners with respect to which such amount was withheld. SECTION 5. MANAGEMENT 5.1 Authority of the Managing General Partner. Subject to the limitations and restrictions set forth in this Agreement, the Managing General Partner shall conduct the business and affairs of the Partnership and in so doing shall have all of the rights and powers which may be possessed by general partners under the Act, including, without limitation, the right, power and authority to: (a) Acquire, own, maintain, sell, convey, and assign any property which may be necessary, related, or incidental to the accomplishment of the purposes of the Partnership; (b) Execute any and all agreements, contracts, documents, certifications, and instruments necessary or convenient in connection with the acquisition, maintenance, and conveyance of the Partnership property, or in connection with managing the affairs of the Partnership; (c) Enter into the Purchase Agreement and comply with all terms and requirements thereof; (d) Subject to the restriction in Section 5.3(h) hereof, borrow money and issue evidences of indebtedness, and secure the same by mortgage, pledge, or other lien on any property; (e) Care for and distribute funds to the Partners by way of cash, income, return of capital, or otherwise, all in accordance with the provisions of this Agreement; (f) Arrange for or contract on behalf of the Partnership for the employment and services of employees and/or independent contractors, such as lawyers, accountants and appraisers, and delegate to such Persons the duty to manage or supervise any of the assets or operations of the Partnership; (g) Engage in any kind of activity and perform and carry out contracts of any kind (including contracts of insurance covering risks to property and General Partner liability) necessary or incidental to, or in connection with, the accomplishment of the purposes of the Partnership, as may be lawfully carried on or performed by a partnership under the laws of each state in which the Partnership is then formed or qualified; (h) Make any and all elections for federal, state, local and foreign tax purposes including, without limitation, any election, if permitted by applicable law: (i) to adjust the basis of Partnership property pursuant to Code Sections 754, 734(b) and 743(b), or comparable provisions of state, local or foreign law, in connection with Transfers of Interests and Partnership distributions; (ii) to extend the statute of limitations for assessment of tax deficiencies against the Partners with respect to adjustments to the Partnership's federal, state, local or foreign tax returns; and (iii) to the extent provided in Code Sections 6221 through 6231 (or related Code sections regarding partnership audits and judicial proceedings), to 11 represent the Partnership and the Partners before taxing authorities or courts of competent jurisdiction in tax matters affecting the Partnership and the Partners in their capacities as Partners, and to file any tax returns and execute any agreements or other documents relating to or affecting such tax matters, including agreements or other documents that bind the Partners with respect to such tax matters or otherwise affect the rights of the Partnership and the Partners. It is contemplated that the Managing General Partner will not make an election under Code Section 754 but may, in its sole discretion, make such election upon ten (10) Business Days notice to the other Partners. The Managing General Partner is specifically authorized to act as the 'Tax Matters Partner,' after reasonable consultation with the other Partners, under the Code and in any similar capacity under state, local or foreign law; (i) Take, or refrain from taking, all actions, not expressly proscribed or limited by this Agreement, as may be necessary or appropriate to accomplish the purposes of the Partnership; and (j) Subject to Section 5.3(d) hereof, institute, prosecute, defend, settle, compromise, and dismiss lawsuits or other judicial or administrative proceedings brought on or in behalf of, or against, the Partnership or the Partners in connection with activities arising out of, connected with, or incidental to this Agreement, and to engage counsel or others in connection therewith. In the event (i) either there is no Managing General Partner or of the Bankruptcy of the Managing General Partner and (ii) if there is one General Partner, such General Partner shall exercise the rights and powers of the Managing General Partner hereunder, or if there are two or more General Partners, the rights and powers of the Managing General Partner hereunder shall be exercised by such General Partners in such manner as they may agree, and absent an agreement among such General Partners, no such General Partner shall exercise any of such rights and powers without the unanimous consent of all such General Partners. 5.2 Right to Rely on the Managing General Partner. (a) Any Person dealing with the Partnership may rely (without duty of further inquiry) upon a certificate signed by the Managing General Partner as to: (i) The identity of any General Partner or any Limited Partner; (ii) The existence or nonexistence of any fact or facts which constitute a condition precedent to acts by the Managing General Partner or which are in any other manner germane to the affairs of the Partnership; (iii) The Persons who are authorized to execute and deliver any instrument or document of the Partnership; or (iv) Any act or failure to act by the Partnership or any other matter whatsoever involving the Partnership or any Partner. (b) The signature of the Managing General Partner shall be necessary and sufficient to convey title to any real property owned by the Partnership or to execute any promissory notes, trust deeds, mortgages, or other instruments of hypothecation, and all of the Partners agree that a copy of this Agreement may be shown to the appropriate parties in order to confirm the same, and further agree that the signature of the Managing General Partner shall be sufficient to execute any 'statement of partnership' or other documents necessary to effectuate this or any other provision of this Agreement. All of the Partners do hereby appoint the Managing General Partner as their attorney-in-fact for the execution of any or all of the documents described in this Section 5.2(b). 5.3 Restrictions on Authority of the General Partners. The General Partners shall not have the authority to, and each covenants and agrees that it shall not, do any of the following acts without the consent of the Limited Partner: (a) Cause or permit the Partnership to engage in any activity that is not consistent with the purposes of the Partnership as set forth in Section 1.3 hereof; (b) Knowingly do any act in contravention of this Agreement; (c) Knowingly do any act which would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement; 12 (d) Confess a judgment against the Partnership in an amount in excess of $25,000,000; (e) Cause the Partnership to possess property, or to assign rights in specific property, for other than a Partnership purpose; (f) Knowingly perform any act that would subject the Limited Partner to liability as a general partner in any jurisdiction; (g) Cause the Partnership to voluntarily take any action that would cause a Bankruptcy of the Partnership; (h) Cause the Partnership to incur any Debt prior to the repayment of the Investment Principal, any accrued but unpaid Investment Return and any payment required by Section 6.02 of the Purchase Agreement, except as otherwise permitted under the Purchase Agreement or under Section 5.6 hereof; (i) Cause the Partnership to admit any additional Partners other than pursuant to Section 10.6 hereof; (j) Cause the Partnership to acquire any stock, puts, calls, options or warrants issued by any Person, other than Permitted Investments; (k) Cause the Partnership to acquire any commercial paper issued by any Person or any term indebtedness issued by any Person, other than, in each case, Permitted Investments; or (l) Cause the Partnership to acquire any financial instruments, other than Permitted Investments. 5.4 Duties and Obligations of the Managing General Partner. (a) The Managing General Partner shall cause the Partnership to conduct its business and operations separate and apart from that of the Managing General Partner or any of its Affiliates. (b) The Managing General Partner shall take all actions which may be necessary or appropriate (i) for the continuation of the Partnership's valid existence as a limited partnership under the laws of the State of Delaware (and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Limited Partner or to enable the Partnership to conduct the business in which it is engaged) and (ii) for the accomplishment of the Partnership's purposes. (c) The Managing General Partner shall notify the Partners of the occurrence of any Liquidating Event described in Section 12.1 hereof (other than the twentieth anniversary of the formation of the Partnership), and the action which the Managing General Partner has taken or proposes to take with respect thereto, promptly but no later than thirty (30) Business Days after any responsible officer of the Managing General Partner has actual knowledge of such occurrence. 5.5 Indemnification of the Partners. (a) The Partnership, its receiver or its trustee shall indemnify, save harmless, and pay all judgments and claims against a General Partner or any officers or directors of such General Partner relating to any liability or damage incurred by reason of any act performed or omitted to be performed by such General Partner, or any officer or director of such General Partner, in connection with the business of the Partnership, including attorneys' fees incurred by such General Partner, officer or director in connection with the defense of any action based on any such act or omission, which attorneys' fees may be paid as incurred, including all such liabilities under federal and state securities laws as permitted by law. (b) In the event of any action by the Limited Partner against a General Partner, including a Partnership derivative suit, the Partnership shall indemnify, save harmless, and pay all expenses of such General Partner, including attorneys' fees, incurred in the defense of such action, if such General Partner is successful in such action. (c) Notwithstanding Sections 5.5(a) and 5.5(b) above, no such indemnification and payment shall be made until such time as the Partnership has repaid the Investment Principal, any accrued but unpaid Investment Return and any payment required by Section 6.02 of the Purchase Agreement. (d) Notwithstanding anything to the contrary in any of Sections 5.5(a) and 5.5(b) above, no Partner shall be indemnified from any liability for fraud, willful misconduct, breach of fiduciary responsibility, bad faith, or gross negligence. 13 (e) Notwithstanding anything to the contrary in any of Sections 5.5(a) and 5.5(b) above, in the event that any provision in any of such Sections is determined to be invalid in whole or in part, such Section shall be enforced to the maximum extent permitted by law. 5.6 Compensation, Expenses and Loans. (a) Compensation and Expenses. A General Partner may charge the Partnership, and shall be reimbursed, for any reasonable, direct, out-of-pocket expenses incurred in connection with the Partnership's business, provided, however, no such reimbursement shall be made until such time as the Partnership has repaid the Investment Principal, any accrued but unpaid Investment Return and any payment required by Section 6.02 of the Purchase Agreement, other than of expenses of the Partnership in an aggregate amount not in excess of $100,000 in any Fiscal Year. No Partner otherwise shall receive any salary, fee, or draw for services rendered to or on behalf of the Partnership, nor shall any Partner be reimbursed for any expenses incurred by such Partner on behalf of the Partnership. (b) Loans. If the funds of the Partnership (including any amounts required to be contributed pursuant to Section 2.3 hereof) are insufficient to pay, or the Partnership fails or is otherwise unable to pay, in full the Investment Principal, the Investment Return and/or any payment required by Section 6.02 of the Purchase Agreement when due, the General Partners shall advance funds to the Partnership (or shall cause the Partnership to borrow funds from other sources) in an amount sufficient and at the time needed to allow the Partnership to pay timely all such amounts in full. The obligation of the General Partners pursuant to the preceding sentence shall be joint and several. Such obligation of a General Partner shall be subordinate in right of payment to the unsecured claims of all creditors of such General Partner, and a General Partner shall not be required to advance funds to the extent that, after giving effect to such advance, such General Partner would be Insolvent. A General Partner also may lend or advance additional money to the Partnership. If a General Partner shall make any loan or loans to the Partnership or advance money on its behalf, the amount of any such loan or advance shall not be treated as a Capital Contribution but shall be a debt due from the Partnership, which, however, shall be subordinate in right of payment to the payment of the Investment Principal, any accrued but unpaid Investment Return, and any payment required by Section 6.02 of the Purchase Agreement. The amount of any loan or advance by a General Partner shall be repayable out of the Partnership's cash and shall bear interest at a rate determined by the Managing General Partner, taking into consideration, without limitation, prevailing interest rates and the interest rates such General Partner is required to pay in the event such General Partner has itself borrowed funds to loan or advance to the Partnership, and the terms and conditions of such loan, including the rate of interest, shall be substantially comparable to those the Partnership could have obtained if the lender had been an independent third party, provided, however, that the Partnership shall not repay any loan or advance made by a General Partner, or interest on either, until such time as the Partnership has repaid in full the Investment Principal, any accrued but unpaid Investment Return, and any payment required by Section 6.02 of the Purchase Agreement. Except as otherwise provided in this Section 5.6(b), no Partner shall be obligated to make any loan or advance to the Partnership. 5.7. Indemnification of the Limited Partner. The Partnership and each of the General Partners, jointly and severally, covenant and agree, unconditionally, absolutely and irrevocably, to indemnify and hold harmless the Limited Partner from and against any and all claims, damages, losses, and reasonable expenses (including, without limitation, reasonable fees and disbursements of counsel) arising out of or in connection with or by reason of any Person's assertion that the liabilities, debts or other obligations of the Partnership are liabilities, debts or other obligations of the Limited Partner; provided, however, that no such indemnification shall be required hereunder for any such claims, damages, losses, and expenses resulting from (i) the gross negligence or willful misconduct of the Limited Partner or (ii) any action taken by the Limited Partner which exposes the Limited Partner to liability as a general partner under Delaware law. No payment shall be made by the Partnership to the Limited Partner pursuant to this Section 5.7 until such time as the Partnership has repaid the Investment Principal, any accrued but unpaid Investment Return and any payment required by Section 6.02 of the Purchase Agreement. 14 SECTION 6. ROLE OF LIMITED PARTNER 6.1 Rights or Powers. The Limited Partner shall not have any right or power to take part in the management or control of the Partnership or its business and affairs or to act for or bind the Partnership in any way. 6.2 Voting Rights. The Limited Partner shall have the right to vote only on the matters specifically reserved for its vote or approval which are set forth in this Agreement. 6.3 Procedure for Consent. In any circumstances requiring the approval or consent of the Limited Partner as specified in this Agreement, such approval or consent shall, except as expressly provided to the contrary in this Agreement, be given or withheld in the sole and absolute discretion of the Limited Partner and conveyed in writing to the Managing General Partner not later than fifteen (15) Business Days after such approval or consent was requested by the Managing General Partner. If the Managing General Partner receives the necessary approval or consent of the Limited Partner to such action, the Managing General Partner shall be authorized and empowered to implement such action without further authorization by the Limited Partner. SECTION 7. REPRESENTATIONS AND WARRANTIES 7.1 In General. As of the date hereof, each of the Partners hereby makes each of the representations and warranties applicable to such Partner, as set forth in Section 7.2 hereof, and such warranties and representations shall survive the execution of this Agreement. 7.2 Representations and Warranties. Each of the Partners hereby represents and warrants that: (a) Due Incorporation or Formation; Authorization of Agreement. Such Partner is a corporation or limited liability company duly organized, or a partnership duly formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and has the corporate, company or partnership power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby. Such Partner is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder. Such Partner has the corporate, company or partnership power and authority to execute and deliver this Agreement and to perform its obligations hereunder and the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate, company or partnership action. This Agreement constitutes the legal, valid and binding obligation of such Partner. (b) No Conflict with Restrictions; No Default. Neither the execution, delivery and performance of this Agreement nor the consummation by such Partner of the transactions contemplated hereby (i) will conflict with, violate or result in a breach of any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to such Partner, (ii) will conflict with, violate, result in a breach of or constitute a default under any of the terms, conditions or provisions of the articles of incorporation, bylaws, limited liability company agreement or partnership agreement of such Partner or of any material agreement or instrument to which such Partner is a party or by which such Partner is or may be bound or to which any of its material properties or assets is subject, (iii) will conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, give to others any material interests or rights or require any consent, 15 authorization or approval under any indenture, mortgage, lease agreement or instrument to which such Partner is a party or by which such Partner is or may be bound, or (iv) will result in the creation or imposition of any lien upon any of the material properties or assets of such Partner, in each of the foregoing clauses (i) through (iv), the violation, breach or conflict of which could reasonably have a material adverse effect on such General Partner's financial condition or its ability to perform its obligations hereunder. (c) Governmental Authorizations. Any registration, declaration or filing with, or consent, approval, license, permit or other authorization or order by, any governmental or regulatory authority, domestic or foreign, that is required in connection with the valid execution, delivery, acceptance and performance by such Partner under this Agreement or the consummation by such Partner of any transaction contemplated hereby has been completed, made or obtained on or before the effective date of this Agreement. (d) Litigation. There are no actions, suits, proceedings or investigations pending or, to the knowledge of such Partner, threatened against or affecting such Partner or any of such Partner's properties, assets or businesses in any court or before or by any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit or proceeding, which if adversely determined could) reasonably be expected to materially impair such Partner's ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Partner; and such Partner has not received any currently effective notice of any default, and such Partner is not in default, under any applicable order, writ, injunction, decree, permit, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could reasonably be expected to materially impair such Partner's ability to perform its obligations under this Agreement or to have a material adverse effect on the consolidated financial condition of such Partner. (e) Investment Company Act. Neither such Partner nor the Partnership will, as a result of such Partner holding an Interest, be subject to regulation under the Investment Company Act of 1940, as amended. (f) Investigation. Such Partner is acquiring its Interest based upon its own investigation, and the exercise by such Partner of its rights and the performance of its obligations under this Agreement will be based upon its own investigation, analysis and expertise. Such Partner's acquisition of its Interest is being made for its own account for investment, and not with a view to the sale or distribution thereof. Such Partner is a sophisticated investor possessing an expertise in analyzing the benefits and risks associated with acquiring investments that are similar to the acquisition of its Interest. (g) Confidentiality. Except as contemplated hereby or required by law, each Partner shall keep confidential and shall not disclose to others and shall use its reasonable efforts to prevent its Affiliates and any of its, or its Affiliates', present or former employees, agents, and representatives from disclosing to others without the prior written consent of all Partners any information which (i) pertains to this Agreement, any negotiations pertaining thereto, any of the transactions contemplated hereby or the business of the Partnership, or (ii) pertains to confidential or proprietary information of any Partner or the Partnership or which any Partner has labeled in writing as confidential or proprietary; provided that any Partner may disclose to its Parent and its Parent's employees, agents, and representatives any information made available to such Partner. No Partner shall use, and each Partner shall use its best efforts to prevent any Affiliate of such Partner from using, any information which (i) pertains to this Agreement, any negotiations pertaining hereto, any of the transactions contemplated hereby or the business of the Partnership, or (ii) pertains to the confidential or proprietary information of any Partner or the Partnership or which any Partner has labeled in writing as confidential or proprietary, except in connection with the transactions contemplated hereby. SECTION 8. ACCOUNTING, BOOKS AND RECORDS 8.1 Accounting, Books and Records. 16 The Partnership shall maintain at its principal place of business separate books of account for the Partnership which shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received, and all income derived in connection with the conduct of the Partnership and the operation of its business in accordance with GAAP and, to the extent inconsistent therewith, in accordance with this Agreement. The Partnership shall use the accrual method of accounting in preparation of its annual reports and for tax purposes and shall keep its books and records accordingly and, for purposes of federal income tax reporting, shall use the Fiscal Year. Except as otherwise provided in this Agreement, any Partner or its designated representative shall have the right, at any reasonable time, to have access to and inspect and copy the contents of such books or records. 8.2 Reports. (a) In General. The Managing General Partner shall be responsible for the preparation of financial reports of the Partnership and the coordination of financial matters of the Partnership with the Partnership's accountants. (b) Annual Reports. Within ninety (90) days after the end of each Fiscal Year, commencing with the first Fiscal Year ending after the date of this Agreement, and at such time as distributions are made to the Partners pursuant to Section 12.2 hereof following the occurrence of a Liquidating Event, the Managing General Partner shall cause to be prepared and each Partner to be furnished with the following: (i) Financial statements accompanied by a certificate of the chief financial officer of the Managing General Partner certifying that such statements have been prepared and fairly stated in all material respects in accordance with GAAP, including the following: (A) A balance sheet, statement of income or loss, and statement of cash flow of the Partnership as of the last day of such Fiscal Year; and (B) A statement of the Partners' Capital Accounts and changes therein for such Fiscal Year; and (ii) Written certification of the chief financial officer of the Managing General Partner that no Liquidating Event (other than the twentieth anniversary of the formation of the Partnership) has occurred and is continuing, or if any such event has occurred and is continuing, the action the Managing General Partner has taken or proposes to take with respect thereto. (c) Quarterly Reports. Within sixty (60) days after the close of each Fiscal Quarter commencing with the Fiscal Quarter ending March 31, 1994 (other than the last Fiscal Quarter of a Fiscal Year), the Managing General Partner shall cause to be prepared and each Partner furnished with each of the following: (i) Financial statements accompanied by a certificate of the chief financial officer of the Managing General Partner certifying that such statements have been prepared and fairly stated in all material respects in accordance with GAAP, including the following: (A) A balance sheet of the Partnership as of the last day of such Fiscal Quarter, statement of income and loss and statement of cash flow for such Fiscal Quarter; and (B) A statement of the Partners' Capital Accounts and changes therein for such Fiscal Quarter; and (ii) Written certification of the chief financial officer of the Managing General Partner with respect to the matters described in Section 8.2(b)(ii) hereof. (d) Portfolio Certificates. Within fifteen (15) days following the close of each Fiscal Quarter of the Partnership commencing with the Fiscal Quarter ending December 31, 1993, the Managing General Partner shall cause to be prepared and each Partner furnished with a Portfolio Certificate as of the last day of such Fiscal Quarter. In the event that a Triggering Event occurs and is continuing, within five (5) days following each calendar month, the Managing General Partner shall cause to be prepared and each Partner furnished with a Portfolio Certificate as of the last day of such calendar month. 8.3 Tax Information. 17 (a) All necessary tax information shall be delivered to each Partner within ninety (90) days after the end of each Fiscal Year. Each Partner agrees that it will report all Partnership taxable income, gain, loss, deduction and credit for each Fiscal Year in the manner reflected on the Partnership's U.S. Partnership Return of Income (Form 1065) and related Schedule K-1 furnished to such Partner for such year. (b) The Managing General Partner shall give prompt notice to each Partner upon the receipt of (i) written notice that the Internal Revenue Service or any state or local taxing authority intends to examine the Partnership's income tax returns for any year; (ii) written notice of commencement of an administrative proceeding at the Partnership level related to the Partnership under Section 6223 of the Code; (iii) written notice or any final partnership administrative adjustment relating to the Partnership pursuant to a proceeding under Section 6223 of the Code; (iv) any request from the Internal Revenue Service or any comparable state or local agency for waiver of any applicable statute of limitation with respect to the filing of any tax return by the Partnership; and (v) any Form 5701 or comparable state or local audit adjustment notices as soon as received, with copies of such notices provided to each Partner. In addition, each Partner will be notified of and allowed to attend any opening and closing conferences regarding any administrative proceeding at the Partnership level relating to the Partnership under Section 6223 of the Code, and the Managing General Partner will provide copies to each Partner of any correspondence with the Internal Revenue Service or comparable state or local agency regarding legal positions taken on audit issues by the Managing General Partner. Within ninety (90) days after receipt of notice of a final partnership administrative adjustment, the Managing General Partner shall notify each Partner if it does not intend to file for judicial review with respect to such adjustment. SECTION 9. AMENDMENTS; MEETINGS 9.1 Amendments. Amendments to this Agreement may be proposed by any Partner. Following such proposal, the Managing General Partner shall submit to the Partners any such proposed amendment, provided that counsel for the Partnership shall have approved of the same in writing as to form, and the Managing General Partner shall include in any such submission a recommendation as to the proposed amendment. The Managing General Partner shall seek the written vote of the Partners on the proposed amendment or shall call a meeting to vote thereon and to transact any other business that it may deem appropriate. A proposed amendment shall be adopted and be effective as an amendment hereto if it receives the affirmative vote of a majority of the General Partners, except that, if such proposed amendment adversely affects the Limited Partner, it also must receive the affirmative vote of the Limited Partner. 9.2 Meetings of the Partners. (a) Meetings of the Partners may be called by the Managing General Partner and shall be called upon the written request of any Partner. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners not less than ten (10) Business Days or more than thirty (30) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote or consent of Partners is permitted or required under this Agreement, such vote or consent may be given at a meeting of Partners or in such other manner that may be determined by the Managing General Partner. Except as otherwise expressly provided in this Agreement, the vote of a majority of the Partners shall control. (b) For the purpose of determining the Partners entitled to vote on, or to vote at, any meeting of the Partners or any adjournment thereof, the Managing General Partner or the Partner requesting such meeting may fix, in advance, a date as the record date for any such determination. Such date shall not be more than thirty (30) days or less than ten (10) Business Days before any such meeting. (c) Each Partner may authorize any Person or Persons to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Partner executing it. 18 SECTION 10. TRANSFERS, RETIREMENTS AND WITHDRAWALS 10.1 Restriction on Transfers. Except as provided in Section 10 or 11 hereof, no Partner shall Transfer all or any portion of its Interest. Any purported Transfer of an Interest that is not a Permitted Transfer shall be null and void and of no force or effect whatsoever. Each Partner hereby acknowledges the reasonableness of the restrictions on Transfer imposed by this Agreement in view of the Partnership purposes and the relationship of the Partners. Accordingly, the restrictions on Transfer contained herein shall be specifically enforceable. 10.2 Permitted Transfers. Subject to the conditions and restrictions set forth in Section 10.3 hereof, the Limited Partner may at any time Transfer all or any portion of its Interest to (a) any other Partner or Wholly Owned Affiliate of another Partner, (b) any Wholly Owned Affiliate of the transferor, (c) the transferor's administrator or trustee to whom such interest is transferred involuntarily by operation of law, (d) any Person exercising the purchase option described in Section 10.10 hereof, or (e) any Person approved by all of the Partners (any such Transfer under this Section 10.2 being referred to in this Agreement as a 'Permitted Transfer'). 10.3 Conditions to Permitted Transfers. A Transfer shall not be treated as a Permitted Transfer under Section 10.2 hereof unless and until the following conditions are satisfied: (a) Except in the case of a Transfer involuntarily by operation of law, the transferor and transferee shall execute and deliver to the Partnership (i) such documents and instruments of conveyance as may be necessary or appropriate in the opinion of counsel to the Partnership to effect such Transfer and to confirm the agreement of the transferee to be bound by the provisions of this Agreement, and (ii) a confidentiality agreement in a form acceptable to the Managing General Partner. In the case of a Transfer of Interests involuntarily by operation of law, the Transfer shall be confirmed by presentation to the Partnership of legal evidence of such Transfer, in form and substance satisfactory to counsel to the Partnership. In all cases, the Partnership shall be reimbursed by the transferor and/or transferee for all costs and expenses that it reasonably incurs in connection with such Transfer. (b) Except in the case of a Transfer involuntarily by operation of law, the transferor shall furnish to the Partnership an opinion of counsel, which counsel and opinion shall be reasonably satisfactory to the Managing General Partner, that the Transfer will not cause the Partnership to terminate for federal income tax purposes under Code Section 708. (c) The transferor and transferee shall furnish the Partnership with the transferee's taxpayer identification number, sufficient information to determine the transferee's initial tax basis in the Interest transferred, and any other information reasonably necessary to permit the Partnership to file all required federal and state tax returns and other legally required information statements or returns. Without limiting the generality of the foregoing, the Partnership shall not be required to make any distribution otherwise provided for in this Agreement with respect to any transferred Interest until it has received such information. (d) Except in the case of a Transfer involuntarily by operation of law, the transferor shall provide an opinion of counsel, which opinion and counsel shall be reasonably satisfactory to the Managing General Partner, that such Transfer will not violate any applicable laws regulating the Transfer of securities. (e) Except in the case of a Transfer involuntarily by operation of law, the transferor shall provide an opinion of counsel, which opinion and counsel shall be reasonably satisfactory to the Managing General Partner, that such Transfer will not cause the Partnership to be subject to regulation under the Investment Company Act of 1940. 10.4 Prohibited Transfers. 19 If the Partnership is required to recognize a Transfer that is not a Permitted Transfer (or if the partnership, in its sole discretion, elects to recognize a Transfer that is not a Permitted Transfer), the Interest Transferred shall be strictly limited to the transferor's rights to allocations and distributions as provided by this Agreement with respect to the transferred Interest, which allocations and distributions may be applied (without limiting any other legal or equitable rights of the Partnership) to satisfy any debts, obligations, or liabilities for damages that the transferor or transferee of such Interest may have to the Partnership. In the case of a Transfer or attempted Transfer of an Interest that is not a Permitted Transfer, the parties engaging or attempting to engage in such Transfer shall be liable to indemnify and hold harmless the Partnership and the other Partners from all cost, liability, and damage that any of such indemnified Partners may incur (including, without limitation, tax liabilities, attorneys fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby. 10.5 Rights of Unadmitted Assignees. A Person who acquires an Interest but who is not admitted as a substituted Partner pursuant to Section 10.6 hereof shall be entitled only to allocations and distributions with respect to such Interest in accordance with this Agreement, and shall have no right to any information or accounting of the affairs of the Partnership, shall not be entitled to inspect the books or records of the Partnership, and shall not have any of the rights of a Partner under the Act or this Agreement. 10.6 Admission of Substituted Partners. Subject to the other provisions of this Section 10, a transferee of an Interest may be admitted to the Partnership as a substituted Partner only upon satisfaction of the conditions set forth in this Section 10.6: (a) The Managing General Partner consents to such admission, which consent may be given or withheld in the sole and absolute discretion of the Managing General Partner; (b) The Interest with respect to which the transferee is being admitted was acquired by means of a Permitted Transfer; (c) The transferee becomes a party to this Agreement as a Partner and executes such documents and instruments as the Managing General Partner may reasonably request (including, without limitation, amendments to the Certificate) as may be necessary or appropriate to confirm such transferee as a Partner in the Partnership and such transferee's agreement to be bound by the terms and conditions hereof; (d) The transferee pays or reimburses the Partnership for all reasonable legal, filing, and publication costs that the Partnership incurs in connection with the admission of the transferee as a Partner with respect to the Transferred Interest; (e) If the transferee is a partnership, limited liability company or corporation, the transferee provides the Partnership with evidence satisfactory to counsel for the Partnership that such transferee has made each of the representations and undertaken each of the warranties described in Section 7 hereof; and (f) In the event that the transferee of an Interest from the Managing General Partner is admitted as the Managing General Partner hereunder, such transferee shall be deemed admitted to the Partnership as the Managing General Partner immediately prior to the Transfer, and such transferee shall continue the business of the Partnership without dissolution. 10.7 Representations Regarding Transfers. Each Partner hereby represents and warrants to the Partnership and the Managing General Partner that such Partner's acquisition of Interests hereunder is made as principal for such Partner's own account and not for resale or distribution of such Interests. 10.8 Partial Retirement of Limited Partner's Interest in the Partnership. (a) In General. After October 31, 1994, the Managing General Partner may cause the Partnership to retire a portion (but not all) of the Limited Partner's Interest in the Partnership in accordance with this Section 10.8 by giving written notice of such retirement to the Limited Partner (a 'Retirement 20 Notice') and copies of such Retirement Notice to all other Partners. The Retirement Notice shall state (A) the percentage of the Interest of the Limited Partner that is to be retired (the 'Retirement Percentage'), and (B) the date on which the portion of the Limited Partner's Interest is to be retired (the 'Retirement Date'), which date shall not be less than five (5) Business Days or more than sixty (60) Business Days after the date on which the Retirement Notice was given. The Managing General Partner may cause the retirement of a portion of the Limited Partner's Interest in accordance with this Section 10.8(a) only to the extent that the aggregate Interest of the Limited Partner in the capital and Profits of the Partnership is after such retirement not less than one percent (1%). (b) Retirement Adjustments and Procedures. (i) In the event that a portion of the Limited Partner's Interest in the Partnership is retired pursuant to this Section 10.8, (x) the value of the Partnership's assets shall be determined in accordance with Section 10.8(b)(ii) hereof and the Gross Asset Values of all Partnership assets shall be adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value in Section 1.8 hereof as of the day preceding the Retirement Date, and (y) Profits, Losses and other items of Partnership income, gain, loss or deduction for the period beginning on the first day of the Fiscal Year during which the Retirement Date occurs and ending on the day preceding the Retirement Date shall be allocated among the Partners pursuant to Section 3 hereof as if the day preceding the Retirement Date were the end of such Fiscal Year. On the applicable Retirement Date, the Partnership shall distribute to the Limited Partner an amount of cash and/or Gross Asset Value of other property (other than property described in clause (ix) of the definition of Permitted Investments in Section 1.8 hereof) (the mix of cash and/or property to be determined by the Managing General Partner in its sole discretion) which equals the product of the Retirement Percentage and the balance in the Limited Partner's Capital Account (taking into account the adjustments and allocations required by the first sentence of this Section 10.8(b)(i)). (ii) For purposes of determining the amount of any adjustment to the Gross Asset Values of Partnership assets pursuant to subparagraph (ii) or (iii) of the definition of Gross Asset Value in Section 1.8 hereof, the fair market value of any stocks, securities or other financial instruments held by the Partnership shall be determined by the Managing General Partner using principles consistent with any prior valuation of such stocks, securities or other financial instruments and based, to the extent possible, on publicly available information. In the absence of publicly available information, such determination shall be based on market prices as quoted by a reputable securities dealer selected by the Managing General Partner. (iii) In the event that a portion of the Limited Partner's Interest in the Partnership is retired pursuant to this Section 10.8, distributions shall be made to the Limited Partner, and the Limited Partner's Interest (or such portion thereof) in the Partnership shall be retired, at 10:00 a.m. on the Retirement Date. (c) Treatment as Partnership Distribution. The Partnership and the General Partners agree to (1) structure the retirement of the Limited Partner's Interest under this Section 10.8 as a distribution under Section 731 of the Code for federal income tax purposes, (2) treat such retirement as distributions under Section 731 of the Code for federal income tax purposes, and (3) not treat such retirement as a purchase and sale under Sections 741 and 1001 of the Code. 10.9 Requested Withdrawal and Complete Retirement. (a) Withdrawal Request. At any time after the commencement of the Partnership term, the Limited Partner may request to withdraw entirely from the Partnership by giving written notice of such election to the Managing General Partner (a 'Limited Partner Withdrawal Notice') and copies of such Limited Partner Withdrawal Notice to all other Partners, which notice shall state the date on which the Limited Partner is to withdraw (the 'Limited Partner Withdrawal Date'). Upon such request, the Managing General Partner, in its sole discretion, shall decide whether to permit such withdrawal and shall, within thirty (30) Business Days of receipt of the Limited Partner Withdrawal Notice, notify all Partners of its decision; provided, however, that if any request to withdraw from the Partnership that is made after January 31, 1997 is denied by the Managing General Partner, the Partnership shall be dissolved, wound up and liquidated in accordance with Section 12.2 hereof. 21 (b) Complete Retirement. After April 30, 1997, the Managing General Partner may cause the Partnership to retire all of the Limited Partner's Interest in the Partnership in accordance with this Section 10.9(b) by giving written notice of such retirement to the Limited Partner (a 'Complete Retirement Notice') and copies of such Complete Retirement Notice to all other Partners. The Complete Retirement Notice shall state the date on which the Limited Partner's Interest is to be retired (the 'Complete Retirement Date'), which date shall not be less than thirty (30) Business Days or more than sixty (60) Business Days after the date on which the Complete Retirement Notice was given. Upon the receipt of a Complete Retirement Notice, the Limited Partner shall have the right to give a Limited Partner Withdrawal Notice to the Managing General Partner no later than ten (10) Business Days prior to the Complete Retirement Date for the purpose of designating the property it wishes to receive upon a complete retirement. (c) Distributions Upon Withdrawal or Complete Retirement. (i) In the event that the Limited Partner's request to withdraw from the Partnership is approved by the Managing General Partner or that the Limited Partner receives a Complete Retirement Notice, (x) the value of the Partnership's assets shall be determined in accordance with Section 10.8(b)(ii) hereof and the Gross Asset Values of all Partnership assets shall be adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value in Section 1.8 hereof as of the day preceding the Limited Partner Withdrawal Date or the Complete Retirement Date, and (y) Profits, Losses and other items of Partnership income, gain, loss or deduction for the period beginning on the first day of the Fiscal Year during which the Limited Partner Withdrawal Date or the Complete Retirement Date occurs and ending on the day preceding the Limited Partner Withdrawal Date or the Complete Retirement Date shall be allocated pursuant to Section 3 hereof as if the day preceding the Limited Partner Withdrawal Date or the Complete Retirement Date were the end of such Fiscal Year. On the applicable Limited Partner Withdrawal Date or the Complete Retirement Date, the Partnership shall distribute to such Partner an amount of cash and/or Gross Asset Value of other property (other than property described in clause (ix) of the definition of Permitted Investments in Section 1.8 hereof) (the mix of cash and/or property to be determined in accordance with Section 10.9(d) hereof) which equals the Limited Partner's Capital Account (taking into account the adjustments and allocations required by the first sentence of this Section 10.9(c)(i)). (ii) In the event that a Limited Partner withdraws entirely or is completely retired from the Partnership pursuant to this Section 10.9, distributions shall be made to such Limited Partner, and such Limited Partner's Interest in the Partnership shall be retired, at 10:00 a.m. on the Limited Partner Withdrawal Date or the Complete Retirement Date. (d) Property Distributed Upon Withdrawal or Complete Retirement. The Limited Partner may designate in its Limited Partner Withdrawal Notice to the Managing General Partner which property it wishes to receive upon withdrawal or complete retirement from the Partnership. If the Limited Partner fails to so designate, the Managing General Partner shall determine, in its sole discretion, the property (excluding property described in clause (ix) of the definition of Permitted Investments in Section 1.8 hereof) to be distributed to the Limited Partner. If the Managing General Partner receives such designation notice from the Limited Partner and does not reject such designation in writing within five (5) Business Days after receiving notice thereof, such designation shall control. If the Managing General Partner rejects such designation in a timely fashion, such rejection shall contain an alternate designation of property (but excluding property described in clause (ix) of the definition of Permitted Investments in Section 1.8 hereof). If the Limited Partner rejects such alternate designation within five (5) Business Days of receiving notice thereof then, except to the extent the Managing General Partner accepts the Limited Partner's original designation, or the Partners (including the Limited Partner) unanimously agree otherwise, the Partnership shall be dissolved, wound up and liquidated in accordance with Section 12.2 hereof. 10.10 Distributions and Allocations in Respect of Transferred and Retired Interests. (a) Transferred Interests. If all or any portion of an Interest is Transferred during any Fiscal Year in compliance with the provisions of this Section 10, Profits, Losses, each item of either, and all other items for such Fiscal Year attributable to the Transferred Interest shall be allocated between the transferor and the transferee by taking into account their varying Percentage Interests during the Fiscal Year in 22 accordance with Code Section 706(d), using any conventions permitted by law and selected by the Managing General Partner. All distributions on or before the date of such Transfer shall be made to the transferor, and all distributions thereafter shall be made to the transferee. Solely for purposes of making such allocations and distributions, the Partnership shall recognize such Transfer not later than the end of the calendar month during which it is given notice of such Transfer, provided that, if the Partnership is given notice of a Transfer at least ten (10) Business Days prior to the Transfer, the Partnership shall recognize such Transfer as of the day preceding the date of such Transfer, and provided further that if the Partnership does not receive a notice stating the date such Interest was transferred and such other information as the Managing General Partner may reasonably require within thirty (30) days after the end of the Fiscal Year during which the Transfer occurs, then all such items shall be allocated, and all distributions shall be made, to the Person who, according to the books and records of the Partnership, was the owner of the Interest on the last day of such Fiscal Year. (b) Retired Interests. If all or any portion of any Interest is retired during any Fiscal Year in accordance with the provisions of this Section 10 or Section 11 hereof, (i) allocations of Profits, Losses, each item of either, and all other items for such Fiscal Year, as provided in Section 3 hereof, shall be modified in accordance with Code Section 706(d) in such manner as the Managing General Partner deems appropriate to reflect the revised Percentage Interests of the Partners following such retirement and (ii) distributions of Net Cash Flow, as provided in Section 4.1 hereof, shall be modified in such manner as the Managing General Partner deems appropriate to reflect such retirement. (c) No Liability. Neither the Partnership nor any General Partner shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 10.10, whether or not any General Partner or the Partnership has knowledge of any Transfer or retirement of ownership of any Interest. SECTION 11. GENERAL PARTNER WITHDRAWAL, TERMINATION, AND ELECTION 11.1 Covenant Not to Withdraw, Transfer, or Dissolve. Except as otherwise permitted by this Agreement, each General Partner hereby covenants and agrees not to (a) take any action to file a certificate of dissolution or its equivalent with respect to itself, (b) withdraw or attempt to withdraw from the Partnership, (c) exercise any power under the Act to dissolve the Partnership, (d) Transfer all or any portion of its Interest as a General Partner, or (e) petition for judicial dissolution of the Partnership. Further, each General Partner hereby covenants and agrees to continue to carry out the duties of a General Partner hereunder until the Partnership is dissolved and liquidated pursuant to Section 12 hereof. 11.2. Permitted Withdrawal. (a) General Partner Election. A General Partner (but no more than two of the General Partners set forth in Section 2.1 may withdraw pursuant to this Section 11.2) may elect to withdraw from the Partnership and require the Partnership to retire its entire Interest by giving written notice of such election to all other Partners (a 'General Partner Withdrawal Notice'), which notice shall state the date on which such General Partner is to withdraw (the 'General Partner Withdrawal Date'). (b) Distributions Upon Withdrawal. In the event that a General Partner elects to withdraw from the Partnership, (x) the value of the Partnership's property shall be determined in accordance with Section 10.8(b)(ii) hereof and the Gross Asset Values of the property shall be adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value in Section 1.8 hereof as of the day preceding the General Partner Withdrawal Date, and (y) Profits, Losses and other items of Partnership income, gain, loss or deduction for the period beginning on the first day of the Fiscal Year during which the General Partner Withdrawal Date occurs and ending on the day preceding the General Partner Withdrawal Date shall be allocated pursuant to Section 3 as if the day preceding the General Partner Withdrawal Date were the end of such Fiscal Year. On the applicable General Partner Withdrawal Date or as shortly thereafter as practicable, the Partnership shall distribute to such General Partner an amount of cash and/or Gross Asset Value of other property (the mix of cash and/or property to be determined by the Managing General Partner in its sole discretion) which equals the balance in the 23 withdrawing General Partner's Capital Account (taking into account the adjustments and allocations required by this Section 11.2(b)). Distributions shall be made to such General Partner, and its Interest in the Partnership shall be retired, at 10:00 a.m. on the General Partner Withdrawal Date. (c) Admission of New General Partner. In the event that a General Partner elects to withdraw from the Partnership and there is no other General Partner at such time, the withdrawing General Partner shall, prior to the General Partner Withdrawal Date, cause a substitute General Partner to be admitted to the Partnership. 11.3 Termination of Status as General Partner. A General Partner shall cease to be a General Partner upon the first to occur of (i) the Bankruptcy of such Partner, (ii) the involuntary Transfer by operation of law of such General Partner's entire Interest in the Partnership, (iii) the Transfer of such Partner's entire Interest as a General Partner, or (iv) the vote of a majority of the other Partners to remove such General Partner after such General Partner has attempted to make a Transfer of its Interest, committed a material breach of this Agreement or its representations and warranties hereunder, or committed any other act or suffered any other condition that would justify a decree of dissolution of the Partnership under the laws of the State of Delaware. In the event a Person ceases to be a General Partner without having Transferred its entire Interest as a General Partner, such Person shall be treated as an unadmitted transferee of an Interest as a result of a Permitted Transfer of an Interest pursuant to Section 10.5 hereof. If a Person ceases to be a General Partner for any reason hereunder, such Person shall continue to be liable as a General Partner to the extent provided by Delaware law for all debts and obligations of the Partnership existing at the time such Person ceases to be a General Partner, regardless of whether, at such time, such debts or liabilities were known or unknown, actual or contingent. A Person shall not be liable as a General Partner for Partnership debts and obligations arising after such Person ceases to be a General Partner. Any debts, obligations, or liabilities in damages to the Partnership of any Person who ceases to be a General Partner shall be collectible by any legal means and the Partnership is authorized, in addition to any other remedies at law or in equity, to apply any amounts otherwise distributable or payable by the Partnership to such Person to satisfy such debts, obligations, or liabilities. 11.4 Election of New General Partners. Provided the Partnership has one General Partner, any Partner may nominate one or more Persons for election as additional General Partners. The election of an additional General Partner shall require an affirmative vote of all of the Partners. SECTION 12. DISSOLUTION AND WINDING UP 12.1 Liquidating Events. The Partners hereby agree that the Partnership shall dissolve and commence winding up and liquidating upon the first to occur of any of the following ('Liquidating Events'): (a) The twentieth (20th) anniversary of the formation of the Partnership; (b) The sale of all of the Partnership property; (c) The unanimous vote of the Partners to dissolve, wind up, and liquidate the Partnership; (d) The happening of any other event that, in the sole opinion of the Managing General Partner, makes it unlawful, impossible, or impractical to carry on the business of the Partnership; (e) The happening of any event that causes there to be no general partner under the Act; (f) The Bankruptcy of any General Partner; (g) The failure of the Partnership to repay the Purchaser the Investment Principal (along with any accrued but unpaid Investment Return and any payment required by Section 6.02 of the Purchase Agreement) upon the occurrence of a Mandatory Retirement Event in accordance with Section 6.01 of 24 the Purchase Agreement and the instructions by the Purchaser pursuant to Section 6.01(b) of the Purchase Agreement to liquidate the property of the Partnership; (h) The denial by the Managing General Partner of the Limited Partner's request to withdraw from the Partnership after January 31, 1997 as provided in Section 10.9(a) hereof; or (i) The failure of the Managing General Partner to timely accept the Limited Partner's original designation after the Limited Partner has rejected the Managing General Partner's alternate designation (and the Partners' failure to unanimously agree otherwise), as provided in Section 10.9(d) hereof. The Partnership shall not be dissolved or required to be wound up if (x) upon the occurrence of any event set forth in Section 12.1(e) hereof, there is at least one remaining General Partner and that General Partner carries on the business of the Partnership (any such remaining General Partner being hereby authorized to carry on the business of the Partnership), or (y) upon the occurrence of any event set forth in Section 12.1(e) or (f) hereof, within ninety (90) days after such event all remaining Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of the date of such event, of one or more additional General Partners. 12.2 Winding Up. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Partners and no Partner shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership's business and affairs. To the extent not inconsistent with the foregoing, all covenants and obligations in this Agreement shall continue in full force and effect until such time as the Partnership property has been distributed pursuant to this Section 12.2 and the Certificate has been cancelled in accordance with the Act. The Managing General Partner or, in the event there is no Managing General Partner or of a Bankruptcy of the Managing General Partner, a General Partner (or, in the event there is no remaining General Partner or in the event of a Bankruptcy of the remaining General Partner, any Person elected by the Limited Partner) shall be responsible for overseeing the winding up and dissolution of the Partnership, shall take full account of the Partnership's liabilities and property, shall cause the Partnership property to be liquidated as promptly as is consistent with obtaining the fair market value thereof and shall cause the Partnership property or the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed in the following order: (a) First, to the payment and discharge of all of the Partnership's debts, obligations and liabilities (including under the Purchase Agreement) other than those owing the Partners; (b) Second, to the payment and discharge of all of the Partnership's debts and liabilities to the Partners; and (c) The balance, if any, to the Partners in accordance with their positive Capital Accounts, after giving effect to all contributions, distributions, and allocations for all periods. No Partner shall receive any additional compensation for any services performed pursuant to this Section 12. Each General Partner understands and agrees that by accepting the provisions of this Section 12.2 setting forth the priority of the distribution of the assets of the Partnership to be made upon its liquidation, such General Partner expressly waives any right which it, as a creditor of the Partnership, might otherwise have under the Act to receive distributions of assets pari passu with the other creditors of the Partnership in connection with a distribution of assets of the Partnership in satisfaction of any liability of the Partnership, and hereby subordinates to said creditors any such right. 12.3 Compliance With Certain Requirements of Regulations Concerning Deficit Capital Accounts. In the event the Partnership is 'liquidated' within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, (a) distributions shall be made pursuant to this Section 12 to the Partners who have positive Capital Accounts in compliance with Section 1.704-1(b)(2)(ii)(b)(2) of the Regulations, and (b) if any General Partner's Capital Account has a deficit balance (after giving effect to all contributions, distributions, and allocations for all taxable years, including the year during which such liquidation occurs), such General Partner shall contribute to the capital of the Partnership the amount necessary to restore such deficit balance to zero in compliance with Section 1.704-l(b)(2)(ii)(b)(3) of the Regulations. 25 Such obligation of a General Partner to contribute shall be subordinate in right of payment to the unsecured claims of all creditors of such General Partner, and a General Partner shall not be required to contribute funds to the Partnership pursuant to this Section 12.3 to the extent that, after giving effect to such contribution, such General Partner would be Insolvent. In the discretion of the Managing General Partner, a pro rata portion of the distributions that would otherwise be made to the Partners pursuant to Section 12.2(c) hereof may be withheld to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld amounts shall be distributed to the Partners as soon as practicable. 12.4 Deemed Distribution and Recontribution. Notwithstanding any other provision of this Section 12, in the event the Partnership is liquidated within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations but no Liquidating Event has occurred, the Partnership property shall not be liquidated, the Partnership's liabilities shall not be paid or discharged, and the Partnership's affairs shall not be wound up. Instead, solely for federal income tax purposes, the Partnership shall be deemed to have distributed the Partnership property in kind to the Partners (on a pro rata basis), who shall be deemed to have assumed and taken subject to all Partnership liabilities, all in accordance with their respective Capital Accounts and, if any General Partner's Capital Account has a deficit balance (after giving effect to all contributions, distributions, and allocations for all Fiscal Years, including the Fiscal Year during which such liquidation occurs), such General Partner shall contribute to the capital of the Partnership the amount necessary to restore such deficit balance to zero in compliance with Section 1.704-1(b)(2)(ii)(b)(3) of the Regulations. Such obligation of a General Partner to contribute shall be subordinate in right of payment to the unsecured claims of all creditors of such General Partner, and a General Partner shall not be required to contribute funds to the Partnership pursuant to this Section 12.4 to the extent that, after giving effect to such contribution, such General Partner would be Insolvent. Immediately thereafter, the Partners shall be deemed to have recontributed the Property in kind to the Partnership, which shall be deemed to have assumed and taken subject to all such liabilities. 12.5 Rights of Partners. Except as otherwise provided in this Agreement, (a) each Partner shall look solely to the assets of the Partnership for the return of its Capital Contribution and shall have no right or power to demand or receive property other than cash from the Partnership, and (b) no Partner shall have priority over any other Partner as to the return of its Capital Contributions. In the event the Limited Partner believes that the Managing General Partner is unduly delaying the winding up and liquidation of the Partnership following the occurrence of a Liquidating Event, the Limited Partner may compel such liquidation using any appropriate means, including seeking a court order or other judicial relief with respect thereto. 12.6 Notice of Dissolution. In the event a Liquidating Event occurs or an event occurs that results in a dissolution of the Partnership, the Managing General Partner shall, within thirty (30) days thereafter, provide written notice thereof to each of the Partners and to all other parties with whom the Partnership regularly conducts business (as determined in the discretion of the Managing General Partner). 12.7 Form of Liquidating Distributions. For purposes of making distributions required by Section 12.2 hereof, the Managing General Partner may determine whether to distribute all or any portion of the Partnership property in-kind or to sell all or any portion of the Partnership property to any Person, including the Managing General Partner and its Affiliates, and distribute the proceeds therefrom. SECTION 13. POWER OF ATTORNEY 13.1 Managing General Partner as Attorney-In-Fact. Each Partner hereby makes, constitutes, and appoints the Managing General Partner and each successor Managing General Partner, with full power of substitution and resubstitution, its true and 26 lawful attorney-in-fact for it and in its name, place, and stead and for its use and benefit, to sign, execute, certify, acknowledge, swear to, file, and record (a) all certificates of limited partnership, amended name or similar certificates, and other certificates and instruments (including counterparts of this Agreement) which the Managing General Partner may deem necessary or appropriate to be filed by the Partnership under the laws of the State of Delaware or any other state or jurisdiction in which the Partnership is doing or intends to do business; (b) all certificates of cancellation and other instruments which the Managing General Partner may deem necessary or appropriate to effect the dissolution and termination of the Partnership pursuant to the terms of this Agreement; and (c) any other instrument which is now or may hereafter be required by law to be filed on behalf of the Partnership or is deemed necessary or appropriate by the Managing General Partner to carry out fully the provisions of this Agreement in accordance with its terms. Each Partner authorizes each such attorney-in-fact to take any further action which such attorney-in-fact shall consider necessary or advisable in connection with any of the foregoing, hereby giving each such attorney-in-fact full power and authority to do and perform each and every act or thing whatsoever requisite or advisable to be done in connection with the foregoing as fully as such Partner might or could do personally, and hereby ratifying and confirming all that any such attorney-in-fact shall lawfully do or cause to be done by virtue thereof or hereof. 13.2 Nature as Special Power. The power of attorney granted pursuant to this Section 13: (a) Is a special power of attorney coupled with an interest and is irrevocable; (b) May be exercised by any such attorney-in-fact by listing the Partners executing any agreement, certificate, instrument, or other document with the single signature of any such attorney-in-fact acting as attorney-in-fact for such Partners; and (c) Shall survive the Bankruptcy, insolvency, dissolution, or cessation of existence of a Partner and shall survive the delivery of an assignment by a Partner of the whole or a portion of its Interest, except that where the assignment is of such Partner's entire Interest and the assignee, with the consent of the Managing General Partner, is admitted as a substituted Partner, the power of attorney shall survive the delivery of such assignment for the sole purpose of enabling any such attorney-in-fact to effect such substitution. SECTION 14. MISCELLANEOUS 14.1 Notices. Any notice, payment, demand, or communication required or permitted to be given by any provision of this Agreement shall be in writing and sent by overnight courier, or by telephone or facsimile, if such telephone conversation or facsimile is followed by a hard copy of the telephone conversation or facsimiled communication sent by overnight courier, charges prepaid and addressed as follows, or to such other address as such Person may from time to time specify by notice to the Partners: (a) If to the Partnership, to the Partnership at the address set forth in Section 1.4 hereof. (b) If to RHDC, to the address set forth in Section 2.1 hereof. (c) If to DBI, to the address set forth in Section 2.1 hereof. (d) If to IMS, to the address set forth in Section 2.1 hereof. (e) If to RBDB, to the address set forth in Section 2.2 hereof. Any such notice shall be deemed to be delivered, given, and received for all purposes as of the date so delivered. Any Person may from time to time specify a different address by notice to the Partnership and the Partners. 14.2 Binding Effect. Except as otherwise provided in this Agreement, every covenant, term, and provision of this Agreement shall be binding upon and inure to the benefit of the Partners and their respective successors, transferees, and assigns. 14.3 Construction. 27 Every covenant, term, and provision of this Agreement shall be construed according to its fair meaning and not strictly for or against any Partner. The terms of this Agreement are intended to embody the economic relationship among the Partners and shall not be subject to modification by, or be conformed with, any actions by the Internal Revenue Service except as this Agreement may be explicitly so amended. 14.4 Time. Time is of the essence with respect to this Agreement. 14.5 Headings. Section and other headings contained in this Agreement are for reference purposes only and are not intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof. 14.6 Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement. 14.7 Incorporation by Reference. Every exhibit, schedule, and other appendix attached to this Agreement and referred to herein is incorporated in this Agreement by reference unless this Agreement expressly otherwise provides. 14.8 Further Action. Each Partner, upon the request of the General Partner, agrees to perform all further acts and execute, acknowledge, and to deliver any documents which may be reasonably necessary, appropriate, or desirable to carry out the provisions of this Agreement. 14.9 Variation of Pronouns. All pronouns and any variations thereof shall be deemed to refer to masculine, feminine, or neuter, singular or plural, as the identity of the Person or Persons may require. 14.10 Governing Law. The laws of the State of Delaware shall govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the Partners. 14.11 Waiver of Action for Partition; No Bill For Partnership Accounting. Each Partner irrevocably waives any right that it may have to maintain any action for partition with respect to any of the Partnership property. To the fullest extent permitted by law, each Partner covenants that it will not (except with the consent of the Managing General Partner) file a bill for Partnership accounting. 14.12 Counterpart Execution. This Agreement may be executed in any number of counterparts with the same effect as if all the Partners had signed the same document. All counterparts shall be construed together and shall constitute one agreement. 14.13 Sole and Absolute Discretion. Except as otherwise provided in this Agreement, all actions which the Managing Partner may take and all determinations which the Managing General Partner may make pursuant to this Agreement may be taken and made at the sole and absolute discretion of the Managing General Partner. 14.14 No Third-Party Rights. This Agreement will not confer or be construed as conferring (directly, indirectly, contingently or otherwise), any rights or benefits in any Person, including any third-party beneficiary rights, other than rights conferred upon (i) a Partner of the Partnership and (ii) a transferee in connection with a Permitted Transfer. 14.15 Entire Agreement. 28 This Agreement, together with all Exhibits hereto, contains the entire agreement between the parties hereto relative to the operations of the Partnership. 14.16 Specific Performance. Each Partner agrees with the other Partners that the other Partners would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms and that monetary damages would not provide an adequate remedy in such event. Accordingly, it is agreed that, in addition to any other remedy to which the nonbreaching Partners may be entitled, at law or in equity, the nonbreaching Partners shall be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and specifically to enforce the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having subject matter jurisdiction thereof. IN WITNESS WHEREOF, the parties have entered into this Agreement of Limited Partnership as of the day first above set forth. [signatures follow on separate pages] 29 GENERAL PARTNERS: THE REUBEN H. DONNELLY CORPORATION By: /s/ WILLIAM H. BUCHANAN, JR. ................................ Title: Senior Vice President DUN & BRADSTREET, INC. By: /s/ ALAN J. KLUTCH ................................ Title: Vice President IMS AMERICA, LTD. By: /s/ ALAN J. KLUTCH ................................ Title: Vice President 30 THIS IS A SIGNATURE PAGE TO THE AGREEMENT OF LIMITED PARTNERSHIP OF D&B INVESTORS L.P. LIMITED PARTNER: RBDB, LLC By: /s/ D. G. ZIENGS ................................ Title: President 31 THIS IS A SIGNATURE PAGE TO THE AGREEMENT OF LIMITED PARTNERSHIP OF D&B INVESTORS L.P. 32 EX-10 10 EXHIBIT-I CONFORMED COPY INCORPORATING AMENDMENT DATED AS OF 10/14/93 PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (this 'Agreement') is made and entered into this 14th day of October 1993 by and among Merrill Lynch Capital Services Inc., a Delaware corporation (the 'Purchaser'), D&B Investors L.P., a limited partnership organized under the laws of Delaware (the 'Partnership'), The Reuben H. Donnelley Corporation, a Delaware corporation ('RHDC'), Dun & Bradstreet, Inc., a Delaware corporation ('DBI'), and IMS America, Ltd., a New Jersey corporation ('IMS'; and together with RHDC and DBI the 'Initial General Partners'). PRELIMINARY STATEMENT The Partnership has been formed to acquire certain stocks, bonds, notes, debentures, puts, calls, options, warrants and other financial instruments or securities as described in the Partnership Agreement, and to manage, protect and conserve the assets of the Partnership, and to engage in any and all activities related or incidental thereto. The Purchaser has agreed to advance funds to the Partnership totalling up to U.S.$500 million to be used in connection with these purposes. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto agree as follows: SECTION 1. DEFINITIONS Capitalized words and phrases used in this Agreement have the following meanings: 'Affiliate' means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any Person owning or controlling 10% or more of the outstanding voting interests of such Person, (iii) any officer, director or general partner of such Person, or (iv) any Person who is an officer, director, general partner, trustee, or holder of 10% or more of the voting interests of any Person described in clauses (i) through (iii) of this sentence. For purposes of this definition, the term 'control,' (including, with correlative meanings, the terms 'controlling,' 'controlled by' and 'under common control with') means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 'Agreement' means this Purchase Agreement made and entered into on October 14, 1993 among the Purchaser, the Partnership and the Initial General Partners. 'Applicable LIBOR Rate' means, with respect to any Reference Period, (i) a rate per annum (expressed as a decimal and rounded upwards, if necessary, to the nearest one-hundredth of a percentage point) equal to the amount obtained by dividing (a) the sum of the offered rate per annum for six-month deposits in United States dollars in a principal amount of not less than $5,000,000 which appears on the display designated as 'Page 3750' on the Telerate Service (or such other page as may replace 'Page 3750' on that service for the purpose of displaying London interbank offered rates of major banks) for each Wednesday (or, if such Wednesday is not a London Banking Day, the first London Banking Day thereafter) during such Reference Period divided by (b) the number of Wednesdays during such Reference Period, or (ii) if a rate cannot be determined under clause (i) above, a rate per annum equal to the amount obtained by dividing (a) the sum of the average (rounded upwards, if necessary, to the nearest one-hundredth of a percentage point) rate per annum offered for six-month deposits in United States dollars, as set forth on the display designated as page 'LIBO' on the Reuter Monitor Money Rates Service (or such other page as may replace the LIBO page on the service for the purpose of displaying London interbank offered rates of major banks) as of 11:00 A.M. (London Time) for a principal amount of not less than $5,000,000 for each Wednesday (or, if such Wednesday is not a London Banking Day, the first London Banking Day thereafter) during such Reference Period divided by (b) the number of Wednesdays during such Reference Period, or (iii) if a rate cannot be determined under clause (i) or (ii) above, a rate per annum equal to the amount obtained by dividing (a) the sum of the average (rounded upwards, if necessary, to the nearest one-hundredth of a percentage point) of the rates per annum at which six-month deposits in amounts of not less than U.S. $5,000,000 are offered by three London banks mutually agreeable between the Purchaser and the Company for each Wednesday (or, if such Wednesday is not a London Banking Day, the first London Banking Day thereafter) during such Reference Period by (b) the number of Wednesdays during such Reference Period. 'Bankruptcy' means, with respect to any Person, a Voluntary Bankruptcy or an Involuntary Bankruptcy. 'Business Day' means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. 'Capital Stock' means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person, whether now outstanding or issued after the date of this Agreement, including, without limitation, all common stock and preferred stock. 'Code' means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). 'Compliance Certificate' has the meaning specified in Section 7.02(b) hereof. 'Cure Period' has the meaning specified in Section 6.01(a) hereof. 'Currency Agreement' means, with respect to any Person, any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in currency values. 'Debt' means, with respect to any Person, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto), (iv) all obligations of such Person to pay the deferred purchase price of property or services, (v) all obligations of such Person arising from any short sales, the writing of options, forward contracts or similar transactions, (vi) all obligations of such Person as lessee which would be capitalized in accordance with GAAP, (vii) all obligations secured by any mortgage, pledge, security interest, encumbrance, lien or charge of any kind on any asset of such Person, whether or not any such obligation is otherwise an obligation of such Person, (viii) to the extent not otherwise included in the definition, obligations under Currency Agreements and Interest Rate Agreements, and (ix) all obligations of others, of a type described in (i) through (viii) above, that are directly or indirectly guaranteed (whether contingently or otherwise) by such Person; provided that Debt shall not include Trade Payables of such Person or any indebtedness of such Person to Parent incurred in the ordinary course of business consistent with past practice resulting from the cash management system maintained by Parent. 'ERISA' means the Employee Retirement Income Security Act of 1974, as amended (and any corresponding provisions of succeeding law). 'Exchange Act' means the Securities Exchange Act of 1934, as amended (or any corresponding provisions of succeeding law). 'Fair Market Value' means as to any date (i) if a security is registered under the Exchange Act and listed on a national securities exchange or included on the National Association of Securities Dealers Automated Quotation System, National Market ('NASDAQ'), the closing sales price on such date (or in the event such date is not a Business Day, the Business Day immediately preceding such date), and (ii) if a security is not traded on a national securities exchange or listed on NASDAQ or the value otherwise cannot be determined under clause (i), the average of the firm prices bid for such date quoted by Morgan Stanley & Co. Incorporated, Salomon Brothers Inc. and The First Boston Corporation, in each case for the full amount of the specific security for which the Fair Market Value is being determined. 2 'Fiscal Quarter' means (i) the period commencing on the effective date of this Agreement and ending on December 31, 1993 and (ii) any subsequent three-month period commencing on each of January 1, April 1, July 1, or October 1. 'Fiscal Year' means (i) the period commencing on the effective date of this Agreement and ending on December 31, 1993, (ii) any subsequent twelve-month period commencing on January 1 and ending on December 31, or (iii) any portion of the period described in clause (ii) that is considered a short taxable year of the Partnership under the Code and the Regulations. 'GAAP' means United States generally accepted accounting principles as in effect from time to time, applied on a consistent basis. 'General Partners' means collectively the Initial General Partners and any Person who hereafter becomes a general partner in the Partnership. 'Initial General Partners' has the meaning specified in the preamble to this Agreement. 'Insolvent' means, with respect to any Person at any time, the fair market value of the assets and properties of such Person at such time being less than the liabilities of such Person at such time. 'Interest Rate Agreement' means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in interest rates. 'Investment' means any direct or indirect advance, loan or other extension of credit (other than (i) advances to customers in the ordinary course of business that would be recorded as accounts receivable on the balance sheet, in accordance with GAAP, of a General Partner or any of its subsidiaries or (ii) advances, loans or other extensions of credit resulting from the cash management system maintained by Parent, provided such advances, loans and other extensions of credit constitute unsubordinated indebtedness of Parent) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of capital stock, bonds, notes, debentures or other similar instruments issued by any other Person (other than bonds, notes, debentures or other similar instruments issued by Parent or by an Affiliate of Parent if such debt is unconditionally guaranteed by Parent on an unsubordinated basis). 'Investment Advance' means an advance by the Purchaser to the Partnership pursuant to Section 2.01(b) hereof. 'Investment Principal' means the aggregate amount of all Investment Advances. 'Investment Rate' means, with respect to any Reference Period, the sum of (i) 1.42% per annum plus (ii) the Applicable LIBOR Rate for such Reference Period. 'Investment Return' has the meaning specified in Section 2.02(a) hereof. 'Involuntary Bankruptcy' means, with respect to any Person, without the consent or acquiescence of such Person, the entering of an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation, or the filing of any such petition against such Person which petition shall not be dismissed within thirty (30) days, or, without the consent or acquiescence of such Person, the entering of an order appointing a trustee, custodian, receiver or liquidator of such Person or of all or any substantial part of the property of such Person which order shall not be dismissed within thirty (30) days. 'Lien' means any lien, mortgage, pledge, charge, security interest, security agreement, conditional sale or trust receipt or other encumbrance of any kind. 'London Banking Day' means a day of the year on which dealings are carried on in the London interbank market. 'Liquidating Event' has the meaning specified in Section 12.1 of the Partnership Agreement. 3 'Managing General Partner' means RHDC, or in the event RHDC shall no longer be the managing general partner under the Partnership Agreement, such Person who is the managing general partner under the Partnership Agreement. 'Mandatory Retirement Event' has the meaning specified in Section 6.01(a) hereof. 'Net Cash Flow' means the gross cash proceeds of the Partnership less the portion thereof used to pay or establish reserves for all Partnership expenses, debt payments, capital investments, replacements, and contingencies, all as determined by the Managing General Partner in its sole discretion. 'Net Cash Flow' shall not be reduced by depreciation, amortization, cost recovery deductions, or similar allowances, but shall be increased by any reductions of reserves previously established pursuant to the first sentence of this definition. 'Parent' means The Dun & Bradstreet Corporation. 'Parent Agreement' means the agreement dated the date of this Agreement between Parent and the Purchaser. 'Parent Debt' has the meaning specified in Section 6.01(c) hereof. 'Parent Stock' has the meaning specified in Section 6.01(c) hereof. 'Partners' means the Initial General Partners and RBDB, LLC, a limited partner in the Partnership and any Person who hereafter acquires a general or limited partnership interest in the Partnership. 'Partnership' has the meaning specified in the preamble to this Agreement. 'Partnership Agreement' means the Agreement of Limited Partnership of D&B Investors L.P., dated October 14, 1993, among RHDC, DBI and IMS, as general partners and RBDB, LLC, a Delaware limited liability company, as in effect on the date of this Agreement. 'Permitted Investments' means any of the following: (i) cash; (ii) direct obligations of the United States of America for the payment of which its full faith and credit is pledged, Federal Home Loan Mortgage Corporation participation certificates, Federal National Mortgage Association mortgage pass-through certificates or Government National Mortgage Association mortgage pass-through certificates; (iii) short-term commercial paper issued by any corporation organized under the laws of the United States of America or any state thereof, rated at least 'A-1' by S&P; provided that the aggregate Fair Market Value of all commercial paper issued by any Person shall not exceed 10% of the aggregate Fair Market Value of all Property (other than cash) owned by the Partnership; (iv) indebtedness of any Person organized under the laws of the United States of America or any state thereof that is not an Affiliate of Parent, rated at least 'AA' by S&P; provided, that the aggregate Fair Market Value of all such indebtedness issued by any Person shall not exceed 10% of the aggregate Fair Market Value of all Property (other than cash) owned by the Partnership; (v) unsubordinated debt issued by Parent or unsubordinated debt issued by an Affiliate of Parent if (and only if) such debt is unconditionally guaranteed by Parent on an unsubordinated basis; provided, that Parent has agreed to register such debt under the Securities Act upon the request of the holder of such debt and such agreement inures to the benefit of any subsequent holder of such debt; (vi) common stock or preferred stock issued by Parent; provided (A) the ownership of such stock (when taken together with any other securities owned by the Partnership) would not require the Partnership to file a Schedule 13D under the Exchange Act and (B) Parent has agreed to register such stock under the Securities Act upon the request of the holder of such stock and such agreement inures to the benefit of any subsequent holder of such stock; or (vii) puts, calls, options or warrants to purchase or sell common stock of Parent; provided that (A) such puts, calls, options or warrants do not, in the aggregate, at the time of their acquisition, exceed 10% of the Fair Market Value of all Property then held by the Partnership and (B) the ownership of such puts, calls, options or warrants (when taken together with any other securities owned by the Partnership) would not require the Partnership to file a Schedule 13D under the Exchange Act. 4 'Permitted Liens' means with respect to any Person (i) Liens for taxes, assessments, governmental charges or claims that are not yet due and payable or that are being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as would be required in conformity with GAAP shall have been made; (ii) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as would be required in conformity with GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers' acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business of such Person (exclusive of obligations for the payment of borrowed money); (v) easements, rights-of-way, municipal and zoning ordinances and similar charges, encumbrances, title defects or other irregularities that do not materially interfere with the ordinary course of business of such Person; (vi) Liens (including extensions and renewals thereof) upon real or personal property acquired by such Person after the date of this Agreement; provided that (a) such Lien is created solely for the purpose of securing Debt incurred (1) to finance the cost (including the cost of improvement or construction) of the item of property or assets subject thereto and such Lien is created prior to, at the time of or within six months after the later of the acquisition, the completion of construction or the commencement of full operation of such property or (2) to refinance any Debt previously so secured, (b) the principal amount of the Debt secured by such Lien does not exceed 100% of such cost and (c) any such Lien shall not extend to or cover any property or assets other than such item of property or assets and any improvements on such item; (vii) leases or subleases granted to others that do not materially interfere with the ordinary course of business of such Person; (viii) any interest or title of a lessor in the property subject to any capitalized lease or operating lease; and (ix) Liens arising from filing Uniform Commercial Code financing statements regarding leases. 'Person' means any individual, partnership, corporation, trust, limited liability company, association or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 'Portfolio Certificate' means a written certificate of the Managing General Partner signed by the chief financial officer of the Managing General Partner delivered in accordance with Section 7.02 hereof, that certifies the aggregate Fair Market Value of the Property held by the Partnership as of a given date. 'Property' means all property acquired by the Partnership, and shall include both tangible and intangible Property. 'Purchaser' has the meaning specified in the preamble to this Agreement and its successors and assigns. 'Rating Category' means (i) with respect to short-term ratings, A-1+, A-1, A-2, A-3, B, C and D (or equivalent successor categories) or (ii) with respect to long-term ratings, AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories). 'Redeemable Stock' means any class or series of Capital Stock of any Person that by its terms or otherwise is (i) required to be redeemed, (ii) redeemable at the option of the holder of such class or series of Capital Stock at any time or (iii) convertible into or exchangeable for capital stock referred to in clause (i) or (ii) above or Debt. 'Reference Period' means the six month period beginning on the date of this Agreement and each successive six month period thereafter; provided that in the event a Mandatory Retirement Event occurs during any Reference Period, the last day of such Reference Period shall be the date the Partnership shall repay the Investment Principal pursuant to Section 6.01(b) hereof. 5 'Regulations' means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time (including any corresponding provisions of succeeding regulations). 'Securities Act' means the Securities Act of 1933, as amended (or any corresponding provisions of succeeding law). 'S&P' means Standard & Poor's Corporation and its successors. 'Trade Payables' of any Person means indebtedness owed by such Person to trade creditors incurred in the ordinary course of business in connection with the acquisition of goods or services by such Person and paid on ordinary commercial terms; provided that Trade Payables shall not include any payment made by the Partnership in reimbursement of reasonable, direct, out-of-pocket expenses incurred by a General Partner in connection with the Partnership's business in an aggregate amount not to exceed $100,000 per fiscal year. 'Triggering Event' means either (i) the occurrence of a decrease of the short-term rating of the Parent by S&P by one or more rating gradations; provided, that, in the event Parent shall at any time not have a short-term rating, Triggering Event shall mean the occurrence of a decrease of the long-term rating of the Parent by S&P by one or more rating gradations or (ii) Parent not at any time having either a short-term or a long-term rating. In determining whether the rating has decreased by one or more gradations, gradations within Rating Categories (e.g., + and - for S&P long-term ratings), shall be taken into account (e.g., a decline in a rating from AA+ to AA, as well as from AA to A+, will constitute a decrease of one gradation). 'Voluntary Bankruptcy' means, with respect to any Person, the inability of such Person generally to pay its debts as such debts become due, or an admission in writing by such Person of its inability to pay its debts generally or a general assignment by such Person for the benefit of creditors; the filing of any petition or answer by such Person seeking to adjudicate it a bankrupt or insolvent, or seeking for itself any liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of such Person or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking, consenting to, or acquiescing in the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for such Person or for any substantial part of its property; or partnership or corporate action taken by such Person to authorize any of the actions set forth above. 'Weighted Average Investment Principal Amount' means, for any Reference Period, the amount obtained by dividing (i) the sum of the amount of Investment Principal outstanding at the opening of business on each day in such Reference Period by (ii) the number of days in such Reference Period. SECTION 2. INVESTMENT PRINCIPAL AND INVESTMENT RETURN 2.01. The Investment Principal. (a) Maximum Investment Principal Amount. The Purchaser shall, on the terms and conditions hereinafter set forth, transfer to the Partnership, at the address specified in Section 7.01 hereof, up to an aggregate amount of U.S.$500 million. (b) Investment Advances. Each Investment Advance shall be made on notice, given not later than the third Business Day prior to the requested date of a proposed Investment Advance (or such shorter period of time acceptable to the Purchaser), by the Partnership to the Purchaser specifying therein the Business Day on which such Investment Advance is to be made and the amount of such Investment Advance; provided, that each Investment Advance shall be in an amount at least equal to $50 million or an integral multiple of $1 million in excess thereof. If the Partnership shall request in such notice an Investment Advance which the Purchaser determines is available hereunder, the Purchaser shall, before 11:00 a.m. (New York City time) on the date of each such Investment Advance and upon fulfillment of the conditions in this Agreement, transfer to the Partnership at the address specified in Section 7.01, the amount of such Investment Advance in immediately available funds. 2.02. Investment Return. 6 (a) Determination of Investment Return. The return on the Investment Principal for each Reference Period (the 'Investment Return') shall equal the product obtained by multiplying (i) the Investment Rate for such Reference Period by (ii) the Weighted Average Investment Principal Amount and by (iii) a fraction the numerator of which is the number of days in such Reference Period and the denominator of which is 360. (b) Payment of Investment Return. The Partnership shall pay the Investment Return for each Reference Period to the Purchaser on the last day of such Reference Period; provided that, in the event the last day of any Reference Period is not a Business Day, the last day of such Reference Period shall be extended to occur on the next succeeding Business Day; provided further that if such extension would cause the last day of such Reference Period to occur in the next following calendar month, the last day of such Reference Period shall occur on the next preceding Business Day. Payment shall be made to the Purchaser in immediately available funds at its address specified in Section 7.01 hereof. (c) Insufficient Partnership Funds. To the extent the Partnership fails or is otherwise unable to pay the Investment Return with respect to any Reference Period when due, each of the General Partners jointly and severally agrees to advance funds to the Partnership in an amount sufficient to permit the Partnership to pay the Investment Return (but only to the extent the Investment Return accrued while such General Partner was a general partner of the Partnership) in accordance with Section 2.02(b), and shall cause the Partnership to make such payment; provided, however, that the Partnership's obligation to repay any such advances shall be subordinate in right of payment to the repayment of the Investment Principal, any accrued and unpaid Investment Return and any payment required pursuant to Section 6.02 hereof and no such advance or any interest thereon may be repaid prior to the repayment of the Investment Principal, any accrued and unpaid Investment Return and any payment required pursuant to Section 6.02 hereof; provided further, however, that (i) the obligations of each General Partner under this Section 2.02(c) shall be subordinate in right of payment to the unsecured claims of all creditors of such General Partner and (ii) no General Partner shall be required to advance funds to the Partnership under this Section 2.02(c) to the extent that, after giving effect to such advance, such General Partner would be Insolvent. 2.03. Withholding. Notwithstanding anything to the contrary in this Agreement, unless the Partnership has received from the Purchaser an Internal Revenue Service Form 4224 or other applicable form, certificate or document prescribed from time to time by the Internal Revenue Service of the United States certifying that payments hereunder to the Purchaser are not subject to or are exempt from United States withholding tax, the Partnership (i) shall withhold the applicable taxes from payments made to the Purchaser prior to such receipt at the applicable statutory rate, and (ii) shall treat all amounts so withheld as a payment to the Purchaser under this Agreement. SECTION 3 CONDITIONS TO INVESTMENT ADVANCES 3.01. Condition Precedent to Initial Investment Advance. The obligation of the Purchaser to make its initial Investment Advance is subject to the condition precedent that the Purchaser shall have received on or before the date of the initial Investment Advance the following, each dated such day, in form and substance satisfactory to the Purchaser: (a) An executed copy of this Agreement. (b) Certified copies of the resolutions of the Board of Directors of each of the Initial General Partners approving this Agreement, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement. (c) A certificate of the Secretary or an Assistant Secretary of each of the Initial General Partners certifying the names and true signatures of the officers of such Initial General Partner authorized to sign this Agreement and the other documents to be delivered hereunder. 7 (d) A certificate of the Secretary or an Assistant Secretary of the Managing General Partner certifying that the representations and warranties of the Partnership contained in Section 4.01 hereof are true and correct on such date. (e) A certificate of the Secretary or an Assistant Secretary of each of the Initial General Partnerscertifying that the representations and warranties of such Initial General Partner contained in Section 4.03 hereof are true and correct on such date. (f) A certified copy of the Partnership Agreement and evidence that the Original Capital Contributions (as defined in the Partnership Agreement) have been made. (g) An executed copy of the Parent Agreement. (h) Certified copies of the resolutions of the Board of Directors of Parent approving the Parent Agreement, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Parent Agreement. (i) A certificate of the Secretary or an Assistant Secretary of Parent certifying the names and true signatures of the officers of Parent authorized to sign the Parent Agreement and the other documents to be delivered thereunder. (j) A request for the initial Investment Advance in accordance with Section 2.01(b) hereof. (k) a favorable opinion of Skadden, Arps, Slate, Meagher & Flom, in form and substance reasonably satisfactory to the Purchaser. (l) a favorable opinion of Stephen J. Boatti, in form and substance reasonably satisfactory to the Purchaser. (m) such other approvals, opinions or documents as the Purchaser may reasonably request. 3.02. Conditions Precedent to Each Investment Advance. The obligation of the Purchaser to make each Investment Advance (including the initial Investment Advance) shall be subject to the further conditions precedent that on the date of such Investment Advance (a) the following statements shall be true (and each of (i) the giving of the applicable notice by the Partnership to the Purchaser requesting such Investment Advance and (ii) the acceptance by the Partnership of the proceeds of such Investment Advance, shall constitute a representation and warranty by the Partnership and each of the General Partners that on the date of such Investment Advance such statements are true): (i) The representations and warranties contained in Section 4.01 (with respect to the Partnership) and Section 4.03 (with respect to the General Partners) are correct on and as of the date of such Investment Advance, before and after giving effect to such Investment Advance and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from such Investment Advance or from the application of the proceeds therefrom, which constitutes a Mandatory Retirement Event or would constitute a Mandatory Retirement Event but for the requirement that notice be given or time elapse or both; and (b) the Purchaser shall have received such other approvals, opinions or documents as the Purchaser may reasonably request. SECTION 4. REPRESENTATIONS AND WARRANTIES 4.01. Representations and Warranties of the Partnership. The Partnership represents and warrants as follows: (a) Due Authorization. It is a partnership duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation and has the power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby. The Partnership is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial 8 condition or its ability to perform its obligations hereunder. It has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder and the execution, delivery and performance of this Agreement has been duly authorized by all necessary partnership action. This Agreement constitutes the legal, valid and binding obligation of the Partnership enforceable against it in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). (b) No Conflict with Restrictions; No Default. Neither the execution, delivery and performance of this Agreement nor the consummation by the Partnership of the transactions contemplated hereby (i) will conflict with, violate or result in a breach of any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to the Partnership, (ii) will conflict with, violate, result in a breach of or constitute a default under any of the terms, conditions or provisions of the Partnership Agreement or of any agreement or instrument to which the Partnership is a party or by which the Partnership is bound or to which any of its properties or assets is subject, (iii) will conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any indenture, mortgage, lease agreement or instrument to which the Partnership is a party or by which the Partnership is bound, or (iv) will result in the creation or imposition of any lien upon any of the properties or assets of the Partnership, in each of the foregoing clauses (i) through (iv), the violation, breach or conflict of which could reasonably have a material adverse effect on the Partnership's financial condition or its ability to perform its obligations hereunder. (c) Governmental Authorizations. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made) or exemption by, any court, governmental or public body or authority, or any subdivision thereof, is required to authorize the execution, delivery or performance of this Agreement or as a condition to the legality, validity, binding effect or enforceability of this Agreement. (d) Litigation. There is no action, suit, proceeding or investigation pending or, to the knowledge of the Partnership, threatened against or affecting the Partnership or any of its properties, assets or businesses in any court or before or by any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit or proceeding, which if adversely determined could) reasonably be expected to materially impair its ability to perform its obligations under this Agreement or to have a material adverse effect on the financial condition of the Partnership; and the Partnership has not received any currently effective notice of any default, and the Partnership is not in default, under any applicable order, writ, injunction, decree, permit, determination or award of any court, governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could reasonably be expected to materially impair the Partnership's ability to perform its obligations under this Agreement or to have a material adverse effect on the financial condition of the Partnership. (e) Investment Company Act. The Partnership is not an 'investment company' or an 'affiliated person' of, or 'promoter' or 'principal underwriter' for an 'investment company,' as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended. (f) Margin Regulations. Neither the execution and delivery of this Agreement nor the use of the proceeds by the Partnership will violate or be inconsistent with the provisions of Regulation G, T, U or X. 4.02. Representations and Warranties of the Purchaser. The Purchaser represents and warrants as follows: (a) Due Authorization. It is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has the power and authority to own its 9 property and carry on its business as owned and carried on at the date hereof. The Purchaser is duly licensed to or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder. It has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Purchaser and constitutes the legal, valid and binding obligation of the Purchaser enforceable against it in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). (b) Litigation. There is no action, suit, proceeding or investigation pending or, to the knowledge of the Purchaser, threatened against or affecting the Purchaser which seeks to question, delay or prevent the consummation of the transactions contemplated hereby. (c) No Conflict with Restrictions; No Default. Neither the execution, delivery and performance of this Agreement nor the consummation by the Purchaser of the transactions contemplated hereby (i) will conflict with, violate or result in a breach of any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to the Purchaser, (ii) will conflict with, violate, result in a breach of or constitute a default under any of the terms, conditions or provisions of the certificate of incorporation or bylaws of the Purchaser or of any agreement or instrument to which the Purchaser is a party or by which the Purchaser is bound or to which any of its properties or assets is subject or (iii) will conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any indenture, mortgage, lease agreement or instrument to which the Purchaser is a party or by which the Purchaser is bound, in each of the foregoing clauses (i) through (iii), the violation, breach or conflict of which could reasonably have a material adverse effect on the Purchaser's ability to perform its obligations hereunder. (d) Governmental Authorizations. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made) or exemption by, any court, governmental or public body or authority, or any subdivision thereof, is required to authorize the execution, delivery or performance of this Agreement or as a condition to the legality, validity, binding effect or enforceability of this Agreement. (e) Availability of Funds. Purchaser has or will have all funds necessary to consummate the transactions contemplated by this Agreement. No part of such funds constitutes assets allocated to any qualified trust which contains the assets of any employee pension benefit plan with respect to which the Purchaser or its subsidiaries or any corporation considered an affiliate of any of them is a party in interest or disqualified person. For purposes of this Section 4.02(e), the terms 'employee pension benefit plan' and 'party in interest' shall have the meanings assigned to such terms in Section 3 of ERISA, the term 'disqualified person' shall have the meaning assigned to such term in Section 4975 of the Code and the term 'qualified trust' shall mean any trust qualified under Section 401(a) of the Code in which is held the assets of any employee pension benefit plan and the term 'affiliate' shall have the meaning assigned to it in Section 407(d)(7) of ERISA. (f) QIB. Purchaser is a 'qualified institutional buyer' within the meaning of Rule 144A under the Securities Act and acknowledges that it has received such information regarding the Partnership and the General Partners as it has requested pursuant to Rule 144A or has determined not to request such information. (g) Non Broker Dealer. Purchaser is not a broker or dealer as defined in Section 3(a)(4) and 3(a)(5) of the Exchange Act, a member of a national securities exchange or a person associated with a broker or dealer (as defined in section 3(a)(18) of the Exchange Act), except for business entities controlling or under common control with the Purchaser. 4.03. Representations and Warranties of the General Partners. 10 Each of the General Partners hereby represents and warrants that: (a) Due Authorization. It is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and has the corporate power and authority to own its property and carry on its business as owned and carried on at the date hereof and as contemplated hereby. It is duly licensed or qualified to do business and in good standing in each of the jurisdictions in which the failure to be so licensed or qualified would have a material adverse effect on its financial condition or its ability to perform its obligations hereunder. It has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action. This Agreement constitutes the legal, valid and binding obligation of such General Partner enforceable against it in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). (b) No Conflict with Restrictions; No Default. Neither the execution, delivery and performance of this Agreement nor the consummation by such General Partner of the transactions contemplated hereby (i) will conflict with, violate or result in a breach of any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator, applicable to such General Partner, (ii) will conflict with, violate, result in a breach of or constitute a default under any of the terms, conditions or provisions of the articles of incorporation or bylaws of such General Partner, or of any agreement or instrument to which such General Partner is a party or by which such General Partner is bound or to which any of its properties or assets is subject, (iii) will conflict with, violate, result in a breach of, constitute a default under (whether with notice or lapse of time or both), accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any indenture, mortgage, lease agreement or instrument to which such General Partner is a party or by which such General Partner is bound, or (iv) will result in the creation or imposition of any lien upon any of the properties or assets of such General Partner, in each of the foregoing clauses (i) through (iv), the violation, breach or conflict of which could reasonably have a material adverse effect on such General Partner's financial condition or its ability to perform its obligations hereunder. (c) Governmental Authorizations. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made) or exemption by, any court, governmental or public body or authority, or any subdivision thereof, is required to authorize the execution, delivery or performance of this Agreement or as a condition to the legality, validity, binding effect or enforceability of this Agreement. (d) Litigation. There is no action, suit, proceeding or investigation pending or, to the knowledge of such General Partner, threatened against or affecting such General Partner or any of its properties, assets or businesses in any court or before or by any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could, if adversely determined (or, in the case of an investigation could lead to any action, suit or proceeding, which if adversely determined could) reasonably be expected to materially impair its ability to perform its obligations under this Agreement or to have a material adverse effect on the financial condition of such General Partner; and such General Partner has not received any currently effective notice of any default, and such General Partner is not in default, under any applicable order, writ, injunction, decree, permit, determination or award of any court, any governmental department, board, agency or instrumentality, domestic or foreign, or any arbitrator which could reasonably be expected to materially impair such General Partner's ability to perform its obligations under this Agreement or to have a material adverse effect on the financial condition of such General Partner. (e) Investment Company Act. Neither such General Partner nor any of its subsidiaries is an 'investment company' or an 'affiliated person' of, or 'promoter' or 'principal underwriter' for, an 'investment company', as defined in, or is subject to regulation under, the Investment Company Act of 1940, as amended. 11 (f) Ownership of Property; Liens. Such General Partner has good and valid title to all of its properties and assets free and clear of Liens, except for Permitted Liens or to the extent the lack of good and valid title or the existence of any such Lien reasonably could not have a material adverse effect on the ability of such General Partner to run its business as conducted on the date of this Agreement. The General Partner is not a party to or subject to any agreement, contract or commitment which could reasonably be expected to materially impair such General Partner's ability to perform its obligations under this Agreement or have a material adverse effect on the financial condition of such General Partner. (g) Financial Information. The balance sheets of RHDC and DBI dated December 31, 1992 and June 30, 1993 and the related statements of income and cash flow for the 12-month and 6-month periods then ended and the balance sheets of IMS dated November 30, 1993 and May 31, 1993 and the related statements of income and cash flow for the 12-month and 6-month periods then ended (collectively, the 'Partners' Statements'), copies of which will be delivered to the Purchaser by October 22, 1993 have been prepared from each Initial General Partner's books and records, on a basis consistent with their presentation in the Parent's consolidated financial statements. Such Partners' Statements fairly present in all material respects the financial position of each of the Initial General Partners as of such date and its results of operations and cash flow for such period. As of the date hereof, none of the Initial General Partners has outstanding Debt in excess of $10 million in the aggregate (not including Debt owed by an Initial General Partner to Parent or to a wholly owned subsidiary of Parent). Since June 30, 1993 (with respect to RHDC and DBI), and May 31, 1993 (with respect to IMS), there has been no material adverse change in the business, financial position or results of operations of such Initial General Partner. (h) Ownership by Parent. All of the outstanding Capital Stock of such General Partner is owned directly by Parent or a wholly owned subsidiary of Parent. (i) Margin Regulations. Neither the execution and delivery of this Agreement nor the use of the proceeds by the Partnership will violate or be inconsistent with the provisions of Regulation G, T, U or X. SECTION 5. COVENANTS 5.01. Covenants of the Partnership. For so long as the Investment Principal and any accrued Investment Return shall remain unpaid, the Partnership agrees as follows: (a) Debt Limitations. The Partnership shall not, directly or indirectly, create, authorize, issue, incur, assume or otherwise become liable for or with respect to, or become responsible for any Debt (other than Debt incurred pursuant to and in accordance with Section 2.02(c) and Section 6.01(d) of this Agreement) or Trade Payables. (b) No Liens. The Partnership shall not create, incur, or suffer to exist, or agree to create, incur or suffer to exist, or consent to cause or permit in the future (upon the happening of a contingency or otherwise) the creation, incurrence or existence of, any Lien upon any of its Property. (c) Separate Affairs. The Partnership shall at all times (1) maintain and keep its assets separate and apart from any Affiliate of the Partnership, and under separate registration, and (2) maintain its books and records separate and apart from those of any Affiliate of the Partnership. (d) No Distributions. The Partnership shall not make any distributions to the Partners, except to the extent provided in Sections 10.8, 10.9 and 11.2 of the Partnership Agreement; provided that the Partnership shall not make a distribution pursuant to Sections 10.8, 10.9 or 11.2 at a time when any accrued Investment Return remains unpaid unless the Partnership reserves for payment to the Purchaser the amount of any accrued but unpaid Investment Return; provided further that in no event may the Partnership make any distribution if after giving effect thereto the Fair Market Value of the Property held by the Partnership at such time would be less than the outstanding amount of the Investment Principal plus any accrued and unpaid Investment Return and, if a Triggering Event has occurred, plus $50 million. 12 (e) Property. The Partnership shall not make any loan or advance to any Person, purchase or acquire any capital stock, warrants, rights, options, obligations or other securities of any Person or any other investment in any Person, or acquire or hold any assets, other than Permitted Investments. (f) Additional General Partners. The Partnership shall cause any Person who becomes a general partner in the Partnership after the date of this Agreement to expressly assume, by a supplemental agreement executed and delivered to the Purchaser, all of the obligations of a General Partner under this Agreement. 5.02. Covenants of the General Partners. For so long as the Investment Principal and any accrued Investment Return shall remain unpaid, each of the General Partners agrees as follows: (a) Transactions with Affiliates. No General Partner shall, and no General Partner shall permit the Partnership or any subsidiary of a General Partner to, directly or indirectly, enter into, renew or extend any transaction with Parent or any other Affiliates except upon fair and reasonable terms no less favorable to such General Partner, the Partnership or such subsidiary, as the case may be, than could be obtained at the time of such transaction or at the time of the execution of the agreement providing therefor, in a comparable arm's-length transaction with a Person that is not such an Affiliate; provided that the foregoing limitation shall not apply to transactions in the ordinary course of business consistent with past practice. (b) Debt Limitations. Except as otherwise provided in this Agreement, no General Partner shall, and no General Partner shall permit any of its subsidiaries to, directly or indirectly, create, authorize, issue, incur, assume or otherwise become liable for any Debt (other than Debt owing to another General Partner or to its wholly owned subsidiary); provided that notwithstanding the foregoing a General Partner may, and may permit its subsidiaries to, incur each of the following: (i) Debt owing to Parent, provided that the aggregate Debt owing to Parent of all General Partners at any time that is not subordinate to the General Partners' obligations hereunder may not exceed $100 million, (ii) Debt in respect of overdrafts of zero balance bank accounts, (iii) Debt to the extent such Debt is secured by a purchase money lien that is a Permitted Lien, (iv) obligations to pay rent or other amounts under a lease that would be required to be capitalized for financial reporting purposes in accordance with GAAP, incurred in the ordinary course of business consistent with past practice, (v) Debt incurred as the result of the acquisition of assets or the stock of any Person in an aggregate amount outstanding at any time not in excess of $75 million for all General Partners, provided that the value of the assets or stock acquired exceeds the amount of such Debt, and (vi) Debt outstanding at any time that does not exceed $10 million in the aggregate. (c) No Liens. No General Partner shall, and no General Partner shall permit its subsidiaries to, create, incur, or suffer to exist, or agree to create, incur or suffer to exist, or consent to cause or permit in the future (upon the happening of a contingency or otherwise) the creation, incurrence or existence of, any Lien upon any of its assets or properties other than Permitted Liens, except to the extent the existence of any such Lien could not reasonably have a material adverse effect on the ability of such General Partner to run its business as conducted on the date of this Agreement. (d) Separate Affairs. Each General Partner shall at all times maintain such General Partner's books and records separate and apart from those of any Affiliate of such General Partner. The Board of Directors of each General Partner shall hold appropriate meetings, or act by written consent, to authorize such General Partner's corporate actions, and records of all such meetings and written consents shall be maintained. (e) Management of Partnership Assets. Each General Partner shall cause the Managing General Partner to use its best efforts to manage the Partnership's assets so as to produce Net Cash Flow sufficient to pay the Investment Return in accordance with Section 2.02 hereof. (f) Portfolio Certificates. Each General Partner shall cause the Managing General Partner to deliver to the Purchaser the Portfolio Certificates required pursuant to Section 7.02 hereof and in the event the Fair Market Value of the Property held by the Partnership as reflected in any such Portfolio Certificate is less than (I) in the event a Triggering Event has not occurred, the amount of (x) Investment Principal plus (y) all accrued but unpaid Investment Return or (II) in the event a Triggering 13 Event has occurred, the amount of (x) Investment Principal plus (y) all accrued but unpaid Investment Return plus (z) $50 million, each General Partner jointly and severally agrees for so long as such General Partner is a general partner in the Partnership, within five (5) Business Days following the date such Portfolio Certificate is required to be delivered pursuant to Section 7.02, to make a capital contribution in cash to the Partnership in an amount at least equal to such deficit; provided, that (i) the obligations of each of the General Partners under this Section 5.02(f) shall be subordinate in right of payment to the unsecured claims of all general creditors of such General Partner and (ii) no General Partner shall be required to make a capital contribution under this Section 5.02(f) to the extent that, after giving effect to such contribution, such General Partner would be Insolvent. (g) Issuance of Redeemable Stock. No General Partner shall, and no General Partner shall permit any of its subsidiaries to, directly or indirectly, issue or sell any shares of its Redeemable Stock (including options, warrants or other rights to purchase shares of such Redeemable Stock). (h) Restricted Payments. No General Partner shall, and no General Partner shall permit any of its subsidiaries to, directly or indirectly (i) declare or pay any dividend or make any distribution on its capital stock (other than (x) dividends by a General Partner not in excess of such General Partner's earnings and profits (excluding capital gains and extraordinary items) from June 30, 1993 for RHDC and DBI and from May 31, 1993 for IMS and (y) dividends by a subsidiary of a General Partner on capital stock held by the General Partner or another wholly owned subsidiary of such General Partner), (ii) purchase, redeem, retire or otherwise acquire for value any shares of its Capital Stock (including options, warrants or other rights to acquire such shares of Capital Stock) held by Persons other than the General Partner or a wholly owned subsidiary of the General Partner, provided that a General Partner may, and may permit its subsidiaries to (x) purchase, redeem, retire or otherwise acquire for value shares of Capital Stock of foreign subsidiaries which were required to be issued to foreign nationals or directors under applicable law and (y) purchase, redeem, retire or otherwise acquire for value any interest in a joint venture to which such General Partner or its subsidiary is a party if such interest is owned by a Person who is not an Affiliate of Parent and if such interest is acquired on terms which the General Partner in good faith determines is fair and reasonable or (iii) make any Investment in Parent or any of its other Affiliates (other than Permitted Investments and Investments of a General Partner in wholly owned subsidiaries of such General Partner). (i) Deficiency Payments. Each of the General Partners jointly and severally agrees to make the advances to the Partnership required pursuant to Sections 2.02(c) and 6.01(d) hereof; provided, however, that (i) the obligations of each of the General Partners under this Section 5.02(i) shall be subordinate in right of payment to the unsecured claims of all general creditors of such General Partner and (ii) no General Partner shall be required to advance funds to the Partnership under this Section 5.02(i) to the extent that, after giving effect to such advance, such General Partner would be Insolvent. (j) Merger, Consolidation, Etc. No General Partner shall consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially an entirety in one transaction or a series of related transactions) to, any Person; provided, that a General Partner may sell all or substantially all of its assets if the proceeds of such sale are held by such General Partner or loaned to Parent on an unsubordinated basis. (k) Existence. Each General Partner will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and the existence of the Partnership and each of its other subsidiaries in accordance with the respective organizational documents of such General Partner, the Partnership and each such other subsidiary and the rights (whether pursuant to charter, partnership certificate, agreement, statute or otherwise), material licenses and franchises of such General Partner, the Partnership and each such other subsidiary; provided that no General Partner shall be required to preserve any such right, license or franchise, or the existence of any subsidiary (other than the Partnership), if the maintenance or preservation thereof is no longer desirable in the conduct of the business of such General Partner and its subsidiaries taken as a whole. 14 SECTION 6. RETIREMENT EVENTS 6.01. Mandatory Retirement. (a) Mandatory Retirement Events. Each of the following events shall constitute a 'Mandatory Retirement Event': (i) the failure of the Managing General Partner to deliver a Portfolio Certificate or the failure of the Managing General Partner or any other General Partner to deliver any other report or certificate to the Purchaser as required under Section 7.02 hereof (and, if a Triggering Event has not occurred, such failure continues for a period of fifteen (15) days); (ii) the failure of the Partnership to pay any accrued Investment Return to the Purchaser in accordance with Section 2.02(b) hereof (and such failure continues for a period of fifteen (15) days); (iii) the failure of the General Partners to make a capital contribution to the Partnership in accordance with Section 5.02(f) hereof; (iv) any default on any securities held by the Partnership if the Fair Market Value of such securities (and any other securities held by the Partnership that were issued by the issuer of the securities on which there has been a default), in the aggregate, is more than ten percent (10%) of the Fair Market Value of all of the Property then held by the Partnership; (v) the Bankruptcy of (1) the Partnership, (2) any General Partner or (3) any issuer or guarantor of any securities held by the Partnership if the Fair Market Value of such securities (and any other securities held by the Partnership that were issued or guaranteed by such bankrupt issuer or bankrupt guarantor), in the aggregate, is more than ten percent (10%) of the Fair Market Value of all of the Property then held by the Partnership; (vi) the failure by the Partnership or the General Partners to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (i), (ii) or (iii) above) (and such failure continues for a period of thirty (30) days); (vii) the occurrence of any Liquidating Event; and (viii) the occurrence of October 15, 1996; provided, that if, within five (5) Business Days of the Partnership's discovery of a Mandatory Retirement Event (other than a Mandatory Retirement Event specified in clauses (ii) or (viii) above, which shall have a Cure Period of 0 Business Days) (the 'Cure Period'), the Partnership or the General Partners, as the case may be, cures the failure, breach or default which constituted the Mandatory Retirement Event, such failure, breach or default shall not be considered a Mandatory Retirement Event. In no event shall the date of the Partnership's discovery of a Mandatory Retirement Event be later than the date it receives notice of the Mandatory Retirement Event from the Purchaser. (b) Repayment by Partnership. In the event a Mandatory Retirement Event occurs and is not cured by the end of the Cure Period, the Partnership shall (i) notify the Purchaser, on the day immediately following the Cure Period, of the occurrence of such Mandatory Retirement Event and (ii) within five (5) Business Days after the Cure Period, repay to the Purchaser the Investment Principal and any accrued but unpaid Investment Return through the date of repayment. In addition, in the event the Investment Principal is not repaid within such time, the Purchaser may instruct the Managing General Partner (or such other Person who is responsible for overseeing the winding up and dissolution of the Partnership pursuant to Section 12.2 of the Partnership Agreement) to, and if so instructed the Managing General Partner (or such other Person) shall, liquidate the Partnership's assets and properties. (c) Assets Used for Repayment. The payment to the Purchaser under Section 6.01(b) hereof shall be made in cash; provided that, at the election of the Managing General Partner, all or a portion of such cash payment may be made by the delivery of publicly traded common stock or preferred stock of Parent ('Parent Stock') or unsubordinated debt of Parent ('Parent Debt') held by the Partnership which has a delivery date value (as determined under this Section 6.01(c)) equal to the cash not being paid; provided that Parent has agreed to cause such Parent Stock or Parent Debt to be registered under the Securities Act upon the request of the holder thereof pursuant to an agreement satisfactory to the 15 Purchaser. For purposes of this Section 6.01(c), the 'delivery date value' of the Parent Stock or Parent Debt used for such repayment shall be equal to the firm price bid for the date of delivery by the Partnership quoted by a reputable securities dealer mutually agreeable to the Purchaser and the Partnership for the full amount of the specific Parent Stock and/or the full amount of the specific Parent Debt to be delivered by the Partnership pursuant to this Section 6.01(c); provided, however, that in the event the Purchaser and the Partnership can not agree on a reputable securities dealer, the 'delivery date value' of the Parent Stock or Parent Debt used for such repayment shall be equal to the highest of the firm prices bid for the date of delivery by the Partnership quoted by Morgan Stanley & Co. Incorporated, Salomon Brothers Inc. and The First Boston Corporation, in each case, for the full amount of the specific Parent Stock and/or the full amount of the specific Parent Debt to be delivered by the Partnership pursuant to this Section 6.01(c). (d) Insufficient Partnership Funds. To the extent the Partnership fails or is otherwise unable to repay the amounts required by Section 6.01(b) and Section 6.02 hereof, each of the General Partners jointly and severally agrees to advance funds to the Partnership (or cause the Partnership to borrow funds from other sources) in an amount sufficient to permit the Partnership to repay the amounts required by Section 6.01(b) hereof (and with respect to a General Partner who was a general partner in the Partnership at the time the Retirement Event occurred, any amount due under Section 6.02 hereof), and shall cause the Partnership to make such repayment; provided, however, that the Partnership's obligation to repay any such advance shall be subordinate to the repayment of the Investment Principal, any accrued but unpaid Investment Return and any payment required by Section 6.02 hereof; provided further, however, that (i) the obligations of each General Partner under this Section 6.01(d) shall be subordinate in right of payment to the unsecured claims of all creditors of such General Partner and (ii) no General Partner shall be required to advance funds to the Partnership under this Section 6.01(d) to the extent that, after giving effect to such advance, such General Partner would be Insolvent. (e) Enforcement of Performance. In the event the Partnership fails to comply with its obligations under Section 2.02(b) or Sections 6.01(b) and 6.02 hereof or the General Partners fail to comply with their obligations under Section 2.02(c) or Section 6.01(d) hereof, the Purchaser may use any legal or equitable remedy to enforce such obligations, including maintaining a cause of action against the Partnership or any General Partner (whether or not the General Partner is a partner in the Partnership at the time of such failure or at the time such cause of action is commenced) for specific performance and/or money damages, or other appropriate judicial relief. 6.02. Additional Payment on Mandatory Retirement Event. If the Investment Principal is retired or is required to be retired by the Partnership pursuant to Section 6.01 hereof before October 15, 1996, the Partnership shall, in addition to the amounts payable pursuant to Section 6.01(b) hereof, pay the Purchaser an amount equal to the product obtained by multiplying (I) 0.95% per annum by (II) the aggregate amount of Investment Principal to be retired by (III) a fraction, the numerator of which is the number of days from the retirement date to October 15, 1996 and the denominator of which is 360, and dividing the result by (IV) (1+R)D. For purposes of the preceding clause (IV), 'D' equals a fraction, the numerator of which is the number of days from the retirement date to October 15, 1996 and the denominator of which is 365; and 'R' equals the midmarket fixed swap rate for LIBOR based swaps of equivalent maturity. SECTION 7. MISCELLANEOUS 7.01. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including facsimile, telegraphic, telex or cable communication) and mailed, telecopied, telegraphed, telexed, cabled or delivered as follows: If to the Partnership: c/o The Dun & Bradstreet Corporation 200 Nyala Farms Road 16 Westport, CT 06880 Attention: Vice President -- Financial Planning If to the Purchaser: Merrill Lynch Capital Services Inc. World Financial Center North Tower New York, NY 10281 Attention: Macauley R. Taylor If to RHDC, DBI or IMS: c/o The Dun & Bradstreet Corporation 200 Nyala Farms Road Westport, CT 06880 Attention: Vice President -- Financial Planning or at such other address as shall be designated by any such party in a written notice to the other parties given in accordance with this Section 7.01. Except as otherwise specified in this Agreement, all such notices and communications shall, when sent by registered or certified mail, telecopied, telegraphed, telexed, cabled or sent by overnight courier, be effective when deposited in the mails, transmitted by telecopier (followed by delivery of the original of such notice or communication), delivered to the telegraph company, confirmed by telex answerback, delivered to the cable company or delivered to the courier company, respectively. 7.02. Reports. (a) Annual and Quarterly Reports. Within the periods specified in this Section 7.02, the Partnership and each of the General Partners shall provide the Purchaser with the following reports: (i) Partnership Annual Reports. Within ninety (90) days after the end of each Fiscal Year commencing with the Fiscal Year ending December 31, 1993 and at such time as distributions are made to the Partners pursuant to Section 12.2 of the Partnership Agreement following the occurrence of a Liquidating Event, the Managing General Partner shall cause to be prepared and furnished to the Purchaser each of the following: (1) financial statements accompanied by a certificate of the chief financial officer of the Managing General Partner certifying that such statements have been prepared and are fairly stated in all material respects in accordance with GAAP, including: a balance sheet, statement of income or loss, and statement of cash flow of the Partnership as of the last day of such Fiscal Year prepared in accordance with GAAP; and (2) a certificate of the chief financial officer of the Managing General Partner certifying that no Liquidating Event has occurred and is continuing, or if any such event has occurred and is continuing, the action the Managing General Partner has taken or proposes to take with respect thereto. (ii) General Partner Annual Reports. Within ninety (90) days after the end of its fiscal year commencing with the first fiscal year ending after the date of this Agreement, each General Partner shall cause to be prepared and furnished to the Purchaser consolidated financial statements (including a balance sheet as of the last day of such fiscal year, and a statement of income or loss, and statement of cash flow for such fiscal year) accompanied by a certificate of the chief financial officer of such General Partner certifying that such statements have been prepared from such General Partner's books and records on a basis consistent with their presentation in the Parent's consolidated financial statements and that such financial statements fairly present in all material respects the financial position of such General Partner as of such date and its results of operations and cash flow for such period. (iii) Partnership Quarterly Reports. Within sixty (60) days after the close of each Fiscal Quarter commencing with the Fiscal Quarter ending March 31, 1994 (other than the last Fiscal Quarter of a Fiscal Year), the Managing General Partner shall cause to be prepared and furnished to the Purchaser each of the following: 17 (1) a balance sheet of the Partnership as of the last day of such Fiscal Quarter and statements of income and loss and cash flow for such Fiscal Quarter, together with a certificate of the chief financial officer of the Managing General Partner certifying that such statements have been prepared in accordance with GAAP; and (2) a certificate of the chief financial officer of the Managing General Partner with respect to the matters described in Section 7.02(a) (i)(2) hereof. (iv) General Partner Quarterly Reports. Within sixty (60) days after the close of each of its fiscal quarters commencing with the first fiscal quarter ending after the date of this Agreement (other than the last fiscal quarter of a fiscal year), each General Partner shall cause to be prepared and furnished to the Purchaser consolidated financial statements (including a balance sheet as of the last day of such fiscal quarter, and a statement of income or loss, and statement of cash flow for such fiscal quarter) accompanied by a certificate of the chief financial officer of such General Partner certifying that such statements have been prepared from such General Partner's books and records on a basis consistent with their presentation in the Parent's consolidated financial statements and that such financial statements fairly present the financial position of such General Partner as of such date and its results of operations and cash flow for such period. (b) Quarterly Certificates. Within fifteen (15) days following the close of each Fiscal Quarter of the Partnership commencing with the Fiscal Quarter ending December 31, 1993, the Managing General Partner shall furnish the Purchaser with (i) a certificate (a 'Compliance Certificate') prepared by the chief financial officer of the Managing General Partner certifying whether or not the General Partners have complied with their obligations under Section 5.02 hereof and attaching the arithmetic computations or financial statements to demonstrate compliance therewith and (ii) a Portfolio Certificate as of the last day of such Fiscal Quarter. (c) Monthly Certificates. In the event a Triggering Event occurs and is continuing, within five (5) days following each calendar month, the Managing General Partner shall furnish the Purchaser with (i) a Compliance Certificate certifying whether or not the General Partners have complied with their obligations under Section 5.02 hereof and attaching the arithmetic computations or financial statements to demonstrate compliance therewith and (ii) a Portfolio Certificate as of the last day of such month. 7.03. Transfers and Assignments. (a) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. (b) The Purchaser may assign all or a portion of its rights and obligations under this Agreement, upon not less than three (3) Business Days' notice to the Partnership (which notice shall specify the name and address of the assignee and the amount of Investment Principal assigned); provided that the amount of Investment Principal being assigned pursuant to any such assignment shall in no event be less than $25 million (unless such assignment is an assignment of all of the Purchaser's remaining rights and obligations under this Agreement) and shall be an integral multiple of $1 million; provided further that any such assignee expressly assumes, by a supplemental agreement executed and delivered to the Partnership, the obligations of the Purchaser under this Agreement that are the subject of such assignment; provided further, that the Purchaser may not assign its rights and obligations under this Agreement without the consent of the Partnership (which consent shall not be unreasonably withheld) unless the assignee makes representations and warranties in substantially the form of Exhibit A hereto. In the event the Purchaser assigns all or any portion of its rights and obligations under this Agreement, any notice or communication to the Purchaser hereunder shall also be made to each of the Purchaser's assignees; provided, that no notices or communications need be made to any Person who has assigned all of its rights and obligations under this Agreement. (c) The Purchaser has entered into this Agreement with the expectation of assigning all of its rights and obligations hereunder to one or more customers and not for the purpose of earning the Investment Return or profiting from a possible increase in the value of the rights under this Agreement. Any communication of information by the Purchaser to a prospective transferee in connection with a sale, pledge or other transfer (or an attempted sale, pledge or other transfer) of the Investment Principal or a portion thereof pursuant to this Section 7.03 shall not be considered a violation of Section 7.07 hereof 18 provided the prospective transferee executed a confidentiality agreement in substantially the form of Section 7.07(b). (d) Neither the Partnership nor any General Partner shall have the right to assign its rights or obligations hereunder without the prior written consent of the Purchaser; provided, that one (and only one) of the Initial General Partners may terminate its obligations under this Agreement if (and only if) Parent (or a wholly owned subsidiary of Parent that is acceptable to the Purchaser in the Purchaser's sole discretion) executes an agreement reasonably acceptable to Purchaser whereby Parent (or such acceptable subsidiary) agrees on an unsubordinated basis to pay Purchaser any Investment Return or Investment Principal or any other payment required to be paid hereunder in the event the Partnership fails or is otherwise unable to make such payment. 7.04. No Waiver; Remedies. No failure on the part of the Purchaser or the Partnership to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 7.05. Status of Purchaser. The parties intend the Investment Principal to be classified as debt and the Investment Return and payments pursuant to Section 6.02 to be classified as interest for U.S. federal, state and local income and franchise and all other tax purposes, and each party agrees to file its income and franchise tax returns in a manner consistent therewith and to not take a contrary position with any tax authority. The parties intend that the Purchaser have no interest in Partnership profits, losses or distributions. In all events, the Purchaser shall possess no voting, management, inspection or other rights possessed by the Partners of the Partnership except as otherwise expressly provided for herein. 7.06. Indemnification of Purchaser. (a) The Partnership and each of the General Partners, jointly and severally, covenant and agree, unconditionally, absolutely and irrevocably, to indemnify and hold harmless the Purchaser from and against any and all claims, damages, losses, and reasonable expenses (including, without limitation, reasonable fees and disbursements of counsel) arising out of or in connection with or by reason of any Person's assertion that the liabilities, debts or other obligations of the Partnership are liabilities, debts or other obligations of the Purchaser; provided, however, that no such indemnification shall be required hereunder for any such claims, damages, losses, and expenses resulting from the gross negligence or willful misconduct of the Purchaser. (b) The Partnership and each of the General Partners jointly and severally agrees to indemnify the Purchaser's assignees and their respective directors, officers, employees, agents and controlling persons (each such person being an 'Indemnified Party') from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under any applicable federal or state law, or otherwise, and related to or arising out of the transactions contemplated by this Agreement (excluding any such losses, claims, damages and liabilities under the Code or any applicable state, local, foreign or other tax laws related to or arising out of the transactions contemplated by this Agreement; provided, however, that no such exclusion shall apply to any such losses, claims, damages and liabilities resulting from the gross negligence or willful misconduct of the Partnership or General Partner) and will reimburse any Indemnified Party for all expenses (including counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by or on behalf of the Partnership or such General Partner. Neither the Partnership nor any General Partner will be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted from such assignee's gross negligence or willful misconduct. 7.07. Confidentiality. Until October 31, 1995: 19 (a) Except as contemplated hereby or required by law, the Partnership and the General Partners shall keep confidential and shall not disclose to any Person (other than Parent or employees, agents and representatives to the extent required to consummate the transactions contemplated hereby and who agree to be bound by the terms of this Section 7.07(a)) without the prior written consent of the Purchaser any information which pertains to this Agreement or the Partnership Agreement, any negotiations pertaining thereto or any of the transactions contemplated hereby. Neither the Partnership, the General Partners nor any of their Affiliates shall use any information which pertains to this Agreement or the Partnership Agreement, any negotiations pertaining hereto or any of the transactions contemplated hereby, except in connection with the transactions contemplated hereby. (b) Subject to Section 7.03(b), the Purchaser agrees that, (i) except as contemplated hereby or required by law, the Purchaser shall keep confidential and shall not disclose to any Person (other than employees, agents and representatives to the extent required to consummate the transactions contemplated hereby and who agree to be bound by the terms of this Section 7.07(b)) without the prior written consent of the Partnership any information which (x) pertains to this Agreement or the Partnership Agreement, any negotiations pertaining thereto, any of the transactions contemplated hereby or the business of the Partnership, or (y) pertains to confidential or proprietary information of the Partnership and (ii) neither the Purchaser nor any of its Affiliates shall use, any information which (x) pertains to this Agreement or the Partnership Agreement, any negotiations pertaining hereto, any of the transactions contemplated hereby or the business of the Partnership, or (y) pertains to the confidential or proprietary information of the Partnership, except in connection with the transactions contemplated hereby. 7.08. Amendments; Actions. (a) No amendment or waiver of any provision of this Agreement, nor any consent to any departure by the Partnership or any General Partner therefrom, shall in any event be effective unless the same shall be in writing and signed by the Purchaser, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing, in the event the Purchaser assigns all or any portion of its rights and obligations under this Agreement, the Partnership and the General Partners may amend this Agreement with the written consent of the Persons entitled to a majority of the Investment Principal amount hereunder and the Persons entitled to a majority of the Investment Principal amount hereunder may, by written notice to each other Person entitled to any Investment Principal hereunder, waive compliance by the Partnership or any General Partner with any provision of this Agreement; provided that without the consent of each Person entitled to any Investment Principal hereunder affected, an amendment or waiver may not: (i) amend, modify, supplement, alter or waive any provision of Section 2, Section 5.01 or Sections 6 or (ii) reduce the percentage in Investment Principal amount the consent of whose holders is required for any amendment or waiver under this Section 7.08. (b) Actions by Purchaser. In the event the Purchaser assigns all or any portion of its rights and obligations under this Agreement, any decision or action required to be made by the Purchaser under this Agreement shall be made by the Persons entitled to a majority of the Investment Principal amount hereunder. 7.09. Binding Effect; Governing Law. This Agreement shall become effective when it shall have been executed by the Partnership, the General Partners and the Purchaser and thereafter shall be binding upon and inure to the benefit of the Partnership, the General Partners and the Purchasers. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts and instruments executed and to be performed entirely in such state. 7.10. Submission to Jurisdiction; Venue. Any and all suits, legal actions or proceedings against any party hereto arising out of this Agreement shall be brought in the United States District Court for the Southern District of New York or, if such court shall not have jurisdiction, the court of appropriate jurisdiction sitting in New York County, New York, and each party hereby submits to and accepts the exclusive jurisdiction of such courts for the purpose of such suits, legal action or proceedings. Each party hereto hereby irrevocably 20 waives any objection which it may now or hereafter have to the laying of venue of any such suit, legal action or proceeding in any such court and hereby further waives right for a jury trial, and any claim that any suit, legal action or proceeding brought in any such court has been brought in an inconvenient forum. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. MERRILL LYNCH CAPITAL SERVICES INC. By /s/ MACAULEY R. TAYLOR ................................... Authorized Signatory D&B INVESTORS L.P. By THE REUBEN H. DONNELLEY CORPORATION, its managing general partner By /s/ WILLIAM H. BUCHANAN JR. ................................... Sr. Vice President and Secretary THE REUBEN H. DONNELLEY CORPORATION By /s/ WILLIAM H. BUCHANAN JR. ................................... Sr. Vice President and Secretary IMS AMERICA, LTD. By /s/ ALAN J. KLUTCH ................................... Vice President DUN & BRADSTREET, INC. By /s/ ALAN J. KLUTCH ................................... Vice President 21 EXHIBIT A Pursuant to Section 7.03(b) of the Purchase Agreement dated October 14, 1993 (the 'Purchase Agreement', terms used herein as therein defined) among D&B Investors L.P., Merrill Lynch Capital Services Inc., The Reuben H. Donnelley Corporation, Dun & Bradstreet, Inc. and IMS America, Ltd., the undersigned (the 'Assignee') hereby represents and warrants to [name of assignor] and D&B Investors L.P. that each of the following statements is true and correct as of the date hereof: (i) Assignee was not formed and is not being utilized primarily for the purpose of making an investment in the Partnership and either (x) the value of all securities owned by the Assignee of all issuers which would be investment companies (as defined under the Investment Company Act of 1940, as amended), but for the fact that the outstanding securities (other than short-term paper) of such companies are beneficially owned by not more than one hundred persons and were not issued in a public offering, does not exceed ten percent of the value of the Assignee's total assets or (y) in the event the Assignee cannot satisfy clause (x) above and the aggregate amount of Investment Principal being assigned to Assignee equals or exceeds $25 million, the aggregate number of securityholders of Assignee is less than 4 and each holder of more than 10% of the voting securities of Assignee can satisfy clause (x) above. (ii) Assignee does not rely on the 'private investment company' exclusion provided by Section 3(c)(1) of the Investment Company Act of 1940 to avoid registration and regulation under such Act. (iii) The assignment of the rights and obligations under the Purchase Agreement to Assignee is (x) pursuant to a registration statement under the Securities Act, (y) pursuant to an exemption from the registration requirements of the Securities Act, or (z) if such act does not apply. [Name of Assignee] By: ................................. Name: Title: 22 PURCHASE AGREEMENT AMENDMENT PURCHASE AGREEMENT AMENDMENT, dated as of October 14, 1993, by and among D&B Investors L.P. (the 'Partnership'), Dun & Bradstreet, Inc., IMS America, Ltd., The Reuben H. Donnelley Corporation (collectively, the 'General Partners') and Merrill Lynch Capital Services Inc. ('MLCS'). WHEREAS, the parties hereto are also the parties to a Purchase Agreement dated October 14, 1993 (the 'Purchase Agreement'), NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto agree as follows: 1. Section 6.01(c) of the Purchase Agreement is, effective as of the date hereof, hereby amended by deleting the word 'average' as it appears in the proviso to the second sentence thereof and substituting therefor the word 'highest'. 2. On and after the date hereof, each reference in the Purchase Agreement to 'this Agreement', 'hereunder', 'hereof' or words of like import referring to the Purchase Agreement shall mean and be a reference to the Purchase Agreement as amended hereby. The Purchase Agreement, as amended hereby, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. D&B INVESTORS L.P. by THE REUBEN H. DONNELLEY CORPORATION, its managing general partner By /s/ WILLIAM H. BUCHANAN, JR. .................................. Title: Senior Vice President THE REUBEN H. DONNELLEY CORPORATION By /s/ WILLIAM H. BUCHANAN, JR. .................................. Title: IMS AMERICA, LTD. By /s/ ALAN J. KLUTCH .................................. Title: Vice President DUN & BRADSTREET, INC. By /s/ ALAN J. KLUTCH .................................. Title: Vice President MERRILL LYNCH CAPITAL SERVICES INC. By /s/ MACAULEY R. TAYLOR .................................. Title: -----END PRIVACY-ENHANCED MESSAGE-----